Category: Finance

Montana Republican “Body-Slams” Guardian Reporter Over Healthcare Question

Montana Republican congressional candidate Greg Gianforte reportedly "body slammed" Guardian reporter Ben Jacobs during an interview after being pressed for his opinion on the CBO healthcare score. Gianforte is the Republican candidate in Thursday's special election for Montana's open U.S. House seat.

"I'm sick and tired of you guys! The last time you came in here you did the same thing. Get the hell out of here! Get the hell out of here!

 

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Jacobs told MSNBC's Chris Hayes that he was trying to ask Gianforte about the Congressional Budget Office's financial analysis of the Republican health care plan when "the next thing I know, I'm being body-slammed."

"He's on top of me. My glasses are broken," Jacobs said. "It's the strangest thing that's happened in my entire life reporting."

Jacobs said he fell on his elbow and was waiting to be X-rayed.

The Guardian has released the audio of the event…

NBC News reports that , in a statement, Shane Scanlon, a spokesman for Gianforte's campaign, alleged that Jacobs crashed an interview Gianforte was giving another reporter "and began asking badgering questions," adding that "Jacobs was asked to leave."

"Greg then attempted to grab the phone that was pushed in his face," Scanlon said.

 

"Jacobs grabbed Greg's wrist, and spun away from Greg, pushing them both to the ground.

 

"It's unfortunate that this aggressive behavior from a liberal journalist created this scene at our campaign volunteer BBQ," he said.

The Gallatin County Sheriff's Office and and representatives of the state Republican Party didn't immediately respond to NBC News' requests for comment.

The question is – was the video more like this…

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Or this…

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But on a more serious note, it appears the constant tensions between a liberal media and not-liberal politicians is reaching a tipping point.


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The Genesis Of The Bubble’s Bubble – “It’s Financial Civil War, How Much You Bleed Is Up To You”

Authored by Richard Rosso via RealInvestmentAdvice.com,

The financial services industry is headed for the greatest debate in recent history.

Regardless of what occurs from here –a continued stock market bullish trend or reversion to long-term averages which chronicles back to 2000 levels, the confines of discussion, the heated verbal and written volleys tossed deep from the roots of philosophical differences will forge a permanent rift between the steadfast buy-and-hold brethren and the stewards who manage risk by preserving capital (the dreaded group with a market escape plan), through the forthcoming bear cycle.

The stakes are higher than I can recall.

Future generations: Those we are depending on to lift the globe from the depths of a demographic malaise, groups nowhere near as ostentatious as Baby Boomers; generations that savor experience over product and have been wary of the risk in stocks, are beginning to relent and take notice of this bull market trajectory.

How they experience the ride in stocks and what occurs from here will shape their investment philosophy. I fear Millennials to Gen Y are going to get fooled, taken out. Smacked in the face.

Betrayed.

The buy-and-hold side, ‘the setters and forgetters,’ which I’ll explain, appear to be winning this battle so far and that’s part of the reason for my concern and ironically, a matter-of-fact bullishness.

For now and the near future it’ll be hunky dory. You see, I think we are in the midst of witnessing the greatest market bull stampede since 1995 through 1999. I believe it’ll eventually make the tech bubble explosion sound and feel like a 5-year old throwing down in joy, a bang pop noise maker on hot cement through a humid-heavy July 4th.

However, this is just my humble opinion.

I hold the utmost respect for the market as it’s designed to fool me as much as possible and at every gyration. I’m open-minded and with the assistance of our no-spin, in-house data crunching at Real Investment Advice, I remain more eagle, or eye witness, as opposed to a ‘bull’ or ‘bear.’ And I observe here, the beginning of the “bubble’s bubble.”

The break out of a long-term sideways market cycle which began in 2013, stalled in early January 2015 when the S&P 500 closed at 2058. On November 9, 2016, it stood at 2163. Watching paint dry through the summer of ’16 would have been more exciting than the market action. It was torturous. I described it to Lance Roberts at the time as suspended animation.

Then the presidential election happened and the rest is history…

I’m hesitant to refer to the current market as a bubble. I refer to it as the boom that leads to a bubble. See, my definition, perception, differs from market soothsayers. It isn’t in a textbook. It emerges from my boyhood summer activities on a New York street. The greatest bubbles I recall were the largest ones, most magnificent, right before they burst in a soapy, rainbow mess, stung my eyes like slimy razors, and forced me to lament through a wince:

“Wow – that was freakin’ incredible!”

