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[Markets] There could be politics talk at your Thanksgiving table, but Uno won’t be the reason ‘Uno Nonpartisan’ scraps red and blue cards for orange and purple ones.
Published:11/20/2019 1:07:01 PM
[Markets] "Wide-Scale" Israeli Strike On Damascus Kills 23 After Alleged Iranian Rocket Attack "Wide-Scale" Israeli Strike On Damascus Kills 23 After Alleged Iranian Rocket Attack

During the night Tuesday Israel conducted a “wide-scale” strike on Syria, focused in and around Damascus, resulting in a soaring casualty count according to the AP.

"A Britain-based war monitoring group said the Israeli airstrikes killed 11 people, including seven non-Syrians who are most likely Iranians," the AP initially reported, though Syrian state media cited two civilians killed among multiple wounded. That number was revised Wednesday morning to at least 23 people, most said to be "non-Syrians"  likely Iranians, according to reports.

The Israeli military said it had hit multiple targets belonging to Iran’s elite Quds force, specifically missile and weapons warehouses, after the Israeli Defense Forces (IDF) said rockets were "fired at Israel by an Iranian force in Syria".

Screengrab from video of Tuesday night's massive airstrikes on Damascus. 

International reports have described the attacks as the most intense since a similar operation last January. Over the past months what were previously somewhat frequent Israeli raids inside Syria had grown quiet. 

The Israeli military said its fighter jets hit multiple targets belonging to Iran’s elite Quds force, including surface-to-air missiles, weapons warehouses and military bases. After the Syrian military fired an air defense missile, the Israeli military said a number of Syrian aerial defense batteries were also destroyed.

Damascus residents are outraged after a direct hit on a civilian home Wednesday night, which included children among the wounded, as the AP reports:

Syria’s state SANA news agency said the two civilians were killed by shrapnel when an Israeli missile hit a house in the town of Saasaa, southwest of Damascus. It said several others were wounded, including a girl in a residential building in the suburb of Qudsaya, also west of the Syrian capital.

Syrian air defenses were active during the assault, with the Syrian Army saying it downed multiple inbound Israeli rockets. 

Official media said Syrian anti-aircraft missiles were able to successfully "intercept and destroy most of the hostile missiles before reaching their targets."

However, Israeli statements disputed this, with an Army statement saying up to "dozens" of targets were hit, including an Iranian base at Damascus International Airport.

"The attack was carried out in response to the launching of rockets by an Iranian force from Syria's territory into Israel, intending to strike Israeli territory," read the IDF statement, referring to a barrage of rockets launched toward Israel's Golan on Tuesday.

“Yesterday’s Iranian attack towards Israel is further clear proof of the purpose of the Iranian entrenchment in Syria, which threatens Israeli security, regional stability and the Syrian regime,” Israeli spokesman Lt. Col. Jonathan Conricus said.

The statement added that Israel would “continue operating firmly and resolutely” against Iran in Syria, which shows that despite the war inside Syria slowly winding down and Assad in firm control over most of the country, the long-running "shadow war" with Israel is still escalating.

Meanwhile, Russia condemned the raid as "an unnecessary escalation of tensions" and as "very wrong" according to a Foreign Ministry statement.

"Recently, the intensity of Israeli rocket and bomb attacks on Syrian territory have increased sharply...This development evokes the most serious concern and opposition in Moscow. We consider it critically important to respect the sovereignty and territorial integrity of the Syrian Arab Republic and other states in the region," the foreign ministry said.

Tyler Durden Wed, 11/20/2019 - 13:45
Published:11/20/2019 1:07:01 PM
[Markets] Walmart Has a Dog Problem, the Post Office Has Advice Walmart employees are running into dogs “big and small” as the retail giant pushes more into home delivery. They better learn to deal with canines because package deliveries by Walmart as well as UPS, FedEx and even will only rise from here. Published:11/20/2019 1:07:01 PM
[Markets] The Dow is down more than 200 points as stocks extend their decline The Dow is down more than 200 points as stocks extend their decline Published:11/20/2019 12:38:34 PM
[Markets] Stocks slide on report trade deal ‘may not be completed this year’ U.S. stocks lurched lower Wednesday midday after a report that a trade deal might not be done this year and after China condemned a U.S. Senate resolution supporting human rights in Hong Kong Published:11/20/2019 12:38:34 PM
[Markets] The Margin: The 2020 Grammys snubbed K-Pop acts like BTS — even though they’ve outsold Taylor Swift and Beyoncé The MTV Video Music Awards were also accused of sidelining the K-Pop genre earlier this year.
Published:11/20/2019 12:38:34 PM
[Markets] Trader Warns: This Rally Is "Fraught With Problems" Trader Warns: This Rally Is "Fraught With Problems"

Authored by Sven Henrich via,

As the 3 main indices have made multiple new highs in recent days and weeks it may be worth to keep taps on the health of this rally. Why? Because for rallies to be sustainable you want to see rallies show supporting signals. This rally doesn’t. It’s fraught with problems and I’ll highlight a few of these.

In fact the divergences that signal problems with the rally are profound, but they won’t mean anything until they do. But once they do they will have signaled that this rally was not sustainable.

High yield, a key supporting driver of rallies past has negatively diverged:

As I outlined on twitter a few times consumer discretionary has not been participating at all and has failed to make new highs, but rather a series of lower highs:

$NYMO: All new highs have come on negative readings suggesting a profound weakening of the rally similar to what we’ve seen during previous rallies that have led to corrections:

$NAHL: Recent $NDX highs have come on virtually no expansion in new highs/new lows:

The rally has been highly dependent on a high number of open gaps leaving markets at risk of a filling of many of these gaps in the days/weeks to come:

All of this comes in context of a market trading at 147% market cap to GDP with record short positioning in $VIX:

..and price to sales at 2000 type levels:

With key stocks such as $AAPL vastly overbought and technically stretched:


Is all this price action a sign of an economy improving or growing vastly?

Transports say no, still no break out above the 2 year range:

The value line geometric index still hasn’t confirmed new highs either:

Indeed looking at the structure of the market this rally so far does not look any different than the ones we’ve seen before:

In fact the overall market has hit key trend line resistance:

With new highs now not reaching higher than the previous new highs. Recall incremental new highs have been limited to 3%-3.5%:

(see context of this chart discussed in this weekend’s video).

Now it may well be said that none of this matters if this rally is primarily inspired by the Fed’s liquidity injections. After all we can see that markets have rallied harder on days of larger repo operation and rallied less on days with smaller repos:

Perhaps it’s all coincidental, but the chart appears to show quite a bit of correlation. Liquidity is liquidity and of course the Fed, like other central banks across the globe, is busy adding liquidity and markets appear to flow along with the amount of liquidity coming into the system:

Where would markets trade without all that liquidity thrown in? We may never know, but the signal charts suggest this rally is not as strong as it appears, in fact it is full of problems, weak underneath, very weak and that makes its sustainability highly questionable especially considering it appears driven by liquidity only, not based on any fundamental growth basis.

Record $VIX short positioning, record highs on price to sales, 147% market cap to GDP, key stocks vastly overbought and technically stretched.

What could possibly go wrong?

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

Tyler Durden Wed, 11/20/2019 - 13:30
Published:11/20/2019 12:38:33 PM
[Markets] Stocks, Yuan Tumble On Reports That 'Phase One' Trade-Deal Delayed Stocks, Yuan Tumble On Reports That 'Phase One' Trade-Deal Delayed

This should come as a surprise to absolutely no one (especially after last night's vote on the Democracy Bill), but Reuters is reporting that 'Phase One' US/China trade deal may not be completed this year, citing trade experts and people close to the White House.

US equity markets ARE TUMBLING...

Additionally, as Rabobank noted yesterday,. if Trump gets wind of the fact that China is ignoring him, or even has the perception Beijing is working against him politically, it must surely raise the risk of higher US tariffs--at least on 15 December--rather than the risk-on imminent decrease so many have said so loudly for oh-so long.


Tyler Durden Wed, 11/20/2019 - 13:00
Published:11/20/2019 12:07:05 PM
[Markets] US STOCKS SNAPSHOT-Wall Street extends fall after report trade deal may not be completed this year Published:11/20/2019 12:07:05 PM
[Markets] Dow Jones Falls Mildly, This Retailer Surges From A New Buy Point; Pinduoduo Hits 2 Sell Rules Target reaffirmed budding strength in the discount retail sector as the Dow Jones Industrial Average kept losses small. Pinduoduo sold off hard. Published:11/20/2019 11:37:44 AM
[Markets] FBI Wants To Speak With Trump-Ukraine CIA Whistleblower FBI Wants To Speak With Trump-Ukraine CIA Whistleblower

The FBI has reached out to an attorney for the Trump-Ukraine whistleblower reported to be CIA analyst Eric Ciaramella, who filed a complaint over President Trump's July 25 phone call with his Ukrainian counterpart, Volodomyr Zelensky, according to Yahoo! News

The move came after a vigorous internal debate at the agency over how to proceed with an investigation of allegations contained in the complaint, according to sources familiar with the matter.

According to the report, an FBI agent from the Washington field office reached out to whistleblower attorney Mark Zaid (The
'Coup has started' guy who loves going to Disneyland alone), who declined comment for the article.

An interview with the whistleblower has yet to be scheduled.

The request from the FBI comes at a sensitive moment when Republicans on the House Intelligence Committee are making repeated efforts to “out” the whistleblower in order to suggest he may have had political motivations hostile to the president when he filed his Aug. 12 complaint with the intelligence community’s inspector general. 

It also comes after multiple threats have been made against the whistleblower and his lawyers — some of which have been separately passed along by the lawyers to other officials at the FBI. But the agent who sought to question the whistleblower made no reference to the threats as the purpose of the interview, according to sources familiar with the discussions. -Yahoo! News

Yahoo suggests that an FBI interview will "introduce a new wild card into the debate over whether to impeach the president over his Ukraine dealings."

Tyler Durden Wed, 11/20/2019 - 12:24
Published:11/20/2019 11:37:44 AM
[Markets] Key Words: Sondland says Ukraine aid was tied to ‘quid pro quo’, in impeachment testimony European Union Ambassador Gordon Sondland testifies that there was a “quid pro quo” tying U.S. aid to Ukraine in exchange for a promise to investigate the role of political rival Joe Biden and Democrats in the 2016 presidential election.
Published:11/20/2019 11:37:44 AM
[Markets] Upgrade: If you have these personality traits, you could be at higher risk of going broke in retirement Plus two traits that predict slower withdrawal rates in retirement
Published:11/20/2019 11:06:27 AM
[Markets] Devin Nunes Exposes The Democrats' 10 Most "Outlandish" Trump Conspiracy Theories Devin Nunes Exposes The Democrats' 10 Most "Outlandish" Trump Conspiracy Theories

"In their mania to attack the president, no conspiracy theory is too outlandish for the Democrats."

Those were the 'fighting' words of a clearly frustrated Rep. Devin Nunes as he addressed the American public ahead of today's latest round of farcical impeachment circus shenanigans.

With Democrats yawningly repeating endless hearsay and opinion as 'fact', Nunes - in a few brief minutes - exposed the whole house of cards by laying out succinctly the 'facts' of what Democrats have tried to pull in the last three years:

"Time and again, they floated the possibility of some far-fetched malfeasance by Trump, declared the dire need to investigate it, and then suddenly dropped the issue and moved on to their next asinine theory"

Nunes' "Top 10" list of "asinine" Democrat attacks on Trump are as follows...

  1. Trump is a long-time Russian agent, as described in the Steele dossier.

  2. The Russians gave Trump advance access to emails stolen from the DNC and the Hillary Clinton campaign.

  3. The Trump campaign based some of its activities on these stolen documents.

  4. Trump received nefarious materials from the Russians through a Trump Campaign aide.

  5. Trump laundered Russian money through real estate deals.

  6. Trump was blackmailed by Russia through his financial exposure with Deutsche Bank.

  7. Trump had a diabolical plan to build a Trump Tower in Moscow.

  8. Trump changed the Republican National Committee platform to hurt Ukraine and benefit Russia.

  9. The Russians laundered money through the NRA for the Trump campaign.

  10. Trump’s son in law lied about his Russian contacts while obtaining his security clearance

“It’s a long list of false charges, all false, and I can go on and on and on,” Nunes concluded.

But, as Schiff would have you believe, this time is different - "we gotcha".

Tyler Durden Wed, 11/20/2019 - 12:03
Published:11/20/2019 11:06:27 AM
[Markets] Nasdaq edges into positive territory, but Dow and S&P remain saddled with losses Nasdaq edges into positive territory, but Dow and S&P remain saddled with losses Published:11/20/2019 10:35:47 AM
[Markets] GLOBAL MARKETS-Shares slide on U.S.-China spat over Hong Kong, dollar gains Global stock markets stumbled and the dollar climbed on Wednesday after China condemned U.S. Senate legislation aimed at protecting human rights in Hong Kong, the latest obstacle to reaching a deal in a prolonged Sino-U.S. trade dispute that has weighed on growth worldwide. Gold prices rose to their highest in nearly two weeks before paring gains, while the yield on Germany's 10-year bond tumbled to a 2-1/2 week low as worries over the direction of U.S.-China trade talks swept world markets. The dollar edged higher, fueled by the worsening trade tensions, ahead of the 2 p.m. ET (1900 GMT) release of minutes from the Federal Reserve's policy-setting meeting in October when it raised interest rates a third time this year. Published:11/20/2019 10:35:47 AM
[Markets] Campus 'Inclusivity' Training: "If You're Breathing, You're Biased" Campus 'Inclusivity' Training: "If You're Breathing, You're Biased"

Authored by Daniel Payne via The College Fix,

Diversity training at a prominent Christian university seems to suggest that merely being alive is enough to qualify one as biased...

Baylor University’s Equity Office recently offered a training session called “If You’re Breathing, You’re Biased.” The event, which was held last Wednesday, was styled as an “introductory workshop to Building an Inclusive Community.”

“You probably don’t even know you have biases. The problem is that biases are unconscious,” the event listing reads:

As a result, you may be unaware of some of the reasons underlying your actions and reactions. According to Howard J. Ross, author of “Everyday Bias,” bias is “far from simply being malicious prejudgments of others and situations.” It influences the core of decision making abilities in how we interact within our very own communities.

The workshop promised to “take a look at defining bias, identifying personal and potential biases, and consider the effects of biases in the workplace as well as within the Baylor community.”

Earlier in the semester, reporting on another offering of the same workshop, the Baylor Lariat cited several approving responses from the student body.

“I tend to think that a lot of people here are not as open to other ideas and thinking in different ways as people might be on other campuses,” one student said, with another adding:

“I feel like we’re a very set-in-our-ways university; we all could benefit from opening our minds to different groups of people.”

Tyler Durden Wed, 11/20/2019 - 11:25
Published:11/20/2019 10:35:47 AM
[Markets] Market Snapshot: Stocks remain under pressure on U.S. - China tensions U.S. stocks were slightly lower Wednesday morning after China condemned a U.S. Senate resolution supporting human rights in Hong Kong and after President Donald Trump threatened to boost tariffs if Washington and Beijing are unable to negotiate a trade agreement.
Published:11/20/2019 10:35:47 AM
[Markets] "This Is An Entirely Different Bubble" - Veteran Short-Seller Warns "Central Banks Are Losing Control" "This Is An Entirely Different Bubble" - Veteran Short-Seller Warns "Central Banks Are Losing Control"

Authored by Christoph Gisiger via,

In an in-depth conversation with The Market, Kevin Duffy, the head of hedge fund Bearing Asset Management, reveals where he sees the most dangerous excesses and which stocks look attractively cheap in today’s environment.

All is good. The trade war between China and the United States comes to an end, the global economy has weathered the worst, and central banks are making sure that markets continue to go up. This is the scenario currently shaping the consensus.

Kevin Duffy remains skeptical. The experienced short seller warns that the super easy monetary policy is getting less and less effective.

Although it’s been a brutal year for short sellers, Duffy is convinced his time will come soon. In this in-depth conversation with The Market, he explains why he’s betting against stocks like BlackRock and MSCI – and which names are on his buy list.

Mr. Duffy, investors are in «risk on» mood again: concerns about a global recession are waning, the S&P 500 is at record levels. What’s your take on financial markets?

To me, it’s interesting how everything is out-of-sync: You have the bond market going down, the stock market going up and gold being sort of all over the place. I think central bankers are already starting to lose control as the recent weakness in bonds shows. Just look what’s happening with the 100-year Argentine bond: It has been cut in half since August.

In the US, the yield on ten-year Treasuries is up more than 40 basis points since late August. What’s behind the recent weakness in the bond market?

I think it’s exhaustion. This year, we’ve had this big sea change in terms of the central banks going back to easing and being more accommodative. Yet, the bond market is basically saying: no more! Easy monetary policy is not having the same stimulative effect as it had in the past.

You have been warning about a gigantic bubble in the bond market for some time now. What are the reasons for the excesses in fixed income?

Bill Bonner has a good quip where he says: «When it comes to science and technology, man learns, but when it comes to love, war and finance, he makes the same mistakes over and over again.» The big mistake of our times is the great monetary experiment which started in August 1971 when the US went off the gold standard. Every bubble has a belief system, a unifying narrative. This time it’s that the central bankers are all powerful.

What do you mean by that?

It’s this idea that there is a free lunch when it comes to printing money. That’s what Modern Monetary Theory is all about: We can have our cake and eat it, too. We don’t have to feel the pain of a recession or the pain of a severe bear market. Anytime we get close to a downturn, central banks can just print money. Of course, we know that’s sheer nonsense. There is no free lunch. Polices like negative interest rates and Quantitative Easing are doing damage to the underlying economic engine. They misallocate capital, discourage thrift and promote fast money over slowly building wealth. At the end of the day, central banks are not all powerful. They are not immune to the laws of economics.

What does that mean for investors?

Let’s go back to the last couple of bubbles and compare them to the current one. We know that the seeds of these bubbles are artificially low interest rates. The last two bubbles were sector specific: You had the tech bubble and then the housing and credit bubble. But this one is an entirely different animal. This time, the center of the bubble is the bond market. You can even say at its core is the sovereign debt bubble. Then, you have all these other bubbles at the periphery: the high yield bubble, corporate bonds, auto finance, large cap technology, passive investing, private equity – bubbles everywhere. That’s what we’re looking at: Something on a much greater scale than anything we’ve seen before.

Since the financial crisis, we went through similar growth scares before. Each time central banks printed more money and a global recession was avoided. Why do you think it’s different this time?

With $16 trillion of the world’s bonds priced at negative yields a few months ago, it felt like all of this policy stimulus into the bond market had reached the climactic point. Since then, bond investors have started feeling some pain. One of the signatures of this bubble is the price insensitive buyer, with central bankers at the top of the list. The idea is that if the markets are on autopilot you might as well get rich by front running the central bankers and the index investors who are just blindly buying the index. It’s this narrative that we have a massive steamroller in terms of monetary policy and easy money is there for the taking. But beware the old saying about picking up pennies in front of a steamroller.

Then again, interest rates have been declining for almost four decades. Why do you think we’re at an inflection point?

Besides the absurdity of creditors paying for the privilege of lending money to governments, we’re seeing wild disconnects typical of major inflection points. In this regard, I think a lot about what happened in the late 1970s and early 1980s. At that time, you had severe price inflation and Fed Chairman Paul Volcker coming in to try to break the back of that. The first sign of a change in sentiment was the gold bubble starting to unwind in the spring of 1980. Yet, the stock market floundered and the bond market continued to decline into September of 1981. In other words, investors ignored the early signals of disinflation. The gold market was telling them that something was changing fundamentally. But at first, the other markets were completely disconnected. Then, the bond market started to get in sync and rally because it sniffed out that something was changing. The stock market continued to go down for another eleven months before it turned. That’s a classic example of these disconnects.

How is it going to play out this time?

My thesis is that when this bubble bursts, gold should rally, while bonds and stocks should crash. Against this backdrop, it’s remarkable that gold seems to have bottomed right around late April when Bloomberg BusinessWeek came out with its «Is Inflation Dead?» cover. Yet, this signal from gold was widely ignored and we got this blow-off in the bond market. Since this crazy rally peaked in August, we’ve seen a pretty good decline in bonds. Maybe this is telling us that a change is afoot. Yet, the stock market is breaking out to new highs. These markets can just disconnect for a while and it looks like stocks will be the last to get in line.

Couldn't the recent rally in stocks and the decline in bonds also be a signal that the worst of the global slowdown is behind us and the economic picture is improving?

I think that’s not really the case. That’s not what the economic evidence is showing. We’re ten years into a recovery. It’s not like we went through an economic trough and now we’re just going to have a classic business cycle where the economy starts to recover and rates go up. Something different is happening.

What is happening?

I tend to focus on things like the fact that we have all this easy money which went into malinvestments. To me, that’s more of a forward look compared to, let’s say, labor market statistics which are backward looking. Also, I do a lot of bottom-up work by looking at companies. There, it’s fairly obvious what’s going on: You see growth rates coming down pretty much across the board. Take a look at Apple’s numbers, for instance: Annual gross profits are down over the past twelve months, yet the stock is up close to 70% year-to-date.

What do you mean when you’re referring to malinvestments?

We’re starting to see what’s behind the curtain in terms of the venture capital markets ecosystem. When these unicorns like Uber were still private, there was a tendency to assume they had substance. Now that these companies are under the light of public scrutiny we can see that the emperor is not wearing any clothes. For example, look at SoftBank’s recent $6 billion loss from the WeWork debacle and Uber racking up $20 billion in losses over the past five years. As short sellers, we were thrilled by the prospect that WeWork would go public and we’d get an opportunity to short it. The cracks in the IPO market are telling us that there are limits to easy money. That’s the common theme: we’re getting exhaustion.

In the business of short selling, you are a battle-proven veteran. How are short sellers doing these days?

I have never been through anything like this. As the ultimate price discovery agents fighting a market on auto pilot, our tiny corner of the market has been decimated. It’s been an absolutely brutal year. As of the end of October, inverse Exchange Traded Funds made up only 0.29% of total ETF assets. By comparison, in 2010, this was at 2.35%.

Very few short targets have unravelled this year. At Bearing Asset Management, we’re not only shorting stocks but bonds as well – and the bond market has been even worse up until recently. This Everything Bubble is much more difficult to short than a «normal» bubble since it’s so broad-based and persistent. I’m sure that will change. But honestly, as somebody who’s been doing this for a while, there are times I wish I had never discovered short selling. That’s what a major top feels like.

That said, where do you see the most promising short opportunities?

In auto finance, in the passive bubble and in money losing companies like Tesla or Carvana. These are a few of the themes we’re betting against. But we’re scaling back and trying to stay focused on our best ideas. It’s kind of a circle the wagons, bunker mentality at this point.

What makes this market so difficult for short sellers?

For instance, as a way to bet against the passive bubble, we’re short BlackRock and MSCI. These companies have benefited from rising asset prices and have been able to take in a good portion of the inflows into passive strategies. But they have given most of these benefits back because of fee compression as a result of investors gravitating toward lower cost alternatives. It’s amazing how much of a headwind this has been, yet investors are so far unfazed. BlackRock is up close to 25% year-to-date and MSCI around 65%. For short sellers like us this has been frustrating because I think we’ve gotten a lot of the fundamentals right.

You’re also investing on the long side. Where do you see attractive investments?

Jean-Marie Eveillard, the highly respected value investor who has been in this business for decades, once said that there has been only one market where he was not able to find any value: Japan in the late 80s. There is always value when you look hard enough. One of the things we know from past bubbles is that you often get anti-bubbles. This was clearly the case in the year 2000 when you had the new economy bubble on one side, and the old economy anti-bubble on the other side. When tech stocks peaked in March of 2000, a lot of the «boring» value stocks bottomed at the same time.

Where do you find anti-bubbles today?

One of the reigning narratives is that Amazon is going to put all retailers out of business. This may be true in a lot of cases, particularly in the mall space. But there will be survivors who benefit from their competitors going bust. Many of these names went through massive bear markets over the past three years. That’s why it may pay off to rummage through the junk pile in the retail sector.

Any specific names you have in mind?

American Eagle. They compete in the teen apparel area. Aéropostale, one of their main competitors, is bankrupt and in liquidation. Aéropostale was a poster child for financial engineering: They once had a great balance sheet and were doing well, but squandered it all on buybacks. When the business started to go sour, they didn’t have the balance sheet to weather the storm. In contrast, American Eagle has come through unscathed while everybody else was falling by the wayside. Now, they have less competition. Also, with their Aerie concept they compete with Victoria's Secret and are trying to reach an audience that doesn't have the perfect supermodel body. It’s one of the most successful concepts in retail, and yet it’s wrapped in this older mall-based company that has this «Amazon roadkill» stigma. Another interesting company is Urban Outfitters. The stock is up close to 50% since mid-August, so it’s not quite as cheap as American Eagle. But it’s a high-quality retailer and clear survivor.

Where else do you spot opportunities on the long side?

I’m a little bit hesitant to bang the drum for resource-based stocks and commodities because I think we’re going into a global recession. But there are some interesting areas we’ve been poking around a little bit. For instance, food-related commodities like fertilizer tend to be more defensive as opposed to things that are more sensitive to the economy like copper.

How about gold?

Precious metals and mining stocks are another example of an anti-bubble: Faith in central banking is at the heart of this bubble and precious metals are the inverse of faith in central banks. So we like gold and gold stocks. Admittedly, gold mining is not a good business since it’s very capital intensive and whenever there is a boom there tends to be tremendous waste. But if gold goes up further, these companies are going to benefit.

Are there any other bubbles or anti-bubbles investors should be aware of?

There is also a socially responsible investing aspect – along the lines of environmental, social and governance factors – to this bubble as the Millennials start to take over investing functions. It’s a filter that you have to be aware of. Certainly, Tesla appeals to this ESG crowd. Another example is Beyond Meat, which went public in early May and shot up nearly tenfold in less than three months. At its peak, the company was valued at $15 billion with just $200 million in revenue and barely about to turn a profit.  Large bureaucratic companies in general have become bastions of political correctness willing to cater to the ESG crowd. On the other side, if you’re a small entrepreneurial company, you’re not hiring based on diversity quotas. You’re hiring the most competent people you can find since you don’t have time to collect a bunch of worthless statistics. I feel this will be the gift that keeps on giving for contrarian investors: You want to look for stocks that don't neatly fit into the ESG screens. The obvious example is the energy sector, especially natural gas exploration and production stocks, which are severely depressed. Fossil fuel investments are strictly verboten in the ESG playbook. That's an opportunity.

*  *  *

Kevin Duffy is a battle-proven veteran in the risky business of short selling. He co-founded Bearing Asset Management in 2002. He and his partner were vocal critics of the 2007 credit bubble, successfully shorting many of its most aggressive players including Countrywide Financial and Bear Stearns. Prior to Bearing, Kevin co-founded Lighthouse Capital Management and served as Director of Research from 1988 to 1999. He chronicled the excesses of the Japan and technology bubbles of the late 1980s and the late 1990s. Kevin Duffy bought his first stock at the age of 13. He has a passion for Austrian economics and is the author of the popular Notable and Quotable blog.

Tyler Durden Wed, 11/20/2019 - 10:45
Published:11/20/2019 10:04:58 AM
[Markets] Absurdity Spewed From Market Peaks: "Investors Should Check Their Brains At The Door" Absurdity Spewed From Market Peaks: "Investors Should Check Their Brains At The Door"

Authored by Michael Lebowitz and Jack Scott via,

A recent article by James Deporre at asked Will Powell’s Remarks Push the Algos to Make a Move?

Deporre’s article is a recap of a day’s market events beginning with Jerome Powell’s recent testimony to Congress. He suggests that what matters are not Powell’s words, but whether computerized trading programs, known as “algos,” would buy stocks as a result of Powell’s testimony. Summarizing what ended up being an uneventful day of trading activity, Deporre made the following absurd comment which caught our attention:

“On the other hand, the mighty Apple (AAPL) is holding up and seems to function as a de facto money market account these days. It is a great place for some to park cash and that helps to keep the indices hovering near highs.” 

While we currently hold Apple stock on behalf of some of our clients, we do so with the full awareness that valuations for Apple and many other stocks are extreme. A reversion back to or below average historical valuations will result in a massive loss of wealth for many investors. As such, we maintain a careful and balanced investment posture and take nothing for granted. Most importantly, we never confuse “parking” cash with owning a stock. Like a shovel and hammer, stocks and cash are valuable tools, but neither is a perfect substitute for the other. 

What Apple Is And What It Isn’t

Apple is one of the world’s largest corporations, with innovative products and a great growth trajectory. As reported in its third-quarter 2019 earnings release, the company has a war chest of $245 billion in cash. These facts are not lost on investors. As shown below, Apple shares have risen at a remarkable pace. Since its IPO in 1984, the stock is up almost 70,000% or more than 20% annually. A $1500 investment in 1984 is now worth over a million dollars!

Data Courtesy Bloomberg

Money market mutual funds, also known as cash accounts, are vehicles that allow investors to hold cash and earn the short term rate of interest in the market. These funds invest in very short term, liquid, and highly rated securities. The investments produce little to no price volatility. Many money market mutual funds are governed by the SEC’s 2A7 rules, which greatly limit the credit and liquidity risk of these funds and attempt to ensure investors in them do not have a risk of loss of principal. Given the near riskless nature of money market mutual funds, they offer meager returns.

Buy And Hold

As the Byrds sang, “there is a season- turn – turn- turn. Similarly, there is a time to invest heavily in stocks and a time to scale back on stock holdings and take less risk. It is all too popular for market gurus, especially at market peaks when complacency is the highest, to preach about buy and hold strategies. This advice is based on a misconception that market drawdowns will be short-lived and investors will quickly recoup any losses. Therefore, it is not surprising that the popular investing view today insists that investors should check their brains at the door and remain fully invested in stocks at all times.

As shown below, such logic flies in the face of history.   

Over the long run, investors in Apple have fared better than the market. As shown, drawdowns over the last decade have been relatively short-lived. However, those setbacks have not been small. Since 2010, Apple’s stock price has dropped by 35-45% on three different occasions and by 20% on one other. So, can we treat Apple like a money market fund and hold it with the certainty of knowing that it will never lose value?

It is important to understand that, in the long run, stock prices are regulated by the cash flows of the underlying corporation. We explained this recently as follows:

“A Honus Wagner baseball card from 1909 was recently auctioned for over $3 million. While that may seem like a lot of money, it is not necessarily expensive. A baseball card is nothing more than paper and ink with no real value. Its street value, or price, is based on the whims of collectors. “Whim” is impossible to value.

Stocks are not baseball cards. Stocks represent ownership in a corporation, and therefore, their share prices are based on a series of future expected earnings and cash flows. Further, there are many other types of investments that serve not only as alternatives, but provide a means to assess relative value.

Today, investors are trading stocks on a “whim,” with scant attention to their value. Unlike a baseball card, when a stock’s market value rises much more than its real value, an inevitable correction will occur. The only question is not if, but when.”

There is an important distinction to be made here between “investing” vs. “speculating.” 

Apple’s shares are priced at a historically steep premium to its fundamentals, meaning “whim” is playing a role in recent price appreciation. Whim is speculating. Here are a few fundamental data points to consider, but as you do, keep in mind Apple has bought back a third of their shares outstanding since 2012, making per share data when adjusted for buybacks higher than that shown below.

  • Price to book value is the highest it has ever been since the IPO (12.90x)

  • Price to earnings (trailing twelve months), price to sales, and price to free cash flow are at the highest levels since 2009

Regardless of whether Apple’s valuation may appear rich, there is little doubt the valuation premium can still rise further in the future. Earnings can grow faster than expected and justify the current valuations.  However, the premium can also revert back to historical levels and earnings may disappoint in the future. Apple’s stock price dropped 61% in 2008, and that was following the release of the first iPhone. It is difficult to imagine a better time to have owned shares in the company.

Apple also appears to be over extended on a technical basis. The graph below shows the premium or discount of Apple stock price to its 50 day moving average. As circled, three of the last four times that the stock has been this far above the moving average, a drawdown of at least 20% occurred.

Data Courtesy Bloomberg

Our simple conclusion is that Apple is a speculative investment with zero guarantees and, therefore a poor substitute for a money market fund.

Sorry Mr. Deporre, but Apple is not cash. When markets drop in earnest, so will Apple, as suggested by its beta to the S&P 500 of 1.06. Holding Apple shares will not afford you the ability to take advantage of lower prices when stocks go on sale. Therein lies an important difference between the utilization of cash and stocks in a portfolio.

The graph below shows the percentage drawdowns that occurred in Apple’s stock over the last fifteen years.

Data Courtesy Bloomberg


There are two key points that Deporre’s article fails to consider.

First, an equity stake in any company – whether a boring utility or hot IPO – is speculative, especially when valuations are above fair value. Value is never guaranteed, but it is far less uncertain when the price paid is below fair value.

Second, cash is king when markets decline. Investors that are fully invested with little cash as an insurance policy tend to sell when markets decline rapidly. Quite often, a low is marked with a massive amount of capitulation selling.  Those who harvest gains when markets are over-valued and hold a reasonable amount of their portfolio in cash can buy stocks that trade at a discount to fair value from those who are panicking.

We leave you with an interesting graph from The Leuthold Group.

Tyler Durden Wed, 11/20/2019 - 10:25
Published:11/20/2019 9:38:16 AM
[Markets] Stocks remain under pressure after Trump threatens to raise tariffs if China trade talks languish U.S. stock-index futures head lower Wednesday morning as doubts persist about progress toward a U.S.-China trade deal despite encouraging earnings from some retailers. . Published:11/20/2019 9:38:15 AM
[Markets] This Texas Oil Town Sees Strongest Salary Growth In US This Texas Oil Town Sees Strongest Salary Growth In US

Authored by Tsvetana Paraskova via,

Driven by the U.S. shale boom in the Permian basin, personal income in Midland County, Texas, grew by the highest percentage - 17.5 percent - of all metropolitan counties in the United States last year, data from the Bureau of Economic Analysis (BEA) showed.

The average personal income in the metropolitan areas of the United States grew by 5.7 percent, the data showed, while personal income in the non-metropolitan part of the U.S. increased by 4.8 percent last year.

Last year, personal income increased in 3,019 U.S. counties, decreased in 91 counties, and was unchanged in 3, according to estimates released by the BEA.  

Personal income in Midland and Odessa—two of the centers of the Permian shale production—increased in percentage terms more than the personal income in large cities, while per capita personal income in Midland and Odessa was higher than the per capita personal income in New York, San Francisco, or Boston, according to Bloomberg estimates of the data.

Per capita personal income in Midland and Odessa grew the fastest in the United States last year, according to the BEA data reported by the Real Estate Center at Texas A&M University.

Midland had the lowest unemployment rate in Texas at 2 percent in September, according to data from the Texas Workforce Commission, while Odessa’s unemployment rate was 2.6 percent, tied in third place with Austin-Round Rock and College Station-Bryan.

With the oil boom and population growth, schools in the towns of Midland and Odessa need more buildings to house more students and Odessa is even thinking of buying a hotel to house the new teachers that the schools need. 

This time, unlike in previous boom-and-bust cycles, residents and local authorities believe that the boom will continue as the biggest U.S. oil companies are betting on the Permian to grow their production volumes.

But the already evident slowdown in U.S. oil production growth could jeopardize the boom in the Texas shale towns.

Oil and gas activity in Texas, northern Louisiana, and southern New Mexico declined in Q3 2019 as uncertainty remained high, the latest Dallas Fed Energy Survey showed.  

Tyler Durden Wed, 11/20/2019 - 09:45
Published:11/20/2019 9:04:53 AM
[Markets] Wall Street slips at open on escalating U.S.-China tensions Published:11/20/2019 9:04:53 AM
[Markets] Capitol Report: Tonight’s Democratic debate set to feature attacks on Pete Buttigieg as he leads Elizabeth Warren in Iowa Since the past four Democratic debates have featured attacks on the current front-runner, it looks like Pete Buttigieg might as well wear a bull’s-eye to Wednesday night’s 10-person clash in Georgia.
Published:11/20/2019 9:04:53 AM
[Markets] Watch now: Sondland, U.S. ambassador to EU, testifies in impeachment hearing Watch now: Sondland, U.S. ambassador to EU, testifies in impeachment hearing Published:11/20/2019 8:36:31 AM
[Markets] Feds Charge Former Baltimore Mayor With Fraud, Tax Evasion Over Book Scandal  Feds Charge Former Baltimore Mayor With Fraud, Tax Evasion Over Book Scandal 

Former Baltimore Mayor Catherine Pugh has been indicted on federal charges of wire fraud, tax evasion, and conspiracy to defraud the US, reported Fox 45 News Baltimore


Pugh has been in hiding for 7 to 8 months, is expected to surrender to US Marshals Service in the next 24 hours before her hearing in US District Court in Baltimore on Nov. 21 at 1 pm. est. 

Pugh went missing in Apr. after the FBI and IRS raided her home amid speculation, she was involved in a brazen kickback scheme involving sales of her "Healthy Holly" book series. 

The former mayor of Baltimore was accused of using her position to secure agreements worth hundreds of thousands of dollars from the University of Maryland Medical System and managed-care consortium KaiserPermanente. The contracts were arrangements to purchase thousands of copies of Pugh's "Healthy Holly" books, a series written by Pugh.

Pugh was sitting on the organization's board when she received the book deal from the University of Maryland system. And shortly after she received a payment from KaiserPermanente, the company received a $48 million contract from the city. Though we're sure, that's just a coincidence. Furthermore, some of the "Healthy Holly" copies that Pugh sold to the University of Maryland Medical System remain unaccounted for, and some suspect they may never have been printed.

"Our elected officials must place the interests of the citizens above their own," said United States Attorney Robert K. Hur. "Corrupt public employees rip off the taxpayers and undermine everyone's faith in government. The US Attorney's Office and our law enforcement partners will zealously pursue those who abuse the taxpayers' trust and bring them to justice."

"The people of Maryland expect elected officials to make decisions based on the public's best interests, not to abuse their office for personal gain," said Special Agent in Charge Jennifer Boone of the FBI's Baltimore Division. "Catherine Pugh betrayed the public's trust. The FBI will continue to diligently work to detect fraud and corruption and hold those who violate this trust accountable."

The next significant development will be Pugh surrendering herself to US Marshals within the next 24 hours, but then again, there's always a chance that a corrupt politician may flee. 

Tyler Durden Wed, 11/20/2019 - 09:25
Published:11/20/2019 8:36:31 AM
[Markets] Need to Know: Your three-stock survival kit for 2020, says this equity strategist Our call of the day from Nuveen’s equity strategists says investors need to brace for a coming year that won’t top the 20%-plus gains we’ve been seeing. The key to survival are these three stocks.
Published:11/20/2019 8:36:31 AM
[Markets] Watch Live: 'Key Witness' Sondland Testifies In Wednesday's Impeachment Hearing Watch Live: 'Key Witness' Sondland Testifies In Wednesday's Impeachment Hearing

Update (9 am ET): As the hearing begins, it appears Sondland has already outlined his approach in a statement leaked to the Guardian.

And that approach is: Blame Rudy.

Sondland alleges that he, Energy Secretary Rick Perry, and others were ordered by President Trump to work with Giuliani on all things Ukraine-related.

And that they followed those orders so as not to miss the opportunity to cement closer relations between the US and Ukraine.

Sondland also believes that there was a quid pro quo between Giuliani and the Ukrainians, as they sought an Oval Office meeting with President Trump.

* * *

In what many pundits are calling the most important moment of the impeachment hearings (just like Vindman was...but wasn't and just like Volker was...but wasn't), Gordon Sondland, the ambassador to the European Union, will take the stand and testify on Wednesday.

Unlike the prior witnesses, Sondland notably had to 'update' his testimony to House investigators earlier this month when another witness (acting Ukraine ambassador Bill Taylor) said he'd heard Sondland discuss President Trump and Rudy Giuliani's demand that the military aid money for Ukraine would be withheld if it didn't restart investigations into Burisma, the energy company with ties to Hunter Biden, and 2016 election interference.

Watch the hearing below. The House Intelligence Committee Chairman Adam Schiff will swing the gavel at 9 am:

After Sondland, Laura Cooper, a deputy assistant secretary of defense, and David Hale, the under secretary of state for political affairs, will testify in the afternoon.

According to BBG, Sondland, who won his position after emerging as a major Trump donor, is likely to face intense questioning about his call with President Trump on July 26, the day after Trump’s phone conversation with Ukrainian President Volodymyr Zelenskiy. That's the call where Sondland was allegedly instructed to deliver the ultimatum to Ukraine.

David Holmes, a member of the embassy staff in Kyiv, infamously told House investigators last Friday that he overhead Trump asking Sondland about "the investigations" - a reference to Ukraine agreeing to the administration's demands. Holmes added that Sondland told him after he hung up with Trump that the president "didn’t give a s--- about Ukraine" and that Trump only cares about the "big stuff" that benefits him "like the Biden investigation."

Sondland was also reportedly present at a July 10 White House meeting where Mick Mulvaney reportedly made clear that an Oval Office meeting with Zelensky wouldn't happen unless the Biden investigations were re-started. Former National Security Advisor John Bolton left that meeting, saying later he wouldn't be part of whatever "drug deal" Mulvaney and Sondland were cooking up.

As Reuters points out, Sondland is particularly important because he's the first witness with a direct line of communication to the president. Sondland spoke to Trump some half a dozen times between mid-July and mid-September, according to the testimony of other witnesses.

Here a couple of critical questions that Reuters believes Sondland will be asked:


Sondland was one of three officials who largely took over U.S.-Ukraine policy in May. Career U.S. diplomats have portrayed Sondland in their testimony as a central figure in what became a shadow Ukraine policy operation, undercutting official channels and pressing Kiev to investigate the Bidens.