The current Shiller Price-Earnings Ratio stands at 29X; the tech-wreck Shiller was a hair short of 45X in December 1999. My definition of bubble begins at the apex of the ‘pop’ of the previous high. From there, I believe only if or when we exceed that limit, that the market should be deemed the “bubble’s bubble.”

For now, I’m going to outline the factors or input that is breathing sustainability into this phenomenon.

Don’t misunderstand: My belief is when this market adjusts, there’s going to be stinging eyes from tears spilled over brokerage statements and the mutter of “I got suckered again,” over and over.

You see, every bubble differs in composition. The boom-bust cycle feedback loop we’re traveling now isn’t fueled by an industry or sector. It’s greater in scope. The wind in the proverbial sails is a confluence of factors fueled by post-election animal spirits and a lower-than-longer interest rate environment which is the prime food source or hive for the bull.

Poor demographics, below-average productivity which keeps the Federal Reserve and yield curve captive in a flat wasteland of inertia, a new generation of financial professionals who never experienced a bear market, an overwhelming number of passive preachers who believe indexing (without regard to risk management), is some form of financial nirvana, a brokerage industry under pressure to comply with a looming Department of Labor fiduciary standard slated implementation on June 9, stirred with the hope of corporate tax reform ‘sometime in the future, (it’ll be big)’, boils a seductive porridge the bubble’s bubble can’t get enough of.

Regardless of the possible repeal or modification of the DOL ruling under the current presidential administration, investors are demanding a greater standard of care from those who assist them.

Big box financial retailers are desperately scrambling to create procedures designed to reduce possible liabilities that come from taking on fiduciary responsibilities. The last thing on their minds is to “do what’s in the highest best care of the client.” The paramount concern is to work with their cadre of lawyers to minimize business risk for themselves. The investment risk you absorb will remain of little concern except for how thinly they determine your ‘risk profile.’ As long as your responses to risk queries are recorded, you’re screwed.

A method I know is growing popular with several financial behemoths is to take the portfolio decisions out of the hands of otherwise knowledgeable employees and place them with a group in a centralized location thus creating a homogenized, factory assembly-line process allegedly for closer monitoring.

Strangely, and perhaps insidiously, I wholeheartedly believe the intention is to build closer ties to the firm thus severing the relationship with the adviser, who is always deemed a flight risk. This method also frees up frontline professionals to sell more packaged asset-allocation product or you got it, feed the profit-margin beast.

The next bubble pop may be a game changer for the industry again and motivate financial professionals who do a magnificent job of selling products or outsourcing money management which ostensibly distances themselves from ground zero of an imminent explosion (hey, it’s the market, not me), to possibly re-think their careers. Take on a fiduciary calling.

Perhaps a bubble or at the least, a severe bear market is required to cleanse the system, drain the swamp, by migrating miscreants to more fitting livelihoods like pushing phone service deals at T-Mobile or taking roles as activities directors for Carnival Cruise Lines. We’re due.

The best activities director on a cruise ship: Julie from The Love Boat.

It’s a romantic notion. A nice thought. Meh, it keeps me motivated to consistently provide what I consider ‘full circle’ financial guidance, the complete story, pros & cons, and planning for risk markets that we strive for at Real Investment Advice.

 

While we await comeuppance, let’s review what stirs inside the bubble’s bubble.

The ‘passive’ revolution we’re witnessing is to provide a portfolio solution which is based on the demand for the products, regardless of how expensive the products may be.

To be clear, I’m an advocate for index investments and lower internal portfolio costs. I was one of the first financial professionals at my former employer to use market cap weighted exchange-traded funds in client portfolios to replace mutual funds.

My beef is how indexing is perceived by unsuspecting investors as safe and insidiously branded or allowed to be positioned by the buy-and-hold faction, as the ultimate never-sell strategy.

Not because it’s best for the investor; well, that’s a convenient half-truth. Mostly, it’s optimum for the adviser under pressure who can offer a pretty asset allocation solution in a package and move on to the next notch on the sales belt.

The front-line consultant of a publicly-traded big box financial retailer is under never-ending intense pressure to increase margins for shareholders. The performance of the stock price is the priority. I was provided this wisdom, which I have never forgotten, from a former regional manager at Charles Schwab – “It’s shareholders first; then follows the rest of us, including clients.”

If passive is what clients want, passive is what they shall receive, but in a manner that can be delivered and scalable by a financial retailer in a CYA/fiduciary manner. It’s time efficient to get cash fully invested in an asset allocation at once; buy full in to the story that it’s time in the market not timing the market, regardless of current valuations         or expected returns, especially as corrections appear more as distant memory than reality. READ: The Deck is Stacked: Putting Risk and Reward into Perspective.

Here’s how I see it as the bull rages on:

The asset allocator factory box designers are diligent at work, creating neat, easy-breezy investment packages positioned as products or “solutions,” thus forging a path perhaps we haven’t walked so passionately before.

The demand for these attractive boxes filled with a colorful palate of panacea in the form of passive investments, may drive valuations higher than we’ve seen, even greater than the tech bubble, which will leave investment veterans perplexed.

Market this sausage to a new breed of adviser who perceives passive as safe, has rarely witnessed a correction or bear market working in the trenches with clients, and serve it up on the finest wrapper Wall Street marketing has to offer, and God help us.

Why?

The investment vs. valuation connection is aggressively being severed. Asset-allocation solutions are being positioned to ‘pros’ as simple, third-party adjuncts to an overall financial planning experience. The intoxicating promise of ease and low cost which places what you pay in the form of valuations in a clean-up spot, or makes it an afterthought (if that), is incredibly alluring. Buy it up now, let it grow, harvest later. Simple.

After all, stock valuations are as easy to comprehend as nebulae millions of light years away.

So why bother?

Just buy the box. Open in 20 years. Hopefully, just hopefully, there’s something in there to show for it.

The demand for the product of stocks to market and maintain aggregate static asset allocation programs overrides the price paid for that product.

One of the best blogs I’ve read about “earningless” bull markets and the overall demand for stocks comes from http://ift.tt/1C0pqR6 in a piece penned The Single Greatest Predictor of Future Stock Market Returns.

At this juncture, a lack of viable alternatives, the massive growth of robotic allocations of passive investments packaged and sold, and the aversion of the corporate sector to issue new equity has created a demand for stocks similar to the demand for a product, like an IPhone. Regardless of price, if the IPhone is in demand, you’ll stand on line for days to get it. It doesn’t need to make sense, don’t try to rationalize it.

From the blog post:

Ultimately, the price of equity is determined in the same way that the price of everything is determined–via the forces of supply and demand.  For any given stock (or for the space of stocks in aggregate), price is always and everywhere produced by the coming together of those that don’t own the stock and want to allocate their wealth into it, and those that do own the stock and want to allocate their wealth out of it.  

It’s all up to the allocators–they decide how much of their wealth they are going to allocate into stocks, how much exposure they are going to take on.  Their preferences–or rather, their efforts to put those preferences in place, by buying and selling–set the price.  Valuation is a byproduct of this process, not a rule that it has to follow.  

Buy-and-hold is painted as the informed, responsible, pro-American thing to do with a portfolio.  But, in terms of financial stability, it can actually be a very destructive behavior.  Consider the classic buy-and-hold allocation recommendation: 60% to stocks, 40% to bonds (or cash). What rule says that there has to be a sufficient supply of equity, at a “fair” or “reasonable” valuation, for everyone to be able to allocate their portfolios in this ratio?  There is no rule

 

If everyone were to jump on the buy-and-hold bandwagon, and decide to allocate 60/40, but equities were not already 60% of total financial assets, then they would necessarily become 60% of total financial assets.  The excess bidding would not stop until they reached that level.  It doesn’t matter that the associated price increase would cause the P/E ratio to rise to an obscenely high value.  The supply-demand dynamic would force it to go there.  

If aggregate demand for stocks continues, then valuations will be an afterthought. However, there is a risk to this rosy scenario. Currently, household equity percentages among individual investors stand at their highest level in two years at 67.6% per the March AAII Asset Allocation Survey. Prior bull cycles have seen equity allocations exceed 70%. Granted. Yet, consumer sentiment or the ‘feel good factor’ is at thresholds we haven’t crossed since 2004. Confusing.