Ukraine is not part of the European Union but aspires to membership, making Ukraine issues part of Sondland’s official remit. But his involvement was viewed as a problem by some White House National Security Council (NSC) officials.

Trump named Sondland to the post after Sondland, a hotel entrepreneur, donated $1 million to Trump’s inaugural committee.


Democrats have heard testimony that Sondland has had frequent contact with Trump and can provide a first-hand account of Trump’s interest in pressing Ukrainian President Volodymyr Zelenskiy to announce an investigation into the Bidens. He will also face questions about the role of the president’s personal lawyer Rudy Giuliani in that effort.

Lawmakers are also likely to delve into one phone conversation between Sondland and Trump on July 26 in which a witness says Sondland reassured Trump the Ukrainians would agree to investigate the Bidens. The call took place the day after Trump’s phone conversation with Zelenskiy that is at the heart of the inquiry.

David Holmes, a U.S. embassy staffer, testified that Sondland told him after the July 26 call that Trump only cared about “big stuff” in Ukraine, like “the Biden investigation."

He may also be asked about a July 10 White House meeting where, according to the testimony of one NSC official, Sondland made clear that the Ukrainians would have to agree to investigate the Bidens, as well as Burisma, for Zelenskiy to get an Oval Office meeting with Trump.

And in a report published less than two hours before the start of the hearings, The New York Times reported that Sondland kept Secretary of State Mike Pompeo apprised of all important developments in the campaign to pressure Ukraine to re-start the investigations into the Bidens, which will almost certainly become a focus during Wednesday's hearing.

Tyler Durden Wed, 11/20/2019 - 08:55
Published:11/20/2019 8:04:41 AM
[Markets] Deep Dive: Stock investors may want to hitch a ride with this car-related industry that is set for decades of big growth Semiconductor stocks have a long runway ahead of them as chip demand for electric and autonomous vehicles ramps up.
Published:11/20/2019 8:04:41 AM
[Markets] Dow Jones Today Faces Test, Futures Slip On China Threat; Target Stock, Lowe's Stock Soar Target and Lowe's traded sharply higher, but global markets slumped as China threatened the U.S., setting up the Dow Jones today for a key test. Published:11/20/2019 7:34:28 AM
[Markets] Over 100 Protesters Killed In Iran Amid Largest Internet Shutdown In Nation's History Over 100 Protesters Killed In Iran Amid Largest Internet Shutdown In Nation's History

Now five days into widespread protests in some one hundred Iranian cities after a dramatic gas price hike last Friday, Amnesty International reports that at least 106 have been killed

However, “The organisation believes that the real death toll may be much higher, with some reports suggesting as many as 200 have been killed,” Amnesty said in a statement.

This as the government has cut off internet access across much of the country, resulting in few videos of clashes with police reaching the West, as in the early couple of days of the unrest. 

Image source: AFP/Getty Images

A statement from the global outage monitor Oracle's Internet Intelligence called it the largest blockage ever observed in Iran:

Protesters took to the streets shortly after the government announced an increase in fuel prices by as much as 300%. Social media images showed banks, petrol stations and government buildings set ablaze by rioters. Some protesters chanted "down with Khamenei," according to videos, referring to the country's Supreme Leader Ayatollah Ali Khamenei.

The internet blackout started on Saturday evening and continued through Monday, according to internet watchdogs. Oracle's Internet Intelligence called it the "largest internet shutdown ever observed in Iran."

The United Nations is now urging Iran to lift the internet blockage and to show restraint after what the international body called the “clearly very serious” extent of casualties.

The UN high commissioner also acknowledged it is looking into reports of live ammunition being used on demonstrators, which activists say there's ample video evidence for. 

The government-imposed internet block began on Saturday, leaving some 80 million citizens without online access. 

“We are especially alarmed that the use of live ammunition has allegedly caused a significant number of deaths across the country,” UN spokesman Rupert Colville said.

With the information blackout he described it as “extremely difficult” to get an accurate overall death toll.

Gunfire has been observed in some of the recent unverified videos to have made it out of Iran:

Official Iranian state figures put the death toll at 12, which included numbers of total protest and police deaths.

According to Tehran security officials, over 600 have also been arrested. 

Days ago the US State Department predictably came out in favor of more protests, in a volatile situation in the sanctions-ravaged country which has already witnessed banks and gas stations torched in anger over soaring gas prices after the country's leadership slashed petrol subsidies. 

“The proud Iranian people are not staying silent about the government’s abuses,” Pompeo said in a statement published Sunday, saying that “the United States is with you,” and will stand against Iran’s “tyranny.”

The statement said further, "We condemn the lethal force and severe communications restrictions used against demonstrators” and described the unrest as a “Cautionary tale of what happens when a ruling class abandons its people and embarks on a crusade for personal power and riches.”

However, Iranian Foreign Minister Javad Zarif hit back, calling such solidarity hypocrisy, given it's Washington's crushing sanctions that are making life miserable for the common populace

“The regime that imposes coercive economic actions and bars delivery of food and drugs to the elderly and patients, can never claim that it's supporting the Iranian nation, Zarif said of the United States on Tuesday, as cited in Iran’s semi-official IRNA news agency.

Tyler Durden Wed, 11/20/2019 - 08:25
Published:11/20/2019 7:34:28 AM
[Markets] Global Markets Slide After China Says It's Ready For "Worst Case Scenario" Following Senate Vote In Support Of Hong Kong Protest Global Markets Slide After China Says It's Ready For "Worst Case Scenario" Following Senate Vote In Support Of Hong Kong Protest

Trade deal "optimism", which together with QE4 (which even Bloomberg now admits) has helped push the S&P to all time highs, was decidedly lacking on Wednesday when the global mood soured after the U.S. Senate angered China by passing a bill requiring annual certification of Hong Kong’s autonomy and warning Beijing against violently suppressing protesters.

In response to the unanimous Senate vote, China Foreign Ministry said it strongly condemns the US Senate measure on Hong Kong and resolutely opposes the action, while calling for the US to stop interfering in Hong Kong and China affairs, as well as stop the latest bills on Hong Kong from becoming law. Furthermore, it added China must take necessary measures to safeguard its sovereignty and security, while it summoned the US Embassy representative in China and lodged stern representations with US over the Senate action on Hong Kong.

Then, shortly after 2am, China's notorious twitter troll, Global Times editor Hu Xijin opined, stating that "China wants a deal but is prepared for the worst-case scenario, a prolonged trade war."

President Donald Trump also threatened to up tariffs on Chinese goods if a trade deal is not reached soon.

As a result of the renewed flare-up in Sino-U.S. tensions and the creeping return of U.S. recession fears, world stocks were knocked off 22-month highs with US equity futures sliding as low as 3,105 amid a bid for bonds and other “safe” assets such as gold.

European markets tumbled half a percent at the open, edging further off recent four-year highs hit when it appeared - to some confused, naive souls and algorithms - that Washington and Beijing were about to agree the first phase of a trade deal. Europe's Stoxx 600 Basic Resources Index dropped as much as 2.1%, trading below its 200-DMA, as nickel neared a bear market. Diversified miners fell, with BHP -1.8%, Anglo American -1.4%, Rio Tinto -2%, Glencore -1.4% (these 4 stocks account for ~64% of the index). Steelmakers also fell: ArcelorMittal -2.5%, Evraz -2.2%, Voestalpine -2.3%.

Wall Street futures were also lower amid a sea of red in global stocks, while oil prices suffered their biggest daily loss in seven weeks. MSCI's All World index slipped 0.3%, ending a three-day winning streak.

“Markets have taken a bit of a wobble due to the talk about Hong Kong, but they had rallied a lot in recent weeks on expectations of a (trade) deal,” said Salman Ahmed, chief investment strategist at Lombard Odier.

Ahmed said both sides needed a deal to be signed — Trump cannot afford a recession because of his re-election bid next year, while China’s economy is slowing markedly. “I think we are looking at a short-term setback rather than a major issue that would derail the process. The bill still has to be signed into law by Trump so there’s a high probability he will use it as leverage against China.”

Earlier in the session, MSCI's index of Asia-Pacific shares ex-Japan tumbled 0.7%, Japan's Nikkei .N225 fell 0.8% and Shanghai blue chips lost 1%. Asia stocks fell, as the U.S. Senate passed a legislation supporting Hong Kong protesters, triggering China to repeat its threat to impose unspecified retaliation. Most markets in the region were down, with South Korea among the weakest. Hong Kong’s Hang Seng Index closed 0.8% lower, paring a world-beating rally earlier this week. In contrast, India’s benchmark Sensex headed for another record high, helped by a surge in telecommunications-related stocks. The passage of the U.S. bill on Tuesday may potentially complicate trade talks between the world’s two largest economies.

On Tuesday, US stocks closed just below record highs as world stocks remained just 0.5% off all-time peaks hit last year. “It was noticeable that fixed income markets rallied despite equity markets being stable, suggestive of a market that remains cautious about the growth outlook,” ANZ said in a note.

After falling in six out of the past seven sessions, US Treasury yields dropped again, with 10Y US paper sliding as much as 5bps, from 1.78% to 1.73% amid the flight to safety. In Europe, German Bunds yields fell for the third straight day to touch a 2-1/2 week, shrugging off European Central Bank Chief Economist Philip Lane’s comment that the euro zone economy would not fall into a recession. Bunds bull flattened after Germany’s 30-year bond sale meets steady demand, with bid-to-cover of 1.17x versus 1.20x prior, although the real subscription rate, which accounts for retention by the Bundesbank, increased to 0.91x against 0.76x at the previous sale. In Italy, BTPs outperformed euro-area peers, tightening the BTP-bund spread 2bps to 156bps.

“It’s all about sentiment on trade ... We have this classical risk-off trade taking place again,” Rainer Guntermann, a rates strategist at Commerzbank, said.

In FX, the dollar and yen both rose versus major peers as the Senate vote threatened to complicate a potential U.S.-China trade deal. Australia’s dollar fell with other risk assets, while the euro snapped a four-day advance.

Moves on commodity prices imply fears of economic recession may be creeping back. Japan’s October exports fanned those fears further, tumbling at their quickest rate in three years, with shipments to China and the United States suffering big falls.

US WTI stocks rose far more than expected according to the latest API report, driving Brent crude into a 2.6% slide. Brent fell another half percent, inching towards the $60 mark last breached three weeks ago.

A marked flattening of the 2s10s Treasury curve also hints at a return of recession fears. The curve inverted earlier this year, returning to normal only after three U.S. interest rate cuts. But Federal Reserve officials have hinted there will be no further easing for now, a message the U.S. central bank may reiterate later in the day when it releases minutes from its last meeting. Markets are now pricing in just a 0.8% chance of a December rate cut

Dour forecasts from retailers Home Depot and Kohl’s also fueled worries about U.S. consumer spending, which has so far been extremely robust, in contrast to manufacturing. On the other hand, stellar results from Target have helped offset the downbeat retail sentiment somewhat.

“We’ve had a bit of topping out of the U.S. consumer in the past couple of months, possibly we are seeing some catch up between consumer and manufacturing sectors,” Lombard Odier’s Ahmed said.

In geopolitics, Israel attacked buildings belonging to Iranian militias in southern Damascus where heavy explosions were reported. At the same time, US aircraft carrier strike group Abraham Lincoln transited through the Strait of Hormuz on Tuesday according to US Navy statement, which officials had been considering and suggested would send a strong message to Iran. Elsewhere, Russia's Foreign Ministry said the US decision to remove sanction waivers for the Iranian Fordow nuclear plant violates US international commitments and that Moscow continues to cooperate with Iran on Fordow reconfiguration.

Looking at the day ahead, it’s fairly light on data, with October’s PPI release from Germany and CPI release from Canada, along with the weekly MBA mortgage applications from the US. From central banks, the FOMC’s October minutes and the ECB’s Financial Stability Review will be released, while we’ll hear from the ECB’s Lane and Irish central bank governor Makhlouf. Earnings out today include Lowe’s and Target, and in the US tonight there’s another Democratic primary debate.

Market Snapshot

  • S&P 500 futures down 0.3% to 3,109.25
  • STOXX Europe 600 down 0.6% to 402.94
  • MXAP down 0.6% to 164.79
  • MXAPJ down 0.7% to 527.43
  • Nikkei down 0.6% to 23,148.57
  • Topix down 0.3% to 1,691.11
  • Hang Seng Index down 0.8% to 26,889.61
  • Shanghai Composite down 0.8% to 2,911.05
  • Sensex up 0.6% to 40,690.50
  • Australia S&P/ASX 200 down 1.4% to 6,722.42
  • Kospi down 1.3% to 2,125.32
  • German 10Y yield fell 3.3 bps to -0.372%
  • Euro down 0.1% to $1.1066
  • Brent Futures down 0.4% to $60.68/bbl
  • Italian 10Y yield rose 3.7 bps to 0.899%
  • Spanish 10Y yield fell 3.5 bps to 0.396%
  • Brent Futures down 0.4% to $60.68/bbl
  • Gold spot up 0.3% to $1,476.12
  • U.S. Dollar Index up 0.1% to 97.95

Top Overnight News

  • The U.S. Senate unanimously passed a bill aimed at supporting protesters in Hong Kong and warning China against a violent suppression of the demonstrations -- drawing a rebuke from Beijing
  • The near-deal between the U.S. and China that fell apart six months ago is now being used as the benchmark to decide how much tariffs should be rolled back in the initial phase of a broader trade agreement, people familiar with the talks say
  • Labour Leader Jeremy Corbyn defied his negative ratings to draw level with Prime Minister Boris Johnson in a crucial television debate ahead of the U.K.’s general election. His plan to make the top 5% of earners pay more income tax could raise less than the party thinks, according to the Institute for Fiscal Studies
  • China’s base rate for new corporate bank loans dropped in November, following a series of policy-rate cuts from the central bank aimed at easing liquidity concerns
  • Japan’s export slump deepened in October, with the value of shipments dropping the most in three years, as the U.S.-China trade war weighs on global demand. Japan’s ruling coalition will ask the government to devote 10t yen in fresh spending for the extra budget it’s compiling, Nikkei reports, without attribution
  • Argentine President-elect Alberto Fernandez told International Monetary Fund Managing Director Kristalina Georgieva that he has a plan to grow the economy and tackle the nation’s debt after his predecessor agreed to a $56 billion credit line from the fund
  • Oil dropped the most in seven weeks as American crude stockpiles are forecast to rise and U.S.-China trade talks stall
  • President Donald Trump’s former special envoy to Ukraine said he only realized after the fact that the president and a few close advisers were putting “unacceptable” pressure on Ukraine to launch a politically motivated investigation
  • The European Central Bank warned of potential side effects from its loose monetary policy, highlighting how years of unprecedented economic stimulus is contributing to an erosion of financial stability. Low interest rates have encouraged excessive risk-taking by investment funds and insurers as well as in some real estate markets, the ECB said in its semi-annual Financial Stability Review released Wednesday
  • Traders should brace for heightened volatility in 2020 as the U.S. presidential election becomes one more reason for investors to hedge, according to TD Securities.
  • Helicopter money could be both the best and worst options for the European Central Bank if the euro-area slowdown morphed into a recession, according to a Peterson Institute paper.
  • European Central Bank watchers who monitor its every signal to gauge the future of interest rates would quite like new President Christine Lagarde to give them some clues when she breaks her silence this week.

Asian equity markets traded mostly lower as investor sentiment continued to hang on the US-China trade uncertainty and after the US Senate unanimously passed the legislation aimed at supporting Hong Kong protests, which was met by condemnation from China and spurred concerns of a derailment in trade talks. ASX 200 (-1.4%) and Nikkei 225 (-0.6%) were both negative with Australia pressured by losses in its largest weighted financials sector after Westpac was accused by AUSTRAC of 23mln breaches related to anti-money laundering, while the weakness in Japan was a function of the JPY-risk dynamic, tumultuous trade headlines and disappointing data including a larger than expected contraction in the nation’s Exports. Elsewhere, Hang Seng (-0.8%) and Shanghai Comp. (-0.8%) conformed to the subdued picture following China’s stern response to the US Senate’s passage of the Hong Kong Human Rights Bill, in which it called on the US to stop interfering in its affairs and suggested that it must take necessary measures to safeguard its sovereignty and security. However, losses in the mainland were somewhat limited by optimistic comments from US Commerce Secretary Ross that they still think there's hope a China deal can be done and following the PBoC’s 5bps reduction to its Loan Prime Rates. Finally, 10yr JGBs tracked the gains in T-notes and was spurred by safe-haven demand following China’s retaliation threat, while the 20yr JGB auction was inconclusive as the results showed stronger demand at lower accepted prices.

Top Asian News

  • World’s Largest Wealth Manager Says Add Asian Stocks on Earnings
  • Nissan Plans First Bond Sale Since Scandals After Leader Changes

Concerns regarding the state of US/China trade negotiations are weighing on major European bourses (Euro Stoxx 50 -0.8%) on Wednesday morning, after the US Senate unanimously voted in favour of the Hong Kong Human Rights bill and sent it to the House of Representatives overnight, drawing strong condemnation from China and raising fears that trade talks will be complicated. Downside has extended during European trade, with negative comments from China’s Global Times Editor Hu Xijin only exacerbating things. In terms of the sectors, Energy (-1.6%) is the laggard, as yesterday’s steep decline weighs. Other more risk sensitive sectors including Consumer Discretionary (-1.0%), Tech (-0.5%) and Financials (-1.3%) are also suffering, while defensive sectors are holding up better. Moving on to the most notable stock specific movers; Nexi (+3.1%) tops the Stoxx 600 table, with the news that it is in preliminary talks with Intesa Sanpaolo (-0.4%) regarding a possible commercial partnership supportive. Moreover, positive broker moves for Novozymes (+2.5%) and ADP (+1.5%) from Citigroup and RBC respectively saw their shares move higher. In terms of the laggards; Kingfisher (-6.7%) sunk after downbeat earnings, in which the Co. noted there is clearly much to be done to improve performance and that they had not found the correct balance between group scale benefits and local market. Sage Group (-3.6%) is lower after underlying operating profit and EPS fell, although the Co. did increase its FY dividend. Swedbank (-3.8%) shares are lower, with US authorities investigating the Co’s Baltic unit to determine if transactions violated US sanctions on Russia; the Co.’s CEO said he was not aware of any violations and internal investigations to be concluded early next year. Elsewhere amongst the laggards are Wirecard (-2.8%); auditors at EY have reportedly refused to approve Co’s 2017 Singapore accounts, reported Handelsblatt citing documents.

Top European News

  • ECB Flags Risks to Financial Stability From Its Own Stimulus
  • Emirates Trims Boeing Wide-Body Plan as It Curbs Global Ambition
  • Corbyn Holds Johnson to Debate Draw: U.K. Campaign Trail

In FX, the broad Dollar and Index gains traction in early European trade amid underlying safe-haven support given the bleaker rhetoric out of China regarding an imminent Phase One deal and potential complications from the US Hong Kong bill. On trade, Global Time’s Chief Editor highlighted China’s readiness for a prolonged trade spat, aiding the DXY to test 98.00 to the upside (vs. an overnight low of ~97.80) shortly after the cash open and eclipse its 100 DMA (98.02) before stabilising below the round figure. Meanwhile, China condemned the US bill supporting Hong Kong protesters which was unanimously passed in Senate and makes way to the House for a re-vote, with some wondering whether this could be another wedge in trade talks despite the official previously highlighting the issues are separate. USD/CNH sees renewed upside in early hours (after little move on the expected PBoC LPR cut) with the pair now above its 21 and 100 DMAs (7.0288 and 7.0411) and at the top of its current 7.0250-0430 intraday range.

  • AUD, NZD, CAD - All moving in-line with the current trade-induced risk aversion. The non-US Dollars are all pressured in wake of the aforementioned pilling of bearish-sentiment factors which dwindle the prospect of a long-lasting truce between the two nations. AUD/USD reversed a bulk of yesterday’s gains and retested 0.6800 to the downside at one point, currently residing just off the lower bound of today’s 0.6800-30 parameter. Similarly, its Kiwi counterpart fell below its 100 DMA (0.6432) in overnight trade following China’s condemnation of US Senate’s action and tested support at 0.6400 (vs. high of 0.6435). The Loonie meanwhile bears the brunt of softer energy prices but looks forwards to the Canadian CPI metrics with the headline YY remaining steady at 1.9%. USD/CAD took out its 200 DMA (1.3275) in early EU hours as it takes a stab at 1.3300 to the upside.
  • JPY, CHF - Supported by their safe-haven statuses as the trade landscape shifts away from the recent hopefulness. USD/JPY meanders a touch below the 108.50 mark ahead of a Fib level and its 50 DMA both at 108.26 whilst notable option expiries include USD 1bln at strikes 108.50-65. Correspondingly, the Franc sees modest gains with EUR/CHF back under its 100 DMA and 21 DMAs both at 1.0960.
  • GBP, EUR - Both modestly softer and largely at the whim of a firming Buck. Last night’s UK leadership debate provided little by way of new substance, whilst a YouGov snap poll on performance (1600 respondents) showed the leaders more-or-less neck and neck, and the election survey from the same pollster indicated a slight narrowing in Tory’s lead over Labour. GBP/USD hovers around a 38.2.% Fib level just above 1.2900 having dipped below the figure earlier on a firmer Buck. EUR/USD losses more ground below its 100 DMA (1.1089) but found a base at 1.1060 ahead of its 21 DMA at 1.1042.

In commodities, crude futures are relatively flat following a mammoth sell-off in the prior session where anti-production cut commentary out of Russia and bearish supply updates in Europe saw the complex sell off. There was little by way of reactions to last night’s mixed API Inventory data; headline crude stocks built much more than expected but gasoline and distillates posted larger than expected draws, and front month WTI and Brent contracts stabilised around the USD 55.20/bbl and USD 60.80/bbl levels overnight, although both have since crept slightly lower since the arrival of European players. Subdued risk appetite has lent a hand to gold, which advanced to near the USD 1480/oz mark before pulling back slightly, with upside being capped by a firmer buck. Meanwhile, copper was caught between the conflicting forces of the PBoC’s latest LPR cuts and negative developments on the US/China trade front overnight, but has since seen some upside since the arrival of European players, making new highs for the week at USD 2.666/lbs.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 9.6%
  • 2pm: FOMC Meeting Minutes

DB's Jim Reid concludes the overnight wrap

If you’re looking to top up the performance of your fund before year end you could do worse than to visit Blackhall Colliery, County Durham, North England. This week has seen the twelfth time in five years that a bundle of notes totalling exactly £2000 pounds has been found in a bag on a street and handed into Police. If twelve bags have been handed in, how many have actually been “absorbed” into the local economy. I would wager many many more. Police are totally confused by these “drops” and made this info public late yesterday. Maybe we’ll get the 21st century version of The Gold Rush on our hands today.

There wasn’t quite the same rush in markets yesterday as Equity markets traded in the red for most of the day after some poor US retail earnings, before more positive trade headlines spurred risk assets back towards flat into the close. The S&P 500 had been down as much as -0.27% but it ended -0.06%. The DOW lost -0.36%, with most of that attributable to Home Depot’s -5.44% move after they said that comparable sales in Q3 rose +3.6% (vs. +4.6% expected), and downgraded their comparable sales growth guidance to 3.5%, having been 4.0% previously. Kohl’s (-19.49%) also reported soft demand, lowering their guidance for adjusted annual earnings per diluted share to $4.75-$4.95, down from $5.15-$5.45 previously. Investor attention will now turn to Lowe’s (-1.41%) and Target (-0.96%), both of whom are releasing results today.

Offsetting the poor earnings reports were some optimistic trade headlines, with Bloomberg reporting that the US-China deal that fell through in May is now the benchmark in terms of the amount of tariffs to be rolled back in an initial agreement between the two sides. The reports suggest that China is asking that all tariffs applied since May be immediately removed, then earlier tariffs removed in tranches moving forward. If realised, this would be a notably more risk-positive outcome than most had expected. However, the article also noted apparent differences among US officials as to how comprehensive the phase one deal would be and how much tariffs would be rolled back. So if this is right it doesn’t look as though there’s an agreed viewpoint within the US administration. So hard to get too excited one way or other by the story.

Staying with trade, in a move that could well have significance for upcoming discussions, the US Senate unanimously passed the Hong Kong Human Rights and Democracy Act that would require the US State Department to assess each year whether Hong Kong has sufficiently “autonomous decision-making” to justify retaining its different tariff treatment compared to China. Last month the House of Representatives passed a modestly different version, so the two will now be reconciled in committee. President Trump has been silent on the bill. Both the Chinese and Hong Kong governments expressed disappointment over the legislation. Chinese Foreign Ministry spokesman Geng Shuang urged the US to take immediate measures to prevent the bill from becoming law, although it appears to have sufficient support to over-ride a Presidential veto.

Staying with trade themes, Bloomberg reported overnight that China’s antitrust regulator is closely monitoring US chipmaker Diodes Inc.’s proposed $428mn takeover of Taiwan’s Lite-On Semiconductor Corp, responding to complaints that a deal will deliver the Taiwanese company’s Shanghai-based affiliate On-Bright Electronics Inc. into US hands. Lite-On Semiconductor shares fell by their daily limit of 10% overnight.

Overnight Asian markets are trading lower as the passage of the Hong Kong bill casts a shadow over the US-China trade deal. The Nikkei (-0.66%), Hang Seng (-0.67%), Shanghai Comp (-0.39%) and Kospi (-1.15%) are all lower. Elsewhere, futures on the S&P 500 are -0.14% lower and yields on 10y USTs are down -3.5bps this morning. As for overnight data releases, Japan’s October adjusted trade balance came in at JPY -34.7bn (vs. JPY 248.1bn expected) as declines in exports (-9.2% yoy vs. -7.5% yoy expected) outpaced small declines in imports (-14.8% yoy vs. -15.2 yoy expected).

The main highlight today will be the FOMC minutes, which will likely signal that policy is on hold for now, barring a material reassessment in the outlook, per Chair Powell’s recent rhetoric. It’ll be interesting to see if the minutes shed any light on what exactly would qualify as a “material reassessment,” as well as details on how deep the internal disagreement over the rate cut was. Also any updates on the policy review, and any new thoughts on dealing with funding market disruptions will be looked for. Staying with the Fed, the New York Fed’s Williams spoke yesterday, and maintained his existing rhetoric, saying that “the current stance of monetary policy seems appropriate” for the economy’s current position. He also noted that the current system of ad hoc repo operations is a temporary solution to problems in funding markets, the need for which will hopefully be obviated by the Fed’s balance sheet expansion currently underway.

Turning to sovereign bonds, peripheral spreads widened yesterday, with Italian debt leading the sell-off. 10yr BTP yields were up +3.8bps, while Spanish (+1.4bps) and Portuguese (+2.3bps) yields also rose. Sovereign debt elsewhere advanced however, with 10yr Bunds -0.5bps and Treasuries -3.4bps to 1.781%. The 2s10s curve flattened for a 5th consecutive session, taking it -8.8bps lower over the last week (-3.3bps yesterday). Meanwhile in commodities, oil fell for a second successive day, with both WTI (-3.24%) and Brent Crude (-2.51%) losing ground, as expectations are for official data to show a large inventory build later today.

Here in the UK, with just over 3 weeks now until the general election, last night’s TV leader’s debate is unlikely to change anyone’s view of either candidate measurably. A YouGov poll people canvassed immediately after the event showed that Johnson edged it by a wafer thin 51%/49%. On balance given how far Corbyn’s personal ratings are below Johnson’s and how far Labour are behind in the polls, then such a split could be seen a small victory for the opposition. Sterling is trading down -0.13% this morning.

Indeed a poll out yesterday from Kantar put the Conservatives 18pts ahead of Labour, their biggest lead of the campaign so far in any opinion poll. The Tories were on 45% (up 8pts on the previous week), Labour on 27% (unchanged), while the Brexit Party collapsed to 2% (down 7pts). However, another poll from YouGov showed the Tories 12pts ahead of Labour, down from a 17pt lead on Friday, so it’s a slightly volatile picture even if the range of the lead continues to be in the 8-18 percentage point area.

We got some strong housing data out of the US yesterday, with building permits rising to a seasonally-adjusted annual rate of 1461k in October (vs. 1385k expected), their highest level since May 2007. Looking within the data, all four US regions saw an increase in building permits, and the less-volatile single-family permits also rose to a post-crisis high of 909k. October’s housing starts were also up to 1314k (vs. 1320k expected).

To the day ahead now, and it’s fairly light on data, with October’s PPI release from Germany and CPI release from Canada, along with the weekly MBA mortgage applications from the US. From central banks, the FOMC’s October minutes and the ECB’s Financial Stability Review will be released, while we’ll hear from the ECB’s Lane and Irish central bank governor Makhlouf. Earnings out today include Lowe’s and Target, and in the US tonight there’s another Democratic primary debate.


Tyler Durden Wed, 11/20/2019 - 07:55
Published:11/20/2019 7:05:18 AM
[Markets] U.S. stock futures fall on worries over China trade talks U.S. stock futures fall on worries over China trade talks Published:11/20/2019 7:05:18 AM
[Markets] Dow futures slip as Trump threatens to raise tariffs if China trade talks languish U.S. stock-index futures head modestly lower Wednesday morning as persistent doubts about progress toward a U.S.-China trade and weakness corporate earnings offer few reasons for investors to bid stocks higher after a round of all-time highs. Published:11/20/2019 7:05:18 AM
[Markets] "Shackled, Blindfolded and Hooded:" Ex-Hong Kong Consulate Worker Tortured By Chinese Agents "Shackled, Blindfolded and Hooded:" Ex-Hong Kong Consulate Worker Tortured By Chinese Agents

Simon Cheng, a Hong Kong citizen who worked for the British Consulate-General Hong Kong, was arrested and tortured by Chinese agents for 15 days in August for his alleged involvement in supporting pro-democracy protests in Hong Kong, reported BBC News. Cheng told BBC he was "shackled, blindfolded, and hooded" and was beat into submission.

Chinese agents accused him of sparking political unrest in Hong Kong that has since led to the economic and social collapse of the city.

"They said I'm a state enemy and I'm a traitor, and also they asked whether the consulate instructed me to mingle with the protest", he told the BBC, adding that "They wanted to know what role the U.K. had in the Hong Kong protests – they asked what support, money, and equipment we were giving to the protesters.

"I told them I want to make it 100% clear, the U.K. didn't assign resources or help with the protests."

Foreign Secretary Dominic Raab released a statement that his office, the British Consulate-General Hong Kong, was "shocked and appalled by the mistreatment" Cheng experienced during the 15-day detainment, which he was tortured. "I have made clear we expect the Chinese authorities to investigate and hold those responsible to account," Raab said.

Hong Kong lawmakers have said Cheng's arrest is a prime example of the abuse of the legal system in China and why Hong Kongers have been protesting over the last five months to prevent the city from passing an extradition bill to China. 

"Beijing is throwing down further signs of disrespect for the rule of law and taking a vindictive attitude toward Hong Kong citizens, particularly those with links to foreign countries," Willy Lam, an adjunct professor at the Chinese University of Hong Kong's Centre for China Studies, who spoke with Bloomberg. "This might resonate very badly, poison the atmosphere and prevent a peaceful and rational solution to the confrontation between the protesters and the SAR government."

Cheng said secret agents identified him as the "mastermind behind the protests," which allegations he rejected; agents also threatened him with long-term jail time, causing him to consider suicide.

Raab said, "I summoned the Chinese Ambassador to express our outrage at the brutal and disgraceful treatment of Cheng, in violation of China's international obligations." 

Cheng told BBC that it's too dangerous for him and his fiancee to return to Hong Kong or mainland China. He fears for his safety and is seeking a new life in the UK.

Tyler Durden Wed, 11/20/2019 - 07:05
Published:11/20/2019 6:35:46 AM
[Markets] Intelsat’s stock sinks again as Congress looks to ‘rake’ in revenue from 5G spectrum auction Shares of Intelsat S.A. continued to plummet to earth on heavy volume after the U.S. Federal Communications Commission’s decision to move forward with a public auction of new 5G spectrum prompted what was essentially a Congressional money grab.
Published:11/20/2019 6:35:45 AM
[Markets] Lowe’s Stock Jumps After Earnings Show It’s Not Home Depot It’s opposite day. Home improvement retailer Lowe’s raised earnings guidance one day after peer Home Depot cut growth guidance. Investors are bidding up Lowe’s shares in premarket trading. That’s the opposite reaction investor had to Home Depot’s earnings report. Published:11/20/2019 6:35:45 AM
[Markets] Target stock heads toward record after hiking profit guidance Target stock heads toward record after hiking profit guidance Published:11/20/2019 6:03:48 AM
[Markets] Corbyn Draws Even With Johnson In Dramatic Pre-Vote Debate Corbyn Draws Even With Johnson In Dramatic Pre-Vote Debate

Though it probably wasn't convincing enough to spoil the conservatives' lead in most pre-election polling, some polls taken after Tuesday night's debate between Prime Minister Boris Johnson and Labour leader Jeremy Corbyn showed Corbyn, with a promising upswing, polling almost neck-and-neck with the PM.

According to Bloomberg, the YouGov/Sky News poll of 1,600 people gave Johnson a narrow victory, with 51% saying he won the ITV debate, while 49% said Corbyn performed best.

The prickly Corbyn has often struggled to win support among normal every-day Britons, thanks to his reputation as a one-time communist sympathizer and radical leftist. Corbyn entered the campaign with a satisfaction rating of minus 60, the lowest such score of any candidate since the agency started tracking the data. Though by the end of last month, Corbyn's likeability levels had improved to +2.

While it was only one debate, several more are planned, including another head-to-head showdown between the leaders of the two biggest parties. And last night, Bloomberg captured how many times each candidate said either "Brexit" or "the NHS" during the course of the debate.

In one of the most consequential elections for Britons in recent memory, voters will face a choice on Dec. 12 between Johnson and his plans for a speedy departure from the EU, and Corbyn, who has embraced plans for another embattled referendum that could ultimately scrap the Brexit deal altogether.

Even as he pulled ahead, Corbyn struggled to deny allegations that antisemitism is rife inside the Labour Party, and was repeatedly mocked by some in the audience for claiming his policy on Brexit was clear, when he couldn't say whether he'd vote to leave or remain. But Corbyn won big cheers for promising to end the privatization of the National Health Service.

A moment of levity arrived when both candidates were asked to reveal which Christmas gifts they would have bought for each other.

Playing into accusations he had a one-track mind, Johnson said he'd give Corbyn a copy of his Brexit deal, which many dismissed as lame. Meanwhile, Corbyn said during his final message of the night that as PM he would protect the NHS and invest in “good jobs” across the country. "Vote for hope and vote for Labour on the 12th of December," he said.

According to the YouGov poll, Corbyn beat Johnson 59% to 25% on being in touch with ordinary people. But Johnson beat Corbyn 54% to 29% on appearing prime ministerial, and 54% to 37% on likeability.

Most recent polls put Johnson's conservatives at 42% of likely voters, a double-digit lead over Labour.

Tyler Durden Wed, 11/20/2019 - 06:12
Published:11/20/2019 5:41:00 AM
[Markets] Project Syndicate: Saving Venice means restoring the citizenry as well as rescuing the art and buildings It’s not just the buildings, bridges and artwork of Venice that is threatened, but the heart of the city itself — its people.
Published:11/20/2019 5:41:00 AM
[Markets] Lowe's says it will shut 34 stores in Canada Lowe's says it will shut 34 stores in Canada Published:11/20/2019 5:41:00 AM
[Markets] China Fears Rattle European Stocks European stocks were on track for their worst single-day performance in six weeks following concerns over U.S.-China trade talks. Published:11/20/2019 4:33:38 AM
[Markets] Vitaliy Katsenelson's Contrarian Edge: Why Tesla might be the next Apple and Elon Musk the heir to Steve Jobs Tesla Model 3 could become the iPhone of electric vehicles, writes Vitaliy Katsenelson.
Published:11/20/2019 4:33:38 AM
[Markets] Next Avenue: How to avoid 5 common retirement money mistakes You could end up over-diversified, or trapped in your own home. A financial planner offers advice.
Published:11/20/2019 4:04:38 AM
[Markets] Lacalle: The Next Wave Of Debt Monetization Will Also Be A Disaster Lacalle: The Next Wave Of Debt Monetization Will Also Be A Disaster

Authored by Daniel Lacalle,

According to the IMF (International Monetary Fund) and the IIF (Institute of International finance) global debt has soared to a new record high. The level of government debt around the world has ballooned since the financial crisis, reaching levels never seen before during peacetime. This has happened in the middle of an unprecedented monetary experiment that injected more than $20 trillion in the economy and lowered interest rates to the lowest levels seen in decades. The balance sheet of the major central banks rose to levels never seen before, with the Bank Of Japan at 100% of the country’s GDP, the ECB at 40% and the Federal Reserve at 20%.

If this monetary experiment has proven anything it is that lower rates and higher liquidity are not tools to help deleverage, but to incentivize debt. Furthermore, this dangerous experiment has proven that a policy that was designed as a temporary measure due to exceptional circumstances has become the new norm. The so-called normalization process lasted only a few months in 2018, only to resume asset purchases and rate cuts.

Despite the largest fiscal and monetary stimulus in decades, global economic growth is weakening and leading economies’ productivity growth is close to zero. Money velocity, a measure of economic activity relative to money supply, worsens.

We have explained many times why this happens. Low rates and high liquidity are perverse incentives to maintain the crowding out of government from the private sector, they also perpetuate overcapacity due to endless refinancing of non-productive and obsolete sectors t lower rates, and the number of zombie companies -those that cannot pay their interest expenses with operating profits- rises.  We are witnessing in real-time the process of zombification of the economy and the largest transfer of wealth from savers and productive sectors to the indebted and unproductive.

However, as monetary history has always shown, when central planners face the evidence of low growth, poor productivity and higher debt, their decision is never to stop the monetary madness, but to accelerate it. That is why the message that  the ECB (European Central Bank) and the IMF are trying to convey is that there is a savings glut and that the reason why negative rates are not working as expected is that economic agents do not believe rates will stay low for longer, so they hold on to investment and consumption decisions. Complete nonsense. With the household, corporate and government debt at still elevated levels and close to pre-crisis highs, the notion of excess savings is ludicrous. What informs such a misinformed opinion? The often-repeated “there is no inflation” fallacy. If money supply is high and rates are low but inflation does not creep up, then surely there must be a savings glut.  False. There is massive inflation in financial assets and housing but there is also a very clear rise in inflation in non-replicable goods and services versus replicable ones, which means that the official consumer price indices (CPI) misrepresent the true cost of living increase. That is the reason why there are demonstrations all over the eurozone against the rising cost of living at the same time as the ECB repeats that there is no inflation.

When central planners blame economic agents for a non-existent savings glut and repeat that there is no inflation when there clearly is a lot,  they also tend to add a conclusion: if households and corporates are unwilling to spend or invest, then the government must do it.  This is, again, a false premise. Households and corporates are spending and investing. There is no evidence of a lack of capital expenditure, let alone solvent credit demand. The private sector is simply not investing and spending as much as governments would want them to, among other reasons because the private sector does suffer the consequences of taking a higher risk when the evidence of debt saturation is clear to all those who risk their capital.

Unfortunately, the next wave of central bank action will be the full monetization of government excess. The excuse will be the so-called “climate emergency” and “green deals”. Yet governments do not have better or more information about the best course of action in the energy transition, and by artificially picking winners and losers, ignoring the positive forces of competition and creative destruction to deliver faster innovation and progress, governments tend to delay, not accelerate change.

In any case, it will happen. The ECB, always happy to repeat the mistakes of Japan with an even stronger impetus, is likely to start new programs of debt monetization for green projects and claim it is a different, radical and new measure… as if it was not doing so already with the Juncker and Green Energy Directives.

The result is easy to predict, unfortunately. Governments hate two things that disruptive technologies do: reduce consumer prices and generate lower tax revenues. Yes, disruptive technologies are, by definition, disinflationary both in CPI and in tax receipts. Furthermore, disruptive technologies also demolish government control of the economy. These three reasons, lower inflation, lower tax revenues, and less control, are the reasons why governments will never adopt true changes in the economic growth pattern. And because of these reasons, the massive spending financed with new money creation is likely to be even worse for economic growth. Not only it is likely to be an even bigger crowding-out of the private sector, but make economies less dynamic, less productive and more indebted.

There are ways to incentivize change and a green revolution. It is called competition and creative destruction. None of those are favored by governments, not because they are evil, but because governments have the incentive to maintain the obsolete sectors via subsidies.

If the previous $20 trillion stimuli have delivered more debt, less growth, and rising discontent among the middle class that always pays for government experiments, the next one will likely be the last step towards full Japanization. If anything, what are already prudent spending and investment decisions from the private sector are likely to be even more conservative, and the resulting negative productivity growth will mean lower salaries and employment but higher debt and a larger size of government in the economy… Which is, in reality,  the ultimate goal of these massive plans.

The reader may think that this time is different but it is not, because the incentives are the same. What I am completely sure is that, once it fails as well, many will demand even more stimuli to solve the problem.

Tyler Durden Wed, 11/20/2019 - 05:00
Published:11/20/2019 4:04:38 AM
[Markets] West African Coastal States Are Failing To Curb The World's Biggest Piracy Problem West African Coastal States Are Failing To Curb The World's Biggest Piracy Problem

Pirates are thriving off of the coast of West Africa, despite what is supposed to be a concerted effort to prevent them. And with business starting to boom in areas like Togo, dealing with the threat has become more important than ever. 

The coastline's failure to coordinate a unified response is allowing the attacks to continue, Togolese President Faure Gnassingbe told Bloomberg.  

Earlier this month, pirates boarded two ships off the coast of Togo, marking the latest attacks in an area where piracy is rampant: the Gulf of Guinea between Senegal and Angola. 15 states and western partners signed a pact in 2013 to collaborate against piracy in the area, but the region still accounts for 40% of the world's reported piracy incidents. 

Togolese forces are left to pursue pirates in their own waters, which span a coastline of about 31 miles. They often need to hand over the chases to neighboring states to pursue pirates, but cooperation is spotty between states.

Gnassingbe said: “Individually countries are doing what needs to be done. Where we are a little bit weak is how to cooperate. We need to cooperate and take some measures.”

The Gulf of Guinea area makes up 82% of all kidnappings globally, driving up the costs associated with shipping in the area, like insurance and security.

Togo is a $5 billion economy that is made up mostly of agriculture and mining. The country is now implementing regulatory reforms to reduce public debt and lure investments. The country is up 40 places this year in the World Bank's ease-of-doing-business ranking to 97, as a result of introducing reforms to lower electricity costs and fees for construction permits.  

"Over the next year, the government will seek to strengthen the judiciary to ease business litigation and implement digital platforms for the administration of taxes and payments," Gnassingbe said. “It will increase the efficiency, that is for digital, and it will give confidence, that’s for the justice system.”

In early November, Nigerian billionaire Aliko Dangote announced a $2 billion investment in a phosphate mining project in Togo, which shows people's willingness to do business in the area. The reforms and influx of business make dealing with the coastline's piracy problems even more crucial. 

Gnassingbe has been in power since 2005, when his father, who seized power in a 1967 coup, died. Lawmakers in the country recently introduced constitutional reforms in May to limit the number of Presidential terms to two. The reforms aren't retroactive, which means that Gnassingbe will be able to extend his rule by another decade. The country's next election is slated for 2020. 

Tyler Durden Wed, 11/20/2019 - 04:15
Published:11/20/2019 3:35:00 AM
[Markets] Dow Futures Slide, Global Stocks Slump on Renewed U.S.-China Trade Doubts Wall Street futures indicated a weaker open Wednesday, following sell-offs in European and Asia markets, after China condemned a U.S. Senate on human rights in Hong Kong and President Donald Trump again threatened to increase tariffs if the two sides aren't able to negotiate a near-term trade agreement. Published:11/20/2019 3:04:29 AM
[Markets] Outside the Box: These are the companies most at risk if venture funding dries up Companies with ‘soft’ assets such as intellectual property in the form of patents, software code and contracts ought to shore up their balance sheet, says David Spreng.
Published:11/20/2019 3:04:29 AM
[Markets] Left-Wing Journalist On Sweden's Migrant Suburbs: "Everyone Knew It Would End In Disaster" Left-Wing Journalist On Sweden's Migrant Suburbs: "Everyone Knew It Would End In Disaster"

Authored by Paul Joseph Watson via Summit News,

A left-wing journalist in Sweden who vehemently supported mass immigration has changed her tune, admitting that when it came to Sweden’s crime-ridden no-go areas, “everyone knew it would end in disaster.”

Aftonbladet’s Lena Mellin now acknowledges that Sweden’s attempt to integrate huge numbers of migrants from Africa and the Middle East has failed.

“All parties, with the possible exception of the Left Party and the Sweden Democrats [SD], who hardly affected the reality on this point, should be ashamed,” writes 64-year-old Mellin.

She accuses politicians of having “largely neglected the development in some of our suburbs” despite the fact that “everyone knew it would end in disaster.”

Numerous people pointed out the hypocrisy of Mellin admitting she knew integration was failing yet still refusing to abandon her support for mass immigration.

“Incredible! Lena Mellin, of all journalists one of the foremost advocates for mass immigration and multiculturalism, one of the worst SD-haters, claims that ‘one has known for years’ that it would go to hell,” tweeted Ted Ekeroth.

“For more than a decade Sweden’s ruling class — including political leaders and the media — has denied that there are any problems in the country’s banlieues caused by the mass importation of Third World immigrants. Except for problems caused by those WAYCIST Swedes, of course,” writes the Gates of Vienna blog.

Now it seems that the truth about cultural enrichment has become so blatant that it can no longer be denied. The response of the Swedish media establishment? “We knew all along that things would end badly; we just forgot to tell you.” And they blame the politicians.”

Sweden continues to experience huge problems with violent crime, shootings, explosions and grenade attacks, mostly as a result of turf warfare between rival migrant gangs.

Authorities in Malmo responded by inviting local gang leaders for pizza, while the Swedish government recently announced it would commit $175,000 to funding Drag Queen Story Time events where men dressed as women read and perform to children.

*  *  *

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Tyler Durden Wed, 11/20/2019 - 03:30
Published:11/20/2019 2:36:02 AM
[Markets] Fear And Loathing At The UK Polling Station Fear And Loathing At The UK Polling Station

A new survey by YouGov has revealed the overriding feeling going into this December's general election is one of fear.

When asked how they mostly feel about the upcoming vote, Statista's Martin Armstrong points out that from the six options ranging from Excited (5 percent) to Angry, Fearful was chosen by a quarter of respondents.

Infographic: Fear and loathing in the polling station | Statista

You will find more infographics at Statista

The other positive options of Enthusiastic (7 percent) and Proud (1 percent) also garnered little interest, giving way - fitting to the times - to anger and confusion.

Tyler Durden Wed, 11/20/2019 - 02:45
Published:11/20/2019 2:03:18 AM
[Markets] The Wall Street Journal: Australian banking giant, Westpac, accused of massive money-laundering breaches Westpac Banking Corp. allegedly breached money laundering laws more than 23 million times, including failing to report in a timely way about $7.5 billion in international transfers, Australia’s financial-intelligence agency said in a court filing Wednesday.
Published:11/20/2019 1:40:50 AM
[Markets] Denmark: Shootings, Car Torchings, & Gang Violence Denmark: Shootings, Car Torchings, & Gang Violence

Authored by Judith Bergman via The Gatestone Institute,

On September 24, the US embassy in Denmark published a security alert. It warned US citizens in Copenhagen that:

"The Danish National Police urge individuals living in or visiting the areas of Nørrebro, Ishøj, and Hundige to exercise heightened awareness at all times due to a recent increase in gun violence. Copenhagen Police have instituted a stop-and-search zone in a large area covering Nørrebro. The ordinance – which will run through September 30 – allows police officers to stop and search anyone within the area without cause".

The alert also encouraged US citizens to "keep a low profile", "do not physically resist any robbery attempt" and "use caution when walking or driving at night".

Police in Copenhagen eventually decided to extend the stop and search ordinance in parts of Copenhagen until October 14.

The police have confirmed that the numerous shootings, one of them lethal, are connected to rivalries between two criminal gangs, "Brothas" and "NNV". The situation is beginning to resemble that of Sweden, where shootings and bombings have become commonplace. In late August, in Denmark, a residential building in Greve, a suburb of Copenhagen, was targeted. A bomb with the approximate explosive force of a hand grenade was detonated at the entrance to the building. In June, also in Greve, a man was shot; and in April, several cars were blown up.

In 2017, when shootings in Copenhagen grew more frequent as the conflict intensified between the two gangs, "Brothas" and "Loyal to Familia" (the latter has since been prohibited by Danish authorities), statistics published by the daily Berlingske Tidende showed that 30% of the gang members involved had foreign passports.

"These numbers underline, first of all, that we are talking about a problem that has to do with ethnicity. The argument that this has nothing to do with foreigners has to be taken off the table," said the legal affairs spokesperson for the Social Democrats, Trine Bramsen, at the time.

"In addition to a common fondness for crime, the culture of immigrant gangs is a cocktail of religion, clan affiliation, honor, shame and brotherhood," wrote Danish Conservative Party MP Naser Khader, who is also a co-founder of the Muslim reform movement .

"They also distinguish themselves from the rockers [predominantly ethnically Danish biker gangs, Ed.] by an incredibly strong cruelty. The harder and the more brutal [you are], the stronger you are, and then you create awareness of yourself and attract more [people]".

The flare-up in gang violence has also led to what appears to be a new trend in Denmark: Carjackings at gunpoint. The Danish police confirm that there have been at least three armed carjackings in the conflict between the Brothas and NNV gangs. In one incident, two people were threatened with guns to get out of their cars and leave them.

As in Sweden, car-torchings have also become commonplace. In the first nine months of 2019, according to the Danish police, there were 648 car torchings, the highest number in the past four years.

Nørrebro, where 17.6 % of the inhabitants were non-Western immigrants and their descendants in 2018, has some of the most serious problems, and is where many of the criminal gangs originate. In July 2019, Mathilde Graversen of the daily Berlingske Tidende visited a small neighborhood in the area, where, according to locals with whom she spoke, just 20-25 local boys and young men of ethnic minority background, between the ages of 12 and 20, are causing all the problems. Describing the measures some residents take for personal security, she wrote:

"It has become a habit to use the back door instead of the front door [to their apartment building]. They pass a fence into the garden... and go through the basement up to their apartment. In this way, they avoid having to pass a group of boys and young men, who often hang out in front of the building. Other residents periodically give up using their bedroom. They blow up an air mattress every night and sleep in the living room because the group of boys and young men listen to loud music, shout and occasionally knock on the windows to the [residents'] bedrooms at night. Others say that they have friends who dare not visit them in the evening".

In September, Christian Lunøe, who lives with his children in Nørrebro, wrote an op-ed in Berlingske Tidende, in which he described his intention to move away from there.

"Last Sunday it became so dangerous at my house that I can no longer defend living [in Nørrebro] with my children," Lunøe wrote. He added that he had been out for an evening walk with his children when they encountered a group of boys and young men "with an aggressive and confrontational attitude". When he and his children passed the group on the street, the group "explodes in a... brawl, with two out of the five pulling a knife".

Lunøe described how there has been, "a spread of gang crime and associated groups of admirers, right down to the age of ten. Children who are left to the street and themselves. Young people with knives and threatening behavior". When he called the police, they told him, "We know it's bad out there, but we have no patrol cars to send."

"It is clear," Lunøe wrote, "that young criminals must be punished and weapons removed from the streets, and it is clear that there can be no denying that in my street, boys and young men with ethnic minority backgrounds make up 100 % of both the gangs and their aspirants..."

Lunøe is not the first person wanting to move away from Nørrebro because of the problems there. After his op-ed, the historian and columnist Niels Jespersen wrote, "I also left Nørrebro, because I couldn't stand the gangs". More importantly, Jespersen asked in his op-ed, "how many Danes, who do not have... access to [write] an op-ed in Berlingske, not to mention the resources to move away, have been exposed to the same things [as Lunøe] over the decades?"

"[T]he price for the failed integration [of immigrants] is [paid] by those with the least resources. It is the schools and neighborhoods of the working classes that are destroyed, while it is rare that the well-educated and progressive middle classes meet other immigrants than those who are equally well-educated and progressive".

People with the means to move, such as Lunøe, will take their children and run to safer areas. What will happen to the many people who are unable to do so and have no choice but to stay in the crosshairs of the shootings, the knives and the car-torchings?

Tyler Durden Wed, 11/20/2019 - 02:00
Published:11/20/2019 1:04:25 AM
[Markets] What Will Happen In The 2020s? (Spoiler Alert: Nothing Good) What Will Happen In The 2020s? (Spoiler Alert: Nothing Good)

Authored by 'Lance Welton' via,

Peter Turchin And The Coming Crisis Of The 2020s

Increasingly, social science is dominated by Leftist ideologues who use the remaining respect that academia still has among the public to inculcate students and public alike with their equalitarian dogmas.

But there are honorable exceptions.

One of these: Peter Turchin, a Russian who is professor of Evolutionary Biology at the University of Connecticut. Turchin, who did PhD at Duke University, applies his “hard science” training to the Woke world of social science, aiming to make clear and testable predictions about the cycles through which civilizations go. According to Turchin, the West is headed for trouble in the 2020s.

Turchin, who keeps a blog about civilization cycles, recently presented his latest findings to the Centre for Complex Systems Studies in Utrecht, Holland, under the heading “A History of the Near Future: What History Tells Us About the Near Future.” [PDF] His conclusions are startling. Based on his detailed number-crunching about events, civilizations that are in decline - as is the USA is - always enter periods of extreme polarization. For the USA, the 2020s will be that period. It will be marred by years of political violence, and intense conflict. Worryingly, Turchin claims that the U.S. more polarized that it was on the eve of the Civil War [ See his Ages of Discord: A Structural-Demographic Analysis of American History].

Turchin argued in his Utrecht presentation that political instability in the USA and Western Europe in the 2020s will be of unparalleled severity, to the extent that it may well “undermine scientific progress.”

Turchin began his presentation by quoting himself from almost a decade ago already making this prediction, one which—in a world of Trump, Brexit and the rise of European “populism”—now seems extremely prescient. Spain has just become the latest country to give a right-wing populist party a substantial vote: the Vox party took 3rd place in the country’s November 10th general election. [ Eurosceptics rejoice as Vox becomes 3rd most powerful party in Spanish election ,RT, November 11, 2019]

“Qualitative historical analysis reveals that complex human societies are affected by recurrent—and predictable—waves of political instability” he wrote in a letter to the leading science journal, Nature, which he quoted at the beginning of his presentation [Political instability may be a contributor in the coming decade, February 4, 2010].

Turchin’s presentation then moved on to highlighting the key forces that, according to his massive data base on historical cycles of violence, appear to auger political instability in the 2020s. There are four of them, and they were last this intense in the early 1970s, also a period of political instability in the West.

Mass Mobilization Potential

This, in essence, is “too many workers.” Turchin noted that when “the supply of labor exceeds its demand, the price of labor decreases, depressing the living standards for the majority of population, thus leading to popular immiseration [impoverishment] and growing mass-mobilization potential, but creating favorable economic conditions for the elites.”

In other words, as gradually occurred in the 1950s and the 1960s in Europe, the rich have grown richer on the back of cheap labor underpinned by mass immigration. This, however, has led to economic polarization and resentment, with the rich getting rich at a much faster rate than the poor. This means a well of angry, resentful people in the working and lower middle class.

Intra-Elite Competition.

Turchin argued that “favorable economic conjuncture for the elites results in increasing numbers of elites and elite aspirants, as well as runaway growth of elite consumption levels.” This means that many people who are higher up the hierarchy have to, in effect, become economically poor to maintain the veneer of “elite” status. Turchin added: “Elite overproduction results when elite numbers and appetites exceed the ability of the society to sustain them, leading to spiraling intra-elite competition and conflict.”

If you over-educate the populace, you have too many people who believe that in some way they have a right to rule—because when they were children, for people had a degree, that was kind of the case. So, if we assume that having a degree used to make you part of an “elite,” then we have “over-produced” this “elite”—over half of young people go into higher education in some Western countries. [More than half of young p eople are going to university for the first time, figures reveal, by Camilla Turner, Telegraph, September 26, 2019]

Thus there are far too many people qualified as lawyers, far too many college graduates, and thus very intense competition within and resentment between different sub-groups of “elite” people.

Many of them are not really “elite” other than on paper, but they regard “non-elite” jobs as beneath them. Think of all the baristas with Cultural Anthropology degrees, the wannabe attorneys working as civil servants or for charities; the numerous graduates doing The Office-type tedious jobs. This breeds hatred and conflict among the more educated.

State Fragility

This occurs when a “fiscal crisis,” of the kind Turchin claims we have, reduces the power of the government to control the police, the army and other enforcers. The state begins to lack “legitimacy,” meaning that the elites and the populace are less likely to defend its institutions. Thus Trump supporters regard hallowed newspapers as “Fake News.” Brexit supporters label senior judges [ British newspapers react to judges’ Brexit ruling: ‘Enemies of the people’, Guardian, November 4, 2019] and even parliament itself [ Boris Johnson’s attempt to subvert democracy has failed, and he should resign, New Statesman, September 242019] as the “Enemy of the People.”

International Environment

The state will be rendered even more fragile if foreign governments support the insurgents within the elite—for example, Trump expressing his support for Brexiteers. And similar insurgencies in other countries spur emulation: Trump supporters could look to the Brexit vote and see that such victories over the Establishment were possible.

Turchin argues that these factors also existed in the 1920s and 1930s, resulting in a crisis and in war. The elites dealt with this by attempting to create a more equal society, by limiting the size of the work force, by regulating the economy, and by limiting imports. The result was that between about 1930 and 1970, real (inflation-adjusted) wages grew.

But once the elites forgot about the 1930s, and became focused on their own enrichment, wages started to plateau and fall, leading to crisis by the 1970s. Policies to, in essence, make everyone much wealthier were then instituted across the 1980s.

But these could only last for so long and, claims Turchin, real wages have effectively been in decline since about the year 2000. And as this has happened, the elites have got richer and larger. For example, the percentage of the USA population worth 1 million dollars (in 1995 dollars) has grown from 2.9% to 6.3% between 1983 and 2007. So there is growing economic polarization.

The “over-production of elites” leads to aspirant elites challenging the “established elites,” if necessary by violent means. The number of elite positions is limited—there are 50 state governors and 100 senators, no matter the population size—so this leads to political instability. In this regard, Turchin charts how the number of candidates for Congress—the number of elite aspirants—has increased over time, meaning more and more resentful people in the elite, who might be attracted to radical action to get their way.

Turchin brings together a variety of “well-being indicators”—employment, real wages, health, family size—and finds that they all follow exactly the same pattern. They are low around 1900, which Turchin argues was a period of conflict and instability. They are very high by about 1960 and then start to rapidly fall. We would thus expect a crisis.

Serious crises seeming to manifest every 50 years or so. Turchin takes us into what he calls the “deep past”—back even to the history of Rome—to show that these cycles occur again and again in almost exactly the same way, for exactly the same reasons, even involving similar lengths of time, such as instability every 50 years [A History of the Near Future]. Fascinatingly, he shows—setting out the data in a graph—that there is a clear negative association between societal well-being and elite over-production between 1780 and 2010 in the USA.

What will happen in the 2020s?

Turchin argues that one possibility is mass mobilization leading to war, revolution, state collapse, a lethal pandemic, population collapse—and, eventually, the higher living standards that tend to go with a reduced population.

Turchin, however, is slightly more optimistic for this coming decade. He predicts that the West will undergo something more similar to the collapse of the Soviet Union, and thus avoid pandemics and a mass die-off.

Let’s hope he’s right.

Tyler Durden Wed, 11/20/2019 - 00:05
Published:11/19/2019 11:34:22 PM
[Markets] Your Digital Self: NASA’s mission to an asteroid could uncover the secrets of planet formation An orbiter will map and study the properties of an asteroid called 16 Psyche.
Published:11/19/2019 11:34:22 PM
[Markets] China 'Mega Dump' Full Of Trash 25 Years Ahead Of Schedule China 'Mega Dump' Full Of Trash 25 Years Ahead Of Schedule

A 'mega dump' in China has reached capacity 25 years sooner than anticipated after receiving far more trash per day than originally planned, according to the BBC.

The Jiangcungou ladfill in Shaanxi Province - around the size of 100 football fields, was designed to accept 2,500 tons of trash per day. Instead, it received 10,000 tons daily, the most of any landfill site in China.

The Jiangcungou landfill in Xi'an city was built in 1994 and was designed to last until 2044.

The landfill serves over 8 million citizens. It spans an area of almost 700,000 square metres, with a depth of 150 metres and a storage capacity of more than 34 million cubic metres.

Until recently, Xi'an was one of the few cities in China that solely relied on landfill to dispose of household waste - leading to capacity being reached early.

Earlier this month, a new incineration plant was opened, and at least four more are expected to open by 2020. Together, they are expected to be able to process 12,750 tonnes of rubbish per day. -BBC

The landfill sites are eventually slated to become ecological parks.

China collected 215 million tons of urban household waste in 2017 according to the country's statistical yearbook, up from 152 million a decade earlier. There are currently 654 landfill sites across the country and 286 incineration plants.

It's unknown what their recycling rate is as they have not released figures, however Beijing announced plans to recycle 35% of waste in major cities within the next 13 months, according to a government report.

To that end, the sorting and recycling of rubbish was made mandatory in Shanghai this July, leading to a "sense of panic" over people's social credit scores.

The plan is ambitious - Shanghai is the largest and most populous city in the world, with more than 24 million residents - three times the size of London or New York. And according to some reports, only 10% of its waste is recycled. Official statistics show that only 3,300 tonnes of recyclables are collected daily, compared to the 19,300 tonnes of residual waste and 5,000 tonnes of kitchen waste that are collected. -BBC

In 2017 alone, China accepted seven million tons of trash from Europe, Japan and the United States, along with 27 million tons of paper waste.

Tyler Durden Tue, 11/19/2019 - 23:45
Published:11/19/2019 11:04:34 PM
[Markets] Six Conflicting Global Projects Six Conflicting Global Projects

The six major world powers approach the reorganization of international relations according to their experiences and dreams. Prudently, they intend to defend their interests first before promoting their vision of the world.'s Thierry Meyssan describes their respective positions before the fight begins.

The US withdrawal from Syria, even if it was immediately corrected, indicates with certainty that Washington no longer intends to be the world’s policeman, the "necessary Empire". It destabilized without delay all the rules of international relations.

We have entered a period of transition during which each major power is pursuing a new agenda. Here are the main ones.

The Three "Greats"

The United States of America

The collapse of the Soviet Union could have caused the collapse of the United States, since the two empires were leaning on each other. This was not the case. President George Bush Sr. ensured with Operation Desert Storm that Washington became the undisputed leader of all nations, then demobilized 1 million soldiers and proclaimed the quest for prosperity.

Transnational corporations then signed a pact with Deng Xiaoping to have their products manufactured by Chinese workers, who were paid twenty times less than their American counterparts. This led to a considerable development of international freight transport, followed by the gradual disappearance of jobs and the middle classes in the United States. Industrial capitalism was replaced by financial capitalism.

At the end of the 1990s, Igor Panarin, a professor at the Russian Diplomatic Academy, analyzed the economic and psychological collapse of American society. He hypothesized that the country would break up along the lines of what had happened to the Soviet Union with the emergence of new states. To repel the collapse, Bill Clinton freed his country from international law with NATO’s aggression against Yugoslavia. As this effort proved insufficient, US personalities imagined adapting their country to financial capitalism and organizing, by force, international trade so that the coming period would be a "new American century". With George Bush Jr., the United States abandoned its position as a leading nation and tried to transform itself into an absolute unipolar power. They launched the "endless war" or "war on terrorism" to destroy one by one all state structures in the "broader Middle East". Barack Obama continued this quest by associating a host of allies with it.

This policy paid off, but only a very few benefited, the "super-rich". The Americans responded by electing Donald Trump as president of the federal state. He broke with his predecessors and, like Mikhail Gorbachev in the USSR, tried to save the United States by relieving it of its most costly commitments. He boosted the economy by encouraging national industries against those that had relocated their jobs. He subsidized the extraction of shale oil and managed to take control of the world hydrocarbon market despite the cartel formed by OPEC and Russia. Aware that his army is first and foremost a huge bureaucracy, wasting a huge budget on insignificant results, he stopped supporting Daesh and the PKK, negotiating with Russia a way to end the "endless war" with as little loss as possible.

In the coming period, the United States will be driven primarily by the need to save on all its actions abroad, until it abandons them if necessary. The end of imperialism is not a choice, but an existential question, a survival reflex.

The People’s Republic of China

After Zhao Ziyang’s attempted coup d’état and the Tiananmen uprising, Deng Xioping began his "journey south". He announced that China would continue its economic liberalization by entering into contracts with US multinationals.

Jiang Zemin continued on this path. The coast became a "workshop of the world", causing gigantic economic development. Gradually he cleaned the Communist Party of its caciques and ensured that well-paid jobs extended inland. Hu Jintao, concerned about a "harmonious society", repeals the taxes paid by peasants in the interior regions still not affected by economic development. But he failed to control the regional authorities and fell into corruption.

Xi Jinping proposed to open up new markets by building a huge project of international trade routes, the "Silk Roads". However, this project came too late because, unlike in antiquity, China no longer offers original products, but what transnational corporations sell at a lower price. This project was welcomed as a blessing by poor countries, but feared by the rich who are preparing to sabotage it. Xi Jinping is taking up positions in all the islets his country had abandoned in the China Sea, during the collapse of the Qing Empire and the occupation by the eight foreign armies. Aware of the destructive power of the West, he formed an alliance with Russia and refrained from any international political initiative.

In the coming period, China should affirm its positions in international fora, bearing in mind what the colonial empires imposed on it in the 19th century. But it should refrain from military intervention and remain a strictly economic power.

The Russian Federation

When the USSR collapsed, the Russians believed they would save themselves by adhering to the Western model. In fact, Boris Yeltsin’s team, trained by the CIA, organized the looting of collective property by a few individuals. In two years, about a hundred of them, 97% of them from the Jewish minority, took everything available and became billionaires. These new oligarchs fought each other mercilessly with machine guns and attacks in the middle of Moscow, while President Yeltsin bombed parliament. Without a real government, Russia was nothing more than a wreck. Warlords and jihadists armed by the CIA organized the secession of Chechnya. The standard of living and life expectancy collapsed.

In 1999, FSB Director Vladimir Putin rescued President Yeltsin from an investigation for corruption. In exchange, he was appointed President of the Council of Ministers; a position he used to force the President to resign and get himself elected. He put in place a vast policy of state restoration: he put an end to the civil war in Chechnya and methodically killed all the oligarchs who refused to comply with the state. The return of order was also the end of the Russian Western fantasy. Living standards and life expectancy improved.

Having restored the rule of law, Vladimir Putin did not stand for re-election after two consecutive terms. He supported a pale law professor, worshipped by the United States, Dmitry Medvedev, to succeed him. But not intending to leave power in weak hands, he was appointed Prime Minister until his re-election as President in 2012. Wrongly believing that Russia would collapse again, Georgia attacked South Ossetia, but instantly found Prime Minister Putin in its path. He then saw the pitiful state of the Red Army, but managed to overcome it thanks to the effect of surprise. Re-elected President, he focused on defence reform. He retired hundreds of thousands of officers, often disillusioned and sometimes drunk, and placed the Tuvan general (Turkish-speaking Siberian) Sergei Choïgou in the Ministry of Defence.

Adopting a traditional Russian management style, Vladimir Putin separated the civilian budget from part of the military budget. The first is voted by the Duma, the second is secret. He restored military research, while the United States imagined that it would no longer have to invest in this area. He tested a number of new weapons before deploying the new Red Army to help Syria. He experimented with his new weapons in combat situations and decided which ones would be produced and which ones would be abandoned. He organized a quarterly rotation of his troops so that all of them, one after the other, would become stronger. The Russian Federation, which in 1991 was nothing more than nothing, became the world’s leading military power in eighteen years.

At the same time, he used the Nazi coup d’état in Ukraine to reclaim Crimea, a Russian territory administratively linked to Ukraine by Nikita Khrushchev. He then faced a campaign of European Union agricultural sanctions that he used to create self-sufficient domestic production.

He forged an alliance with China and forced it to modify its Silk Roads project by integrating the communication needs of Russian territory to form an "Extended Eurasia Partnership".

In the coming years, Russia will try to reorganise international relations on two bases: to separate political and religious powers; to restore international law on the basis of the principles formulated by Tsar Nicholas II.

Western Europeans

The United Kingdom of Great Britain and Northern Ireland

When the USSR fell, the United Kingdom subscribed with reservations to the Maastricht Treaty. Conservative Prime Minister John Major intended to take advantage of the supranational state under construction while keeping his currency out of the way. So he rejoiced when George Soros attacked the Pound and forced it out of the EMS ("monetary snake"). His successor, Labourist Tony Blair, restored full independence to the Bank of England and considered leaving the EU to join NAFTA. He transformed the defence of his country’s interests by substituting references to human rights for respect for international law. He promoted the US policies of Bill Clinton, then George Bush Jr., encouraging and justifying the enlargement of the European Union, the "humanitarian war" against Kosovo, and the overthrow of Iraqi President Saddam Hussein. In 2006, he developed the "Arab Spring" plan and submitted it to the United States.

Gordon Brown hesitated to pursue this policy and tried to regain some room to manoeuvre, but his energy was caught up in the 2008 financial crisis, which he managed to get through. David Cameron implemented, with Barack Obama, the Blair-Bush plan for the "Arab Spring", including the war against Libya, but eventually only partially succeeded in placing the Muslim Brotherhood in power in the broader Middle East. In the end, he resigned after the Brexit voters voted, when the project to join NAFTA was no longer on the agenda.

Theresa May proposed to apply Brexit with regard to the exit of the supranational state from the Maastricht Treaty, but not with regard to the exit from the common market prior to Maastricht. She failed and was replaced by Winston Churchill’s biographer, Boris Johnson. He decided to leave the European Union completely and to reactivate the kingdom’s traditional foreign policy: the fight against any competing state on the European continent.

If Boris Johnson remains in power, the United Kingdom should in the coming years try to pit the European Union and the Russian Federation against each other.

The French Republic

François Mitterrand did not understand the dislocation of the USSR, going so far as to support the generals’ putsch against his Russian counterpart, Mikhail Gorbachev. In any case, he saw an opportunity to build a European supranational state, big enough to compete with the USA and China in the continuity of the Napoleonic attempt. Together with Chancellor Helmut Kohl, he promoted German unification and the Maastricht Treaty. Worried about this United States of Europe project, President Bush Sr, convinced of the "Wolfowitz doctrine" of preventing the emergence of a new challenger to the US leadership, forced him to accept NATO’s protection of the EU and its extension to former members of the Warsaw Pact. François Mitterrand used cohabitation and the Gaullist Minister of the Interior, Charles Pasqua, to fight the Muslim Brotherhood that the CIA had made him accept in France and that MI6 used to oust France from Algeria.

Jacques Chirac developed French deterrence by completing air nuclear tests in the Pacific before moving on to simulations and signing the Comprehensive Nuclear-Test-Ban Treaty (CTBT). At the same time, he adapted the armies to NATO’s needs by ending compulsory military service and integrating the Alliance’s Military Committee (planning). He supported NATO’s initiative against Yugoslavia (Kosovo war), but - after reading and studying 9/11 The Big Lie [1]- took the lead in global opposition to aggression against Iraq. This episode allowed him to bond with Chancellor Helmut Kohl and to advance the European supranational state, which he always conceived as a tool of independence around the Franco-German couple. Disrupted by the assassination of his business partner, Rafik Hariri, he turned against Syria, which the United States referred to as the mastermind behind the murder.

Advocating a radically different policy, Nicolas Sarkozy placed the French army under US command via NATO’s Integrated Command. He tried to enlarge the French area of influence by organizing the Union for the Mediterranean, but this project did not work. He proved his worth by overthrowing Laurent Bagbo in Côte d’Ivoire and, although he was overtaken by Arab springs in Tunisia and Egypt, he led NATO’s operation against Libya and Syria. However, for the sake of realism, he noted the Syrian resistance and withdrew from the theatre of operation. He continued the construction of the United States of Europe by having the Lisbon Treaty adopted by Parliament, even though the voters had rejected the same text under the name of the "European Constitution". In reality, the modification of institutions, which are supposed to become more effective with 27 Member States, is profoundly transforming the supra-national State, which can now impose its will on Member States.

Coming to power without being prepared for it, François Hollande followed in Nicolas Sarkozy’s footsteps in a somewhat rigid way, forcing him to adopt the latter¹s ideology. He signed all the treaties that his predecessor had negotiated - including the European Budget Pact allowing Greece to be sanctioned - adding to them each time, as if to apologise for his reversal, a declaration setting out his own point of view, but without binding force. Thus he authorized the establishment of NATO military bases on French soil, putting a definitive end to the Gaullist doctrine of national independence. Or he continued the policy of aggression against Syria, making a verbal overbid before doing nothing on the White House’s orders. He assigned the French Army a mission in the Sahel, as a ground-based substitute for AfriCom. Finally, he justified the CO2 emissions trading exchange by the Paris Climate Agreement.

Elected thanks to the American investment fund KKR, Emmanuel Macron is first and foremost an advocate of globalization according to Bill Clinton, George Bush Jr. and Barack Obama. However, he quickly adopted the vision of François Mitterrand and Jacques Chirac according to which only a European supranational state would allow France to continue to play a significant international role, but in its Sarkozy-Holland version: the Union allows constraint. These two lines sometimes lead to contradictions, particularly with regard to Russia. However, they are united in a condemnation of the nationalism of the Member States of the European Union, a short Brexit, or a desire to restore trade with Iran.

In the coming years, France should measure its decisions in terms of their impact on the building of the European Union. It will seek as a priority to ally itself with any power working in this direction.

Federal Republic of Germany

Chancellor Helmut Kohl saw the break-up of the Soviet Empire as an opportunity to bring the two Germanies together. He obtained the green light from France in exchange for German support for the European Union’s single currency project, the euro. He also obtained the agreement of the United States, which saw it as a way to divert the East German army into NATO despite the promise made to Russia not to allow the German Democratic Republic to join.

Once German reunification was achieved, Chancellor Gerhard Schröder raised the question of his country’s international role, still under attack from its defeat in the Second World War. Although Germany is no longer militarily occupied by the four major powers, it nevertheless hosts huge US garrisons and the headquarters of EuCom and soon AfriCom. Gerhard Schöder used the "humanitarian" war against Kosovo to legally deploy German troops out of the country for the first time since 1945. But he refused to recognize this territory conquered by NATO as a state. Similarly, he is very strongly committed alongside President Chirac against the United States-British war in Iraq, stressing that there is no evidence that President Saddam Hussein was involved in the attacks of September 11th. He tried to influence European integration in a peaceful way. He therefore strengthened energy ties with Russia and proposed a federal Europe (including Russia in the long term) based on the German model, but he met with opposition from France, which is very attached to the project of a supra-national state.

Chancellor Angela Merkel returned to the politics of her mentor Helmut Kohl, who handed her over in one night from her responsibilities at the Communist Youth of Democratic Germany to the Federal Government of Germany. Closely monitored by the CIA, which is not sure how to define her, she strengthened Germany’s ties with Israel and Brazil. In 2013, on Hillary Clinton’s proposal, she asked Volker Pethes to study the possibility of developing the German army to play a central role in CentCom if the United States moved its troops to the Far East. She then commissioned studies on how German officers could supervise the armies of Central and Eastern Europe and asked Volker Perthes to write a plan for Syria’s surrender. Very attached to Atlanticist and European structures, she distanced herself from Russia and supported the Nazi coup d’état in Ukraine. In order to be effective, she required that the European Union impose its will on small Member States (Lisbon Treaty). She was very tough during the Greek financial crisis and patiently placed her pawns in the European bureaucracy until Ursula von der Leyen was elected President of the European Commission. When the United States withdrew from northern Syria, she immediately responded by proposing to NATO to send the German army to replace it in accordance with the 2013 plan.

In the coming years, Germany should focus on the possibilities of military intervention in the framework of NATO, particularly in the Middle East, and be wary of the project of a centralised European super-national state.


It is very strange to hear today about "multilateralism" and "isolationism" or "universalism" and "nationalism". These questions do not arise because everyone has known since the Hague Conference (1899) that technological progress has made all nations in solidarity. This logorrhoea does not hide our inability to admit the new power relations and to envisage a world order that is as unjust as possible.

Only the three Great Powers can hope to have the means to implement their policies. They can only achieve their ends without war by following the Russian line based on international law. However, the danger of internal political instability in the United States raises more than ever the risk of a generalized confrontation.

When they left the Union, the British were forced to join the United States (which Donald Trump rejected) or to disappear politically. While Germany and France, which are losing ground, have no choice but to build the European Union. However, for the time being, they assess the time available very differently and consider it in two incompatible ways, which could lead them to disrupt the European Union themselves.

Tyler Durden Tue, 11/19/2019 - 23:25
Published:11/19/2019 10:35:53 PM
[Markets] Impeach The Government: Rogue Agencies Have Been Abusing Their Powers For Decades Impeach The Government: Rogue Agencies Have Been Abusing Their Powers For Decades

Authored by John Whitehead via The Rutherford Institute,

“When a man unprincipled in private life[,] desperate in his fortune, bold in his temper . . . despotic in his ordinary demeanour - known to have scoffed in private at the principles of liberty - when such a man is seen to mount the hobby horse of popularity - to join in the cry of danger to liberty - to take every opportunity of embarrassing the General Government & bringing it under suspicion - to flatter and fall in with all the non sense of the zealots of the day - It may justly be suspected that his object is to throw things into confusion that he may ‘ride the storm and direct the whirlwind.’

- Alexander Hamilton

By all means, let’s talk about impeachment.

To allow the President or any rogue government agency or individual to disregard the rule of law whenever, wherever and however it chooses and operate “above the law” is exactly how a nation of sheep gives rise to a government of wolves.

To be clear: this is not about Donald Trump.

Or at least it shouldn’t be just about Trump.

This is a condemnation of every government toady at every point along the political spectrum—right, left and center—who has conspired to expand the federal government’s powers at the expense of the citizenry.

For too long now, the American people have played politics with their principles and turned a blind eye to all manner of wrongdoing when it was politically expedient, allowing Congress, the White House and the Judiciary to wreak havoc with their freedoms and act in violation of the rule of law.

“We the people” are paying the price for it now.

We are paying the price every day that we allow the government to continue to wage its war on the American People, a war that is being fought on many fronts: with bullets and tasers, with surveillance cameras and license readers, with intimidation and propaganda, with court rulings and legislation, with the collusion of every bureaucrat who dances to the tune of corporate handouts while on the government’s payroll, and most effectively of all, with the complicity of the American people, who continue to allow themselves to be easily manipulated by their politics, distracted by their pastimes, and acclimated to a world in which government corruption is the norm.

Don’t keep falling for the Deep State’s ploys.

This entire impeachment process is a manufactured political circus—a shell game—aimed at distracting the public from the devious treachery of the American police state, which continues to lock down the nation and strip the citizenry of every last vestige of constitutional safeguards that have historically served as a bulwark against tyranny.

Has President Trump overstepped his authority and abused his powers?

Without a doubt.

Then again, so did Presidents Obama, Bush, Clinton, and almost every president before them.

Trump is not the first president to weaken the system of checks and balances, sidestep the rule of law, and expand the power of the president. He is just the most recent.

If we were being honest and consistent in holding government officials accountable, you’d have to impeach almost every president in recent years for operating “above the law,” unbound by the legislative or judicial branches of the government.

When we refer to the “rule of law,” that’s constitutional shorthand for the idea that everyone is treated the same under the law, everyone is held equally accountable to abiding by the law, and no one is given a free pass based on their politics, their connections, their wealth, their status or any other bright line test used to confer special treatment on the elite.

When the government and its agents no longer respect the rule of law—the Constitution—or believe that it applies to them, then the very contract on which this relationship is based becomes invalid.

Although the Constitution requires a separation of powers between the executive, legislative and judicial branches of government in order to ensure accountability so that no one government agency becomes all-powerful, each successive president over the past 30 years has, through the negligence of Congress and the courts, expanded the reach and power of the presidency by adding to his office’s list of extraordinary orders, directives and special privileges.

All of the imperial powers amassed by Barack Obama and George W. Bush—to kill American citizens without due process, to detain suspects indefinitely, to strip Americans of their citizenship rights, to carry out mass surveillance on Americans without probable cause, to suspend laws during wartime, to disregard laws with which he might disagree, to conduct secret wars and convene secret courts, to sanction torture, to sidestep the legislatures and courts with executive orders and signing statements, to direct the military to operate beyond the reach of the law, to operate a shadow government, and to act as a dictator and a tyrant, above the law and beyond any real accountability—were inherited by Donald Trump.

These presidential powers—acquired through the use of executive orders, decrees, memorandums, proclamations, national security directives and legislative signing statements and which can be activated by any sitting president—enable past, president and future presidents to act as a dictator by operating above the law and beyond the reach of the Constitution.

Yet in operating above the law, it’s not just the president who has become a law unto himself.

The government itself has become an imperial dictator, an overlord, a king.

This is what you might call a stealthy, creeping, silent, slow-motion coup d’état.

This abuse of power has been going on for so long that it has become the norm, the Constitution be damned.

There are hundreds—make that thousands—of government bureaucrats who are getting away with murder (in many cases, literally) simply because the legislatures, courts and the citizenry can’t be bothered to make them play by the rules of the Constitution.

Unless something changes in the way we deal with these ongoing, egregious abuses of power, the predators of the police state will continue to wreak havoc on our freedoms, our communities, and our lives.

It’s the nature of the beast: power corrupts.

Worse, as 19th-century historian Lord Acton concluded, absolute power corrupts absolutely.

It doesn’t matter whether you’re talking about a politician, an entertainment mogul, a corporate CEO or a police officer: give any one person (or government agency) too much power and allow him or her or it to believe that they are entitled, untouchable and will not be held accountable for their actions, and those powers will eventually be abused.

We’re seeing this dynamic play out every day in communities across America.

A cop shoots an unarmed citizen for no credible reason and gets away with it. A president employs executive orders to sidestep the Constitution and gets away with it. A government agency spies on its citizens’ communications and gets away with it. An entertainment mogul sexually harasses actors and actresses and gets away with it. The U.S. military bombs civilian targets and gets away with it.

Abuse of power—and the ambition-fueled hypocrisy and deliberate disregard for misconduct that make those abuses possible—works the same whether you’re talking about sexual harassment, government corruption, or the rule of law.

Twenty years ago, I was a lawyer for Paula Jones, who sued then-President Clinton for dropping his pants and propositioning her for sex when he was governor of Arkansas. That lawsuit gave rise to revelations about Clinton’s affair with Monica Lewinsky, a 21-year-old intern at the White House, and his eventual impeachment for lying about it under oath.

As Dana Milbank writes for The Washington Post:

We didn’t know it at the time, of course. But in Bill Clinton were the seeds of Donald Trump. With 20 years of hindsight, it is clear… Clinton’s handling of the Monica Lewinsky affair was a precursor of the monstrosity we now have in the White House: dismissing unpleasant facts as “fake news,” self-righteously claiming victimhood, attacking the press and cloaking personal misbehavior in claims to be upholding the Constitution…. Clinton set us on the path, or at least accelerated us down the path, that led to today.