Keep in mind, stocks don’t need to correct exclusively in price, they can in time. In other words, the higher valuations our team calculates for stocks can even out over the next few years ostensibly pulling down the long-term averages of stocks to 2%, maybe less.

And the reward for stock risk flies in the face of Warren Buffett’s commentary that “bonds are lousy investments.” Let’s see – 2% with 100% probability of recovering my principal at the end of a period or 2% return with a tremendous chance of loss at the roulette wheel. Hmm…

The demand for risk assets is going to require several conditions to remain consistent. I’ll cover what I consider the most important.

Which gets me to:

Passive investing is exploding in popularity. I’m concerned about the true reasons why.

From a recent article in the L.A. Times:

When money flows into conventional index funds, they must buy the stocks in their index regardless of the underlying companies’ financial health or outlook.

“Of course it distorts things,” said Rob Arnott, who has pioneered a fundamentals-based form of indexing at Research Affiliates in Newport Beach. “Price discovery,” the term for research that gets to the heart of a stock’s relative value, “is diminished as fewer and fewer investors care about the fundamentals,” Arnott said.

The migration to passive investments is indeed exploding. Currently, 42% of all U.S. stock funds are in passive vehicles.

One reason is indeed lower costs. Indexing is definitely a bargain TYPE of investment (more on this coming), when compared to many actively-managed funds.  Low internal fees is a positive for investors.

Unfortunately, I believe the overwhelming reason for the massive popularity of passive investments is performance or outperformance when compared to their actively-managed colleagues; the market momentum we’ve been experiencing since 2009 fueled by strong tailwinds of prolonged low rates, multiple quantitative easing programs, corporate share buybacks, and companies that operate lean and mean (it’s always a recession in corporate America when it comes to employee headcount), have forged accelerants to market increases.

However, cycles do change. Yet, nothing about that fact from passive preachers. Zero about bearing the full brunt of stock market risk. Nada about the math of loss.

Which gets me to:

Passive investing is not safe. Not by a long shot. To clarify: Passive is an investment type. It is NOT an investing process nor a manner to which RISK is managed.

The clearest thought I can conjure up about passive investments and bear markets is I have the finest potential to lose money at low internal costs. Never forget – Once wealth is allocated to stocks, it’s active. On occasion, radioactive. Plain and simple. Index positions must be risk managed. They bear the full risk of markets. The highs and the lows. There’s no escape-risk-free card for you.

The passive preachers make it sound like once you’re indexing there’s no need to manage risk. Diversification is supposedly the only means to do so, but beware. How you define diversification differs from how your broker does. READ: Never Look at Diversification the Same Way Again.

The granddaddy of indexing Jack Bogle of Vanguard readily tells the media that stocks are ‘overpriced.’ Future returns will be below average. In the next breath, he’ll suggest go all in because there’s nothing else you can do. If anything, that’s a pretty dangerous passive attitude to have considering the wealth carnage from math of loss, which again, is a topic that is never discussed.

Go for it. Select your own index or exchange-traded funds or work with a fiduciary to create an asset allocation plan. Regardless, a rules-based approach to rebalance overheated asset classes or exit stocks surgically through market derails as identified in Lance Roberts’ weekly newsletter, should be part of the process. That’s a full-circle approach to investing – The buy, the hold and the other four-letter word – Sell.

I’d keep the “sell” word on the “down low” with your passive friends. Go slow. Perhaps you can enlighten them. Help them redefine how passive should be perceived in the real world.

The current economic conditions handcuff the Fed and holds captive an upside move in rates which in turn, makes the bubble’s bubble a closer reality.

I’m no Lance Roberts however, I do believe stocks and bonds do vie for capital attention. Not based on an interest rate vs. equity earnings yield comparison, mind you. That’s just an ingenious Enron-like mathematical travail financial analysts devised to lead your portfolio into a high-risk, low-return trap and appear intelligent doing it. READ: Do Low Rates Justify Higher Valuations?