It doesn’t matter what starts us down this path, whether it’s a president insisting that he get a free pass for sexually harassing employees, or waging wars based on invented facts, or attempting to derail an investigation into official misconduct.

If we continue down this road, there can be no surprise about what awaits us at the end.

After all, it is a tale that has been told time and again throughout history about how easy it is for freedom to fall and tyranny to rise, and it often begins with one small, seemingly inconsequential willingness on the part of the people to compromise their principles and undermine the rule of law in exchange for a dubious assurance of safety, prosperity and a life without care.

For example, 86 years ago, the citizens of another democratic world power elected a leader who promised to protect them from all dangers. In return for this protection, and under the auspice of fighting terrorism, he was given absolute power.

This leader went to great lengths to make his rise to power appear both legal and necessary, masterfully manipulating much of the citizenry and their government leaders.

Unnerved by threats of domestic terrorism and foreign invaders, the people had little idea that the domestic turmoil of the times—such as street rioting and the fear of Communism taking over the country—was staged by the leader in an effort to create fear and later capitalize on it.

In the ensuing months, this charismatic leader ushered in a series of legislative measures that suspended civil liberties and habeas corpus rights and empowered him as a dictator.

On March 23, 1933, the nation’s legislative body passed the Enabling Act, formally referred to as the “Law to Remedy the Distress of the People and the Nation,” which appeared benign and allowed the leader to pass laws by decree in times of emergency.

What it succeeded in doing, however, was ensuring that the leader became a law unto himself.

The leader’s name was Adolf Hitler, and the rest, as they say, is history.

Yet history has a way of repeating itself.

Hitler’s rise to power should serve as a stark lesson to always be leery of granting any government leader sweeping powers.

Clearly, we are not heeding that lesson.

“How lucky it is for rulers,” Adolf Hitler once said, “that men cannot think.”

The horrors that followed in Nazi Germany might have been easier to explain if Hitler had been right. But the problem is not so much that people cannot think but that they do not think. Or if they do think, as in the case of the German people, that thinking becomes muddled and easily led.

Hitler’s meteoric rise to power, with the support of the German people, is a case in point.

On January 30, 1933, Hitler was appointed chancellor of Germany in full accordance with the country’s legal and constitutional principles. When President Paul von Hindenburg died the following year, Hitler assumed the office of president, as well as that of chancellor, but he preferred to use the title Der Füehrer (the leader) to describe himself. This new move was approved in a general election in which Hitler garnered 88 percent of the votes cast.

It cannot be said that the German people were ignorant of Hitler’s agenda or his Nazi ideology. Nazi literature, including statements of the Nazi plans for the future, had papered the country for a decade before Hitler came to power. In fact, Hitler’s book Mein Kampf, which was his blueprint for totalitarianism, sold more than 200,000 copies between 1925 and 1932.

Clearly, the problem was not that the German people did not think but that their thinking was poisoned by the enveloping climate of ideas that they came to accept as important.

At a certain point, the trivial became important, and obedience to the government in pursuit of security over freedom became predominant.

As historian Milton Mayer recounts in his seminal book on Hitler’s rise to power, They Thought They Were Free, “Most of us did not want to think about fundamental things and never had. There was no need to. Nazism gave us some dreadful, fundamental things to think about—we were decent people-—and kept us so busy with continuous changes and ‘crises’ and so fascinated, yes, fascinated, by the machinations of the ‘national enemies’, without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us.”

The German people were not oblivious to the horrors taking place around them. As historian Robert Gellately points out, “[A]nyone in Nazi Germany who wanted to find out about the Gestapo, the concentration camps, and the campaigns of discrimination and persecutions need only read the newspapers.”

The warning signs were definitely there, blinking incessantly like large neon signs.

“Still,” Gellately writes, “the vast majority voted in favor of Nazism, and in spite of what they could read in the press and hear by word of mouth about the secret police, the concentration camps, official anti-Semitism, and so on. . . . [T]here is no getting away from the fact that at that moment, ‘the vast majority of the German people backed him.’”

Half a century later, the wife of a prominent German historian, neither of whom were members of the Nazi party, opined:

“[O]n the whole, everyone felt well. . . . And there were certainly eighty percent who lived productively and positively throughout the time. . . . We also had good years. We had wonderful years.”

In other words, as long as their creature comforts remained undiminished, as long as their bank accounts remained flush, as long as they weren’t being discriminated against, persecuted, starved, beaten, shot, stripped, jailed and turned into slave labor, life was good.

This is how tyranny rises and freedom falls.

The American kleptocracy (a government ruled by thieves) has sucked the American people down a rabbit hole into a parallel universe in which the Constitution is meaningless, the government is all-powerful, and the citizenry is powerless to defend itself against government agents who steal, spy, lie, plunder, kill, abuse and generally inflict mayhem and sow madness on everyone and everything in their sphere.

This dissolution of that sacred covenant between the citizenry and the government—establishing “we the people” as the masters and the government as the servant—didn’t happen overnight. It didn’t happen because of one particular incident or one particular president. It is a process, one that began long ago and continues in the present day, aided and abetted by politicians who have mastered the polarizing art of how to “divide and conquer.”

Unfortunately, there is no magic spell to transport us back to a place and time where “we the people” weren’t merely fodder for a corporate gristmill, operated by government hired hands, whose priorities are money and power.

As I make clear in my book Battlefield America: The War on the American People, our freedoms have become casualties in an all-out war on the American people.

So yes, let’s talk about impeachment, but don’t fall for the partisan shell game that sets Trump up as the fall guy for the Deep State’s high crimes and misdemeanors.

Set your sights higher: impeach the government for overstepping its authority, abusing its power, and disregarding the rule of law.

Tyler Durden Tue, 11/19/2019 - 22:45
Published:11/19/2019 10:03:55 PM
[Markets] Asia Markets: Asian markets pull back after weak Japanese trade data Shares retreated in Asia on Wednesday after Japan reported its worst monthly decline in exports in three years, putting pressure on the economy as growth slows following a sales tax hike.
Published:11/19/2019 10:03:55 PM
[Markets] Baby Boomers Face Most Economic Insecurity In Democratic States Baby Boomers Face Most Economic Insecurity In Democratic States

New estimates from the 2019 Elder Index, calculated by the Gerontology Institute at the University of Massachusetts Boston, show that older Americans living alone in mostly Democratic Northeast states are at risk of not having enough financial resources to cover expenses, reported Bloomberg

The Elder Index tracks the income needed for baby boomers to cover basic needs. The average older adult without a mortgage needs about $21,000 per year to live or about $31,800 if married. 

The 2019 Elder Index details how older adults living in Northeast states, with several regional exceptions of Hawaii and California, are at the highest risk of financial instability. Some of the costliest states are Democratic ones, while the most affordable ones are Republican. 

A well-funded retirement account of a boomer generally has a mix of bonds and stocks that produce income, with the compliments of social security payouts. But since the Federal Reserve has robbed savers over the last ten years by setting interest rates lower than usual -- income for boomers has been rather depressing -- contributing to their economic demise.

Economic stress among older Americans has been increasing in the last decade, and at least 25% of boomers are struggling with deteriorating health, the Centers for Disease Control and Prevention has said. 

There are about 77 million boomers across the country; many of them are becoming a financial drain on the system. At least 33% of older folks have zero savings, and it could explain why they're all becoming Lyft and Uber drivers, crowding out insolvent millennials. 

The take away from this report, if you're a boomer and broke, don't live in a Democrat state. If you already do, move while you still can. 


Tyler Durden Tue, 11/19/2019 - 21:45
Published:11/19/2019 9:04:14 PM
[Markets] Dow Jones Futures Fall On China Tensions; Pinduoduo, Target Earnings On Tap Futures fell on China tensions over Hong Kong. Facebook and Visa broke out Tuesday, expanding stock market leadership. Pinduoduo and Target earnings are due. Published:11/19/2019 8:34:28 PM
[Markets] C.J. Hopkins: Reclaiming Your Inner Fascist C.J. Hopkins: Reclaiming Your Inner Fascist

Authored (satirically) by C.J.Hopkins via The Unz Review,

OK, we need to talk about fascism. Not just any kind of fascism. A particularly insidious kind of fascism. No, not the fascism of the early 20th Century. Not Mussolini’s National Fascist Party. Not Hitler’s NSDAP. Not Francoist fascism or any other kind of organized fascist movement or party. Not even the dreaded Tiki-torch Nazis.

It’s the other kind of fascism we need to talk about. The kind that doesn’t come goose-stepping up the street waving big neo-Nazi flags. The kind we don’t recognize when we’re looking right at it.

It’s like that joke about the fish and the water … we don’t recognize it because we’re swimming in it. We’re surrounded by it. We are inseparable from it. From the moment we are born, we breathe it in.

We are taught it by our parents, who were taught it by their parents. We are taught it again by our teachers in school. It is reinforced on a daily basis at work, in conversations with friends, in our families and our romantic relationships. We imbibe it in books, movies, TV shows, advertisements, pop songs, the nightly news, in our cars, at the mall, the stadium, the opera … everywhere, because it is literally everywhere.

It doesn’t look like fascism to us. Fascism only looks like fascism when you’re standing outside of it, or looking back at it. When you are in it, fascism just looks like “normality,” like “reality,” like “just the way it is.”

We (i.e., Americans, Brits, Europeans, and other citizens of the global capitalist empire) get up in the morning, go to work, shop, pay the interest on our debts, and otherwise obey the laws and conform to the mores of a system of power that has murdered countless millions of people in pursuit of global-hegemonic dominance. It has perpetrated numerous wars of aggression. Its military occupies most of the planet. Its Intelligence agencies (i.e., secret police) operate a worldwide surveillance apparatus that can identify, target, and eliminate anyone, anywhere, often by remote control. Its propaganda network never sleeps, nor is there any real way to escape its constant emotional and ideological conditioning.

The fact that the global capitalist empire does not call itself an empire, and instead calls itself “democracy,” doesn’t make it any less of an empire. The fact that it uses terms like “regime change” instead of “invasion” or “annexation” makes very little difference to its victims. Terms like “security,” “stability,” “intervention,” “regime change,” and so on are not meant for its victims. They are meant for us … to anesthetize us.

The empire is “regime-changing” Bolivia currently. It has “regime-changed” most of Latin America at one time or another since the Second World War. It “regime-changed” Iraq, Libya, Yugoslavia, Indonesia … the list goes on. It very much wants to “regime-change” Iran, which it “regime-changed” back in the 1950s, before the Iranians “regime-changed” it back. It would love to “regime-change” Russia and China, but their ICBMs make that somewhat impractical. Basically, the empire has been “regime-changing” everyone it can since the end of the Cold War. It has run into a little bump in Syria, and in Venezuela, but not to worry, it will get back there and finish up eventually.

Now, let’s be clear about this “regime-change” business. We’re talking about invading other people’s countries, and orchestrating and sponsoring coups, or otherwise overthrowing their governments, and murdering, torturing, and oppressing people. Sending in terrorists, death squads, and such. We have organizations that train guys to do that, i.e., to round people up, take them out to the jungle, or the woods, or wherever, rape the women, and then summarily shoot everyone in the head. We pay for this kind of thing with our taxes, and our investments in the global corporations that our militaries and intelligence agencies serve. We know this is happening. We can google this stuff. We know “where the trains are going,” as it were.

And yet, we do not see ourselves as monsters.

The Nazis didn’t see themselves as monsters. They saw themselves as heroes, as saviors, or just as regular Germans leading regular lives. When they looked at the propaganda posters which surrounded them (as the Internet surrounds us today), they didn’t see sadistic mass-murderers and totalitarian psychopathic freaks. They saw normal people, admirable people, who were making the world a better place.

They saw themselves. They saw “the good guys.”

This is primarily how propaganda works. It isn’t meant to fool anybody. It is there to represent “normality” (whatever “normality” happens to be in whatever empire one happens to inhabit). It is Power’s way of letting us know what it wants us to believe, how it wants us to behave, who our official enemies are. Its purpose isn’t to mislead or deceive us. It is an edict, a command, an ideological model … to which we are all expected to conform. Conform to this ideological model, and one is rewarded, or at least not punished. Deviate from it, and suffer the consequences.

It is a question of obedience, not one of truth.

This is why it doesn’t matter that there is no actual “Attack on America,” and that the Russians didn’t “hack,” “subvert,” “meddle in,” or otherwise significantly “influence” the 2016 presidential election or otherwise put Donald Trump in office. John Brennan and the CIA say they did, and the corporate media say they did, so all Good Americans have to pretend to believe it. Likewise, it also doesn’t matter if an organization like the OPCW collaborated with the empire’s regime-change specialists who staged a “chemical weapons attack” on helpless women and children in Douma (because, no matter what the empire did or didn’t do, Assad is a Russian-backed, baby-gassing devil!), or if The Guardian just makes up stuff about Julian Assange out of whole cloth and prints it as news.

This is also why, when The Guardian runs an enormous color propaganda photo of a beneficent-looking Hillary Clinton and her soon-to-be-Democratic senator daughter posing as our last line of defense against the Invasion of the Putin-Nazis, and as the future of Western democracy, and whatever, on the cover of its cultural Review, this isn’t perceived as propaganda. Never mind that this woman (i.e., Hillary) is directly responsible for the deaths and misery of God knows how many innocent people in the course of her lucrative service to the empire. Never mind that this is the same exact person that sadistically cackled on national television when the empire’s associates anally knife-raped and murdered Muammar Gaddafi in Libya, and then transformed a developed African country into a hellish human-slavery market.

For fascists (and authoritarian personalities generally), facts are completely beside the point. The point is to robotically conform to the ideology (or hysterical ravings) of whatever leader or system of power happens to be in charge of things.

Authoritarian personality types are skilled at determining exactly who that is (i.e, who is really in charge of things) and obsequiously currying favor with them. For some, this is an innate talent; others have this talent conditioned into them (or beaten into them) over the course of years. Either way, the result is the same.

Put a bunch of random people together in a group and give them a problem to solve, or a complex project or objective to accomplish. Don’t give them any organizational guidance, just put them in a room and watch what happens.

The first thing that happens is … a “leader” emerges. Someone (or a few people) decides that someone needs to be in charge of this project, and they feel pretty strongly that it should be them. If more than one such “leader” emerges, or if the need for a leader itself is challenged, a struggle for power will immediately ensue. The aspiring “leaders” will compete for the support of the “followers” in the group. Sides will be taken. Eventually, a “leader” will be chosen. Occasionally, this will happen openly, but, more often than not, it will happen unconsciously. Someone in the group will want to dominate … and the rest of the group will want them to dominate. They will experience discomfort until a “leader” is established, and they will feel an enormous sense of relief once one is, and they can surrender their autonomy.

I assume you’re familiar with the Milgram experiment, but, if not, you should probably read up on that, and maybe read Adorno’s The Authoritarian Personality. It’s a bit outdated, and over-focused on the Nazis (it was originally published in 1950), but I think you’ll get the general idea. Once you’ve done that, turn on your television, or your radio, or scan the news on the Internet, or walk down any big city street and compare the content on the digital billboards, movie posters, and advertisements to historical fascist propaganda … that is, if your boss will let you leave the workplace long enough to do that, which he probably will if you ask him in that special way you have learned over time that he likes and generally tends to respond to.

Sorry, I didn’t mean to get inside your mind. That’s kind of a fascistic thing to do.

Look, the point is, we all have an “Inner Fascist,” with whom we are either acquainted or not. I’m a playwright and a novelist, which means I’ve got a big, fat, Sieg-heiling Inner Fascist goose-stepping around inside my head. I invent whole worlds, which I dictatorially control. I put people in them and make them say things. It doesn’t get much more fascistic than that. The way I see it, my art is how I sublimate my Inner Fascist, so that he doesn’t run around invading Poland, exterminating the Jews, or “regime-changing” Bolivia.

I’m not a psychiatrist, or a fascism expert, but I figure this is probably the most we can do … recognize, acknowledge, and find some way to sublimate our Inner Fascists, because, I guarantee you, they’re not going away. (If you don’t believe me, go watch that Planet Earth episode featuring the fascist chimpanzees.) Seriously, I recommend you do this. Get acquainted with your Inner Fascist, in an appropriate set and setting, of course. Give him something safe to dominate and then let him go totally totalitarian. You’ll be doing yourself and the rest of us a favor.

Ironically, it is those who are not acquainted with their Inner Fascists (or who deny they have one) who are usually the first to make a big public show of loudly denouncing “fascism,” brandishing their “anti-fascist” bona fides, accusing other people of being “fascists,” and otherwise desperately projecting their Inner Fascists onto those they hate, and want to silence, if not exterminate. This is one of the hallmarks of repressed Inner Fascism … this compulsion to control what other people think, this desire for complete ideological conformity, this tendency, not to argue with, but rather, to attempt to destroy anyone who disagrees with or questions one’s beliefs.

We all know people who behave this way. If you don’t, odds are, one of them is you.

So, please, if you haven’t done so already, get acquainted with your “Inner Fascist,” and find him something harmless to do, before he … well, you know, starts singing hymns to former FBI directors, or worshipping the CIA, or Obama, or Trump, or Hillary Clinton, or supports the empire’s next invasion, or coup, or just makes a desperate, sanctimonious ass of you both on the Internet.

I’m not kidding. Reclaim your “Inner Fascist.” It might sound crazy, but you will thank me someday.

*  *  *

C. J. Hopkins is an award-winning American playwright, novelist and political satirist based in Berlin. His plays are published by Bloomsbury Publishing (UK) and Broadway Play Publishing (USA). His debut novel, ZONE 23, is published by Snoggsworthy, Swaine & Cormorant Paperbacks. He can be reached at or

Tyler Durden Tue, 11/19/2019 - 21:25
Published:11/19/2019 8:34:28 PM
[Markets] "...And You Thought Recession Risk Was A Thing Of The Past..." "...And You Thought Recession Risk Was A Thing Of The Past..."

Authored by Danielle DiMartino Booth via,

Rabbit Season! Duck Season! Rabbit Season! Duck Season!

  • As the third-quarter earnings season comes to a close with a -2.3% showing on EPS, analysts are more bearish going into the fourth quarter; the weakness looks to spread to six sectors vs. five in the third quarter indicating the industrial slowdown has spread to services

  • Third quarter revenue growth has slowed to levels not seen since 2016’s third quarter while expectations are that the year’s final three months slow further; as with earnings, the quarter-on-quarter weakness is expected to broaden to health care and consumer discretionary

  • In the short-run, companies will likely endeavor to cut costs, including labor, to draw a line under earnings as revenues deteriorate; given revenues are a demand proxy, a concurrent slowing in GDP is also foreseeable

Rabbit Fire was a 1951 Looney Tunes cartoon starring Bugs Bunny, Daffy Duck and Elmer Fudd. The Warner Bros. short was the first to feature the classic feud between Bugs and Daffy. In it, Daffy lures Elmer to Bugs’ burrow, calls down to him, then watches as Elmer shoots at the emerged Bugs, parting his ears. As Elmer aims again, Bugs informs him that it’s not rabbit season, but rather duck season. Daffy storms in irate and attempts to convince Elmer that Bugs is lying. Their conversation breaks down into Bugs engaging Daffy in the verbal play illustrated in today’s title. Of course, Daffy fumbles into saying “duck season” and Elmer fires away.

Whether you are a fan of Bugs or Daffy, there’s another season in the financial market world that’s about to come to a close – earnings season.

Ninety-two percent of S&P 500 companies have reported third-quarter earnings results. Last Friday, FactSet reported that earnings per share (EPS) had declined 2.3% versus a year ago. Industry performance was mixed with five sectors – Energy, Materials, Information Technology, Financials and Consumer Discretionary – reporting year-over-year declines and the other six – Utilities, Health Care, Real Estate, Consumer Staples, Industrials and Communication Services – posting year-over-year gains.

Analysts’ fourth-quarter guidance is more bearish for earnings compared to the third quarter. It’s anticipated that six sectors will decline including Energy, Materials, Industrials, Information Technology, Consumer Discretionary and Consumer Staples. This widened breadth carries a broader cyclical narrative beyond the sectors more closely affected by trade war; it bleeds into the entire consumer space. Implicit are hints of contagion from manufacturing to services that introduce broader labor market risks. And you thought recession risk was a thing of the past just because the yield curve un-inverted.

Cue Bugs and Daffy for an encore with a twist: “Earnings season! Revenue season! Earnings season! Revenue season!” The bottom line (earnings) gets all the attention each quarter. But the top line (revenue) should never be overlooked. For cycle chasers and equity strategists alike, revenue growth is the heartbeat of U.S. economic activity. It proxies Gross Domestic Product (GDP).

FactSet reported that revenue growth slowed to 3.1% in the third quarter, the slowest pace since the 2016’s third quarter. Despite the slowing, the breadth of gains revealed eight sectors expanded with only the remaining soft spots of Energy, Materials and Industrials contracting. Analysts projected a further deceleration in revenues to 2.5% with the same three sectors posting another retrenchment in the fourth quarter. Does this mean that top-line headwinds are, and will be contained to the sectors most exposed to the global growth slowdown and will therefore not spread across the economy to more consumer and service-oriented sectors?

Let’s reserve judgement on that. Instead, look at the trend in revenues from the third to fourth quarters. As the inset table above illustrates, the tamping down in demand will be relatively broad-based. The Consumer Discretionary sector is especially prominent.

To see if the storyline holds beyond equity analysts’ models, we recruited three other macro sources in today’s chart to gauge preliminary top-line guidance for the fourth quarter. Composite indexes that weighted manufacturing and services by their respective industry shares in GDP were utilized for credit managers (NACM), purchasing managers (ISM) and C-suite executives (IHS Markit).

In all three cases, a downshift has been in place for multiple quarters and the fourth quarter looks either close to or weaker than the third quarter. What’s important to note about a broadening slowdown in revenue is that over the short run, more companies could face cost cutting decisions, as opposed to the luxury of cost expansion choices.

Central banks are doing their darnedest to stave off the global slowdown with stimulus injections. Ascertaining clarity on the revenue outlook here at home will be a challenge as we head into an election year. Capex budgets are apt to be hamstrung by tight-fisted management so long as concerns about the top line refuse to fade. And that applies whether you’re in a red state or a blue state or you’re a rabbit or a duck.

Tyler Durden Tue, 11/19/2019 - 20:45
Published:11/19/2019 8:02:09 PM
[Markets] Cannabis Watch: As pot stocks sink, these two guys just raised $120 million to buy Amid the vast ocean of red ink that are marijuana stocks this fall, Mitch Baruchowitz and Peter Lee, who run the blank check company Merida Merger Corp., see an even more vast opportunity to make money.
Published:11/19/2019 7:34:46 PM
[Markets] Swiss Watch Exports To Hong Kong Crash Amid Social Unrest Swiss Watch Exports To Hong Kong Crash Amid Social Unrest

This morning we have some very telling data of the dire economic situation in Hong Kong: Swiss watch exports to Hong Kong crashed in October as social unrest continues to gain momentum in the city as demand for luxury goods evaporates. 

The Federation of the Swiss Watch Industry published a new report Tuesday on Swiss watchmaking for October, detailing how shipments of steel and precious metal watches to Hong Kong plunged by as much as 30%. 

Hong Kong's tourism industry has suffered the worst downturn in a decade, as violent protests shut down streets and major shopping districts. Protests have become more violent in the last several months, forcing many wealthy mainland Chinese to abandon their visit to the city as it plummets into economic and social collapse. 

The city entered a technical recession in the last several weeks, with its retail industry, comprised of the world's luxury brands, experienced some of the worst declines in sales ever.

Watchmakers, particularly ones from Switzerland, have been reeling from the plunge in sales, as at least 30 major shopping malls have had to shut down, on and off across the city for the last five months amid continuing social unrest. 

Luxury goods, such as jewelry, are usually half the cost in Hong Kong than in mainland China, but with protests continuing to spiral out of control, and the tourism industry collapsed as shopping districts are shut down, it seems that the Hong Kong crisis is sparking a slowdown contagion across the world. 

Though Swiss trade with Hong Kong fell, Swiss watchmakers saw global exports increase by 1.5% in October. Growth in the first ten months was around 2.7%, far from last year's annual pace of 6.3%, indicating the global economy has yet to bottom. 


Tyler Durden Tue, 11/19/2019 - 20:25
Published:11/19/2019 7:34:46 PM
[Markets] Why The "Atrophied" U.S. Economy Isn't As Free Or Competitive As You Think Why The "Atrophied" U.S. Economy Isn't As Free Or Competitive As You Think

Author Thomas Philippon, a French professor at New York University, recently set out on a journey to try and figure out just how the intricacies of business works in America.

Upon the conclusion of his research, he determined that the U.S. economy simply isn't as free - or as competitive - as many think, according to FT. What he found was that over the last 20 years, competition and competition policy have "atrophied" with ugly consequences. 

"America is no longer the home of the free-market economy," he concludes. The country isn't as competitive as Europe, its regulators are not more proactive and its new companies aren't much different from their predecessors. 

Thomas Philippon

His book, The Great Reversal, argues for the importance of competition and summarizes the results of his findings:

“First, US markets have become less competitive: concentration is high in many industries, leaders are entrenched, and their profit rates are excessive. Second, this lack of competition has hurt US consumers and workers: it has led to higher prices, lower investment and lower productivity growth. Third, and contrary to common wisdom, the main explanation is political, not technological: I have traced the decrease in competition to increasing barriers to entry and weak antitrust enforcement, sustained by heavy lobbying and campaign contributions.”

His argument is backed up by evidence. Broadband access in the U.S. costs about double what it costs in comparable countries. Profits per passenger on airlines are also far higher in the U.S. than they are overseas.

His analysis shows that “market shares have become more concentrated and more persistent, and profits have increased.”

And, more concentration then translates to higher profits. This has lead to post-tax profit share in the U.S. gross domestic product nearly doubling since the 1990s. 

The increase in market concentration in places like manufacturing can be attributed to competition from China, which drove weaker competitors out of the market. Companies like Walmart, in the 1990s, drove the rate of investment and productivity growth higher in the 1990s while the opposite happened in the 2000's: rising market concentration drove the profits of entrenched companies up and both the investment rate and productivity lower. 

This ugly form of increased concentration means that entry of new businesses has diminished and that the U.S. economy has seen a significant reduction in competition and a corresponding rise in monopoly and oligopoly.

The book often turns to comparisons with the EU. For instance, real GDP per head rose 21% in the U.S. between 1999 and 2017. In the EU, this number stood at 25%. Even in the Eurozone, this number was 19% despite the damage done by its "ineptly handled financial crisis".

Even inequality levels and trends and income distribution are less adverse in the EU. The comparisons seem justified, according to FT: 

In short, comparisons between the EU and the US are justifiable. These show that neither profit margins nor market concentration have exploded upwards in the EU as they have done in the US. The share of wages and salaries in the aggregate incomes — so-called “value-added” — of business has fallen by close to 6 percentage points in the US since 2000, but not at all in the eurozone. This destroys the hypothesis that technology is the main driver of the downward shift in the share of labour incomes. After all, technology (and international trade, as well) affected both sides of the Atlantic roughly equally.

Competition in product markets has become far more effective in the EU over the course of the last 20 or 30 years. It is reflective of purposeful deregulation and a more aggressive and independent competition policy than in the U.S.

But the EU has established more independent regulators than the U.S. would: what is being called a "healthy result" of a mutual distrust within the EU. 

Individual states fear the idea of being vulnerable to the practices of fellow members when it comes to regulation, which is beneficial to countries with weak national regulators. The independence of EU regulators also means that lobbying is far less of a problem overseas. 

Evidence shows that "the higher an EU member country’s product market regulation in 1998, the bigger the sub­sequent decline in such regulation". And the effect is more robust for those in the EU than non-EU members.

Lobbying has much more of an effect in the U.S. Evidence supports that lobbying works, which is exactly why large corporations in the U.S. continue to rely on it. This all boils down to a larger problem of the role of money in U.S. politics. FT writes that "members of Congress spend about 30 hours a week raising money."

The Supreme Court even ruled in 2010 that "companies are persons" and "money is speech". Former representative Mick Mulvaney summed it up in 2018: “If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

Corporate lobbying is two to three times bigger in the U.S. than in the EU. Campaign contributions are about 50 times larger. 

The book also looks at finance, healthcare and technology. In finance, the book finds that the cost of taking in savings and transferring it to end users has stayed at about 2% for a century, regardless of technological developments. The book calls call the industry a "rent-extraction machine".

In healthcare, the book looks at why the U.S. spends far more on healthcare, but has far worse health outcomes than any other high-income country. The book says it is due to "rent-extracting monopolies" in the industry - all the way from doctors, to hospitals, to insurance companies to pharmaceutical businesses. 

In the world of tech, the book touches on the size of major players like Google, Amazon and Apple. The book says that while the weight of these mega-huge companies is no bigger than that of giants in the past, their links to the economy as a whole are far smaller than they ever were.

Tyler Durden Tue, 11/19/2019 - 19:45
Published:11/19/2019 7:04:31 PM
[Markets] China's Annual Aluminum Consumption To Decline For First Time In 30 Years China's Annual Aluminum Consumption To Decline For First Time In 30 Years

China's economy is quickly decelerating, and data last month shows GDP could slip under 6% in 2020.

A structural decline, blended with a global synchronized slowdown, and accelerated by trade tensions with the US, have been blamed for China's deteriorating industrial sector.

New evidence from research firm Antaike, via Reuters, shows China's aluminum consumption is likely to decline for the first time in 30 years as domestic demand plunges and exports slump.

Antaike's senior analyst Shen Lingyan stated at a conference in China's Qingdao city on Wednesday that consumption of aluminum in China would be around 36.55 million tons this year, down 1.2% YoY.

"The first reason is domestic consumption, which will decline by 0.9%. Exports will fall 3%," Shen said at the China Aluminium Week conference.

October export data of China's unwrought aluminum fell to 431,000 tons, the lowest levels since February.

The output of aluminum in China this year has recorded the sharpest decline on record, down 1.6% to 36 million tons, Shen told the conference.

Shen forecasts a 3% increase in aluminum output in 2020 to 37.2 million tons -- though there are currently no signs the global economy is bottoming.

Factory activity in China contracted for a sixth straight month in October. It's likely that in the coming quarters, GDP will dive under 6% as cooling in the manufacturing sector continues.

China Association of Automobile Manufacturer has said the decline of aluminum demand could be linked to the weak automobile sector.

When the world's top aluminum producer records the first consumption decline in nearly three decades -- this should mean the global economy continues to worsen.

As for the global rebound in the economy, one where equity markets around the world have already priced in, it seems that China is no longer able to reflate its all too critical credit impulse, which means the 2016-style rebound everyone was expecting might not exactly happen in early 2020.


Tyler Durden Tue, 11/19/2019 - 19:05
Published:11/19/2019 6:31:59 PM
[Markets] Fat Tire brewer New Belgium is latest to sell in craft-beer buying bonanza Through all the sales of craft breweries to massive beer conglomerates in recent years, New Belgium Brewing appeared ready to hold out. In the end, though, the different route led the Fat Tire brewer to the same destination as other craft breweries that grew too large to do it on their own.
Published:11/19/2019 6:31:58 PM
[Markets] Outside the Box: The success of Medicare Advantage makes it a better policy choice than ‘Medicare for All’ This public-private partnership is delivering high-quality health care at comparatively low cost.
Published:11/19/2019 6:02:15 PM
[Markets] The Margin: Was a $280 million emerald destroyed in California wildfire? PG&E is dubious It would be one of the most valuable gemstones on the planet, lost in the most destructive fire in California history — if it even exists.
Published:11/19/2019 5:51:30 PM
[Markets] Venezuela To Pay Retirees And Pensioners Christmas Bonus In Petro Venezuela To Pay Retirees And Pensioners Christmas Bonus In Petro

Authored by Adrian Zmudzinski via,

Venezuelan President Nicholas Maduro announced that the Christmas bonus of the country’s retirees and pensioners will be paid to them in the national cryptocurrency Petro.

image courtesy of CoinTelegraph

The Twitter profile of local news outlet Venepress reported on Maduro’s remarks on Nov. 17. This particular instance is not the first time that Venezuela pushes Petro into the wallets of pensioners so far.

As Cointelegraph reported in December last year, Venezuela back then has automatically converted pensioners’ bonuses for the year into Petro.

Petro, the future for Venezuelan economy?

The crypto asset in question has been first launched for a pre-sale in February last year and raised concerns among foreign observers from the start. In late August last year, Petro was already scathingly denounced as an opaque “stunt” backed by a centralized and debt-saddled entity.

Still, the national cryptocurrency and cryptocurrencies as a whole are being increasingly pushed by the local government.

As Cointelegraph Spain reported on Nov. 13, the Deputy of the National Constituent Assembly of Venezuela, Francisco Torrealba, said that he believes all currencies will be replaced by cryptocurrencies.

Speaking about Venezuela, Torrealba claimed that the country is facing a great change and Maduro is making a “great contribution” to the country by creating the Petro. He concluded his interview by saying that "everything will be from this currency [the Petro].”

Tyler Durden Tue, 11/19/2019 - 18:45
Published:11/19/2019 5:51:30 PM
[Markets] Dow Jones Futures: Stock Market Leadership Expands Bullishly; Pinduoduo, Target Earnings On Tap Dow Jones futures: Facebook, Visa, Broadcom, Mastercard and Carvana broke out Tuesday, expanding stock market leadership. Pinduoduo and Target earnings are due early Wednesday. Published:11/19/2019 5:34:17 PM
[Markets] Boomers Win Again: Old Americans To Inherit "Unprecedented Amount That Is Incomprehensably Large" Boomers Win Again: Old Americans To Inherit "Unprecedented Amount That Is Incomprehensably Large"

When it comes to the generational conflict at the heart of America's inequality split, there is no contest: the elderly - those between the ages of 65 and 75 who own the bulk of financial assets - have over 13 times as much wealth as America's Millennials (see chart below), young people between 25 and 35, who may not be rich, but have come up with a biting, witty response to their much richer elders: "Ok, Boomer."

Unfortunately for America's youth, who may have been hoping to get rich quick when they inherit the wealth of their aging parents, we have some very bad news.

While it is true that an unprecedented $36 trillion - roughly a third of total US household wealth - will flow from one US generation to another over the next 30 years with the pace of bequests already surging as Americans inherited $427 billion in 2016, up 119% from 1989, it's not the Millennials who stand to benefit.

Instead, the beneficiaries of this inheritance tsunami are quite old themselves; according to the the study, from 1989 to 2016 U.S. households inherited more than $8.5 trillion. Over that time, the average age of recipients rose by a decade to 51. Fast forward a few more years, and now, more than a quarter of bequests now go to adults 61 or older.

In other words, America's again rich are about to get even richer as their parents pass away.

“Wealth equal to nearly two times the size of the U.S. GDP is expected to be gifted to charities and heirs over the next few decades,” said United Income founder Matt Fellowes. "It’s a historically unprecedented amount that is almost incomprehensibly large." However, "instead of diapers and school, inheritances are increasingly going toward medical bills and retirement savings,” Fellowes said.

The irony is that in addition to virtually every other aspect of US life, one can now add inheritances to the dynamic that’s widening the wealth gap between generations.

As we noted last week, Americans younger than 50 held just 16% of all investable assets in 2016, down from 31% in 1989, the Fed’s latest triennial Survey of Consumer Finances found, leaving the rest to households 50 and older. It also means that the bulk of America's "Top 1%" also happens to be 50 or older.

However, age inequality is most dramatic when comparing the oldest and youngest adults. In 1989, the median household age 65 to 75 held almost eight times more wealth than families headed by 25- to 35-year-olds. By 2016, according to an analysis by the St. Louis Fed, the median baby boomer had close to 13 times more wealth than the typical millennial.

Even more ironic: while boomers as a group inherited trillions from their parents, most members of the postwar generation got nothing. That's about to change, however, as about 20% of households have received inheritances, United Income’s analysis shows, a share that while flat over the past 30 years, is set to soar.

These generational gifts are coming in handy, with the median recipient getting about $55,000, which is more than double their typical retirement savings. "Most inheritances are going to older adults who have little in the way of retirement savings," said Fellowes, a former Brookings Institution scholar. “People receiving inheritances are pretty middle class."

Except, when they are not, of course.

Meanwhile, the size of the average inheritance received in 2016 was about $295,000, sharply higher from $169,000 in 1989.

Why is this notable? Because contrary to popular opinion, as elderly Americans receive an "unexpected" gift, they don't rush to spend it, but instead since more Americans live longer without the safety net of a traditional pension, they’re spending frugally to make sure their wealth lasts. The result is more Americans dying before they can spend all of their savings. Amusingly, financial advisers told Bloomberg they often need to encourage affluent clients to enjoy their wealth rather than hoarding it.

Some more details: only about 9% of estates consist entirely of a house or other property; the average estate is 46% stocks, bonds, cash and other liquid investments, giving an immediate boost to recipients’ own retirement planning at a key time.

That said, the data is likely skewed even more in favor of the older rich: according to Bloomberg, United Income’s estimates don’t include gifts made during donors’ lifetimes - a typical move in estate planning for the ultra-high net worth cohort, often using trusts.

Even so, it still found a widening gulf between the super rich and everyone else: the median inheritance has risen only about $15,000 in three decades, while they’ve more than doubled for the 0.3% of Americans receiving at least $1 million. In 1989, their inheritances averaged an inflation-adjusted $2.7 million. By 2016, they were each getting an average of $6.6 million.

To summarize: America's Millennials may be ridiculing the country's boomers with the rather nonsensical "Ok, Boomer' tagline that has gone viral, but not only are the Boomers getting the final laugh, they are getting richer as America's youth gets progressively poorer.

Tyler Durden Tue, 11/19/2019 - 18:25
Published:11/19/2019 5:34:17 PM
[Markets] Trump Notifies Congress More Troops Headed To Saudi Arabia As Carrier Enters Hormuz Trump Notifies Congress More Troops Headed To Saudi Arabia As Carrier Enters Hormuz

So much for drawing down in the Middle East. President Trump notified Congress on Tuesday that more American troops are en route to Saudi Arabia, which will bring their overall numbers to about 3,000 in the kingdom

"These personnel will remain deployed as long as their presence is required to fulfill the missions described above," the president said in a letter.

The official White House notification of Congressional members described the American military presence there as essential in countering Iran's influence in the region.

US troops arrived at Prince Sultan Air Base in Saudi Arabia earlier this summer. Image source: US Air Force

Forces were deployed “to assure our partners, deter further Iranian provocative behavior, and bolster regional defensive capabilities,” the letter addressed to the House of Representatives stated.

Last month the Pentagon announced the extra troop deployments as well as military hardware, including Patriot missiles to the kingdom, after the prior September drone attacks on Saudi Aramco facilities.

Interestingly, that prior announcement took place just as Trump controversially pushed to withdraw US forces from Syria, something which ended in merely moving troops from the Turkish border and into Syria's oil fields east of the Euphrates. 

“Iran has continued to threaten the security of the region, including by attacking oil and natural gas facilities in the Kingdom of Saudi Arabia on Sept. 14, 2019,” Trump said in the letter.

The president said missiles and radar equipment will “improve defenses against air and missile threats” and includes expeditionary wing to assist Saudi aircraft (which, it should be noted, were also purchased from the US).

All remaining forces will be in place "in the coming weeks" he told Congress, which will cap out at "approximately 3,000" according to the letter.

Crucially, this also came as the US aircraft carrier strike group Abraham Lincoln entered the Strait of Hormuz on Tuesday, where US forces will continue to deter any acts of Iranian 'aggression' against international shipping. 

Tyler Durden Tue, 11/19/2019 - 17:45
Published:11/19/2019 5:03:53 PM
[Markets] U.S. stocks look fully priced — here’s where to put your money now These stocks and ETFs expose you to world markets that are growing faster than the U.S., writes Michael Brush.
Published:11/19/2019 5:03:53 PM
[Markets] Dow Jones Futures: These 5 Stocks Expand Market Leadership; Pinduoduo, Target Earnings On Tap Dow Jones futures: Facebook, Visa, Broadcom, Mastercard and Carvana broke out Tuesday, expanding stock market leadership. Pinduoduo and Target earnings are due early Wednesday. Published:11/19/2019 5:03:53 PM
[Markets] Snyder: Over The Last 3 Years, American Culture Has Gone Even Deeper Down The Toilet Snyder: Over The Last 3 Years, American Culture Has Gone Even Deeper Down The Toilet

Authored by Michael Snyder via The End of The American Dream blog,

The American people have wasted the last three years.  If you don’t know what I am talking about, stick with me, because you will definitely get my point by the end of this article.  Three years ago, Donald Trump beat Hillary Clinton in one of the greatest election upsets in American history.  Many conservatives have used the word “reprieve” to describe what happened, but the truth is that it was actually an opportunity.  It was an opportunity for this nation to move in a fundamentally different direction culturally, but it would be up to the American people to decide if that would actually happen or not.  Unfortunately, it didn’t happen.  Instead, just about every form of evil that you can possibly imagine is running rampant in our society, and things are getting worse with each passing day.  No matter who wins the next presidential election, and no matter who controls Congress, there is no future for our country if we stay on the path that we are currently on.  Our culture is steadily swirling down the toilet, and most Americans don’t seem to care.

On Monday, we witnessed a watershed cultural moment that perfectly illustrates what I am talking about.

For many years, Chick-Fil-A was one of the few major corporations in America that was openly resisting the rising forces of political correctness.  They literally became a heroic counter-cultural symbol for many of us, because they were willing to take a bold stand for the truth even as they endured endless attacks from rabid politically correct militants.

But now Chick-Fil-A has unconditionally surrendered to the politically correct crowd.  On Monday, the company announced that they would no longer be donating money to The Salvation Army and the Fellowship of Christian Athletes.  And CNBC is reporting that this decision was made because both of those organizations “have a history of opposing same-sex marriage”…

Chick-Fil-A said on Monday that it has stopped funding two Christian charities after coming under fire in recent weeks from LGBTQ activists.

The fast-food chain’s foundation has donated millions of dollars to The Salvation Army and the Fellowship of Christian Athletes. Both organizations have a history of opposing same-sex marriage.


Has our society gone so far down the toilet that it is now considered to be “evil” to give money to The Salvation Army?

Are you kidding me?

Look, the truth is that the Salvation Army is not even remotely a radical organization, and yet the politically correct crowd all over America is calling on everyone to boycott it.

Is this really where our society is heading?

Needless to say, a lot of conservatives were absolutely outraged by Chick-Fil-A’s decision.  For example, this is what Allie Beth Stuckey had to say about it on Twitter…

Really @ChickfilA? This is the direction you want to go? You’ve garnered the unconditional support of millions not in spite of but BECAUSE OF your stances, which is the sole reason you’re successful. Idiocy. Bye!

I totally agree with her.

I will no longer be eating at Chick-Fil-A either, and I hope that millions of other outraged Americans will make the same decision.

Sadly, virtually every single day there are more examples in the news of the extreme moral decay that is eating away at the fabric of our society like a very aggressive form of cancer.

And we can see examples of this all around us.

For instance, a business owner in Denver was recently fined for refusing to pick up the poop and discarded needles that drug addicts were continually leaving in front of his store…

One businessman in Denver’s Five Points neighborhood is being fined by the city for his refusal to pick up human waste. He believes the problem goes deeper than just what’s happening on the sidewalk outside his business.

Jawaid Bazyar has seen it all out side of his business near Curtis St. and 24th in Denver’s Five Points Neighborhood.

“There’s food, trash, drug deals. In the alley, we get the defecation, drug needles,” he told CBS’s Dominic Garcia.

In the past, many Americans tended to look down upon “third world countries”, but the truth is that we are literally becoming a third world country.

In Oakland, the number of homeless people has risen by 47 percent over the past two years, and this is causing all sorts of social problems.  The following comes from Fox News

Freddie lives in a hole in Oakland. The middle-aged, longtime heroin addict has no running water, electricity or a bathroom. He does have six pigeons and a feral cat that keep guard over his belongings and hiss at strangers who get too close. He sleeps on a bed of trash and his open-air home is a hodgepodge of reminders that Freddie is not OK. He spends most days cleaning up the sidewalk opposite his home. On days when the drugs really kick in, he can be seen sweeping dirt from one side of a dirt lot to the other.

There are a lot of Freddies in Oakland — people who are down on their luck or pushed out of their homes and struggling with mental illness who find it easier to turn to drugs than face reality.

And this is actually happening in one of the most prosperous areas of the entire country.

In fact, no city in America has prospered more during the Internet era than San Francisco, and it has literally become a cesspool of human degradation.  If you can believe it, during the first 10 months of this year there have been 25,084 official complaints about feces in the streets

The City of San Francisco’s Department of Public Works responded to tens of thousands of “human or animal waste” reports in the first 10 months of 2019, according to the city data.

The department responded to 25,084 such cases from January through October of this year, according to the city’s 311 data portal.

I find it highly ironic that the city at the epicenter of America’s tech boom is literally being used as a toilet.

Sadly, these examples from Denver, Oakland and San Francisco are not even worth comparing to the absolutely disgusting cesspools of filth and corruption that the halls of power in Washington and New York have become.

Our nation is speeding toward a date with destiny, and the road that we are on only leads to one destination.

Last month I wrote an article entitled “The Book Is About To Close On The Late Great United States Of America”, and in that article I tried to get people to understand how late the hour has become.

We are running out of time, and yet our society continues to refuse to change course.

In the end, we will reap what we have sown, and nobody will be able to argue that we do not deserve our fate.

Tyler Durden Tue, 11/19/2019 - 17:25
Published:11/19/2019 4:30:42 PM
[Markets] US STOCKS-Retail sector weighs on Wall Street; Dow and S&P end lower The Dow Jones Industrial Average and the S&P 500 fell from record levels on Tuesday as dour forecasts from retailers Home Depot and Kohl's fueled worries about consumer spending and the U.S.-China trade dispute dragged on. U.S. President Donald Trump on Tuesday threatened to escalate the trade war by raising tariffs on Chinese imports if no deal is reached with Beijing. Published:11/19/2019 4:00:58 PM
[Markets] Watch Live: Volker And Morrison Testify In Round 2 Of Tuesday Impeachment Testimony Watch Live: Volker And Morrison Testify In Round 2 Of Tuesday Impeachment Testimony

Watch live (updates below):

Updates (EST):

4:55 p.m. Nunes begins questioning the witnesses, saying that whatever "drug deal" the Democrats are cooking up, the American people aren't buying it.

4:30 p.m. When asked whether he interpreted President Trump's request to speak with Rudy Giuliani about Ukraine as an order, Volker responds that he understood it to be "part of the dialogue."

4:30 p.m. Volker states his opposition to the Biden investigation, saying "I don’t think that raising the 2016 election or Vice President Biden or these things that I consider to be conspiracy theories circulated by the Ukrainians — they’re not things we should be pursuing as our national security strategy with Ukraine."

4:25 p.m. Morrison says Trump's mention of the Bidens and Crowdstrike during the July 25 call with Zelensky weren't part of his NSC-supplied talking points.


After a morning session of public impeachment testimony from Lt. Col. Alexander Vindman and Russia adviser Jennifer Williams, former National Security Council aide Timothy Morrison and Kurt Volker, Trump’s former special envoy to Ukraine for peace negotiations will appear for testimony.

Morrison listened in on the infamous July 25 phone call between President Trump and Ukraine's newly elected President, Volodomyr Zelensky, in which Trump requested that Ukraine investigate several matters, including Joe and Hunter Biden as well as 2016 US election meddling.

Democrats claim Trump's request constitute election interference, however earlier in the day Vindman told the House Intelligence Committee that it's perfectly acceptable for Presidents to request foreign investigations.

According to a Reuters anonymous source, Volker was central to discussions with Ukraine which would have involved whether the White House withheld US aid in exchange for investigations into gas firm Burisma and the Bidens.

"He knew that Volker and Sondland and Kent were on top of this and were dealing with it on the day to day... His take on this was ... he should let those people do their job."

According to Fox News, a total of nine current and former US officials are set to testify over the next three days in the House's impeachment inquiry.

Tyler Durden Tue, 11/19/2019 - 16:55
Published:11/19/2019 4:00:58 PM
[Markets] AMD stock closes at highest in 13 years Advanced Micro Devices Inc. shares ended at their highest in more than 13 years, with the launch of a new graphics card boosting hopes the stock will continue to gain.
Published:11/19/2019 4:00:58 PM
[Markets] Dow finishes lower as Home Depot weighs; Nasdaq ekes out gain Dow finishes lower as Home Depot weighs; Nasdaq ekes out gain Published:11/19/2019 3:32:02 PM
[Markets] Dow Jones Backs Off 28,000, Hurt By Home Depot Sell-Off; 2 Chip Giants Lead Nasdaq 100 The Dow Jones industrials ended modestly lower Tuesday despite a harsh sell-off in Home Depot stock. Broadcom and AMD stock led another tech rally. Published:11/19/2019 3:32:02 PM
[Markets] Political And Social Conflict Is Accelerating: Here's Why... Political And Social Conflict Is Accelerating: Here's Why...

Authored by Charles Hugh Smith via OfTwoMinds blog,

All the status quo "fixes" only hasten the collapse of the status quo.

That economic, social and political conflict is accelerating is self-evident. What's open to debate are the core drivers of conflict / disorder /unraveling.

Here's the core self-reinforcing dynamic in my view:

1. The status quo elites can no longer mask soaring costs of essentials nor soaring wealth / income inequality between the top .01% (Oligarchs), the top 9.99% who enrich the Oligarchs with their discretionary spending and technocratic/managerial labor, and the bottom 90% who are rapidly losing ground on all fronts: economic, social and political.

2. The elites' "fixes" to the social / political conflicts unleashed by the rigged financial system and winner take most economic order are politically expedient, meaning they don't actually address the sources of conflict, they merely paper them over with PR as a means of preserving the elites' wealth and power.

3. The elites' fundamental financial "fix" is to create trillions in newly issued currency and distribute it to the banks, financiers, super-wealthy families and global corporations-- the top .01% Oligarchs.

4. This "fix" accelerates the asymmetric distribution of wealth by enabling the already-wealthy to buy more productive assets, fund stock buybacks, etc., while forcing the bottom 90% to borrow money from the Oligarchs to make ends meet: the rich get richer, the poor get more indebted.

5. The only possible output of these inputs (political expediency to preserve the elites' wealth and power, the creation and distribution to the Oligarch class of trillions in new currency) is the acceleration of the very erosion that fueled social / political conflicts in the first place. In effect, the elites' "fixes" are accelerating the conflicts that will ultimately lead to their downfall.

This is why the unraveling cannot be reversed or stopped: all the enormous efforts being expended by the elites to maintain the status quo exactly as it is now, with the vast majority of wealth and power in their hands, preclude the structural changes needed to re-set the status quo onto a more sustainable (i.e. more transparent, productive, efficient and decentralized) and less rigged-to-benefit-the-few path.

All the status quo "fixes" only hasten the collapse of the status quo. My longtime colleague Gordon T. Long has laid out the stages of this inevitable descent into conflict and collapse in a series of charts which we discuss in our latest video conversation Coming Era of Political & Social Conflict (29:13).

These stages are predictable because human nature is predictable. That elites will follow a pathway of expediency to preserve their wealth and power is predictable, and this pathway includes the debauchment of currency (printing ever greater sums to add to their wealth and placate the masses), the substitution of credit for capital, the political disenfranchisement of the masses, increasingly oppressive financial repression and social / political conflicts that spiral out of control as the inherently unstable financial house of cards collapses.

Since the elites won't allow an orderly re-set that reduces their wealth and power, the re-set will result from spiraling conflicts and the collapse of all that is viewed as permanent, i.e. the financial and political status quo.

Don't think it won't happen just because it hasn't happened yet.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

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Tyler Durden Tue, 11/19/2019 - 16:25
Published:11/19/2019 3:32:02 PM
[Markets] Outside the Box: Democrats will avoid the real causes of the student loan crisis at Wednesday’s debate Government mostly manufactured the student loan crisis.
Published:11/19/2019 3:32:02 PM
[Markets] Key Words: Vindman says he’ll be ‘fine for telling the truth’ in impeachment probe, as Army stands ready to relocate him for safety A key witness in House Democrats’ impeachment probe on Tuesday offered starkly personal testimony to lawmakers, as it was reported the Army was prepared to move him to a military base to ensure his security.
Published:11/19/2019 3:00:11 PM
[Markets] These are the risks that could trigger a ‘vicious cycle,’ economist warns From the trade war to a debt crisis and everything in between, there’s clearly a lot to be worried about in terms of the health of the global economy, according to Mark Zandi, chief economist at Moody’s Analytics. Published:11/19/2019 3:00:11 PM
[Markets] Mike Novogratz Launches New Funds To Bring Bitcoin To America's Top 1% Mike Novogratz Launches New Funds To Bring Bitcoin To America's Top 1%

Mike Novogratz is still saddled with hundreds of millions of dollars in paper losses on his crypto portfolio, but he hasn't given up on the space yet. The former Goldman executive's Galaxy Digital Holding is launching two new funds, both aimed at accredited investors with little experience in crypto (something to help justify the higher fees), according to Bloomberg.

The billionaire investor is reportedly planning to target "the wealth of America" - that is the 'mass affluent' of Americans who have between $2 million and $25 million in assets (and the firms that represent them) who would like to diversify their portfolios, and those with even more wealth to invest. The vast majority of Americans between the ages of 50 and 80 stayed on the sidelines during the crypto bull run, Novogratz claims. And it's time somebody showed them a way in.

According to BBG, Novogratz isn't wrong. Bitcoin investors have always skewed younger and more tech savvy. Galaxy is hoping to convince everyone else that bitcoin is a worthwhile long-term hold, at a price point that's lower than the Grayscale Bitcoin Trust, pretty much the only tried-and-tested fund that offers exposure to bitcoin at a markup.

Galaxy is trying to design a fund that can "plug into existing infrastructure," which we imagine means fit nicely into the sales pipeline controlled by financial advisors and the big wirehouses.

Here's what Galaxy's head of asset management told BBG.

"The existing landscape for accessing Bitcoin is incomplete," Steve Kurz, head of asset management at Galaxy Digital, said in a phone interview. "We are trying to offer secure service providers, low fees, simple access to Bitcoin. We wanted to create something that could plug into the existing infrastructure."

Still, the stakes for the Galaxy Bitcoin Fund are pretty high. Galaxy's bitcoin fund requires a $25,000 minimum investment and funds can only be withdrawn quarterly. The other fund, the Galaxy Institutional Bitcoin Fund has weekly withdrawal periods and a higher initial buy-in. The funds are being seeded with Galaxy's money (whatever's left of it) and some of Galaxy's initial investors participated as well.

Novogratz believes that more traditional financial services firms will offer bitcoin services in the next 12 months, and hopes he's getting a head start.

With gold prices on the upswing, Novo hopes his new bitcoin funds might benefit from the flight-to-safety momentum that's emerged as of late.

"You are seeing Bitcoin way outperform other coins right now, and I think that will continue until these coins start to get used for things," Novogratz said. "You also get more credentialed people - there are probably 20 billionaires I could name that made their money outside of crypto and are in crypto now. Every speculative asset needs people to tell the story, and people are buying the story."

Novo has been foretelling the mainstream wealth advisors' eventual embrace of bitcoin for years now. And now he's putting his money where his mouth is. But if he can't win over the big institutional clients - endowments & etc. - this could be another major money loser for Novo.

Tyler Durden Tue, 11/19/2019 - 15:50
Published:11/19/2019 3:00:10 PM
[Markets] ISIS Secrets Spilled In Rare On-Camera Interviews: "We Just Walked Into Syria" ISIS Secrets Spilled In Rare On-Camera Interviews: "We Just Walked Into Syria"

Over the years of the war in Syria, an overwhelming amount of evidence has amassed documenting that the so-called 'Islamic State' caliphate was established after tens of thousands of ISIS and other foreign fighters were allowed to pour across Turkey's southern border into Syria

That NATO's second largest military with the help of its allies such as the US, Britain, France, and Gulf countries like Saudi Arabia and Qatar facilitated what the State Department in 2014 described as the largest mass movement of jihadist terrorists in modern history should be a scandal of monumental importance, yet the mainstream media predictably ignored it and "moved on".

And now more bombshell proof of state sponsorship behind the prior rapid rise of ISIS: below are details exposed during unprecedented on-camera interviews of imprisoned ISIS members in Syria spilling all. They confess openly that Turkish military and intelligence simply let them "just walk into Syria"

Award-winning journalist Lindsey Snell, who's been widely published in outlets ranging from MSNBC to ABC to Foreign Policy and others, gained unprecedented access to ISIS prisoners at a facility administered by the Kurdish-led SDF in Hasakah province in northeast Syria:

Abdullah granted us access to a prison in Hasakah that holds around 5,000 ISIS members from 28 different countries. We were able to spend five hours there, touring the various sections and interviewing ISIS militants. Abdullah’s first request to us was that we refrain from telling the prisoners that Abu Bakr al-Baghdadi, ISIS’ leader, had recently been killed in Idlib. “They don’t know. And no good will come from them knowing,” he said.

Those interviewed confessed that their arrival in Syria years prior without doubt had the cooperation of Turkish authoritiesWatch the interviews and video report here:

One captured militant, a Turkish ISIS member identified as Murat Kaymak expressed his initial shock at how easy it was to just walk across the border at the city of Gaziantep.

“I thought it was a joke,” he said. “How can such a large portion of the Turkish border be open? With no police or military? We just walked into Syria.”

As journalist Lindsey Snell describes in her report for The Investigative Journal, over a dozen among those interviewed confessed the same thing:

Over the last few months, we have interviewed more than a dozen ISIS members and ISIS wives in Northeastern Syria. Nearly all of them, including those who are not Turkish nationals, said they want to leave Syria and go to Turkey. Most don’t believe they will face any legal consequences for joining ISIS in Turkey. All of them said that when they crossed the border illegally from Turkey to Syria, no Turkish police or military attempted to stop them.

Another named Faisal Demir explained that even the network of ISIS 'safe-houses' on the Turkish side of the border was likely run by Turkish intelligence.

ISIS prisoners in Hasakah, Image source: Photo by: Cory Popp

“There were people from so many different countries in this house. Men and families,” he said. “Turkish Intelligence is strong. ISIS rented that house, and I am sure Turkey knew ISIS rented that house.” 

“They knew the foreigners staying in the house were in Turkey to cross to Syria and join ISIS. They knew, I am sure,” he admitted. And in separate testimony included in the report:

“Turkey let all of these jihadis cross their border into Syria,” Abdullah said, shaking his head. “And now, Turkey is giving them the chance to start again..”

The other common theme to the interviews is that the ISIS militants believe that if they can make it out of Syria, Turkey will let them go free once on the other side.

When asked if he wanted to return to Turkey, he grinned and said he did. He said he heard about other Turkish ISIS members returning to Turkey, being detained and investigated for a period of weeks, and then simply released. He believes that, although he stayed with ISIS for more than four years, his case would be the same in the eyes of the Turkish government.

“They all want to go to Turkey,” one Kurdish YPJ (Women’s Protection Units) prison guard additionally explained as part of the report. “ISIS started because of Turkey. ISIS is still active in Turkey. And the women here tell us they all want to go and will try to cross at Tel Abyad when they escape.”

And further, according to the report: “A Chechen woman who had been married to an ISIS fighter and living in Syria since 2013 said that she had no desire to return to Chechnya, and that Turkey seemed like a good option for her and her young daughter. She didn’t think she’d be arrested there, because she didn’t believe she’d done anything wrong.”

It must be remembered and bears repeating that Turkey is NATO's second largest military, and throughout the early years of the war US intelligence worked closely with the Turks in pursuit of regime change in Syria.

Thus the "jihadi highway" across the Turkish border, at least in the early years before and during the rise of the Islamic State, appeared willful, intentional policy

Tyler Durden Tue, 11/19/2019 - 15:10
Published:11/19/2019 2:30:51 PM
[Markets] US STOCKS-Retail drags on Wall St; Dow falls, S&P holds steady The Dow Jones Industrial Average fell from record levels while the S&P was flat on Tuesday as dour forecasts from retailers Home Depot and Kohl's fueled worries about consumer spending while uncertainty over the U.S.-China trade dispute simmered in the background. The tech-heavy Nasdaq was the best-performing of the three indexes, with support from Facebook Inc and Broadcom Inc helping to counter a drag from Qualcomm after the chip maker held an investor meeting. Published:11/19/2019 2:30:51 PM
[Markets] Commodities still ‘knee-deep’ in ‘supercycle bear market’ yet to run its course, analyst warns Investors might be tempted to start adding beaten-down commodities to their portfolios right now. Here’s why one analyst thinks otherwise. Published:11/19/2019 2:01:29 PM
[Markets] Meals On Broken Wheels: Uber Eats, GrubHub, DoorDash, & Postmates Meals On Broken Wheels: Uber Eats, GrubHub, DoorDash, & Postmates

Authored by John E. McNellis, Principal at McNellis Partners, for The Registry; via,

The fatal flaw of meal-delivery unicorns...

What do DoorDash, GrubHub, Postmates and Uber Eats have in common with Lassie?

Nothing. They’re dogs; Lassie’s a superstar.

What do they have in common with each other? Everything.

They take the world’s second oldest profession - Babylonia had delivery boys - sprinkle it with tech dust, click their ruby slippers, chant “There’s no place like Silicon Valley” and hope to become unicorns. (By the way, since unicorns are entirely mythical, wouldn’t the Valley be wise to pick another moniker for its wannabe superstars?)

There’s no secret to success in tech. But like hitting a 98 mph fastball, it’s easy to describe, nearly impossible to do: Create a great product that can scale. Even better if you can build a patent moat around it. If, after five hard years of R&D, you create killer software at a cost of $100 million, then the first product you ship for $1,000 comes at a loss of $99.99 million. But by the time you’ve sold your millionth unit at almost no additional cost, you’ve grossed a billion. That’s scale.

Here’s the rub: You can scale intellectual property, you can’t scale labor. Your millionth pizza costs as much to deliver as your first.

Yet the meal-delivery guys claim they will scale when they create a critical mass. They will have the density they need to become profitable (none are yet) if they can somehow bag a huge market share. The density argument goes like this: if we can deliver enough meals in a given trade area, we can be like the post office in terms of efficiency (yes, the post office, I’m not being ironic). Nice idea, but it doesn’t wash.

The post office is a route business - your mail carrier hits the same couple hundred houses on the identical route every day. That beats 200 homeowners making 200 trips to the post office.

Meal delivery is a discrete business. No one else in your zip code is ordering spaghetti Bolognese from Trattoria Pastaria at 6:30 on a Tuesday evening. Whether the Uber Eats guy drives to the restaurant or you do, it’s the same (except the food is hotter if you do it yourself). There is no way to string that discrete delivery into an efficient, cost-effective route. To that point, old-school pizza joints average about 2 deliveries an hour and their drivers start at the restaurant. Can a free-floating DoorDasher do more than two an hour?

In short, Mount Everest is scalable, meal-delivery companies are not.

This claim of eventual profitability calls to mind the very old joke about the jeweler who sold his diamonds below cost, losing a little on each sale. “I make it up in volume,” he said. He didn’t and neither will the meal-delivery companies.

Let’s get specific. DoorDash, Postmates and Uber Eats all deliver for McDonald’s. According to that most reliable of all sources, the internet, they charge about $5 to deliver your burger and fries. And it takes about 30 minutes from the time you order to delivery. This means that, like pizza, the driver can do about two trips an hour. This is a truly great service for the consumer too stoned to get his own milkshake at midnight.

But there is no way, no way, in the world this can be profitable for the meal-delivery companies (or the restaurants if they do it themselves). Ten bucks an hour won’t even pay for the driver’s gas and minimum wage, let alone his incidental car costs. What’s left for DoorDash on ten bucks an hour? Nothing.

Consistent with this column’s reputation for highly thorough investigative journalism, I figured what the hell and ordered home delivery from a local restaurant Saturday night. DoorDash delivered the correct order hot within 30 minutes of ordering at a cost to me of 99 cents. Yes. 99 cents. As a consumer, I couldn’t have been more pleased. If I were a DoorDash investor, maybe not so much; somebody’s losing big here.

The driver told me he does ok thanks to tips. He added that he did better as a straight-up Uber driver (which, by the way, ain’t that great), but he couldn’t stand the drama: people throwing up in his car, the fighting, drinking and taking drugs while he was driving.

But sooner or later, Wall Street and the VCs will tire of handing over free money to these guys. They will insist they turn a profit, that they charge a fair price to make that spaghetti run.

Who’s going to pay for it? Everyone has a different number for the last-mile cost, but let’s say it’s twenty bucks if you throw in a reasonable profit. The 99 percent aren’t going to pay $20 extra for a $15 pizza or even a $50 fettuccine Alfredo. The lazy 1 percent would, but oops — bad business model — they’re only 1 percent of the population.

So, stick the restaurants with the delivery cost? Good luck, they’re already on life support. Being in the retail business means that — just like your children — you hear from your tenants whenever they have problems. And we’re hearing from our restaurants. They’re fighting to adapt to minimum wage hikes and cost increases in a highly competitive environment. Our restaurant tenants are scattered throughout Northern California’s more affluent towns; if they’re struggling — and they are — everyone is struggling.

Virtually free meal-delivery is yet another concept out of Silicon Valley that is:

a) great for consumers (as are WeWork, Uber and Lyft);

b) guaranteed to never make a profit (as are WeWork, Uber and Lyft); and

c) proof that the smartest guys in the room are no smarter than the rest of us.

*  *  *

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate “beer money.” I appreciate it immensely.

Tyler Durden Tue, 11/19/2019 - 14:50
Published:11/19/2019 2:01:29 PM
[Markets] Vigilante Offers $100,000 Bounty To Hack Oil & Gas Companies Vigilante Offers $100,000 Bounty To Hack Oil & Gas Companies

Authored by Tsvetana Paraskova via,

One of the world’s most influential hackers is offering up to US$100,000 in cryptocurrency to hackers who break into oil firms and banks to leak information of public interest.  

According to a new manifesto, “Hacktivist Bug Hunting Program,” the well-known vigilante hacker would pay other hackers if they hack companies and leak documents that could be of public interest. Oil services giant Halliburton—alongside South African mining companies and an Israeli spyware vendor—are among the examples the hacktivist has mentioned as potential targets in their manifesto.

“Hacking to obtain and leak documents with public interest is one of the best ways for hackers to use their abilities to benefit society,” Motherboard quoted the manifesto as saying.

“I’m not trying to make anyone rich. I’m just trying to provide enough funds so that hackers can make a decent living doing a good job,” the hacktivist says.

Hacktivism is a powerful tool to “fight inequality and capitalism,” according to the hacktivist who goes by the nickname Phineas Fisher.

Companies and software developers themselves often launch the so-called ‘bug bounty programs’, rewarding hackers for uncovering potential bugs and vulnerabilities on their systems, in order to bolster their cyber security against attacks, hacks, or leaks.

Just last week, Mexico’s state oil firm Pemex was hit by a ransomware attack, which caused administrative operations at the company to grind to a halt, but work was restored soon after.

The incident highlighted once again the growing importance of cybersecurity in the oil and gas industry and all its critical infrastructure across the globe.

Pemex has no intention of paying the ransom that cyber attackers have requested, Mexico’s Energy Minister and Pemex board chair Rocio Nahle said a day later. The attackers had demanded they be paid US$5 million in ransom in bitcoin, according to various media reports last week.

Tyler Durden Tue, 11/19/2019 - 14:10
Published:11/19/2019 1:31:50 PM
[Markets] Why a ‘supercycle bear market’ means its too early to add commodities to portfolios Investors might be tempted to start adding beaten-down commodities to their portfolios right now. Here’s why one analyst thinks otherwise. Published:11/19/2019 1:31:50 PM
[Markets] Encore: How far off are the actuarial adjustments of Social Security benefits? Not that far, but high earners, who live long and claim late, come out ahead.
Published:11/19/2019 1:31:50 PM
[Markets] AMD stock hits highest level in 13 years after launch of promising graphics card AMD stock hits highest level in 13 years after launch of promising graphics card Published:11/19/2019 1:31:50 PM
[Markets] Dow Jones Reverses Off High On Home Depot, But Nasdaq Rallies To Record High The Dow Jones Industrial Average was under modest selling pressure Tuesday afternoon, while the Nasdaq hit a new record high. Smal caps outperformed. Published:11/19/2019 1:00:30 PM
[Markets] The Company Once Called The "Anti-Uber" Has Officially Shut Down In New York The Company Once Called The "Anti-Uber" Has Officially Shut Down In New York

The startup called Juno that sought to establish itself as a competitor to Uber is no longer doing business in New York.

The company had billed itself as a "kinder" and "gentler" way to get a ride - and as we all know, "kind" and "gentle" gets you precisely nowhere in downtown Manhattan.

The company is now inviting its users to join Lyft, Bloomberg  reports.  Juno is owned by Gett Inc., which is a Tel Aviv based ride-hailing company that spent $200 million to acquire Juno in 2017.

On Monday, Gett said that it was shutting down Juno and was instead starting a partnership with Lyft, which will allow Gett's clients to get rides by Lyft through its app beginning next year. 

The company said that more focus on its corporate clients and “misguided regulations” on ride-hailing companies in New York City were to blame for it shutting down. Gett's CEO, Dave Waiser, said: “This development reinforces Gett's strategy to build a profitable company focused on the corporate transportation sector, a market worth $1 trillion each year."

The company was formerly thought to be a formidable competitor to Uber in the busy New York City market. It launched billing itself as a driver-friendly alternative to Uber and offered equity packages to its drivers, promising that they would be able to share in the wealth if the company made it big. 

Payouts to drivers "did not materialize" after the company's sale to Gett, which is now valued at $1.5 billion. The company has raised more than $800 million from investors and had mulled a sale of Juno - obviously unsuccessfully - last summer.  

Tyler Durden Tue, 11/19/2019 - 13:50
Published:11/19/2019 1:00:30 PM
[Markets] It’s hard for shoppers to avoid Amazon — even in their ETFs Inc. makes up an outsize share of the biggest consumer discretionary ETFs, a fact investors should keep in mind when researching such a trade.
Published:11/19/2019 1:00:30 PM
[Markets] The ‘supercycle’ bear market in commodities still has years to run: Wells Fargo Investors might be tempted to start adding beaten-down commodities to their portfolios right now. Here’s why one analyst thinks otherwise. Published:11/19/2019 12:36:55 PM
[Markets] Venezuela Is Using Invisible Oil Tankers To Skirt Sanctions Venezuela Is Using Invisible Oil Tankers To Skirt Sanctions

Authored by Irina Slav via,

U.S. sanctions on Venezuela have been squeezing the life out of its economy in an attempt to remove the government of Nicolas Maduro from power, but so far those sanctions haven’t been entirely successful. The reason: Venezuela is still exporting oil.

So far in November, according to OilX data, Venezuela has exported an average of 530,000 bpd, up from 523,000 bpd in October.

Bloomberg reports, citing shipping data, that Venezuela had loaded almost 11 million barrels of crude in just the first 11 days of November, which is more than twice as much as it did in the same period last month. Most of the oil seems to have gone to India and China, with half of the vessels transporting it turning their transponders off to avoid detection.

This is the now-standard tactic used by Iran to export its oil amid U.S. sanctions, too. Turning off the geolocation device is what Iranian tankers do when they leave port—or in the open sea—and they only turn them off when they approach their port of destination. This and ship-to-ship transfers have helped Tehran continue taking in oil revenues despite the sanctions.

These same tactics are being used by Venezuela now as well.

Venezuela’s crude oil production in September averaged just 644,000 bpd, according to OPEC’s latest Monthly Oil Market Report. That’s down from 727,000 bpd in August and an average 975,000 bpd over the first half of the year.

In September 2018, Venezuela was pumping more than twice the October level, at 1.354 million bpd.

This goes to show that sanctions are working to curb oil production, but they have not been able to stifle Venezuela’s exports to zero. The country has oil-for-cash agreements with China and Russia, and although it struggles to repay this debt with its limited amount of oil, it is paying down some of it - apparently without violating any sanctions.

One vessel Bloomberg’s data detected recently was the Dragon - a Liberian-flagged Very Large Crude Carrier, whose last GPS signal came off the French coast. The tanker, however, turned out to be offshore Venezuela where it loaded 2 million barrels of local crude for Russia’s Rosneft, one of Caracas’s biggest creditors.

Both the Russian company and the operator of the Dragon told Bloomberg that they have not violated any sanctions. One way Rosneft is doing this is by selling the oil on and getting paid in fuel. This is how India has been getting some of its Venezuelan oil shipments despite pressure from Washington to cut these imports off completely.

So, there are many ways to avoid detection from sanction-prone parties at sea and Venezuela has been using them, like Iran.

The practice of transponder switch-offs has become even more popular recently, after Washington slapped sanctions on several Chinese shippers for violating its sanctions against Iran. Meanwhile, China’s oil imports from ship-to-ship transfers soared threefold in September, with a lot of the oil coming from either Iran or Venezuela, according to analysts.

Venezuela is certainly having no fun in trying to keep its oil industry going amid sanctions and the decay that follows years of underinvestment in field and equipment maintenance. Yet the most fundamental truth of basic economics is helping it trudge along: for as long as there is demand, there will be supply.

There is still demand for Venezuelan oil, and until it’s there, Venezuela will find ways to ship the oil abroad.

Tyler Durden Tue, 11/19/2019 - 13:30
Published:11/19/2019 12:36:54 PM
[Markets] The Tell: A ‘supercycle’ bear market in commodities still has a few years left to run: Wells Fargo Investors might be tempted to start adding beaten-down commodities to their portfolios right now. Here’s why one analyst thinks otherwise.
Published:11/19/2019 12:36:54 PM
[Markets] Trump threatens China with higher tariffs if a trade deal is not completed Trump threatens China with higher tariffs if a trade deal is not completed Published:11/19/2019 12:00:13 PM
[Markets] Dow Jones Down On Home Depot Sell-Off; Will This Sector Produce New Stock Market Winners? Despite a big drop by Dow Jones Industrial Average component Home Depot, the 30-stock Dow is off just mildly. This sector is boosting the Nasdaq. Published:11/19/2019 12:00:13 PM
[Markets] Cannabis Watch: Cannabis stocks snap six-day losing streak on hopes for bill that would end federal ban Cannabis stocks rose Tuesday and were on track to end a six-day losing streak, buoyed by news that a congressional committee is advancing a bill that would lift the federal ban on cannabis and overturn past convictions.
Published:11/19/2019 12:00:13 PM
[Markets] Clinton Foundation Files $16.8 Million Loss Clinton Foundation Files $16.8 Million Loss

Authored by Steve Watson via Summit News,

The numbers don’t lie, Hillary’s name is poison

Hillary Clinton’s name is pure poison and no one in their right mind wants anything to do with her.

This is evidenced nowhere more in the fact that the Clinton Foundation has gone from turning over a revenue of almost $400 million in 2013, to actually LOSING almost $33 million since Donald Trump wiped the floor with Hillary in 2016.

Newly released tax records show that the foundation reported a loss of almost $17 million in 2018, to add to the net loss of $16.1 million the previous year in 2017.

The numbers don’t lie.

Total revenue reported for 2018 was just $30.7 million, less than a tenth of what was being pulled in While Hillary was Secretary of State.


Only $24.2 million was posted in grants and contributions, which constitutes a record low for the “charity.” Expenses amounted to $47.5 million, hence a loss of $16.8 million.

In 2009, the Clinton Foundation hauled in $249 million, and in the four years that followed, another $392.2 million in revenue poured in. In her last three years in office, 2014-16, the foundation raised a whopping $344.4 million.

In total, during the eight years of Obama’s presidency, the Clinton Foundation reported total revenue of more than $1.1 billion

Then Hillary coughed and collapsed her way to the election, and America was ‘made great again’,

We learned about hammers and hard drives, and a many of the Clintons’ donors realised that the optics of giving money to a ‘crooked’ family are not good.

It seems there is only one thing left for Hillary to do…

Tyler Durden Tue, 11/19/2019 - 12:55
Published:11/19/2019 12:00:13 PM
[Markets] Federal Reserve: Enemy Of Liberty And Prosperity? Federal Reserve: Enemy Of Liberty And Prosperity?

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Lost in the media’s obsession with the impeachment circus last week was Federal Reserve Chairman Jerome Powell’s testimony on the state of the economy before the Joint Economic Committee. In his testimony, Chairman Powell warned that when the next recession inevitably occurs, the US Government’s over $23 trillion debt would prevent Congress from increasing spending to revive the economy.

Powell also said that the Fed’s current low interest rate policies would prevent the Fed from using its traditional methods of increasing the money supply and further lowering interest rates to jump-start economic growth in a recession. Hopefully, Powell is correct that when the next recession hits the Federal Reserve and Congress will be unable to “stimulate” the economy with cheap money and new spending.

Interest rates are the price of money and, as with all prices, government manipulation of interest rates distorts the signals regarding market conditions. Artificially low interest rates lead to malinvestment and the creation of bubbles. Recessions are a painful but necessary correction that allows the economy to cleanse itself of these distortions. When the Federal Reserve and Congress try to stimulate the economy, they introduce new distortions, making it impossible for the economy to heal itself. Fiscal and monetary stimulus may temporally create the illusions of prosperity, but in reality they merely create another bubble that will eventually burst starting the boom-and-bust cycle all over again. So, the best thing Congress and the Federal Reserve can do to help the economy recover from a recession is nothing.

Powell is the latest Federal Reserve Chair to warn of the dangers of government debt, which is ironic since the Federal Reserve is the great enabler of deficit spending. Government manipulation of the value of money allows politicians to hide the true costs of their warfare and welfare. This is why throughout history governments have sought the power to dictate what is and is not money and determine the value of the monetary unit. Today’s central bankers are the heirs of the medieval kings who shaved off the edges of gold coins, then ordered the people to pretend that shaved coins were just as valuable as unshaved coins.

Instead of shaving gold coins, today’s central bankers facilitate the growth of government by purchasing government securities in order to keep interest rates - and thus the government’s borrowing costs - low. The Federal Reserve’s interventions enable the expansion of government well beyond what would be politically palatable if politicians had to finance the entire welfare-warfare state through direct taxation or borrowing at market interest rates, which would increase interest rates for private sector borrowers, lower growth, and increase unemployment.

Since the creation of the Federal Reserve, the US dollar has lost over 96 percent of its value.

Source: Bloomberg

The Federal Reserve-caused decline in purchasing power is a stealth tax. This inflation tax does not affect the financial elites—who receive new money created by the Federal Reserve before the Fed’s actions have diminished the dollar’s purchasing power—but has hurt middle-and-working class Americans whose purchasing power is continuously reduced by the Federal Reserve. The inflation tax is not just the most hidden, but the most regressive of taxes.

The Federal Reserve is responsible for the growth of government, the loss of liberty, the rise in income inequality, and the boom-and-bust economic cycle. All those who support liberty, peace, and prosperity should join the effort to audit and end the Fed.

Tyler Durden Tue, 11/19/2019 - 12:15
Published:11/19/2019 11:29:32 AM
[Markets] Boeing's stock dives after NTSB recommends 'more robust redesign' of 737-700s Shares of Boeing Co. took a midday dive into negative territory Tuesday, after the National Transportation Safety Board recommended a "more robust redesign" of the engine structure and its components, as it holds a board meeting to determine the probably cause of the fatal April 2018 crash of the Boeing 737-700 aircraft. The stock was up about 0.7%, then sank as much as 2.1%, before bouncing to be down just 0.1%. Boeing's stock has gained 10.5% over the past three months, while the Dow Jones Industrial Average has advanced 6.9%. Published:11/19/2019 11:29:32 AM
[Markets] Outside the Box: The OAS lied to the public about the Bolivian election and coup The Organization of America States lied about supposed irregularities in the Bolivian election. It’s not the first time the OAS has helped overturn a popular vote.
Published:11/19/2019 11:29:32 AM
[Markets] A ‘vicious cycle?’ These triggers make for an ‘uncomfortably high’ risk of a recession, economist warns From the trade war to a debt crisis and everything in between, there’s clearly a lot to be worried about in terms of the health of the global economy, according to Mark Zandi, chief economist at Moody’s Analytics. Published:11/19/2019 10:59:30 AM
[Markets] Stocks, Yuan Pump'n'Dump On Yet More Trade Deal Headlines Stocks, Yuan Pump'n'Dump On Yet More Trade Deal Headlines

With stocks notably lower this morning, it was time to roll out the "trade deal is close" headlines to juice markets to yet another record high.

Bloomberg reports that US and China are said to tie tariff relief to the failed "deal" in May...

Analysts say the first phase covers significantly less than what Trump has been promising publicly because it leaves on the table most of the thorny issues at the heart of the trade dispute. There’s also widespread skepticism on both sides that the countries would ever reach a second-phase agreement that would tackle structural reforms.

This is the first indication that the two sides are basing their discussion on the May deal text, which the U.S. accused China of reneging on. Trump tweeted in October that the phase one deal would cover about 60% of the “total deal,” although it’s unknown whether that total deal is the same as the May one.

The kneejerk algo reaction was insta-buying but that rapidly faded (even though no one really has a clue what any of that means)...

And yuan spiked and tumbled...

Source: Bloomberg

It appears the headline algos are losing their mojo...

Tyler Durden Tue, 11/19/2019 - 11:48
Published:11/19/2019 10:59:30 AM
[Markets] Kohl’s confident over Amazon partnership despite guidance cut and 17% share plunge Department store chain Kohl’s remained confident its Amazon partnership would boost sales despite cutting its full-year guidance ahead of the holiday season.
Published:11/19/2019 10:59:30 AM
[Markets] Macy’s shares sink after date-breach reports Macy’s shares sink after date-breach reports Published:11/19/2019 10:30:08 AM
[Markets] Nomura Explains What's Behind The "Relentless Bid For Stocks", And Why The Bond Selling Is Over Nomura Explains What's Behind The "Relentless Bid For Stocks", And Why The Bond Selling Is Over

Back on November 9, after 10Y yields had shot up by 20bps in one week and in response to Marko Kolanovic's latest thesis that bond yields would continue rising, and could jump as much as another 150bps before the spike in rates fizzled, we said that we disagree and countered that CTAs - which we pointed out were the biggest drivers for the sharp selloff in rates - had largely liquidated their legacy long positions...

... and as a result we said that the selling in Treasurys is over, and that the "great rotation" out of value and into momentum, a simple pair trade proxy for 10Y yields, was about to reverse.

A little over a week later, we were right on both counts, with 10Y yields sliding almost 20bps from Nov 9, while momentum has outperformed value every single day in the past week.

More importantly, our assessment on the relative CTA positioning was spot on, and as Nomura's Charlie McElligott writes today, Systematic CTA investors have stormed back into duration and, "which in-turn sees the aggregate CTA signal in TY and ED now back to "+100% Long" (and for that matter, across all our G10 Bonds and Rates positions in the model)."

That said, without further "risk off" headlines, the Nomura quant believes it is now likely that we’re back in a range-bound spot for USTs now, because after puking their positions two weeks ago, Systematic CTAs are once again fully long and have no incremental buying left to do.