I am referring to the enduring nature of TINA, or “There Is No Alternative,” to stocks when the hefty lid on bond yields is considered. Warren Buffett on CNBC a few weeks ago called bonds “a lousy investment.” Why? Because who wants to extend their financial neck for a U.S. Treasury Note paying 2% plus for a decade?

No doubt interest rates can remain low for extremely long spans. Several prolonged periods are mind boggling to comprehend as outlined in this chart from Lance Roberts.

Some wines are shorter to age.

From the 1981 peak to 2003, yields of prime corporate and long duration government bonds declined by a thousand basis points.

Intermediate and long-term interest rates are a function of economic growth and inflation. As economic activity heats up, so does the demand for credit. As wages increase, so does the ability of a household to meet or take on additional monthly debt obligations. Unfortunately, wage growth has been stubbornly stagnant for 17 years.

Sentier Research, a powerhouse of information which reflects the financial state of the American household, offers a monthly data for household incomes.

Adjusted for inflation which is most important, median household real income peaked at the beginning of the Great Recession. Sadly, inflation-adjusted income is still .7% below the beginning of the year 2000.

Inflation has been trending at roughly 2%; GDP growth which was disappointing for Q1 2017 is due for a big pick up in Q2 per the Atlanta’s Fed GDP Now’s forecasting model which is estimating as of May 16, a 4.1% annual rate. We’ll be monitoring at Real Investment Advice as this model is updated six or seven times a month with at least one update following seven economic data revisions from the BEA.

 

The Real Investment Advice estimate for GDP growth isn’t as optimistic as the Atlanta Fed’s. In addition, we have witnessed how the GDPNow forecast gets revised lower repeatedly as economic data is released.

In the United States, we have experienced a prolonged period of below-average economic growth since 2000 that may endure through 2022, when a positive demographic cycle emerges. Read: The Long View – Rates, GDP & Challenges.

Structural headwinds will keep longer duration yields subdued and the Fed handcuffed to raise short-term rates as quickly as they prefer. I’ve been a broken record with this commentary since I began to study Japan’s economy in 2009.

The book “The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession,” by economist Richard Koo, enlightened me to the similarities between the U.S. and Japan. The aftermath of deep recessions where household balance sheets are damaged combined with poor demographics, is a lethal structural blow to economic prosperity.

Overly accommodative central bank policies attempt to accelerate (they’re far from successful) or at the least, don’t stand in the way of recovery, which comes down to, for the U.S., a continued period of low interest rates.

The environment is perfect, as long as economic conditions just trudge along and the Fed is stuck, for the TINA monster to feed. Blame it on the demographics of an aging population, not enough young people forming households, excess debt, or poor savings rates. Pick your position. The backdrop is perfect for stocks to continue higher with sights near of the bubble’s bubble.

The continued positive momentum for stocks is a poor reason to let your guard down. On the contrary. More than ever as an investor, one must remain vigilant to take profits and rebalance. Stay humble. Understand the territory your wealth travels today can fall into a sink hole real fast.

Every long-term market cycle forges a unique path. Who knows how this one will crescendo.  For now, I am sticking with the bubble’s bubble theory as I still observe too many Main Street investors who have some form of “spidey-sense” or talk doom when markets take in a short breath, which tells me after toiling in this industry since 1989, that the wall of worry that stocks climb, albeit aging like the nation’s infrastructure, is still intact.

However, when it crumbles, you can’t afford to get crushed.

I’m first and foremost a financial life planner, not a market analyst. However, when partnering with a client to create a retirement income distribution strategy, I fear now more than any other period since 2000, that sequence of return risk or a prolonged period of poor or zero portfolio returns, is a strong possibility in the future. After all, whether it’s through price or time, risk assets revert. It’s never different. As life goes, so do markets ebb and flow.

Oh, and the battle between the buy-and-holders and the risk managers?

It’ll be our financial civil war to fight; as an investor, whether choose to be or not, you will be pulled in unfortunately, by proxy. You see, your wealth will be on the line, the weapons chosen.

Yet again, we will fight.

You will bleed.

How much is up to you.


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California Million-Dollar Home Sales Hit An All Time High

At the end of April, we showed that the California housing market is getting just a “little frothy” again, when in the span of a few days a simple 2-bedroom house sold for 40% above asking.  Now, according to a recent analysis by CoreLogic it appears that this was not a one-off event, because as many Californians struggled to gain a foothold in homeownership early this year, they were hindered as a surging stock market and other forces lifted sales of $1 million-plus homes to the highest level ever for a first quarter. 