Yet while CTAs are once again loading up on bonds, and steamrolling all those who listened to JPM's latest "once in a decade" trade reco to buy value and sell momentum, stocks have also been surging, with Nomura alleging that the ongoing risk-rally is a mix of

  1. Historically strong seasonality in the S&P (the previously noted surge in stock buybacks post EPS and performance-chasing “FOMO grab” into YE)
  2. Clients rolling-out upside
  3. Overwriters covering short strikes as part of an overall impulse “higher”

As McElligott further notes, the market now has the largest SPX/SPY consolidated options Gamma strike now "up" at 3150 ($9.6B), with spot “pinned” between there and the 3100 strike ($8.7B), assisted with further stickiness “inline” at 3125 ($5.7B) and 3130 ($5.3B), which provides a springboard for the S&P on every drop below 3,100. Meanwhile, dealer delta remains "insanely long" at $503B, or roughly the 99th %ile since 2013.

Besides the traditional gamma excuse to push up stocks, Nomura points out several additional positional and flow dynamics which are boosting US Equities:

1. The massive notional of the Leveraged Fund “Net Short” in SPX futures (-$44B, just 4th %ile since 2006) is being squeezed by the relentless Asset Manager buying (purchases of $9.1B more last week, makes $142B Net Long in SPX futures—99th percentile since 2006).

2. The "incredibly low" Hedge Fund L/S exposure to the markets, i.e., "Beta to SPX" (still mediocre “Nets” relative to the scale of the rally PLUS this “short” in Futs as all hedges drag), which is now matched at the lowest percentlile on record since 2003 and likely abetting “grabby” behavior.

VIX ETNs began reducing their 99th %ile “Net Long” Vega position last week, decreasing by $6.7mm—as a second-order "bid" to stocks. We are also again seeing the multi-day impact of the VIX ETN "futures roll" into settlement tomorrow, which would mark the 8th month in a row where VIX has hit local lows either the day into or the day of expiry as the ETNs sell UX1 to buy UX2—punishing front VIX future in the process as another “Equities slingshot” boost.

So while the various technical factors for a continued levitation are all there, which explains why the S&P has had just 2 down days in November (at least until today), what about another topic near and dear to Wall Street's heart - the violent moves in select factors?

Here, as Nomura's other quant, Masanari Takada writes, what had been a nearly consistently unfolding factor reversal in DM equities is also winding down in parallel with the end of selling in Treasuries. Factors that correlate positively with stock market sentiment, such as the performance of cyclicals over defensives and the reversal factor, have seen markedly improved performance recently (as measured by their 3-month Sharpe ratios). Going the other way, low-vol, quality, and other such factors that correlate negatively with sentiment are performing much more poorly now. The contrast here is stark, and moreover, performance in percentile terms for a five-year window is at 85% for the cyclical-defensive factor (on the one hand) and at just 18% for low-vol and 8% for momentum (on the other).

Said otherwise, the spontaneous and swift reversal in equity factors may be poised to wind down and proceed more slowly. However, it is worth noting that the factor reversal may be forced back into higher gear if the bullish narrative stages a comeback, as present factor movements are closely linked to what happens with sentiment... and especially with the 10Y yield. In that event, however, buying of the cyclical-defensive factor and selling of the low-vol factor could quickly start to look overheated, making it look unlikely that the performance would be sustainable from a risk-reward standpoint

Finally, taking a step back, and looking at CTAs, this time in the broader S&P, Nomura notes that in May, August, and October of this year, CTAs' net long position in equity futures has topped out and collapsed after reaching something like the current level. This, to Takada, has been an indication that CTAs' net buying on each occasion this year "has been something like an opening gambit carried out as a means of feeling out the market."

If the market were to see a boost from fundamentals, or if other investors were to start piling into the market out of a fear of missing out, then we would expect CTAs to proceed to making a genuine long play on equity futures.

As such, anyone seeking to find how much further CTAs might go with their trend-chasing buying of equities and selling of bonds should do well to keep a wary eye on the direction of stock market sentiment, which has clearly stopped improving for now.

Tyler Durden Tue, 11/19/2019 - 11:13
Published:11/19/2019 10:30:08 AM
[Markets] Futures Movers: Oil heads for 2nd straight loss as report says Russia won’t push for deeper cuts at a key meeting Oil futures are set for consecutive losses on Tuesday, amid reports that major oil exporter Russia wasn’t likely to advocate for deeper cuts during an important December meeting of influential global oil producers.
Published:11/19/2019 10:30:08 AM
[Markets] GLOBAL MARKETS-Shares, dollar dip as limp results, impeachment inquiry offset trade hopes Shares in Europe dipped, Wall Street backed off record highs and the U.S. dollar was poised to extend a three-day losing streak as underwhelming earnings and uncertainty over an ongoing U.S. impeachment inquiry overshadowed hopes for a U.S.-China trade deal. The U.S. benchmark S&P 500 index was nominally lower and Home Depot Inc pulled the blue-chip Dow Jones Industrial index firmly into the red after the home improvement retailer cut its 2019 sales forecast. The inquiry focuses on a July 25 phone call in which President Donald Trump asked Ukrainian President Volodymyr Zelenskiy to carry out two investigations that would benefit him politically. Published:11/19/2019 10:30:07 AM
[Markets] Dow industrials down 50 points as Tuesday morning’s gains evaporate Dow industrials down 50 points as Tuesday morning’s gains evaporate Published:11/19/2019 10:00:41 AM
[Markets] Indefensible Conclusions: Why Social Security Is Far Worse Off Than Advertised Indefensible Conclusions: Why Social Security Is Far Worse Off Than Advertised

Authored by Chris Hamilton via Econimica blog,

For a dozen plus years, the Census has incorrectly believed and projected that total US births were on the cusp of an upturn.  The chart below shows actual total births and Census projections since '00 through the most recent Census projection in 2017.  Each projection was lower than the last but still far too high.  Since 2007, there have been 5.5 million fewer births than the '00 and '08 Census projected.  And this delta in projected growth versus rapidly diving births and fertility rates is only continuing to widen, as detailed through Q1 of 2019 at CDC Fertility Data.

Social Security essentially gets its projections from the Census and makes forward based assumptions on the median Census projection.  In this case, the chart below shows actual US fertility rates since 1950 and Census projections (solid lines) versus UN projections (dashed lines).  According to Social Security projections (solid lines), fertility rates at present 1.72 (and still falling) are not possible and only higher fertility rates are to come.  Either fertility rates will rise to 2.2, 2, or 1.8...but the current reality and/or further decline is simply inconceivable.  Meanwhile, the situation isn't so inconceivable for the UN Population Projections (dashed lines) which offer a wide range of possibility from a low of 1.3, to high of 2.3, with a long term base case of 1.8.

And here is the decade plus of discrepancy between actual 0 to 20 year-old US population.  Census (Social Security, solid lines) versus United Nations (UN) projections (dashed lines).  Again, the Census nor SS can conceive of what has been happening for the last decade nor can the Census and therefor Social Security project anything but growth.  In fact, the Social Security low growth projection is even slightly higher than the UN medium (baseline) projection?!?  And the UN baseline is too high...which means the reality for Social Security is significantly worse than their most "bearish" scenario.

But it isn't just the absence of population growth, it is how this translates to the lack of fuel for further employment growth.  Rather than use the BLS unemployment data, I simply divide the populations that make up the work force by the quantity of those employed among each age group (chart below)...and this reveals we are at historical levels of full employment.  In fact, only once (briefly in 2000) has the largest and most important group (25-54 year-olds) ever had a higher portion employed.  The 55-64 year-olds have never had such a high portion employed...and even the 15-24 year-olds have recovered much of the losses they suffered in the '09 great financial crisis (but even beyond X-Box, there are structural reasons this group is unlikely to see significantly higher employment %'s...detailed HERE).

Given we have full employment, the problem is we have precious little growth among the working age population over the next decades.  As the chart below details, the population growth over the next two decades shifts to the oldest among us with hardly any labor force participation among them.  The growth among 70-80 year-olds and 80+ year-olds will dominate.

And dividing the age groups by their participation rates gives us a clear idea of the potential fuel available for employment growth (aka, new home buyers, new car buyers, those likely to undertake loans, etc.).  For the coming two decades, I even likely over-estimate the 70-80 year-olds at 12% LFP and 5% LFP among 80+ year-olds versus a consistent 75% for 20-70 year-olds.  This means over the coming twenty years, the US is only capable of about 1/3rd the employment growth it was consistently capable of from 1960 through 2020.

Thanks to the 2019 OASDI Trustees Report, the Social Security situation is fairly plain.  The chart below shows the OASDI annual deficit plus low, medium, and high cost projections.  What I have detailed from this point forward is that given the unrealistic population growth projections and resultant unrealistic employment growth expectations, the worse case "high cost" estimate may be too optimistic. This will mean the Social Security so-called "trust fund" of $2.9 trillion will be burned through prior to 2035 and the politically charged issue of automatic "pay-as-you-go" 20% to 40% declines in benefits will be thrust upon the nation sooner rather than later.  For instance, of the 60+ million SS beneficiaries, the average beneficiary in 2019 pulls in $1461 monthly, and would be looking at an automatic $400 to $600 reduction in monthly benefits once the "trust fund" is depleted.  The worst-case OASDI cumulative scenario adds an additional $5 trillion in deficit spending through 2050 over the medium projection.

And just to round out the picture, the chart below details the combined OASDI and HI (Hospital Insurance) deficits.  Again, the redline worst case "high cost" projection is likely too optimistic.  Annual deficits absent population growth among the young and working and resultant minimal further employment growth...and the inevitable explosion of elderly...means a worse than "worse case" should be the base case.  And the combined worst case OASDI + HI cumulative projection adds another $12+ trillion to the projected debt pile above and beyond the medium projection.

Two final charts, below, detailing the annual change in the 20-40 year-old US childbearing population versus 70+ elderly and the movement of the Federal Funds Rate, plus the impact of the federal funds rate on incentivizing debt.

Below, annual population change (million persons) of the 20 to 40 year old US population versus annual change in 70+ year old US population, Federal Funds Rate (%), and public versus Intragovernmental debt outstanding (trillion $'s).

Below, annual population change (% of total population) of the childbearing versus elderly, Federal Funds Rate (%), and public versus Intragovernmental debt outstanding (trillion $'s).

Of course this doesn't show unfunded liabilities, corporate debt, student debt, auto loans, credit card debt...but the Federal debt gives a nice example of the impact of ZIRP on the undertaking of new debt when the money is essentially "free" (particularly for the Federal Government and Corporations...and when served to our young adults as "student loans").

Why is it important to break out the public vs. IG (Intragovernmental) debt?  IG trust fund surplus' are mandated by law to buy US Treasury debt while Primary Dealers (a select # of the largest banks) are likewise mandated to bid on government debt which they then typically resell to the public and foreigners.  As you can see, IG purchasing is slowing while nearly all the debt is now being resold to the public / foreigners / and Federal Reserve.  This trend will accelerate rapidly over the coming decades.  The surge in 70+ year-olds collecting their Social Security benefits and the minimal growth among new taxpayers will result in public debt soaring while the theoretical IG trust fund is depleted.

Perhaps a "come to Jesus" moment is likely sooner than later.

Tyler Durden Tue, 11/19/2019 - 10:45
Published:11/19/2019 10:00:41 AM
[Markets] US STOCKS-S&P 500, Dow retreat from record levels as Home Depot, Kohl's weigh Published:11/19/2019 10:00:41 AM
[Markets] The Ratings Game: Home Depot shares sink after sales miss but there’s reason to be optimistic Home Depot says investments didn’t yield results during the expected timeline.
Published:11/19/2019 10:00:41 AM
[Markets] Russia Slams US Backing For Israeli Settlements As "New Dangerous Escalation" Russia Slams US Backing For Israeli Settlements As "New Dangerous Escalation"

Reuters reports that Russia’s Ministry of Foreign Affairs on Tuesday condemned the US move to reverse decades-long official policy which viewed Israeli settlements in the occupied West Bank as illegal. 

“The Trump administration is reversing the Obama administration’s approach towards Israeli settlements. U.S. public statements on settlement activities in the West Bank have been inconsistent over decades,” Secretary of State Mike Pompeo announced Monday, effectively overturning the State Department's 41-year-old legal opinion that Israel's West Bank settlements are illegal.

Russia condemned the drastic policy reversal as a severe blow to the peace process, saying "We consider this Washington’s decision as another step aimed at ruining an international legal basis of the Middle East settlement that will exacerbate tensions in Palestinian-Israeli relations," according to the foreign ministry statement.

The West Bank Jewish settlement of Ofra, via Reuters.

"We are urging all concerned parties to refrain from any steps that could provoke a new dangerous escalation in the region and impede the creation of conditions for resuming direct Palestinian-Israeli talks," the statement emphasized.

Russia underscored it still sees as valid and binding the United Nations Security Council Resolution 2334 which states that "the establishment by Israel of settlements in the Palestinian territory occupied since 1967, including East Jerusalem, has no legal validity and constitutes a flagrant violation under international law and a major obstacle to the achievement of the two-State [Palestine-Israel] solution and a just, lasting and comprehensive peace." 

Armed settlers from the hardline Jewish settlement of Yitzhar, via the AFP

Thus Moscow still views such settlements on Palestinian territory as illegal under international law, a Reuters summary of the Russian statement noted.

The historic policy shift of the Trump administration came after the State Department’s legal office was ordered to conduct a year-long review of the official US policy on the expanding settlements in the West Bank, according to The Jerusalem Post

Tyler Durden Tue, 11/19/2019 - 10:25
Published:11/19/2019 9:32:14 AM
[Markets] U.S. stocks slip from records on earnings and doubts about China trade deal U.S. stocks slipped back from record highs on Wednesday on disappointing earnings results and doubts about a U.S. - China trade deal Published:11/19/2019 9:32:13 AM
[Markets] ‘Joker’ officially becomes first billion-dollar R-rated movie ‘Joker’ officially becomes first billion-dollar R-rated movie Published:11/19/2019 8:59:30 AM
[Markets] With six fewer holiday season shopping days there’s no time for impulse purchases, which is bad for retail This year’s holiday season has fewer shopping days, which could be bad for retailers don’t have speed and convenience capabilities.
Published:11/19/2019 8:59:30 AM
[Markets] U.S. stocks open higher despite doubts about China trade deal U.S. stocks edged up to new highs Tuesday despite uncertainty about progress for a partial China trade deal, with gains in Boeing on receiving new orders offsetting a slump in Home Depot after reporting a poor outlook. Published:11/19/2019 8:59:30 AM
[Markets] Dow Dives Into Red, Home Depot Hammered Dow Dives Into Red, Home Depot Hammered

Another overnight ramp evaporates...

As Home Depot weighs heavy on The Dow...

But the consumer is strong, right?

Treasury yields are tumbling too...

Source: Bloomberg

Tyler Durden Tue, 11/19/2019 - 09:53
Published:11/19/2019 8:59:30 AM
[Markets] Barron’s on MarketWatch: How Elizabeth Warren is a value investor’s friend Barron’s on MarketWatch: How Elizabeth Warren is a value investor’s friend Published:11/19/2019 8:28:33 AM
[Markets] Epstein Guards Arrested For Failing To Check On Him Epstein Guards Arrested For Failing To Check On Him

Two federal correctional officers who were on duty the night Jeffrey Epstein died were arrested early Tuesday on federal charges related to their failure to check on him the night he died in his cell, according to the New York Times, citing a person with knowledge of the matter.

The two federal Bureau of Prisons employees were expected to be charged later Tuesday morning and appear in United States District Court in Manhattan.

The charges would be the first to arise from a criminal inquiry into the death of Mr. Epstein, who hanged himself at the Metropolitan Correctional Center in Manhattan while awaiting trial on sex-trafficking charges. -NYT

The guards faced harsh scrutiny after Epstein was found unresponsive in his cell at the Metropolitan Correctional Center in New York City on August 10, after failing to check on him every 30 minutes as required. Instead, they fell asleep for hours and falsified records to cover up what they had done according to reports.

Prosecutors offered the officers a plea deal according to CNN, which they declined, reporting that "at least one federal prison worker on duty the night before Jeffrey Epstein was found dead in his prison cell was offered a plea deal in connection with the multimillionaire's death."

Of the two officers who had the responsibility to monitor Epstein, one was not a detention guard but was temporarily reassigned to that post, according to CNN reporting. The guard, a man not identified by officials, had previously been trained as a corrections officer but had moved to another position. Rules at the Federal Bureau of Prisons allow people who work in other prison jobs, such as teachers and cooks, to be trained to fill in for posts usually manned by regular guards.

The official ruling on Epstein's death was suicide, although skeptics have suggested that Epstein's sudden death was all too convenient as it also buried the toxic secrets of countless implicated "luminaries" and Wall Street and Beltway VIPs across all sectors of US life.

At the end of October, prominent forensic expert Michael Baden refuted the official narrative, stating at the end of October that Epstein was "strangulated."

Tyler Durden Tue, 11/19/2019 - 09:04
Published:11/19/2019 8:28:33 AM
[Markets] Dow seen opening higher despite doubts about China trade deal U.S. stocks are seen opening at a new record Tuesday as investors looked to extend the rally, despite uncertainty about progress for a partial China trade deal, with gains in Boeing on receiving new orders offset by a slump in Home Depot on reporting a poor outlook. Published:11/19/2019 8:28:33 AM
[Markets] U.S. housing starts climb 3.8% in October U.S. housing starts climb 3.8% in October Published:11/19/2019 7:59:19 AM
[Markets] Elizabeth Warren Might Be a Value Investor’s Best Friend. Really. The world’s biggest companies keep getting bigger, and it might take a progressive with a thirst for antitrust to reverse that trend. Published:11/19/2019 7:59:19 AM
[Markets] Watch Live: Vindman, Williams Testify In Tuesday Impeachment Doubleheader Watch Live: Vindman, Williams Testify In Tuesday Impeachment Doubleheader

The impeachment circus is back on Tuesday as the public phase of the Dems' investigation enters its second week with the public testimony of Lt. Col. Alexander Vindman, the top Ukraine specialist on the National Security Council who has objected to President Trump's alleged decision to press Ukrainian Prime Minister Volodymyr Zelensky to investigate the Bidens.

Vindman isn't the only one who will testify Tuesday: Kurt Volker, a former special envoy to Kyiv who reportedly told lawmakers in private that the White House decision to withhold military aid was "not significant" and Ukraine's leaders "never communicated a belief that there was a quid pro quo", will also appear before the Intelligence Committee.

Two other senior officials, Jennifer Williams, a national security veteran detailed to Vice President Mike Pence, and outgoing NSC staffer Tim Morrison, will also testify.

Dems have been working to impeach President Trump since a "whistleblower" believed to be a CIA analyst complained that Trump had risked undermining US foreign policy to pursue personal political ends. Keep in mind: A rough transcript of a call between Trump and his Ukrainian counterpart that took place on July 25 was released weeks ago, allowing members of the public to make their own decisions about what they think they heard.

Watch the hearing live below:

All four of these witnesses have already testified before lawmakers in private sessions.  Vindman, who has suspiciously advised the government of Ukraine in addition to working full time for the US, was on the July 25 call at the center of the impeachment probe. Volker wasn't on the call, but he was a part of the shadow campaign led by Rudy Giuliani and the President to press the Ukrainians to investigate Hunter Biden over his links to a gas company suspected of paying bribes and other corrupt activities.

Morrison, meanwhile, has testified that Ukrainian ambassador Gordon Sondland in September told a top Ukrainian official that the release of US military aid to the war-torn country would hinge on whether Kyiv opened an investigation into the Bidens.

The witnesses will testify 2 at a time during Tuesday's most packed hearing to date. Vindman and Williams will kick things off at 9 am, followed by Volker and Morrison around mid-afternoon.

Tyler Durden Tue, 11/19/2019 - 08:55
Published:11/19/2019 7:59:19 AM
[Markets] Metals Stocks: Gold prices slip, give up previous day’s gain as stocks and bond yields perk up Gold futures slip on Tuesday, relinquishing gains from a day ago, as Treasury yields and stocks headed higher, sapping some appetite for bullion
Published:11/19/2019 7:31:19 AM
[Markets] Home Depot Stock Is Falling After Its Earnings Release. Why You Shouldn’t Worry. Home Depot shares are dropping in premarket trading after the company cut full-year sales growth guidance. But it doesn’t seem to be weighing on the overall market. Published:11/19/2019 7:31:19 AM
[Markets] Sweden Drops Rape Investigation Into Julian Assange Sweden Drops Rape Investigation Into Julian Assange

Sweden has closed its rape investigation into Wikileaks founder Julian Assange, saying that the evidence against him is not strong enough for an indictment.

While all investigative steps have been taken in the case, including additional interviews with Assange, the evidence does not prove he committed a criminal act according to the prosecutor.

The Prosecution Authority added that oral testimony in the case had "weakened," which is natural over time.

Assange has avoided extradition to Sweden for seven years after he sought refuge at the Ecuadorian embassy in London in 2012. The 48-yaer-old publisher was kicked out in May, and was sentenced to 50 weeks in jail for breaching his bail conditions. He is currently being held at Belmarsh prison in London.

The decision can be appealed.


Tyler Durden Tue, 11/19/2019 - 08:24
Published:11/19/2019 7:31:19 AM
[Markets] S&P Futs Hit New All Time High As Tsunami Of Central Bank Liquidity Pushes Everything Higher S&P Futs Hit New All Time High As Tsunami Of Central Bank Liquidity Pushes Everything Higher

It was not very easy to glean from the disjointed overnight headlines and comments if the prevailing trader mood was one of "optimism" or "not so much optimism" when it comes to the daily US-China trade deal barometer, but one look at stocks which are a sea of green this morning...

... the narrative quickly becomes one of smooth sailing between Washington and Beijing, even though in fact none of that matters, and it's all been a diagonal line since the start of QE4, pardon, "NOT QE" on Oct. 14.

Meanwhile, Reuters did not disappoint with its regurgitated, stock explanation for the market move, noting that "world shares touched their highest in nearly two years on Tuesday as investors maintained bets that the United States and China can reach a deal to end their damaging trade war."

It gets better: confirming what we said at the top, Reuters then goes on to state that "A lack of clear news on the progress of talks has not deterred investors emboldened by a growing sense that risks of a recession, a specter through the year, have receded. Looser monetary policy from major central banks like China has also helped bolster expectations for equities."

In other words, there was no actual news, but because a record burst of central bank liquidity since the financial crisis has pushed risk assets higher, the goalseeked explanation is that, somehow, a deal must be closer. And there you have reflexivity in all its fallacious glory.

So amid this liquidity barrage, it's hardly a surprise that the MSCI world equity index gained 0.1% to touch its highest since January last year.

European shares stocks rallied again from the open led by miners, autos and financial services in the absence of fresh news or economic data, with the broad Euro STOXX 600 adding 0.4% to move to its highest since July 2015. Indexes in Frankfurt and London gained 0.4% and 0.5% respectively. DAX rose 1% to outperform peers, while S&P futures breached Monday’s highs above 3,130, and not even dismal results from Home Depot or Kohl's could derail this train.

Earlier in the session, MSCI's index of Asia-Pacific shares ex-Japan rose 0.6%, with Shanghai blue chips gaining 1% and Hong Kong's Hang Seng up 1.6% as Hong Kong equities extended a rebound to recoup some of last week’s losses, shrugging off another night of chaos as a university siege continued, following another major reverse-repo liquidity injection to the tune of 120BN yuan by the PBOC. India’s Sensex rose, but many stocks fell as investors mulled a health check of the nation’s shadow banks that pointed to prolonged distress. Outside of Hong Kong, Asia was quiet as investors awaited signs of progress in U.S.-China trade negotiations. Trading volume was below average in markets including Japan, China and India. While the MSCI Asia Pacific Index has gained more than 6% since the rally began less than six weeks ago, it hasn’t had a price swing greater than 1 percentage point. It’s the longest such stretch in a year and a half.

Going back to the 'imminent' US-China trade deal, investors said assumptions that an initial trade deal would be reached had outweighed any creeping doubts on progress in talks that stemmed from a lack of clear news, with a growing sense of positive economic fundamentals ahead. "Consensus is assuming that there will be a cyclical upturn," Stéphane Barbier de la Serre, a strategist at Makor Capital Markets. "It’s like the market lowered its guard on the big risk metrics — and that has triggered a reweighting of funds from bonds to equities."

Ironically, on Monday markets barely moved, after dipping initially as CNBC reported the mood in Beijing was pessimistic about prospects of sealing a trade agreement with the United States, buffeting the dollar. But signs that suggested growing detente between the sides clouded the picture: a new extension granted by Washington to let U.S. companies keep doing business with Chinese telecoms giant Huawei suggested a possible olive branch.

Still, that lack of clarity did unnerve some investors: “The longer we go on, the more concerns will arise. The reality is the clock is ticking,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.

As usual, much of the optimism relied on hopes that Beijing will deliver some economic stimulus in addition to Monday’s surprise cut to a closely watched lending rate provided a boost to sentiment in Asian markets. Alas, as we showed yesterday, that won't happen, setting up markets for another major disappointment once the Fed's NOT QE fizzles.

Meanwhile, as we also noted yesterday, a full-blown economic recovery is now fully priced in by the S&P.

In rates, bunds fell, underperforming Treasuries which were unchanged at 1.815% amid lighter-than-average trading volumes as stocks extend gains to fresh highs. The bund curve steepens, with 10-year bond underperforming Treasuries by 0.5bps; bund futures trading volumes are running at around 70% of the 10-day average.  BTPs are little changed with futures trading volumes about 55% of the 10-day average. Gilts traded steady, while curve flattens; 2041 gilt linker size is set at GBP2.25b, with final orderbook over GBP17.5b; compares with orders of GBP20.5b for the prior reopening in October 2018.

In FX, the dollar halted a three-day decline while the yen and the Swiss franc came under pressure as risk appetite gained some traction after the London open. “Trade headlines are dominating sentiment but in terms of the key event risk, the release of the Fed minutes will be a big one for market participants,” said Nordea FX strategist Morten Lund.

The EUR/USD traded in a narrow range, with the 21-DMA seemingly capping the upside. The pound slipped as hedge funds took profit on short-term long positions, ahead of the first election debate between the two main party leaders due later Tuesday. Australia’s dollar recovered from an earlier decline that came after the latest minutes from the central bank suggested it was considering another rate cut in November.

In commodities, Brent crude fell, losing 0.2% to $62.29 a barrel, with a combination of jitters over trade and expectations of a rise in U.S. inventories jangling nerves.

Looking at the day ahead, politics is expected to dominate the agenda as the US impeachment inquiry continues and we have the first head-to-head TV debate ahead of the UK election. Today’s data highlights from Europe include September’s Euro Area construction output, Italian industrial sales and orders, and UK industrial trends survey from the CBI. In the US there is October’s building permits and housing starts data, and we’ll also get Canada’s manufacturing sales for September. From central banks, New York Fed President Williams will be speaking, while Home Depot will be releasing earnings.

Market Snapshot

  • S&P 500 futures up 0.2% to 3,128.75
  • STOXX Europe 600 up 0.6% to 408.29
  • MXAP up 0.2% to 165.44
  • MXAPJ up 0.6% to 530.80
  • Nikkei down 0.5% to 23,292.65
  • Topix down 0.2% to 1,696.73
  • Hang Seng Index up 1.6% to 27,093.80
  • Shanghai Composite up 0.9% to 2,933.99
  • Sensex up 0.4% to 40,430.46
  • Australia S&P/ASX 200 up 0.7% to 6,814.22
  • Kospi down 0.3% to 2,153.24
  • German 10Y yield rose 0.4 bps to -0.332%
  • Euro down 0.05% to $1.1066
  • Brent Futures down 0.8% to $61.95/bbl
  • Italian 10Y yield fell 2.4 bps to 0.862%
  • Spanish 10Y yield fell 0.8 bps to 0.406%
  • Gold spot down 0.3% to $1,467.67
  • U.S. Dollar Index up 0.09% to 97.88

Top Overnight News

  • Federal Reserve Chairman Jerome Powell met with President Donald Trump and Treasury Secretary Steven Mnuchin Monday to discuss the economy, marking a second face-to-face sit-down this year amid relentless White House criticism of the U.S. central bank. President Donald Trump said he “protested” U.S. interest rates that he considers too high relative to other developed countries
  • Boris Johnson and Jeremy Corbyn are preparing for their first head-to-head election debate as the Labour leader seeks to reverse the prime minister’s double-digit lead in the polls. The premier wrote an open letter to Corbyn accusing him of “dither” over Brexit, while Labour said Tories are more committed to the billionaires who fund the party
  • A U.S. chipmaker’s attempt to acquire a peer with a valuable Chinese affiliate has spurred concern in Beijing, as tensions between the world’s two biggest economies threaten to disrupt the global tech supply chain.
  • Options traders are the most bullish on the euro’s short- term prospects in a month, as expectations for further policy easing by the European Central Bank fade and with euro-area yields off their cycle lows
  • Fixed-income investors have lagged in incorporating environmental, social and governance (ESG) factors into their strategies, but BlackRock Inc. says they now have more tools -- including benchmark indexes -- to bring sustainable debt into their portfolios
  • Australia’s central bank considered cutting interest rates at its latest meeting, but decided instead to hold steady and monitor the impact of earlier easing amid concern that households were being spooked by very low borrowing costs
  • Caught between a Brexit they don’t want and a firebrand socialist they fear, business executives were not impressed after the leading candidates in Britain’s upcoming general election tried to win their support
  • Bank of Japan Governor Haruhiko Kuroda said the bank would consider additional easing including cutting interest rates if risks were to rise
  • Hong Kong leader Carrie Lam has called for a peaceful resolution to a university siege that has transfixed the city and raised fears of a crackdown on scores of protesters who remain trapped in a campus surrounded by police. Lam said she had instructed police to try and resolve the situation at Hong Kong Polytechnic University peacefully
  • Oil dropped for a second day on indications U.S. crude stockpiles and shale output will continue expanding, while investors wait for news on a breakthrough to the prolonged trade war
  • Japan remained the top foreign holder of U.S. Treasuries in September even after reducing its government securities holdings by the most since at least 2000.

Asian equity markets eventually traded mostly higher but with gains capped after an initial lack of commitment due to the ongoing US-China uncertainty triggered by contrasting trade headlines, including reports of a pessimistic mood in Beijing about a deal being passed. ASX 200 (+0.7%) and Nikkei 225 (-0.5%) were mixed with Australia lifted as gains in the defensive sectors and recovery in financials superseded the heavy losses in tech, while Tokyo sentiment was snagged by detrimental currency flows and with SoftBank pressured by further WeWork troubles as the New York Attorney General was said to be investigating the embattled workspace company. Elsewhere, Hang Seng (+1.5%) and Shanghai Comp. (+0.9%) began indecisively but gradually improved as reports of Beijing trade pessimism was offset by a 90-day license extension for US firms to continue doing business with Huawei, while the PBoC also continued its liquidity efforts with another firm injection of CNY 120bln through 7-Day Reverse Repos. Finally, 10yr JGBs were mildly higher as they tracked recent upside in T-notes and amid weakness in Japanese stocks, while demand was also supported by the BoJ’s presence in the market for over JPY 1.1tln of JGBs in 1yr-10yr maturities.

Top Asian News

  • Chain Hated by Hong Kong Protesters Sees Double Digit Drop
  • Alibaba’s H.K. Share Sale Multiple Times Subscribed: DJ
  • China’s State Grid Chooses to Smarten Up Electric Meters

Major European bourses (Euro Stoxx 50 +0.7%) are on the front foot in another day of quiet trade, following on from a broadly positive APAC handover. A decent liquidity injection from the PBoC, a lack of fresh negative US/China trade negatives (the 90-day Huawei waiver appears to have mostly offset negativity regarding reported pessimism on deal in China), plus a lack of looming risk events appear to be enabling the recent trend in global equities to continue, i.e. a persistent grind higher. Also, possibly acting in support are reports that US President Trump’s Section 232 auto tariff authority (which he could have used to put tariffs on European auto imports) has run out of time, meaning he may have to find other means if he wants to pursue auto tariffs on Europe/Japan, legal experts said. As a reminder, Trump last Thursday took no action to impose or delay national security tariffs on auto imports, despite a deadline to do so by that date. Regardless, US index futures made YTD highs again this morning, with the ES Dec’19 contract reaching highs of 3129, while back in Europe, the Euro Stoxx 50 broke out of last week’s range to make new highs around 3720, with ATHs seemingly now within reach at 3769. In terms of the sectors, things are mostly in the green, with underperformance being seen in the more defensive Utilities (-0.1%), Consumer Stapes (+0.1%) and Health Care (+0.3%) sectors, while Telecoms (unch.) have also been on the back foot, with the news that France’s 5G auction has been delayed until March 2020 doing little to help. Risk sensitive sectors, including Consumer Discretionary (+1.1%) and Financials (+1.1%) are amongst the outperformers. In terms of the standout movers; Halma (+12.0%) tops the Stoxx 600 performance chart, where the Co. posted decent gains in pre-tax profit and increased its interim dividend. Propping up the Stoxx 600 table is SES (-19.4%), after the US FCC chairman voiced support for a public auction to free up space for 5G – SES had been lobbying for a private auction. EasyJet (+3.6%) is higher after the Co. posted earnings which beat on top and bottom line expectations and said bookings are “slightly ahead” of last year. Looking at flow data from EPFR, they show that European equities received inflows averaging USD 9.6bln for a third straight, compared to an average USD 5bln weekly outflow since December last year. Morgan Stanley cited the return of flows as part of the reason why they are overweight European equities, adding that the region has room for a further price-to-earnings re-rating, citing reduced Brexit risk, possible shift from monetary to fiscal stimulus, and tighter peripheral and credit spreads as other catalysts.

Top European News

  • Swiss Watch Exports Stagnate as Shipments to Hong Kong Slump
  • Private Equity Muscles Into Britain’s Booming Pension Market
  • Labour Attacks Tory Billionaires Before TV Showdown: U.K. Votes

In FX, the broad Dollar and Index have rebounded off APAC lows after the latter found a base at the 97.75 mark. DXY resides near the top end of today’s 97.75-88 parameter ahead of another quiet session in terms of scheduled events and with sights still locked on US-Sino trade developments. Meanwhile, USD/CNH trades little changed on the day having earlier tested its 21 DMA to the upside at 7.0320 (vs. intraday low of 7.0230) ahead of its 100 DMA at 7.0415

  • GBP, EUR - Both intially moved sideways and within tight ranges against the Buck amid a lack of fresh catalysts and with eyes on the tonight’s Johnson/Corbyn showdown debate commencing at 2000GMT and the latest YouGov polling at 2100GMT. Upside in Sterling remains somewhat capped in light of comments from EU Trade Chief Weyand who warned of a “bare bones” or no trade deal from Brussels next year, however traders need to steer through domestic political landscape first with election day drawing closer. GBP/USD remains drifted from the 1.2950 mark to around 1.2925, whilst the upside includes reported barriers at 1.3000 and reported stops at 1.3030. EUR/USD resides just north of 1.1050 having earlier tested its 21 DMA at 1.1081 and with eyes on its 100 DMA at 1.1091.
  • AUD, NZD - The antipodeans are flat in early European trade with AUD/USD and NZD/USD around 0.6800 and 0.6400 respectively, but off overnight lows. The pairs were initially pressured (albeit modestly) upon the release of the RBA minutes which noted that a case could be made for a cut at the November meeting and reiterated that the Board is prepared to ease further if needed. However, analysts at Westpac believe that the case for a December cut is heavily downplayed in the minutes and the dismal Aussie labour force figures from last week may not be sufficient enough for a move from its current “monitoring” approach, and thus Westpac maintains its forecast for a 25bps February cut. AUD/USD rebounded from its overnight post-RBA base of 0.6785 back above 0.6800 ahead of its 50 DMA at 0.6814. Similarly, its Kiwi counterpart reclaimed 0.6400+ status from an APAC low of 0.6383 (21 DMA) with the next level to the upside its 50 DMA at 0.6435.
  • JPY, CHF - Little action on the safe-heaven front thus far although prices seem to have a downside bias against the USD, potentially on the latter’s recovery from its APAC trough. Participants will again be eyeing developments on the US-Sino trade front amid mixed/contrasting recent reports. Meanwhile, the situation in Hong Kong seems to feel some reprieve (for now at least) after the number of protesters trapped inside the Polytechnic University fell from around 700 to between 100-200, however sources cite by the SCMP noted of over 8000 petrol bombs at the Chinese University ready for use. USD/JPY tested and resides around 108.75 (21 DMA) ahead of potential resistance at 108.83 (Tenkan line) with a barrage of options expiring with USD 1bln between 108.50-55 and a further USD 1bln between 108.90-109.00. The Franc also awaits further risk-driven action as USD/CHF meanders around 0.9900 in early EU trade and eyes its 21 DMA at 0.9911.
  • RBA Minutes from November meeting stated the board is prepared to ease further if needed and agreed a case could be made for a rate cut at the meeting but decided rates should be held steady. RBA board recognized negative effects of lower rates on savers and confidence as rate cuts could have a different impact on confidence than in the past, while it saw a case to wait and assess impact of its prior substantial stimulus and agreed an extended period of low rates is needed to achieve targets.

In commodities, crude markets are lower, with the complex trading heavy despite this morning’s rally in the equity market and a lack of fresh fundamental catalysts. WTI Dec’ 19 futures fell to lows of USD 56.48/bbl, while Brent Jan’ 19 futures fell as low as USD 61.74/bbl, before losses were somewhat pared. In terms of crude specific news of note; Norwegian oil production stood at 1.519mln bpd in October (prelim) vs. Prev. 1.312mln BPD in September, according to the Norwegian Petroleum Directorate. As a reminder, this Thursday sees the release of the Norwegian oil investment survey, with Q3 oil and gas pipeline/extraction investment seen coming in at NOK 181bln, as estimated by the prior release. Elsewhere, and on the docket today, traders will be eyeing tonight’s API Inventory figure which last week printed a draw of 0.54mln barrels. Finally, gold prices slid back beneath the USD 1470/oz mark and copper has been moving higher, assisted by advancing equity prices with eyes remaining on US-China trade developments.

US Event Calendar

  • 8:30am: Housing Starts, est. 1.32m, prior 1.26m; Housing Starts MoM, est. 5.1%, prior -9.4%
  • 8:30am: Building Permits MoM, est. -0.43%, prior -2.7%; Building Permits, est. 1.39m, prior 1.39m
  • 9am: Fed’s Williams Speaks at Capital Markets Conference

DB's Jim Reid concludes the overnight wrap

Yesterday I mentioned how twin Eddie locked himself in the toilet for nearly 30 mins on Sunday and became hysterical before eventually calming down and realising he could unlock the same door. Well yesterday twin Jamie apparently got in such a rage that he broke his car seat in a violent protest at not getting a rice cake. That’s what I go home to every day.

In comparison markets were relatively calm yesterday but trade sentiment again drove some volatility, with major indexes bouncing between gains and losses as news dripped out of Beijing and Washington. A reminder from our survey (link here ) last week that only 14% thought the trade war would get worse over the next 12 months. So the vast majority think it will de-escalate in election year. However, things are getting a little tense ahead of the ”phase one” signing. The first catalyst that sent equities lower yesterday was a tweet from CNBC’s Beijing Bureau Chief, who said that the mood in Beijing “is pessimistic”. She also said that China was “troubled after Trump said no tariff rollback” and said “Strategy now to talk but wait due to impeachment, US election. Also prioritize China economic support.” The tweet came before the US open, but the impact in Europe was clear, with the STOXX 600 falling from its intraday high of +0.28% to drop as low as -0.33%. However, it rebounded to end flat (-0.01%) after the newsflow shifted in a more optimistic direction. Fox Business reported that the US will extend its licenses, which allow firms to continue doing business with Huawei for another 90 days, which was better than the two-week extension reported earlier. That apparent olive branch from the US administration to China helped equities rebound, with the S&P 500 (+0.04%), NASDAQ (+0.11%), and DOW (+0.11%) all edging to fresh all-time highs. Energy stocks were the worst hit on both sides of the Atlantic though thanks to the decline in oil prices, with Brent crude oil down -1.39% and the S&P 500 energy group ending the session down -1.33%.

This morning in Asia markets are mixed with the Hang Seng (+1.03%) and Shanghai Comp (+0.46%) up while the Nikkei (-0.41%) and Kospi (-0.46%) are down. Elsewhere, futures on the S&P 500 are up +0.07%.

In other news, Hong Kong Chief Executive Carrie Lam said that she very much wants to resolve the PolyU situation peacefully, after it has been taken over by protestors for the past two days, but she can’t guarantee that would happen. She also said that minors at PolyU would be treated in a “humanitarian” way and stressed the special arrangements being made so that they would not be immediately arrested while adding that, “right now” the city’s government is confident it can handle the unrest without the army’s help. Meanwhile, US Senate Majority Leader Mitch McConnell urged President Trump to speak out on behalf of the protesters as he said, “The world should hear from him directly that the United States stands with these brave women and men”. Further to this, Senator Marco Rubio’s bipartisan bill supporting Hong Kong protestors could pass as soon as today.

10yr USTs are -1bp lower overnight following a firm day yesterday as treasuries rallied even if bunds traded flat. 10-year yields in the US were -1.7bps lower, while other European bonds also gained with OATs and BTPs rallying -0.8bps and -2.3bps. Yield curves flattened, with the US 2s10s -0.3bps to 21.6bps and the German 2s10s also flattening by -0.7bps. Gold also recovered, having been down -0.80% before the initial trade headlines to end the session +0.19%.

Moving away from trade, we got the news yesterday that Fed Chair Powell had a meeting with both President Trump and Treasury Secretary Mnuchin at the White House. In a statement from the Federal Reserve, it said that Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.” Afterwards, President Trump tweeted that he’d “finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve”, and that the issues discussed included interest rates and trade with China. A few hours later there was another tweet from Mr Trump saying that “At my meeting with Jay Powell this morning, I protested fact that our Fed Rate is set too high relative to the interest rates of other competitor countries. In fact, our rates should be lower than all others (we are the U.S.). Too strong a Dollar hurting manufacturers & growth!’. So tensions still high between the two. The market has made up its mind which way the Fed are going to go for now though as they’ve removed any pricing of another cut until mid-2020, with the odds for a December cut now around zero.

Other Fed speakers included Cleveland’s Mester and Boston’s Rosengren. Mester said that policy is in a good spot, but that she will be “watchfully waiting,” while Rosengren justified his dissent against the most recent rate cut by saying that he is concerned about having available policy space before the next downturn. He also suggested that a future downturn will necessitate a greater role for fiscal policy to provide support. In Europe, the only central bank communication came from ECB Chief Economist Philip Lane, who said that rates are not at their limit and that their current negative levels are “not particularly a super loose policy. If it were super loose, inflation would be higher.” He also suggested that negative rates have been successful in driving corporates to increase their levels of capital spending.

From the UK yesterday, we got the significant announcement from Prime Minister Johnson that planned corporation tax cuts due to take place in April would be scrapped to help fund the NHS. The rate had been due to fall from 19% at present to 17%. This chimes with our Corporate Bank note out last week, An inflection point in global corporate tax? (link here ), where we wrote how 2020 could see the end of a 40 year race to the bottom on corporate tax. Governments have got precarious finances at a time when corporates are in good health. It doesn’t seem politically viable to see this trend continue with the risks that it reverses if certain politicians get elected. The OECD global taxation plan - set to move on to the next stage early next year - is also key.

In terms of the upcoming U.K. election, attention will turn to tonight’s head-to-head debate between Prime Minister Johnson and Labour leader Corbyn. The Lib Dems and the SNP had challenged their exclusion, but two High Court judges dismissed the attempt yesterday, so it’ll just be the Conservative and Labour leaders on stage tonight. Corbyn has to make these events count with Johnson if he wants to catch up so expect a full on attack from the challenger.

In FX markets, sterling was actually the best-performing G10 currency yesterday, up +0.45% against the dollar and to 6+ month highs against the EUR. The pound looks to have benefited from some strong weekend polls (with more of the same yesterday/last night) for the Conservatives, with the logic being that a Conservative majority in the House of Commons will allow for a smooth ratification of the Withdrawal Agreement through Parliament. Finally, we got the news from Prime Minister Johnson that he would keep Sajid Javid as Chancellor of the Exchequer.

There was very little data of note to report on yesterday, though we did see the NAHB housing market index from the US fall to 70 (vs. 71 expected) in November, a slight decline from its 20-month high back in October.

To the day ahead now, and politics is expected to dominate the agenda as the US impeachment inquiry continues and we have the first head-to-head TV debate ahead of the UK election. Today’s data highlights from Europe include September’s Euro Area construction output, Italian industrial sales and orders, while here in the UK we’ll have this month’s industrial trends survey from the CBI. From the US there’ll be October’s building permits and housing starts data, and we’ll also get Canada’s manufacturing sales for September. From central banks, New York Fed President Williams will be speaking, while Home Depot will be releasing earnings.

Tyler Durden Tue, 11/19/2019 - 07:40
Published:11/19/2019 6:58:43 AM
[Markets] Boris Johnson is like James Bond to Brexit supporters and Homer Simpson to opponents, research finds If Boris Johnson was a fictional character supporters who backed the U.K. leaving the European Union see him as James Bond, according to research, but remainers view him as a confused Homer Simpson describing him as a ‘bit like a buffoon.”
Published:11/19/2019 6:58:43 AM
[Markets] The Dow Is Rising, but Home Depot Stock Slips After Earnings Disappoint Stock are on quite a run and U.S. equity markets are set to open higher again on Tuesday. Home Depot shares, on the other hand, are dropping after company management cut sales growth guidance. Published:11/19/2019 6:58:43 AM
[Markets] Tesla ‘Blade Runner’ pickup truck could be so futuristic that it leaves buyers cold Some on Wall Street are skeptical about the new Tesla Inc. pickup truck — that it could be too futuristic and leave traditional pickup buyers unhappy with its design. Published:11/19/2019 6:29:10 AM
[Markets] Home Depot Shares Plunge Most Since 2008 After Slashing Sales Outlook Home Depot Shares Plunge Most Since 2008 After Slashing Sales Outlook

Home Depot shares slumped more than 7% in premarket trade, putting shares on track for their worst daily drop since 2008, after the company slashed its full-year sales guidance on Tuesday.

The company also posted Q3 sales that slightly missed expectations.

Here's BBG's breakdown of the company's Q3 earnings report...

  • Sees FY comparable sales about +3.5%, saw about +4%

  • Sees FY revenue about +1.8%, saw about +2.30%

  • 3Q comparable sales +3.6% vs. +4.80% y/y, estimate +4.6% (Consensus Metrix, average of 25 estimates)

  • 3Q EPS $2.53 vs. $2.51 y/y, estimate $2.53 (range $2.48 to $2.58) (Bloomberg data)

  • 3Q net sales $27.22 billion, +3.5% y/y, estimate $27.52 billion (range $27.35 billion to $27.72 billion) (BD)

  • 3Q U.S. comparable sales +3.8% vs. +5.40% y/y

  • 3Q average ticket sales $66.36, +1.9% y/y

  • 3Q total location count 2,290, estimate 2,290

  • 3Q customer transactions +1.5%

  • 3Q average ticket +1.9%, estimate +2.41%

The action in Home Depot shares weighed on Dow futures ahead of the bell:

Home Depot CEO Craig Menear cited continued lumber deflation for the lower sales forecast. The company also blamed potential tariff impact for its lower full-year revenue guidance.

Read the company's press release below:

* * *

The Home Depot, the world's largest home improvement retailer, today reported third quarter fiscal 2019 sales of $27.2 billion, an increase of 3.5 percent, or $921 million, compared to the third quarter of fiscal 2018. Comparable sales for the third quarter of fiscal 2019 were positive 3.6 percent, and comparable sales in the U.S. were positive 3.8 percent. Net earnings for the third quarter of fiscal 2019 were $2.8 billion, or $2.53 per diluted share, compared with net earnings of $2.9 billion, or $2.51 per diluted share, in the same period of fiscal 2018.

For the third quarter of fiscal 2019, diluted earnings per share increased 0.8 percent from the same period in the prior year.

“Our third quarter results reflected broad-based growth across our business, yet sales were below our expectations driven by the timing of certain benefits associated with our One Home Depot strategic investments,” said Craig Menear, chairman, CEO and president.

“We are largely on track with these investments and have seen positive results, but some of the benefits anticipated for fiscal 2019 will take longer to realize than our initial assumptions. As a result, today we are updating our fiscal 2019 sales guidance, and we are reaffirming our fiscal 2019 earnings-per-share guidance. We are encouraged by the momentum in our business as we invest to extend our competitive advantages. I would like to thank our associates for their hard work and continued dedication to our customers.”

Fiscal 2019 Guidance

The Company updated its guidance for fiscal 2019, a 52-week year compared to fiscal 2018, a 53-week year. The Company expects its fiscal 2019 sales to grow by approximately 1.8 percent and comp sales for the comparable 52-week period to increase approximately 3.5 percent. This compares to the Company’s prior fiscal 2019 sales growth guidance of 2.3 percent and comp sales growth of 4.0 percent. The Company reaffirmed its diluted earnings per-share guidance for the year and expects diluted earnings-per-share growth of approximately 3.1 percent from fiscal 2018 to $10.03.

* * *

With so many traders worried about a possible pullback in the US economy, signs of weakness at retailers like HD, long a standout in a troubled sector, will entice analysts to take a closer look. HD rival Lowe's will report earnings after the bell on Wednesday. Expect analysts to pay close attention.

Tyler Durden Tue, 11/19/2019 - 06:27
Published:11/19/2019 5:59:43 AM
[Markets] Home Depot's stock selloff a 78-point drag on the Dow Shares of Home Depot Inc. are dropping 4.8% in premarket trading Tuesday, enough to keep the Dow Jones Industrial Average's gains from reaching triple digits, after the home improvement retailer missed fiscal third-quarter revenue expectations and cut its full-year outlook. The stock's implied price decline would shave about 78 points off the Dow's price, while Dow futures rose 59 points. The decline would snap a five-day win streak that took the stock to a record close on Monday. The stock had run up 14.9% over the past three months through Monday, while the Dow had gained 7.3%. Published:11/19/2019 5:59:43 AM
[Markets] Need to Know: Why Vanguard’s chief economist says there is an elevated risk of a ‘large drawdown’ in stocks Joe Davis, the global chief economist at Vanguard, doesn’t expect a trade deal and sees the U.S. economy struggling next year.
Published:11/19/2019 5:59:43 AM
[Markets] Last 100 'PolyU' Protesters Resist Hong Kong Police As Dozens Stage Daring Escape Last 100 'PolyU' Protesters Resist Hong Kong Police As Dozens Stage Daring Escape

It's like something out of a movie.

After a three-day standoff, roughly 100 students remain trapped inside the campus of Hong Kong's Polytechnic University. For more than a day, police have had the  campus surrounded, and have warned protesters that there's only one way out - in handcuffs.

Despite a potential 10-year prison sentence (laws against rioting, which are being applied to the protesters, carry heavy penalties), some 600 students have already walked off campus into the waiting arms of police. Some surrendered because they were in ill-health after hypothermia set in. Of the 600 who left, 400 were above the age of 18 and were immediately arrested, while the 200 minors were stopped, then sent home. They could still face charges pending further investigation, the NYT reported.

The battle over PolyU, which raged all weekend, will be remembered as one of the more intense incidents since the start of the protests. Students hurled hundreds of petrol bombs at police, and police spent hundreds of cannisters of tear gas and thousands of rubber bullets.

Outside the campus, a group of parents continued their vigil, awaiting news from their children while holding up signs that read: "Son, come out safely!” and “Save the kids, don’t kill our children."

Elsewhere in Hong Kong, the city started to recover from a week of non-stop pro-democracy demonstrations. Some of the damage from those petrol bombs included burnt out cars.

On Tuesday afternoon, a pro-democracy lawmaker who had been holed up on campus with the protesters held a press conference to announce that he and a few dozen protesters would leave the campus, but warned that, should he be arrested, he isn't "surrendering" to police.

Meanwhile, in video that appears to have been taken late Monday, a group of demonstrators staged a daring getaway when they climbed down off a bridge using ropes and sped away on motorbikes.

As some headed to work for the first time in days, citizens gathered on the street to help clean up bricks and debris left by the protests.

By the looks of it, the entrances to the PolyU campus, and many areas in and around, will probably need to be cleaned after days of skirmishes between police and students.

It's like something out of a movie.

After a three-day standoff, roughly 100 students remain trapped inside the campus of Hong Kong's Polytechnic University. For more than a day, police have had the  campus surrounded, and have warned protesters that there's only one way out - in handcuffs.

Despite a potential 10-year prison sentence (laws against rioting, which are being applied to the protesters, carry heavy penalties), some 600 students have already walked off campus into the waiting arms of police. Some surrendered because they were in ill-health after hypothermia set in. Of the 600 who left, 400 were above the age of 18 and were immediately arrested, while the 200 minors were stopped, then sent home. They could still face charges pending further investigation, the NYT reported.

The battle over PolyU, which raged all weekend, will be remembered as one of the more intense incidents since the start of the protests. Students hurled hundreds of petrol bombs at police, and police spent hundreds of cannisters of tear gas and thousands of rubber bullets.

Outside the campus, a group of parents continued their vigil, awaiting news from their children while holding up signs that read: "Son, come out safely!” and “Save the kids, don’t kill our children."

Elsewhere in Hong Kong, the city started to recover from a week of non-stop pro-democracy demonstrations. Some of the damage from those petrol bombs included burnt out cars.

On Tuesday afternoon, a pro-democracy lawmaker who has been holed up on campus with the protesters held a press conference to announce that he and a few dozen protesters would leave the campus, but warned that, should he be arrested, he isn't "surrendering" to police.

Meanwhile, in video that appears to have been taken late Monday, a group of demonstrators staged a daring getaway when they climbed down off a bridge using ropes and sped away on motorbikes.

As some headed to work for the first time in days, citizens gathered on the street to help clean up bricks and debris left by the protests.

Meanwhile, in Beijing, the central government’s Hong Kong affairs office said that a ruling by a Hong Kong court "blatantly challenged the authority" of China’s legislature and of Hong Kong Chief Executive Carrie Lam. The court's decision to rule that Lam's anti-mask law was illegal had “severe negative social and political impact," Beijing said. Legally, the Communists have the authority to interfere with the basic law.

Tyler Durden Tue, 11/19/2019 - 06:00
Published:11/19/2019 5:28:07 AM
[Markets] Joe Biden says marijuana might be a ‘gateway drug’ — here’s what the research says ‘It is not irrational to do more scientific investigation,’ the 2020 presidential contender said.
Published:11/19/2019 5:28:06 AM
[Markets] Home Depot lowers sales outlook after third-quarter revenue miss Home Depot lowers sales outlook after third-quarter revenue miss Published:11/19/2019 5:28:06 AM
[Markets] European Stocks Are Climbing As U.S.-China Trade Optimism Remains In the Air European stocks climb, led by banks and mining stocks as investors stay optimistic that a trade deal will get done. Published:11/19/2019 5:28:06 AM
[Markets] Dow futures pare gains as Home Depot's stock sinks 5% after third-quarter earnings Futures for the Dow Jones Industrial Average pared firm gains early Tuesday after quarterly results for the home-improvement giant Home Depot came in weaker than expected. Futures for the Dow were up 46 points at 28,053 but had been up at around 28,128. Home Depot reported a 3% decline in its third-quarter earnings and lowered its full-year sales guidance. The company, however, saw an increase in comparable-store sales, up 3.8%, and revenue rose, up 3.5%. The decline in shares of Dow component Home Depot, down about 5% in premarket action, would exact a roughly 88-point toll on the blue-chip index. A dollar move in any one of the 30 components equates to a roughly 6.8-point swing in the price-weighted index. The Dow still remains poised to post a third consecutive record close, along with the S&P 500 index and the Nasdaq Composite Index . Published:11/19/2019 5:28:06 AM
[Markets] The Wall Street Journal: Boeing gets $5.9 billion of orders for grounded 737 MAX jet Boeing Co. received 50 orders for its grounded 737 MAX, a boost for the embattled plane maker as it continues to deal with the fallout from two fatal crashes involving the jet.
Published:11/19/2019 4:59:32 AM
[Markets] Royal Family Biographer Defends Prince Andrew: "Soliciting Sex From Minors Is Not Pedophilia" Royal Family Biographer Defends Prince Andrew: "Soliciting Sex From Minors Is Not Pedophilia"

Authored by John Vibes via,

Biographer for the Royal Family, Lady Colin Campbell, recently appeared on ITV’s Good Morning Britain where she defended Prince Andrew against claims of pedophilia.

In her defense of the disgraced prince, Campbell pointed to the “prostitution” charge that Jeffrey Epstein was convicted of in 2008, and attempted to downplay the fact that the girls were underage by suggesting that he was simply hiring sex workers.

“You all seem to have forgotten that Jeffrey Epstein, the offense for which he was charged and for which he was imprisoned, was for soliciting prostitution from minors. That is not the same thing as pedophilia,” Campbell told a shocked panel Monday morning.

Host Piers Morgan immediately challenged her claims, saying:

If you solicited a 14-year-old for prostitution, you’re a pedophile.

You’re procuring an underage girl for sex. That’s what he was convicted of. I’m sorry, I’m sorry, with respect, that is nonsense.”

Campbell then immediately attempted to backpedal, claiming that a distinction must be made between a minor and a child.

“Was he? 14? Well, I’m not justifying Jeffrey Epstein. Pedophilia, I suspect there’s a difference between a minor and a child,” she said.

“A 14-year-old is a child. Legally, she’s a child,” Morgan replied.

Campbell then admitted that the prince may have “made many mistakes,” but insisted that his only mistake was being too clueless to realize that one of his closest friends was a predator.

“You can’t criticize someone because they aren’t as bright as you would like them to be,” she said.

The controversy surrounding Prince Andrew has grown since his Newsnight interview with Emily Maitlis. In the interview, the prince gave a variety of bizarre excuses and defenses for the accusations against him, including a claim that he could not sweat due to a rare physical condition.

He also denied knowing about the trafficking victim, Virginia Giuffre—formerly known as Virginia Roberts—despite appearing in photos with her when she was under the age of 18. However, he has previously suggested that these photos are “doctored.” Photographic evidence has been uncovered showing that the prince does, in fact, sweat. He also claimed that even though he did not remember meeting the victim on the night that she said, he does vividly remember his alibi, saying he went to a Pizza Express in Woking before returning home that night.

“Going to Pizza Express in Woking is an unusual thing for me to do, a very unusual thing for me to do. I’ve never been… I’ve only been to Woking a couple of times and I remember it weirdly distinctly,” he said.

The interview was so disastrous for the Royal Family that one of Prince Andrew’s PR advisors quit in response to the broadcast. And to make matters even worse, a video clip from 1984 recently resurfaced showing Johnny Carson, then-host of The Tonight Show, making a joke about Prince Andrew being a pedophile.

None of this looks good for the Royal Family.

Tyler Durden Tue, 11/19/2019 - 05:00
Published:11/19/2019 4:30:13 AM
[Markets] The Wall Street Journal: Trump did not have chest pains, Walter Reed doctor says The White House sought to tamp down speculation about President Trump’s health on Monday, releasing a statement from the president’s physician saying that Trump’s unannounced weekend visit to Walter Reed National Military Medical Center was routine.
Published:11/19/2019 4:30:13 AM
[Markets] Wall Street Indexes Dip From Record Highs Amid Trade Deal Doubts Optimists will tell you the U.S. stock market has shown remarkable resiliency. Pessimists will point out that the U.S. and China aren’t any closer to a trade deal than they were in May. Published:11/19/2019 3:57:46 AM
[Markets] Pope Suddenly Replaces Top Vatican Financial Regulator In Developing 'Mystery' Scandal Pope Suddenly Replaces Top Vatican Financial Regulator In Developing 'Mystery' Scandal

Now over six years since Pope Benedict took the nearly unprecedented step of abdicating the throne in 2013, with rumors at the time swirling that it was due to irregularities and scandal at the Vatican Bank — though it was health reasons officially cited (a papal resignation hadn't happened in the prior 600 years) — the Vatican Bank is once again at the center of scandal. 

The Vatican’s top financial regulator, René Brülhart, has unexpectedly resigned (or was apparently sacked) related to a new scandal first revealed last month centered on the Holy See's investment initiatives in London real estate, specifically involving attempts to secure an €100 million ($110 million) loan to acquire luxury property in London's Chelsea neighborhood, The Wall Street Journal reports.

St. Peter's Basilica at the Vatican, file image.

Brülhart served as president of the Vatican's Financial Information Authority, or AIF, and has been replaced effective Monday.

The office had been established under Benedict in 2010 in order to root out financial corruption and widespread reports of money-laundering, and to bring the Vatican Bank into international norms and greater transparency after a series of major scandals rocked the sovereign Vatican City State in the heart of Rome, and brought embarrassment to the papacy.

The high level regulator's replacement is the culmination of events which began in October when police raided the offices of AIF and the Secretariat of State, the latter which functions as a Vatican executive branch (though the Pope ultimately exercises supreme decision-making power), after the attempt to secure the €100 million loan stirred suspicions.

Thus far the exact nature of possible criminal activity in the London real estate deal has yet to be revealed by Vatican officials, the precise details of wrongdoing remaining a mystery and carefully confined within the usually opaque ancient city-state's circle of top churchmen.

Domenico Giani, chief of Vatican police had also resigned over the developing scandal centered on the Vatican financial watchdog AIF. Image source: CNS

But there has been a great deal of 'house cleaning' since, with the AIF chief being the highest official to fall, along with nearly half a dozen lower level employees.

Among the things the AIF regulator has been busy with is closing thousands of suspicious accounts with the Vatican bank due to their having nothing to do with “works of religion”.

And previously, the longtime chief of the Vatican police and lead bodyguard for Pope Francis, Domenico Giani (above), resigned in mid-October over leaks related to the surprise Oct. 1 raid on the offices of the Vatican's Secretariat of State and the city-state's financial watchdog authority.

René Brülhartm now former president of the Vatican Financial Information Authority. Image source Zuma Press via WSJ.

According to the WSJ:

Since then, the Vatican has suspended five employees — including AIF’s No. 2 official, Tommaso Di Ruzza — and its security chief has resigned in connection with the investigation. It isn’t clear what, if anything, the suspended employees were suspected of doing. Last month, AIF’s board, led by Mr. Brülhart, released a statement expressing “full faith and trust in the professional competence and honorability” of Mr. Di Ruzza.

But again though Vatican officials have yet to comment on specifics, it certainly appears the now dismissed officials were caught overseeing likely major criminal activity.

Or at the very least they may have been in involved in making reckless and high-risk investments, given a theme of Pope Francis this year has been to halt "poorly managed spending and investments," according to the WSJ report.

Tyler Durden Tue, 11/19/2019 - 04:15
Published:11/19/2019 3:28:56 AM
[Markets] Disruptive Money: SEB says suspect customers in Swedish TV show were already known and dealt with The Swedish lender was last week contacted by Swedish TV show Uppdrag Granskning, claiming it had information on the bank ahead of a program it will air on suspected money laundering in the Baltics.
Published:11/19/2019 2:59:04 AM
[Markets] The Roger Stone–Wikileaks–Russia Hoax The Roger Stone–Wikileaks–Russia Hoax

Authored by Craig Murray,

As ever, the Guardian wins the prize for the most tendentious reporting of Roger Stone’s conviction. This is not quite on the scale of its massive front page lie that Paul Manafort visited Julian Assange in the Ecuadorean Embassy. But it is a lie with precisely the same intent, to deceive the public into believing there were links between Wikileaks and the Trump campaign. There were no such links.

The headline “Roger Stone: Trump Adviser Found Guilty On All Charges in Trump Hacking Case” is deliberately designed to make you believe a court has found Stone was involved in “Wikileaks hacking”. In fact this is the precise opposite of the truth. Stone was found guilty of lying to the Senate Intelligence Committee by claiming to have links to Wikileaks when in fact he had none. And of threatening Randy Credico to make Credico say there were such links, when there were not.

It is also worth noting the trial was nothing to do with “hacking” and no hacking was alleged or proven. Wikileaks does not do hacking, it does “leaks”. The clue is in the name. The DNC emails were not hacked. The Guardian is fitting this utterly extraneous element into its headline to continue the ludicrous myth that the Clinton campaign was “Hacked” by “the Russians”.

It is worth noting that not one of those convicted of charges arising from or in connection with the Mueller investigation – Manafort, Papadopolous, Stone – has been convicted of anything to do with Wikileaks, with anything to do with Russia or with the original thesis of the enquiry.

Astonishingly, in the case of Stone, he has been convicted of saying that the Mueller nonsense is true, and he was a Trump/Wikileaks go-between, when he was not. Yet despite the disastrous collapse of the Mueller Report, and despite the absolutely devastating judicial ruling that there was no evidence worthy even of consideration in court that Russiagate had ever happened, the Guardian and the neo-con media in the USA (inc. CNN, Washington Post, New York Times) continue to serve up an endless diet of lies to the public.

Randy Credico was the chief witness for the prosecution against Roger Stone. That’s for the prosecution, not the defence. This is the state’s key evidence against Stone. And Credico is absolutely plain that Stone had no link to Wikileaks. The transcript of my exclusive interview with Randy has now been prepared (thanks to Sam and Jon) and follows here.

I spoke to Randy yesterday to clarify one point.

The full unedited interview from 10 November can be found here.

The first conversation Randy ever had with Julian Assange was on 25 August 2016 and it was on-air on Randy’s radio show. There was no private talk off-air around the show. That was Randy’s only contact of any kind with Julian Assange before the 2016 election. His next contact with him, also an on-air interview, was not until Spring 2017, well after the election.

He could not have been in any sense a channel to Wikileaks.

*  *  *

Unlike the Integrity Initiative, the 77th Brigade, Bellingcat, the Atlantic Council and hundreds of other warmongering propaganda operations, Craig's blog has no source of state, corporate or institutional finance whatsoever. It runs entirely on voluntary subscriptions from its readers – many of whom do not necessarily agree with every article, but welcome the alternative voice, insider information and debate. Subscriptions to keep Craig's blog going are gratefully received.

Tyler Durden Tue, 11/19/2019 - 03:30
Published:11/19/2019 2:59:04 AM
[Markets] Momentum stocks are down, but not for the reason you may have thought Institutional investors have indiscriminately dumped shares of fast-growth companies after earnings reports.
Published:11/19/2019 2:26:59 AM
[Markets] US Publicly Backs Iran Protests As Khamenei Says Crackdown On "Thugs" Coming US Publicly Backs Iran Protests As Khamenei Says Crackdown On "Thugs" Coming

It took Washington all of two days to jump behind the large popular protests over gas price hikes which gripped cities across Iran since Friday. Over the weekend the US State Department predictably came out in favor of more protests, in a volatile situation in the sanctions-ravaged country which has already witnessed multiple demonstrators killed and over a thousands arrested, and banks and gas stations torched in anger over soaring gas prices

Given Uncle Sam is all too eager to hijack any Iranian domestic protests for the purpose of 'regime change' in what's currently a middle and lower class driven movement over the deteriorating economic situation and drastic change in policy which saw petrol subsidies suddenly slashed, this could be the very recipe which brings the unrest to a halt. Ayatollah Khamenei already labeled those behind vandalism and sabotage as "thugs" and described them as "counter-revolutionary" forces, in reference to Iran's 'Islamic revolutionary' government. 

Central Bank In Behbahan, Iran being engulfed in flames as demonstrators chant.

The Islamic Republic's clerics and political leaders will now no doubt paint the crowds in the streets as being the servants of US and Israeli imperial aggression and interference. But then again, considering that the Trump administration established a special CIA unit reportedly named the 'Iran Mission Center' — with an express purpose to facilitate US-driven political change in the country — the mullahs might not be too far off the mark in their paranoia and suspicions at any "spontaneous" uprising. 

“The proud Iranian people are not staying silent about the government’s abuses,” Pompeo said in a statement published Sunday, saying that “the United States is with you,” and will stand against Iran’s “tyranny.” The statement said further, "We condemn the lethal force and severe communications restrictions used against demonstrators” and described the unrest as a “Cautionary tale of what happens when a ruling class abandons its people and embarks on a crusade for personal power and riches.”

Protests and clashes with police began Friday when petrol prices suddenly rose by at least 50% after government subsidies on it were slashed. Government statements said the plan is to divert the funds in order to make cash payments to low-income households. 

The AP reported that while at the start of this week drivers were allotted up to 250 liters a month at the pump at at a controlled 10,000 rials per liter, as of Friday that changed drastically to an allowance of 60 liters (or 13 gallons) of petrol a month at 15,000 rials ($0.13; £0.10) a liter. Additional liters after that cost 30,000 rials. 

Khamenei in a speech on Sunday defended the move: "If the heads of the three branches of the government make a decision [about it], I will support," he said. "The decision must be implemented."

Banks filmed up in flames over the weekend in a serious escalation:

Khamenei blamed opponents and foreign enemies for "sabotage" after multiple banks and gas stations were torched over the weekend. He described that,"The counter-revolution and Iran's enemies have always supported sabotage and breaches of security and continue to do so."

"Setting a bank on fire is not an act done by the people. This is what thugs do," Khamenei said.

The top cleric further signaled a severe crackdown is coming as protests were reported to have hit 100 cities across the country of 80 million people.

Meanwhile, new video emerging from Monday protests and clashes with police appears to show some incidents of security forces using 'live fire' to disperse the crowds.

In some places gas prices have jumped to as much as 300% compared to what they were before last Friday. 

While protests began on Friday, they appeared to get more confrontational by Saturday, as police were filmed using riot control measures against crowds, and with some reports of deadly force being used by police, as has been the case over the past month in neighboring Iraq. 

Tyler Durden Tue, 11/19/2019 - 02:45
Published:11/19/2019 1:58:39 AM
[Markets] Dow Jones Newswires: EasyJet 2019 profit falls, but forward bookings rise The company said that for fiscal 2020 its expected capacity growth will be at the lower end of historic guidance of between 3% and 8% per year.
Published:11/19/2019 1:58:39 AM
[Markets] Is The Middle East Beginning A Self-Correction? Is The Middle East Beginning A Self-Correction?

Authored by Alastair Crooke via The Strategic Culture Foundation,

“Two years, three years, five years’ maximum from now, you will not recognize the same Middle East”, says the former Egyptian FM, Arab League Secretary General and Presidential Candidate, Amr Moussa, in an interview with Al-Monitor.

Mousa made some unexpected points, beyond warning of major change ahead (“the thing now is that the simple Arab man follows everything” – all the events). And in reference to the protests in Iraq, Moussa says that Iraq is in “a preparatory stage for them to choose their way as Iraqis — emphasizing that “the discord between Sunni and Shia is about to fade away.”

The present regional turbulence, he suggests, is [essentially] a reaction to the US playing the sectarian card – manipulating “the issues of sect and religion, et cetera, was not only a dangerous, but a sinister kind of policy”. He added however, “I don’t say that it will happen tomorrow, but [the discord between Sunnis and the Shi’a fading away], will certainly happen in the foreseeable future, which will reflect on Lebanon too.”

What we are witnessing in Iraq and Lebanon, he adds, “are these things correcting themselves. It will take time, but they will correct themselves. Iraq is a big country in the region, no less than Iran, no less than Turkey. Iraq is a country to reckon with. I don’t know whether this was the reason why it had to be destroyed. Could be. But there are forces in Iraq that are being rebuilt … Iraq will come back. And this phase – what we see today, perhaps this is the — what can I say? A preparatory stage?”

Of course, these comments – coming from a leading Establishment Sunni figure – will appear stunningly counter-intuitive to those living outside the region, where the MSM narrative – from Colombia to Gulf States – is that the current protests are sectarian, and directed predominantly at Hizbullah and Iran. Certainly there is a thread of iconoclasm to this global ‘Age of Anger’, targeting all leaderships, everywhere. In these tempestuous times, of course, the world reads into events what it hopes and expects to see. Moussa calls such sectarian ‘framing’ both dangerous and “sinister”.

But look rather, at the core issue on which practically all Lebanese demonstrators concur: It is that the cast-iron sectarian ‘cage’ (decreed initially by France, and subsequently ‘corrected’ by Saudi Arabia at Taif, to shift economic power into the hands of the Sunnis), is the root cause to the institutionalised, semi-hereditary corruption and mal-governance that has infected Lebanon.

Is this not precisely articulated in the demand for a ‘technocratic government’ – that is to say in the demand for the ousting of all these hereditary sectarian Zaim in a non-sectarian articulation of national interests. Of course, being Lebanon, one tribe will always be keener for one, rather than another, sectarian leader to be cast as villain to the piece. The reality is, however, that technocratic government exactly is a break from Taif – even if the next PM is nominally Sunni (but yet not partisan Sunni)?

And just for clarity’s sake: An end to the compartmentalised sectarian constitution is in Hizbullah’s interest. The Shi’i – the largest minority in Lebanon – were always given the smallest slice of the national cake, under the sectarian divide.

What is driving this sudden focus on ‘the flawed system’ in Lebanon – more plausibly – is simply, hard reality. Most Lebanese understand that they no longer possess a functional economy. Its erstwhile ‘business model’ is bust.

Lebanon used to have real exports – agricultural produce exported to Syria and Iraq, but that avenue was closed by the war in Syria. Lebanon’s (legal) exports today effectively are ‘zilch’, but it imports hugely (thanks to having an artificially high Lebanese pound). All this – i.e. the resulting trade, and government budget deficit – used to be balanced out by the large inward flow of dollars.

Inward remittances from the 8 – 9 million Lebanese living overseas was one key part – and dollar deposits arriving in Lebanon’s once ‘safe-haven’ banking system was the other. But that ‘business model’ effectively is bust. The remittances have been fading for years, and the Banking system has the US Treasury crawling all over it (looking for sanctionable Hizbullah accounts).

Which brings us back to that other key point made by Moussa, namely, that the Iraqi disturbances are, in his view, “a preparatory stage for them to choose their way as Iraqis … and that will reflect on Lebanon too”.

If the ‘model’ – either economically or politically – is systemically bust, then tinkering will not do. A new direction is required.

Look at it this way: Sayyed Nasrallah has noted in recent days that other alternatives for Lebanon to a US alignment are possible, but have not yet consolidated into a definitive alternative. That option, in essence, is to ‘look East’: to Russia and China.

It makes sense: At one level, an arrangement with Moscow might untie a number of ‘knots’: It could lead to a re-opening of trade, through Syria, into Iraq for Lebanon’s agricultural produce; it could lead to a return of Syrian refugees out from Lebanon, back to their homes; China could shoulder the Economic Development plan, at a fraction of its projected $20 billion cost – and, above all it could avoid the ‘poison pill’ of a wholesale privatisation of Lebanese state assets on which the French are insisting. In the longer term, Lebanon could participate in the trade and ‘energy corridor’ plans that Russia and China have in mind for the norther tier of the Middle East and Turkey. At least, this alternative seems to offer a real ‘vision’ for the future. Of course, America is threatening Lebanon with horrible consequences – for even thinking of ‘looking East’.

On the other hand, at a donors’ conference at Paris in April, donors pledged to give Lebanon $11bn in loans and grants – but only if it implements certain ‘reforms’. The conditions include a commitment to direct $7 bn towards privatising government assets and state property – as well as austerity measures such as raising taxes, cutting public sector wages and reducing social services.

Great! But how will this correct Lebanon’s broken ‘business model’? Answer: It would not. Devaluation of the Lebanese pound (almost inevitable, and implying big price rises) and further austerity will not either make Lebanon again a financial safe-haven, nor boost income from remittances. It is the classic misery recipe, and one which leaves Lebanon in the hands of external creditors.

Paris has taken on the role of advancing this austerity agenda by emphasising that only a cabinet acceptable to the creditors will do, to release crucial funds. It seems that France believes that it is sufficient to introduce reforms, impose the rule of law and build the institutions – in order to Gulliverise Hizbullah. This premise of US or Israeli acquiescence to this Gulliverisation plan – seems questionable.

The issue for Aoun must be the potential costs that the US might impose – extending even to the possible exclusion Lebanese banks from the dollar clearing system (i.e. the infamous US Treasury neutron bomb). Washington is intent more on pushing Lebanon to the financial brink, as hostage to its (i.e. Israel’s) demand that Hizbullah be disarmed, and its missiles destroyed. It might misjudge, however, and send Lebanon over the brink into the abyss.

But President Aoun, or any new government, cannot disarm Hizbullah. But Israel’s newly ambiguous strategic situation (post – Abqaiq), will likely hike the pressures on Lebanon to act against Hizbullah, through one means or another. Were Aoun or his government to try to mitigate the US pressures through acquiescence to the ‘reform’ package, would that be the end to it? Where would it all end, for Lebanon?

And it is a similar conundrum in Iraq: The economic situation though, is quite different. Iraq has one-fifth of the population of neighbouring Iran, but five times the daily oil sales. Yet the infrastructure of its cities, following the two wars, is still a picture of ruination and poverty. The wealth of Iraq is stolen, and sits in bank accounts abroad. In Iraq, it is primarily the political model that is bust, and needs to be re-cast.

Is this Moussa’s point – that Iraq presently is in the preparatory stage of choosing a new path ahead? He describes it as a self-correcting process leading out from the fissures of sectarianism. Conventional Washington thinking however, is that Iran seeks only a Shi’i hegemony for Iraq. But that is a misreading: Iran’s policy is much more nuanced. It is not some sectarian hegemony that is its objective, but the more limited aim to have the strategic edge across the region – in an amorphous, ambiguous, and not easily defined way – so that a fully sovereign Iraq becomes able to push-back against Israel and the US – deniably, and well short of all-out war.

This is the point: the end to sectarianism is an Iranian interest, and not sectarian hegemony.

Tyler Durden Tue, 11/19/2019 - 02:00
Published:11/19/2019 1:34:28 AM
[Markets] Dow Jones Newswires: EU car sales reach decade high in October New car registrations — a reflection of sales — rose 8.7% on year to 1.18 million vehicles, the highest total for the month since 2009, the European Automobile Manufacturers’ Association said Tuesday.
Published:11/19/2019 1:34:28 AM
[Markets] Egypt Risks US Sanctions If It Finalizes $20BN Deal For Russian Warplanes Egypt Risks US Sanctions If It Finalizes $20BN Deal For Russian Warplanes

As Russia's defense tech sector continues attracting interest from countries across Eastern Europe, the Middle East and Asia, Washington increasingly finds itself in the awkward position of having to threaten and cajole its own regional allies. 

Reuters reports of the latest instance: "The United States could impose sanctions on Egypt and block it from future military sales if it goes ahead with a purchase of Russian warplanes, a U.S. official said on Monday."

Last Spring Cairo and Moscow first unveiled an agreement on the sale to Egypt of “more than twenty” Sukhoi Su-35 heavyweight multirole fighters. Image via AIN Online

This after Egypt signed an agreement to purchase more than 20 Su-35 fighter jets from the Kremlin in a $2 billion deal.

The US has previously threatened other countries with sanctions under its Countering America’s Adversaries Through Sanctions Act (CAATSA) for purchases of Russian military equipment (Serbia being the latest, related to rumors that it's mulling S-400 anti-air acquirement).

Cairo eyeing the advanced Russian fighter might be viewed as an especially insulting affront by the Trump administration especially given that as the second largest recipient of foreign aid historically (after Israel), Washington has provided billions in economic and military aid to Egypt over the past years, including its F-16 fighters.

As with other countries that deploy new Russian weapons systems, Turkey foremost on the list, there's concern over the ability to engage in joint exercises with NATO militaries, specifically related to fears of exposure of American and NATO defense tech secrets. 

Needless to say a major breach between Egypt and the United States hasn't occurred for decades, as it's not secret that Washington needs to prop up its military 'deep state' for sake of keeping the long term peace agreement with neighboring Israel.

Currently, Saudi Arabia and Qatar are also said to be expressing interest in Russian defense purchases, namely the S-400. 

Tyler Durden Tue, 11/19/2019 - 01:00
Published:11/19/2019 12:32:22 AM
[Markets] The Rise Of Tech Totalitarianism The Rise Of Tech Totalitarianism

Authored by James Kirkpatrick,

The Wall Street Journal just published a shocking expose, How Google Interferes With Its Search Algorithms and Changes Your Results, [by Kirsten Grind, Sam Schechner, Robert McMillan and John West November 15, 2019], revealing not only that Google is exploiting its market power in ways the clearly raise anti-trust questions, but also that it shadow-bans sites that promote “hate or violence” even if “expressed in polite or even academic-sounding language”—i.e. and all immigration patriots. This confirms the terrifying message of Michael Rectenwald’s new book Google Archipelago: The Digital Gulag and the Simulation of Freedom: the combination of Woke Capital and monopoly power is turning America into an open-air prison.

Rectenwald is a liberal academic who was chased out of New York University for dissenting mildly from the “pronoun wars” and the Leftist demand for blanket approval of transgenderism [I was a liberal NY prof, but when I said the left was going too far, colleagues called be a NAZI & treated me like a RUSSIAN SPY, RT, November 12, 2019]. In his book, he shows the Left is consumed by collective hysteria, a theme with which readers are familiar, and also that the ideology of “Corporate Socialism” and the emerging “Internet of Things” is making it impossible to escape from a repressive system.

Rectenwald lays out several terms that encapsulate his ideas—the eponymous Google Archipelago, Big Digital, Corporate Socialism, Google Marxism, etc.

  • The “Google Archipelago” is “the corporate leftist centralized system of Big Digital.”

  • “Big Digital” is the “mega-data services, media, cable, and internet services, social media platforms, Artificial Intelligence (AI) Agents, apps, and the developing Internet of Things” [the increasing ability and dependence of ordinary applications of operating online].

  • “Corporate Socialism” is an economic and political system under which a private monopoly or private oligopolies rather than that state eliminates competition and controls all production.

  • “Google Marxism”—originally a concept developed by George Gilder, who argued that Google assumed like Marx that the contemporary mode of production is the ultimate mode, with the only remaining issues are questions of distribution.

Rectenwald adds further that Google Marxism, “like “socialism with Chinese characteristics,” manifests as state-supported monopoly capitalism, and “actually existing socialism” [meaning the actual economic conditions that exist, rather than the “free markets” or “democracy” that are claimed to exist] for everyone else.

It’s an unclear definition and he occasionally links it with corporate socialism. But basically what he’s getting at is that Google commands the flow of information and uses this control to further its ideological and commercial objectives, which are often the same thing

In fact, Rectenwald’s concepts often overlap each other, and the recurring academic jargon may baffle the reader who hasn’t read his Foucault.

Yet his three major themes are easy to identify.

The first major theme: the promotion of far-Left social causes through major corporations.

As New York Times token conservative columnist Ross Douthat has noted, Woke Capital offers consumers symbolic rather than economic values. [The Rise of Woke Capital, NYT, February 28, 2018] Rectenwald calls these “rhetorical placebos in lieu of costlier economic concessions”—placebos which incidentally support “the elite’s agendas of identity politics, gender pluralism, transgenderism, lax immigration standards, sanctuary cities, and so on.” Rectenwald suggests this may be an effort by corporations to avoid higher taxes and regulations.

However, he also suggests a deeper ideological agenda, citing the recent notorious Gillette ad deconstructing masculinity. It turns out the co-founder of Gillette, King Camp Gillette (1855-1932, right) was also a “socialist utopian,” who railed against competition and dreamed of creating a “World Corporation.” Thus instead of the masses seizing the means of production, companies would continuously merge, eventually creating a “great Corporate Mind” that would have “life everlasting” and “all knowledge of all men.”

Gillette’s wild ravings seem uncannily accurate when it comes to

the second major theme: the emerging total control over human information possessed by Big Tech.

Users voluntarily provide data to corporations like Google and Facebook, which they can sell to advertisers. (Mark Zuckerberg himself referred to his trusting subscribers who had done this as “dumb f***s”.) They know us better than we know ourselves.

At the same time, these “private” corporations can also distort what information is provided to users and determine who can compete in the digital marketplace. And because of corporations’ “authoritarian Leftism,” this means that conservatives and patriots can be deplatformed, competitors to Establishment media removed, and Big Tech left in control the “public space” even while being technically “private.” In short, tech companies are taking on governmental roles.

Instead of the Internet freeing discussion, Rectenwald notes accurately that we’re witnessing “the disappearance of public discursive space.” Speech outside the digital sphere is irrelevant, but who can speak inside is determined by companies that practice “blatant double standards, egregious bias, politically-motivated designations of ‘fake news,’ and tilted search engine algorithms.”

In Rectenwald’s striking phrase, tech companies “have acted like referees of a game in which they are also players, taking sides in political contests and the culture wars.”

Naturally, this also means being able to massively manipulate election results by controlling the flow of information and deplatforming independent voices. This could mean that any “democratic vote” is essentially fake and illegitimate, because the outcome is determined in advance. Real political power is found not in Congress or the voting booth, but within the search algorithms and among the moderators of Facebook, Google/YouTube, Twitter, and Instagram.

This is obviously the area most relevant to readers, because and other sites have directly felt the cost of Big Tech censorship. Tulsi Gabbard is directly attacking Big Tech for its control over Americans’ freedom of speech.

Yet President Trump has done little to address these problems. In fact, the president’s much touted NAFTA replacement actually provides Big Tech with additional protections by specifically allowing companies to censor based on political views. His “Social Media Summit” didn’t feature anyone who had actually been banned [Trump’s Pathetic ‘Social Media Summit,’ by Gregory Hood, American Renaissance, July 16, 2019].

The Trump Administration isn’t serious about this. But if it doesn’t get serious in the time that’s left, defeat in 2020 is practically guaranteed.

The third major theme: Rectenwald argues that we are entering an age of practically unlimited tyranny, because we will be required to operate in a digital space endlessly patrolled by far-Left radicals.

Instead of an “Internet specially designed for individual expression and liberation,” the Internet is reshaping us, mutilating individuals “fit to inhabit it.” “Google Marxism” is destroying individual expression and creating a hive mind.

This will accelerate when the “Internet of Things” truly takes off and every application will be required to operate in an online space, with the “Internet ubiquitous, coextensive with the world at large.” We will never “go online” we will always be operating in cyberspace.

“The Internet is not imprisoned,” Rectenwald writes, “but it may become a prison, and once liberated, the world at large might become a digital gulag.”

This may sound dystopian science fiction. But in some ways it has already occurred. Under China’s social credit system, individuals can be tracked in the “real world” and the services they use and rights they possess are dependent on their standing within the digital system.

Consider also the drive towards cashless societies and its potential for tyranny.

Now imagine how such a system would work within the U.S.. Imagine if every time you tried to make a purchase, use an appliance, or engage with someone, the other person or company had instant access to the information Facebook, Google, and other “Big Data” wanted them to have.

Certain individuals would essentially be cut off from social life. You would be technically “free” to speak or operate a business, but cut off from the digital marketplace, your legal rights and economic viability would be essentially non-existent. There would also be no way out of the system, because everyone and everything, everywhere, would always be connected to the network.

Rectenwald examines the implications of Artificial Intelligence, particularly the way such systems are developing to predict human behavior. He expresses concern not just about the somewhat fantastic prospect of “’robot swarms’ gone awry, but the more fundamental question of whether humans will simply keep outsourcing decision-making to algorithms and AI.

Entire industries and basic human functions could presumably be performed more efficiently and effectively by AI. Furthermore, when it comes to distribution of resources, a sufficiently developed AI would be capable of “identifying, tracking, surveilling, algorithmically steering, digitally jailing, and ultimately controlling populations to degrees that would have made Stalin or Mao green with envy.” One possible future: a “docile, algorithmically-directed or even algorithmically-dictated populace, one that is unemployed and probably living on a Universal Basic Incomebecause their labor is unnecessary.”

This raises the deepest questions. What does democracy, citizenship, or identity mean under such a system?

And while all this may sound bizarre, consider how you, the reader, already live in such a way to avoid negative mentions of your name online. Already, we live are in a system where a single media attack, magnified by social media companies that promote certain stories and suppress others, can shape a person’s entire life.

The ancient bonds of family, church, nation and law are as nothing in the face of a systemic digital assault. An individual’s ability to hold a job is already heavily dependent on Google results. What happens when there are no more escapes? What happens when everyone, everywhere, receives the information the elite wants them to know, even if it’s “fake news?”

This is unlimited tyranny. It also reduces each person into simply a part of a centrally directed System. One can already glimpse the bars of the emerging digital cage.

The solution? Conservatives must rethink their opposition to “the state” and realize the real threat to our liberties comes from Big Tech, not “Big Government.”

In the time that’s left, conservatives who value their faith and identity and progressives who don’t want to exist as mere corporate puppets must unite to guarantee free speech online. There should also be more systemic regulation, if not wholesale breaking up, of social media companies.

If we don’t do these things, contemporary China will seem like a libertarian utopia compared to what’s coming.

And thanks to Rectenwald, we can’t say we weren’t warned.

Tyler Durden Mon, 11/18/2019 - 23:45
Published:11/18/2019 10:56:44 PM
[Markets] Here’s what’s coming to Hulu in December — and what’s leaving Amazing food, handmade crafts and homicidal vendettas are on tap for Hulu in December.
Published:11/18/2019 10:56:44 PM
[Markets] World Trade Barometer Suggests Global Economy Continues To Plunge As Trade War Takes Toll World Trade Barometer Suggests Global Economy Continues To Plunge As Trade War Takes Toll

The World Trade Organization (WTO) published a new report Monday that warns global merchandise trade in goods will plunge through this quarter amid no resolution to the trade war, along with the continuation of a worldwide synchronized slowdown that shows no signs of abating in the near term. 

The Geneva-based intergovernmental organization's leading-indicator called the Goods Trade Barometer printed at 96.6 for Sept., down from 95.7 in Jun. Readings under 100 recommend below-trend expansion is present. 

In Sept., WTO economists downgraded global trade growth expectations for 2019 to 1.2 %, down from a 2.6% forecast in Apr. 

The deceleration of slowing global growth was attributed to "increased tariffs, Brexit-related uncertainty, and the shifting monetary policy stance in developed economies," WTO analysts said.

Year-on-year growth in world merchandise trade volume has stalled in recent quarters, as new evidence shows a decline could be seen in early 2020. 

Airfreight, electronic components, and raw materials "have all deteriorated further below trend," the report showed.

"Indices for export orders (97.5), automotive products (99.8), and container shipping (100.8) have firmed up into on-trend territory. However, the indices for international air freight (93.0), electronic components (88.2), and raw materials (91.4) have all deteriorated further below trend. Electronic components trade was weakest of all, possibly reflecting recent tariff hikes affecting the sector." 

And with world trade sinking quick into year-end, the Baltic Exchange's main sea freight index has just tagged a 4-1/2 month low on sluggish vessel demand. 

While the global economy implodes, a rally in global risk assets continues to push US equities to new highs. This is due to central banks pumping a tsunami of liquidity into stocks, in the attempt to save the world from a global trade recession that could be around the corner, if not already here. The biggest threat today as central bankers pump stocks, is that the real economies across the world remain stagnant, which could suggest risk assets are in blowoff tops. 

Tyler Durden Mon, 11/18/2019 - 23:25
Published:11/18/2019 10:28:47 PM
[Markets] Asia Markets: Asian markets mixed on continued uncertainty over U.S.-China trade talks Asian shares were mixed Tuesday as investor sentiment remained cautious amid worries about the next development in trade talks between the United States and China.
Published:11/18/2019 9:55:42 PM
[Markets] Baltimore Taxpayers Fund Lyft-Rides For Inner-City Poor Facing "Food Deserts" Baltimore Taxpayers Fund Lyft-Rides For Inner-City Poor Facing "Food Deserts"

With more than a quarter of all Baltimore City residents living in a food desert, meaning there's no supermarket in a walkable distance, the taxpayers are now funding a new program that will pay for their Lyft ride to the grocery store. 

Starting Monday, residents in South and West Baltimore City, some of the most impoverished areas in the country, can register online for Lyft and get government-subsidized trips to participating grocery stores, reported The Baltimore Sun

The pilot program will sponsor up to 200 residents, will cover one-way rides up to $2.50. Each rider can take as many as eight trips per month. 

"Whoa, that is lovely," Evelyn Robinson told The Sun. "I wouldn't have to wait for someone to be available to take me or pay as much money. I could go whenever I wanted."

For some more color on South and West Baltimore City, these areas are low-income neighborhoods, about 33% of households don't even own vehicles, and most folks have negative net wealth. Many don't have jobs because the local economy has been stuck in a depression for twenty years.

Both areas are equivalent to a third-world country and have the highest per-capita homicide rates in the country.

Instead of supermarkets on each corner of the street, there are liquor stores and methadone clinics.

To be fair, decades of deindustrialization trends have turned many parts of Baltimore into a Venezuelan-like warzone -- not entirely the fault of citizens but the failure of the political class and Washington who've neglected the implosion of the city over the decades.

The subsidized Lyft program will also roll out in about a dozen other cities to shuttle low-income folks to grocery stores. 

In the first six months of operation, Baltimore taxpayers are expected to shell out $73,000.  

"This innovative ride-share pilot not only helps residents get to and from the grocery store but also reduces travel time and puts money back into the pockets of low-income residents so they are able to buy more healthy foods," Democratic Mayor Bernard C. "Jack" Young said in a statement.

More than 146,000 Baltimore City residents live in food deserts, and approximately 124,500 of those residents are African Americans. 

Tyler Durden Mon, 11/18/2019 - 22:45
Published:11/18/2019 9:55:42 PM
[Markets] Landmark Bill Would Bar State From Enforcing Federal Red-Flag Gun Laws Landmark Bill Would Bar State From Enforcing Federal Red-Flag Gun Laws

Authored by Matt Agorist via,

A bill prefiled in the Oklahoma Senate would prohibit state enforcement of any federal “red-flag” laws, setting the foundation to nullify any such laws in practice and effect.

Sen. Nathan Dahm (R-Broken Arrow) filed Senate Bill 1081 (SB1081) for introduction in the 2020 legislative session. Under the proposed law, the Oklahoma legislature would “occupy and preempt the entire field of legislation in this state touching in any way federal or state extreme risk protection orders against or upon a citizen of Oklahoma to the complete exclusion of any order, ordinance or regulation by any municipality or other political subdivision of this state. “ In effect, only the Oklahoma legislature could pass any type of so-called red-flag law effective in the Sooner State.

The legislation also would declare that any federal red-flag law “which would infringe upon a citizen’s Constitutionally-protected rights including, but not limited to the right to due process, the right to keep and bear arms and the right to free speech, shall be null, void, unenforceable and of no effect in the state of Oklahoma.”

These declarations would have very little effect in practice, but SB1081 includes provisions that would make federal red-flag laws nearly impossible to enforce in Oklahoma. The proposed law would prohibit any  Oklahoma agency or any political subdivision from accepting any federal grants to implement any federal statute, rule or executive order, federal or state judicial order or judicial findings that would have the effect of forcing an extreme risk protection order against or upon a citizen of Oklahoma.

It would also make it a felony offense for any individual, including a law enforcement officer, to enforce a federal red flag law. In effect, this would bar state and local police from enforcing a federal red-flag law.


The federal government relies heavily on state cooperation to implement and enforce almost all of its laws, regulations and acts. By simply withdrawing this necessary cooperation, states and localities can nullify in effect many federal actions. As noted by the National Governors’ Association during the partial government shutdown of 2013, “states are partners with the federal government on most federal programs.”

Enforcing a red-flag law would be no different.

Based on James Madison’s advice for states and individuals in Federalist #46, a “refusal to cooperate with officers of the Union” represents an extremely effective method to bring down federal gun control measures because most enforcement actions rely on help, support and leadership from state and local governments.

Fox News senior judicial analyst Judge Andrew Napolitano agreed. In a televised discussion on the issue, he noted that a single state refusing to cooperate with federal gun control would make federal gun laws “nearly impossible” to enforce.

“Partnerships don’t work too well when half the team quits,” said Michael Boldin of the Tenth Amendment Center. “By withdrawing all resources and participation in the implementation and enforcement of a federal red flag law, states and even local governments can help bring these unconstitutional acts to their much-needed end.”


The state of Missouri can legally bar state agents from enforcing federal gun control. Refusal to cooperate with federal enforcement rests on a well-established legal principle known as the anti-commandeering doctrine.

Simply put, the federal government cannot force states to help implement or enforce any federal act or program. The anti-commandeering doctrine is based primarily on five Supreme Court cases dating back to 1842. Printz v. U.S. serves as the cornerstone.

“We held in New York that Congress cannot compel the States to enact or enforce a federal regulatory program. Today we hold that Congress cannot circumvent that prohibition by conscripting the States’ officers directly. The Federal Government may neither issue directives requiring the States to address particular problems, nor command the States’ officers, or those of their political subdivisions, to administer or enforce a federal regulatory program. It matters not whether policy making is involved, and no case by case weighing of the burdens or benefits is necessary; such commands are fundamentally incompatible with our constitutional system of dual sovereignty”


SB1081 will be officially introduced and referred to a committee when the Oklahoma legislature convenes on Feb. 2.

Tyler Durden Mon, 11/18/2019 - 22:25
Published:11/18/2019 9:28:50 PM
[Markets] Sorry CNN, Here's 25 Times Trump Has Been 'Dangerously Hawkish' On Russia Sorry CNN, Here's 25 Times Trump Has Been 'Dangerously Hawkish' On Russia

Authored by Caitlin Johnstone via,

CNN has published a fascinatingly manipulative and falsehood-laden article titled “25 times Trump was soft on Russia”, in which a lot of strained effort is poured into building the case that the US president is suspiciously loyal to the nation against which he has spent his administration escalating dangerous new cold war aggressions.

The items within the CNN article consist mostly of times in which Trump said some words or failed to say other words; “Trump has repeatedly praised Putin”, “Trump refused to say Putin is a killer”, “Trump denied that Russia interfered in 2016”, “Trump made light of Russian hacking”, etc. It also includes the completely false but oft-repeated narrative that “Trump’s team softened the GOP platform on Ukraine”, as well as the utterly ridiculous and thoroughly invalidated claim that “Since intervening in Syria in 2015, the Russian military has focused its airstrikes on anti-government rebels, not ISIS.”

CNN’s 25 items are made up almost entirely of narrative and words; Trump said a nice thing about Putin, Trump said offending things to NATO allies, Trump thought about visiting Putin in Russia, etc. In contrast, the 25 items which I am about to list do not consist of narrative at all, but rather the actual movement of actual concrete objects which can easily lead to an altercation from which there may be no re-emerging. These items show that when you ignore the words and narrative spin and look at what this administration has actually been doing, it’s clear to anyone with a shred of intellectual honesty that, far from being “soft” on Russia, Trump has actually been consistently reckless in the one area where a US president must absolutely always maintain a steady hand. And he’s been doing so with zero resistance from either party.

It would be understandable if you were unaware that Trump has been escalating tensions with Moscow more than any other president since the fall of the Berlin Wall; it’s a fact that neither of America’s two mainstream political factions care about, so it tends to get lost in the shuffle. Trump’s opposition is interested in painting him as a sycophantic Kremlin crony, and his supporters are interested in painting him as an antiwar hero of the people, but he is neither. Observe:

1. Implementing a Nuclear Posture Review with a more aggressive stance toward Russia

Last year Trump’s Department of Defense rolled out a Nuclear Posture Review which CNN itself called “its toughest line yet against Russia’s resurgent nuclear forces.”

“In its newly released Nuclear Posture Review, the Defense Department has focused much of its multibillion nuclear effort on an updated nuclear deterrence focused on Russia,” CNN reported last year.

This revision of nuclear policy includes the new implementation of so-called “low-yield” nuclear weapons, which, because they are designed to be more “usable” than conventional nuclear ordinances, have been called “the most dangerous weapon ever” by critics of this insane policy. These weapons, which can remove some of the inhibitions that mutually assured destruction would normally give military commanders, have already been rolled off the assembly line.

2. Arming Ukraine

Lost in the gibberish about Trump temporarily withholding military aide to supposedly pressure a Ukrainian government who was never even aware of being pressured is the fact that arming Ukraine against Russia is an entirely new policy that was introduced by the Trump administration in the first place. Even the Obama administration, which was plenty hawkish toward Russia in its own right, refused to implement this extremely provocative escalation against Moscow. It was not until Obama was replaced with the worst Putin puppet of all time Uthat this policy was put in place.

3. Bombing Syria

Another escalation Trump took against Russia which Obama wasn’t hawkish enough to also do was bombing the Syrian government, a longtime ally of Moscow. These airstrikes in April 2017 and April 2018 were perpetrated in retaliation for chemical weapons use allegations that there is no legitimate reason to trust at this point.

4. Staging coup attempts in Venezuela

Venezuela, another Russian ally, has been the subject of relentless coup attempts from the Trump administration which persist unsuccessfully to this very day. Trump’s attempts to topple the Venezuelan government have been so violent and aggressive that the starvation sanctions which he has implemented are believed to have killed tens of thousands of Venezuelan civilians.

Trump has reportedly spoken frequently of a US military invasion to oust Venezuelan president Nicolas Maduro, provoking a forceful rebuke from Moscow.

“Signals coming from certain capitals indicating the possibility of external military interference look particularly disquieting,” the Russian Foreign Ministry said. “We warn against such reckless actions, which threaten catastrophic consequences.”

5. Withdrawing from the INF treaty

For a president who’s “soft” on Russia, Trump has sure been eager to keep postures between the two nations extremely aggressive in nature. This administration has withdrawn from the 1987 Intermediate-Range Nuclear Forces Treaty, prompting UN Secretary General Antonio Guterres to declare that “the world lost an invaluable brake on nuclear war.” It appears entirely possible that Trump will continue to adhere to the John Bolton school of nuclear weapons treaties until they all lie in tatters, with the administration strongly criticizing the crucial New START Treaty which expires in early 2021.

Some particularly demented Russiagaters try to argue that Trump withdrawing from these treaties benefits Russia in some way. These people either (A) believe that treaties only go one way, (B) believe that a nation with an economy the size of South Korea can compete with the US in an arms race, (C) believe that Russians are immune to nuclear radiation, or (D) all of the above. Withdrawing from these treaties benefits no one but the military-industrial complex.

6. Ending the Open Skies Treaty

“The Trump administration has taken steps toward leaving a nearly three-decade-old agreement designed to reduce the risk of war between Russia and the West by allowing both sides to conduct reconnaissance flights over one another’s territories,” The Wall Street Journal reported last month, adding that the administration has alleged that “Russia has interfered with American monitoring flights while using its missions to gather intelligence in the US.”

Again, if you subscribe to the bizarre belief that withdrawing from this treaty benefits Russia, please think harder. Or ask the Russians themselves how they feel about it:

“US plans to withdraw from the Open Skies Treaty lower the threshold for the use of nuclear weapons and multiply the risks for the whole world, Russian Security Council Secretary Nikolai Patrushev said,” Sputnik reports.

“All this negatively affects the predictability of the military-strategic situation and lowers the threshold for the use of nuclear weapons, which drastically increases the risks for the whole humanity,” Patrushev said.

“In general, it is becoming apparent that Washington intends to use its technological leadership in order to maintain strategic dominance in the information space by actually pursuing a policy of imposing its conditions on states that are lagging behind in digital development,” he added.

7. Selling Patriot missiles to Poland

“Poland signed the largest arms procurement deal in its history on Wednesday, agreeing with the United States to buy Raytheon Co’s Patriot missile defense system for $4.75 billion in a major step to modernize its forces against a bolder Russia,” Reuters reported last year.

8. Occupying Syrian oil fields

The Trump administration has been open about the fact that it is not only maintaining a military presence in Syria to control the nation’s oil, but that it is doing so in order to deprive the nation’s government of that financial resource. Syria’s ally Russia strongly opposes this, accusing the Trump administration of nothing short of “international state banditry”.

“In a statement, Russia’s defense ministry said Washington had no mandate under international or US law to increase its military presence in Syria and said its plan was not motivated by genuine security concerns in the region,” Reuters reported last month.

“Therefore Washington’s current actions — capturing and maintaining military control over oil fields in eastern Syria — is, simply put, international state banditry,” Russia’s defense ministry said.

9. Killing Russians in Syria

Reports have placed Russian casualties anywhere between a handful and hundreds, but whatever the exact number the US military is known to have killed Russian citizens as part of the Trump administration’s ongoing Syria occupation in an altercation last year.

10. Tanks in Estonia

Within weeks of taking office, Trump was already sending Abrams battle tanks, Bradley infantry fighting vehicles and other military hardware right up to Russia’s border as part of a NATO operation.

“Atlantic Resolve is a demonstration of continued US commitment to collective security through a series of actions designed to reassure NATO allies and partners of America’s dedication to enduring peace and stability in the region in light of the Russian intervention in Ukraine,” the Defense Department said in a statement.

11. War ships in the Black Sea

12. Sanctions

Trump approved new sanctions against Russia on August 2017. CNN reports the following:

US President Donald Trump approved fresh sanctions on Russia Wednesday after Congress showed overwhelming bipartisan support for the new measures,” CNN reported at the time. “Congress passed the bill last week in response to Russia’s interference in the 2016 US election, as well as its human rights violations, annexation of Crimea and military operations in eastern Ukraine. The bill’s passage drew ire from Moscow — which responded by stripping 755 staff members and two properties from US missions in the country — all but crushing any hope for the reset in US-Russian relations that Trump and Russian President Vladimir Putin had called for.”

“A full-fledged trade war has been declared on Russia,” said Russian Prime Minister Dmitry Medvedev in response.

13. More sanctions

“The United States imposed sanctions on five Russian individuals on Wednesday, including the leader of the Republic of Chechnya, for alleged human rights abuses and involvement in criminal conspiracies, a sign that the Trump administration is ratcheting up pressure on Russia,” The New York Times reported in December 2017.

14. Still more sanctions

“Trump just hit Russian oligarchs with the most aggressive sanctions yet,” reads Vice headline from April of last year.

“The sanctions target seven oligarchs and 12 companies under their ownership or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its subsidiary, a Russian bank,” Vice reports. “While the move is aimed, in part, at Russia’s role in the U.S. 2016 election, senior U.S. government officials also stressed that the new measures seek to penalize Russia’s recent bout of international troublemaking more broadly, including its support for Syrian President Bashar Assad and military activity in eastern Ukraine.”

15. Even more sanctions

The Trump administration hit Russia with more sanctions for the alleged Skripal poisoning in August of last year, then hit them with another round of sanctions for the same reason again in August of this year.

16. Guess what? MORE sanctions

“The Trump administration on Thursday imposed new sanctions on a dozen individuals and entities in response to Russia’s annexation of Crimea,” The Hill reported in November of last year. “The group includes a company linked to Bank Rossiya and Russian businessman Yuri Kovalchuk and others accused of operating in Crimea, which the U.S. says Russia seized illegally in 2014.”

17. Oh hey, more sanctions

“Today, the United States continues to take action in response to Russian attempts to influence US democratic processes by imposing sanctions on four entities and seven individuals associated with the Internet Research Agency and its financier, Yevgeniy Prigozhin. This action increases pressure on Prigozhin by targeting his luxury assets, including three aircraft and a vessel,” reads a statement by Secretary of State Mike Pompeo from September of this year.

18. Secondary sanctions

Secondary sanctions are economic sanctions in which a third party is punished for breaching the primary sanctions of the sanctioning body. The US has leveled sanctions against both China and Turkey for purchasing Russian S-400 air defense missiles, and it is threatening to do so to India as well.

19. Forcing Russian media to register as foreign agents

Both RT and Sputnik have been forced to register as “foreign agents” by the Trump administration. This classification forced the outlets to post a disclaimer on content, to report their activities and funding sources to the Department of Justice twice a year, and could arguably place an unrealistic burden on all their social media activities as it submits to DOJ micromanagement.

20. Throwing out Russian diplomats

The Trump administration joined some 20 other nations in casting out scores of Russian diplomats as an immediate response to the Skripal poisoning incident in the UK.

21. Training Polish and Latvian fighters “to resist Russian aggression”

“US Army Special Forces soldiers completed the first irregular and unconventional warfare training iteration for members of the Polish Territorial Defense Forces and Latvian Zemmessardze as a part of the Ridge Runner program in West Virginia, according to service officials,” Army Times reported this past July.

“U.S. special operations forces have been training more with allies from the Baltic states and other Eastern European nations in the wake of the annexation of Crimea by the Russian Federation in 2014,” Army Times writes. “A low-level conflict continues to simmer in eastern Ukraine’s Donbas region between Russian-backed separatists and government forces to this day. The conflict spurred the Baltics into action, as Lithuania, Latvia and Estonia embraced the concepts of total defense and unconventional warfare, combining active-duty, national guard and reserve-styled forces to each take on different missions to resist Russian aggression and even occupation.”

22. Refusal to recognize Crimea as part of the Russian Federation

…even while acknowledging Israel’s illegal annexation of the Golan Heights as perfectly legal and legitimate.

23. Sending 1,000 troops to Poland

From the September article “1000 US Troops Are Headed to Poland” by National Interest:

Key point: Trump agreed to send more forces to Poland to defend it against Russia.

What Happened: U.S. President Donald Trump agreed to deploy approximately 1,000 additional U.S. troops to Poland during a meeting with Polish President Andrzej Duda on the sidelines of the U.N. General Assembly in New York City, Reuters reported Sept. 23.

Why It Matters: The deal, which formalizes the United States’ commitment to protecting Poland from Russia, provides a diplomatic victory to Duda and his governing Law and Justice ahead of November elections. The additional U.S. troops will likely prompt a reactive military buildup from Moscow in places like neighboring Kaliningrad and, potentially, Belarus.

24. Withdrawing from the Iran deal

Russia has been consistently opposed to Trump’s destruction of the JCPOA. In a statement after Trump killed the deal, the Russian Foreign Ministry said it was “deeply disappointed by the decision of US President Donald Trump to unilaterally refuse to carry out commitments under the Joint Comprehensive Plan of Action”, adding that this administration’s actions were “trampling on the norms of international law”.

25. Attacking Russian gas interests

Trump has been threatening Germany with sanctions and troop withdrawal if it continues to support a gas pipeline from Russia called Nord Stream 2.

“Echoing previous threats about German support for the Nord Stream 2 pipeline, Trump said he’s looking at sanctions to block the project he’s warned would leave Berlin ‘captive’ to Moscow,” Bloomberg reports. “The US also hopes to export its own liquefied natural gas to Germany.”

“We’re protecting Germany from Russia, and Russia is getting billions and billions of dollars in money from Germany” for its gas, Trump told the press.

I could have kept going, but that’s my 25. The only reason anyone still believes Trump is anything other than insanely hawkish toward Russia is because it doesn’t benefit anyone’s partisanship or profit margins to call it like it really is. The facts are right here as plain as can be, but there’s a difference between facts and narrative. If they wanted to, the political/media class could very easily use the facts I just laid out to weave the narrative that this president is imperiling us all with dangerous new cold war provocations, but that’s how different narrative is from fact; there’s almost no connection. Instead they use a light sprinkling of fact to weave a narrative that has very little to do with reality. And meanwhile the insane escalations continue.

In a cold war, it only takes one miscommunication or one defective piece of equipment to set off a chain of events that can obliterate all life on earth. The more things escalate, the greater the probability of that happening. We’re rolling the dice on armageddon every single day, and with every escalation the number we need to beat gets a bit harder.

We should not be rolling the dice on this. This is very, very wrong, and the US and Russia should stop and establish detente immediately. The fact that outlets like CNN would rather diddle made-up Russiagate narratives than point to this obvious fact with truthful reporting is in and of itself sufficient to discredit them all forever.

*  *  *

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Tyler Durden Mon, 11/18/2019 - 21:45
Published:11/18/2019 8:57:12 PM
[Markets] Is This Boeing Blowback Or Anger At Lack Of Support For Aramco? Is This Boeing Blowback Or Anger At Lack Of Support For Aramco?

On the second day of the Dubai Airshow, also the same day Saudi Aramco canceled an IPO tour across the US, several Saudi airline carriers made a surprising move to order less Boeing planes, and in one case, even opted to buy Airbus planes instead. 

Saudi Aramco canceled an IPO roadshow across the US over the lack of institutional support for the deal.

Bankers wanted comprehensive reports on oil reserves, something that Aramco has hidden from institutional investors. This made it very hard for bankers to value the deal, which created too many uncertainties about valuation.

As a result, numerous Wall Street banks moved to the sidelines, something that has undoubtedly upset Prince Mohammad Bin Salman (MbS) and has likely resulted in a blowback as Saudi airline carriers have just said they will order fewer Boeing planes. 

When it came time for Saudi airline flynas on Monday to order Boeing 787-8 jets at the airshow, the carrier instead chose to exercise its option to purchase 40 Airbus A320neo, reported Reuters. Coincidence, or is this a blowback for Wall Street banks' lack of support for the Aramco IPO? 

Another Saudi carrier, called Etihad Airways, said on Monday that they would purchase less 787 Dreamliners than initially thought. Another coincidence, or is another subliminal message from the kingdom to the US?

Meanwhile, at the airshow, Boeing executives weren't selling many planes but focused on calming fears amid two 737Max crashes that killed 346 people in the last year. 

Airbus has so far been the big winner at the airshow, already raking in $30 billion worth of new orders as of Monday afternoon. 


Tyler Durden Mon, 11/18/2019 - 21:25
Published:11/18/2019 8:27:54 PM
[Markets] "I Was Wrong. And I Am Sorry": Bloomberg Apologizes To Black Megachurch For 'Stop And Frisk' "I Was Wrong. And I Am Sorry": Bloomberg Apologizes To Black Megachurch For 'Stop And Frisk'

As Michael Bloomberg weighs a bid for the White House next year, the former New York mayor told the congregation at a 'black megachurch' on Sunday that he's sorry for his support of the city's controversial "stop-and-frisk" program which targeted a disproportionate number of blacks and Latinos.

"I was wrong. And I am sorry," Bloomberg said at the Christian Cultural Center in Brooklyn, pandering to the black vote.

In 2013, a federal judge who declared the program unconstitutional found that nearly 90% of those stopped hadn't done anything illegal, while a 2018 Equal Justice Initiative report revealed that the city's abandonment of the tactic had no influence on crime rates, according to Rolling Stone.

Bloomberg notably supported the practice after the ruling.

"Over time [i.e. the last few years, or weeks], I’ve come to understand something that I long struggled to admit to myself: I got something important wrong. I got something important really wrong. I didn’t understand back then the full impact that stops were having on the black and Latino communities. I was totally focused on saving lives, but as we know, good intentions aren’t good enough," he added.

In 2011, the year with the most stop-and-frisks, 685,724 NYPD stops were recorded. Of those, 88% were innocent, while 87% were black or latino and 9% white. Over half were aged 14-24 years old according to the NY ACLU.

The 77-year-old Bloomberg has not formally entered the 2020 race, however he has taken steps to get on the ballot in states with early filing deadlines according to Reuters. If he does run, Bloomberg will be the fifth most popular candidate, and the richest - eclipsing Donald Trump's net worth by around $50 billion.

Tyler Durden Mon, 11/18/2019 - 20:45
Published:11/18/2019 8:00:27 PM
[Markets] MarketWatch First Take: Intel, AMD and Nvidia step up their fight for AI chips in the high-performance arena Three rival chip giants, Advanced Micro Devices Inc., Intel Corp. and Nvidia Corp., all rolled out new products at the annual supercomputing conference, in an increasingly competitive battlefield to speed up the fastest computers on earth.
Published:11/18/2019 8:00:27 PM
[Markets] Netherlands Headed For Unprecedented Crisis: Millions Of Retirees Face Pensions Cuts Thanks To The ECB Netherlands Headed For Unprecedented Crisis: Millions Of Retirees Face Pensions Cuts Thanks To The ECB

When one thinks of pensions crisis, the state of Illinois - with its woefully underfunded retirement system which issues bonds just to fund its existing pension benefits - usually comes to mind. Which is why it is surprising that the first state that may suffer substantial pension cuts is one that actually has one of the world's best-funded, and most generous, pension systems.

According to the FT, millions of Dutch pensioners are facing material cuts to their retirement income for the first time next year as the Dutch government scrambles to avert a crisis to the country's €1.6 trillion pension system. And while a last minute intervention by the government may avoid significant cuts to pensions next year - and a revolt by trade unions -  if only temporarily, the world finds itself transfixed by the problems facing the Dutch retirement system as it provides an early indication of a wider global pensions funding shortfall, not to mention potential mass unrest once retirees across some of the world's wealthiest nations suddenly finds themselves with facing haircuts to what they previously believed were unalterable retirement incomes.

At the core of the Dutch cash crunch is the ECB's negative interest rate policy, which has sent bond yields to record negative territory across the eurozone, and crippled returns analysis while pushing up the funding requirements of Dutch pension funds.

Ahead of a parliamentary debate on Thursday on this hot topic issue, the Dutch minister for social affairs and employment, Wouter Koolmees, will write to lawmakers to outline his response to the pension industry’s problems, the FT reported.

In order to offset the ECB's NIRP policy, Shaktie Rambaran Mishre, chair of the Dutch pension federation which represents 197 pension funds and their members, said that contributions might have to rise by up to 30% over the next few years, an outcome which will lead to outrage among existing working-age employees who will suffer a surge in the pension costs. Absent a dramatic increase in benefits contributions, "as things stand, around 2 million people are facing cuts from next year,” she added.

Predictably, trade unions have already held protests and strikes this year over the potential cuts to pensions and have threatened more action if the government does not step in. “We expect some relief next week and if not we will mobilise,” said Tuur Elzinga, lead pensions negotiator at FNV, the biggest Dutch union.

Protesters marching in The Hague in June hold a banner that reads 'A good pension is matter of decency'

The Netherlands - one of the Eurozone's richest nations - is hardly alone in this predicament, as the ongoing debate reflects broad concerns about the impact of low interest rates among the Eurozone and Japan, as ageing populations and longer life expectancy have put pension systems across the world under great strain. A report last week from the Group of Thirty, a club for current and former policymakers, warned of a $15.8tn shortfall in funding to support the ageing populations of the world’s 20 biggest countries.

And if there is one way to guarantee riots among the world's richest nations, it is to inform pensioners that their benefits are suddenly being "haircut."

In some ways, the Netherlands has one of Europe's most generous retirement systems: at its core, it represents a basic pay-as-you-go state pension as well as employer-run pension scheme which together provide workers with about 80% of their average lifetime wages when they retire. The US and UK have similar systems, but Dutch pension funds are more generous and must use a lower risk-free rate to value their liabilities, forcing them to hold more assets.

Unfortunately, the lower Dutch risk-free rate is not low enough, and as a result about 70 employer-run pension funds with 12.1m members had funding ratios below the statutory minimum at the end of September, according to the Dutch central bank. And here lies the rub: if funds have ratios below the legal minimum for five consecutive years or have no prospect of recovering to a more healthy level, they must cut their payouts. Interest rates have rebounded slightly in recent weeks, but many funds are still facing cuts.

In other words, in making a select handful of European stockholders rich courtesy of NIRP and QE, Mario Draghi is threatening the pensions of hundreds of millions of retired European workers.

So what, if any, is the solution?

Last week, Rabobank reported that the Minister of Social Affairs is supposedly willing to prevent a large part of the pension benefit cuts of 2020, as the government is reportedly willing to lower the minimum coverage ratio from 100% to 90% for one year. This temporary measure can be seen as a pause button, which buys time for:

  • Pension funds to hopefully recover over the next year. For pension funds, a rise in their risk-free rate term structure which is used to discount their liabilities (EUR 6m swap rates) would be most helpful
  • Continuing to work out the details of the Pension Reforms announced in June 2019. Unions, employer representatives and the opposition parties were against pension cuts because this would undermine the goals set out in the Pension Reforms.

Cutting pensions is a very sensitive and unpopular measure especially for politicians because the government has the ability to change the rules by changing the law. This is especially hard in times where there is no economic downturn, because it makes it more difficult to explain and justify the cuts. One can only imagine what will happen to Dutch pensions during the next Eurozone recession, when the ECB will be forced to cut rates even more negative in the process threatening even more pension haircuts.

While this pause would, in theory, prompt some pension funds to reduce their matching portfolio or hedge ratio in anticipation of pension cuts, not many pension funds already acted on the threat of these cuts according to Rabobank. Therefore, this temporary measure will have a limited effect on the investment behaviour of pension funds because:

  • Pension funds are typically big and are long term investors, meaning they take time to react to certain events
  • Most pension funds have a fixed risk budget. This risk budget is maximised by regulation and is fixed at the moment the coverage ratio drops below the required coverage ratio. This means if a pension fund would want to increase its risk toward for example equity, it often has to reduce risk somewhere else in the portfolio
  • Possible pension cuts are based on the policy coverage ratio which is the 12th month average of the coverage ratio. This further reduces the incentive for a temporary risk-on or risk-off strategy.

What's next? On 21 November 2019 the official plans will be discussed in parliament, although Rabobank does not expect any additional changes that would affect investment behavior of pension funds. However, as the Dutch bank admits, "there are some challenging times ahead in the pension reform discussions" and it expects possible big changes this time next year. Chief among them: the risk free rate term structure that is used to discount the liabilities will likely change in every possible reform scenario, although it is unclear how much lower it can drop.

As the FT notes, a group of 10 academics wrote to parliament recently calling on the Dutch government not to raise the risk-free rate, arguing this would be at the expense of younger workers as “the assets pot will be a little bit more empty each year”. Others, however, think the government will intervene. “I expect that politically the cuts will not happen,” said Lex Hoogduin a professor at the University of Groningen and a former board member of the Dutch central bank, who did not sign the letter.

“But this is just kicking the can down the road as eventually they won’t be able to afford the payouts that people expect,” said Mr Hoogduin. And the people have Mario Draghi - and now Christine Lagarde - to thank for it.













Tyler Durden Mon, 11/18/2019 - 20:05
Published:11/18/2019 7:27:26 PM
[Markets] Globalist Magazine "The Economist" Tells Plebs To Eat Bugs Globalist Magazine "The Economist" Tells Plebs To Eat Bugs

Authored by Paul Joseph Watson via Summit News,

Globalist magazine ‘The Economist’ published an article encouraging people to live on a diet of bugs like citizens in the conflict-torn Congo in order to save the planet.

Entitled ‘Why eating bugs is so popular in Congo’, the piece champions the consumption of caterpillars, crickets and grasshoppers as being “richer in protein than beef or fish.”

“Others around the world should catch up,” writes the unnamed author.

“Bug farming takes up less land, requires less food and does less damage to the environment than meat or fish farming.”

Hunting insects is easy, too. Anyone can wander into the forest—or, indeed, to the airport—and gather caterpillars, ants and grasshoppers,” he adds before admitting that

“The wrong variety of insect can poison consumers.”

Eating bugs being popular in the Congo may have something to to with the fact that the DROC is a a conflict-torn, corrupt, politically unstable hellhole with a barely functioning economy from which hundreds of thousands have fled while millions more are at risk of malnutrition and starvation.

Just a thought.

The irony of the Economist telling people to eat bugs is pretty thick given that its own readership, which largely comprises of wealthy privileged elitists, would never even consider doing such a thing.

Once again, it’s very much a case of do as we say not as we do.

Eating bugs has been heavily promoted by cultural institutions and the media in recent months because people are being readied to accept drastically lower standards of living under disastrous global ‘Green New Deal’ programs.

*  *  *

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Tyler Durden Mon, 11/18/2019 - 19:45
Published:11/18/2019 6:59:21 PM
[Markets] JPMorgan Asset Management 'Outs' Jeff Gundlach As The King Of The Armageddonists JPMorgan Asset Management 'Outs' Jeff Gundlach As The King Of The Armageddonists

As bearish-biased analysts, strategists, and investors throw in the towel amid the market's incessant FOMO-driven melt-up in the face of record global policy uncertainty, declining earnings, and a global economy showing anything but 'troughing'; it seems JPMorgan's Asset Management group has decided now is the time to name names and call out the last decade's so-called "Armageddonists"...

Authored by Michael Cembalest, CIO JPMorgan Private Bank,

While recessions and bear markets are a fact of life, something peculiar happened after the Global Financial Crisis: the rise of the Armageddonists, which refers to the market-watchers, forecasters and money managers whose apocalyptic comments spread like wildfire in print and online financial news. I understand why: by 2010, investors had experienced two consecutive bear markets, each with equity declines of over 40%. It took several years for equity markets to recover each time, unlike the shallower, faster-recovering bear markets of the 1960’s and 1980’s. The dismal performance of consecutive 2001/2008 bear markets hadn’t been seen in decades, and is only comparable to parts of the Great Depression.

I also understand that mega-bearish news appeals to human negativity bias, a topic examined by Nobel Prize winner Daniel Kahneman in his 2011 book on the brain and human survival instincts, by political scientist Stuart Soroka who has illustrated the inverse relationship between magazine sales and the positivity of a magazine’s cover, and in a 2014 experiment in which a city newspaper lost two thirds of its readers on a day when it deliberately only published positive news. That said, what are the consequences for investors that reacted to dire Armageddonist predictions which have flooded the airwaves and internet since 2010?