In a blog post by CoreLogic’s Andrew LePage, the real estate consultancy reports that the number of California homes that sold for $1 million or more totaled 10,562 during the January-through-March period, up 11.7% year over year and the highest on record for a first quarter. Luxury homebuyers purchased 2,523 homes priced at $2 million or more in the first quarter, up 11.8% year over year and also a record for a first quarter (Figure 1). 

Maybe it’s just another opportunity to blame the Fed: historically there’s often been a correlation between a rising stock market and an increase in luxury home sales (Figure 2). Higher stock values can make potential homebuyers feel wealthier and in some cases stock proceeds are reinvested in real estate. Job growth and higher consumer confidence are among the other likely drivers of the record $1 million-plus sales last quarter.

Or maybe just simple math: as price appreciation continues, more homes reach or exceed the $1 million mark.

On average, $1 million-plus homes that sold last quarter were a bit smaller, and situated on smaller lots, compared with the average home and lot size for $1 million-plus sales over the past decade (more on this below). Last quarter’s share of $1 million-plus sales that were newly built homes – 11 percent – was lower than a year earlier, when it was 13.9 percent, but higher than the 10-year quarterly average of 8.4 percent. While the number of sales of existing (resale) $1 million-plus homes hit a first-quarter record high in this year’s first quarter, sales of $1 million-plus newly built homes were about 12 percent lower than a year earlier and about 30 percent below the first-quarter record set in 2006.  

According to CoreLogic, California’s all-time high for the total number of $1 million-plus sales was 15,222 in second quarter 2016, which is also when the state experienced an all-time high of 3,508 sales of $2 million-plus homes.

Meanwhile, even as total California home sales – including all price levels – last quarter were the highest for a first quarter in five years, the number of sales of homes priced below $500,000 was the lowest for any quarter in nine years, since first quarter 2008. Home price appreciation and tight inventories in many markets have led to fewer sub-$500,000 sales. Last quarter 59.3% of all sold homes were priced below $500,000 – roughly the same level as during the previous three quarters and the lowest for any quarter in nearly a decade, since third quarter 2007 (Figure 3).

Last quarter the share of homes that sold for $1 million or more – 10.9 percent – was the second-highest on record for any quarter, behind 11.7 percent in second quarter 2016. The share of all homes that sold last quarter for $2 million or more – 2.6 percent – was also the second-highest on record, behind 2.7 percent in second quarter 2016.

Of the homes that sold for $1 million or more last quarter, nearly 77 percent sold for $1 million to $2 million, and the vast majority (91 percent) sold for no more than $3 million…. which probably means that when the Chinese finally leave Canada and hit California, watch out.

Other highlights from California’s $1 million-plus home sales in first quarter 2017, per CoreLogic:

  • Roughly 78 percent of the $1 million-plus sales last quarter were existing (not new) detached houses, up from about 75 percent a year earlier but below the 10-year quarterly average of about 82 percent.
  • About 11 percent of last quarter’s sales were existing condos, roughly the same as a year earlier and above the 10-year quarterly average of around 9 percent.
  • About 31 percent of the homes that sold for $1 million or more last quarter were purchased with cash, while nearly 43 percent of multi-million-dollar sales were bought with cash.
  • The average size of a $1 million-plus home sold last quarter was 2,739 square feet, down from a 10-year average of 3,064 square feet. For resale detached houses the average was 2,825 square feet, while for resale condos it was 2,053.
  • On average, $1 million-plus homes sold last quarter had four bedrooms and three bathrooms.
  • The average lot size for a $1 million-plus home sold last quarter was 17,368 square feet, down from a 10-year average of 19,370 square feet (for homes on 5 acres or less).
  • The five zip codes with the highest number of million-dollar-plus home sales last quarter were 92620 (Irvine); 92130 (San Diego, including Carmel Valley); 95125 (San Jose); 92037 (La Jolla, San Diego); and 92651 (Laguna Beach).


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Paul Craig Roberts Warns “Truth Has Become Un-American”

Authored by Paul Craig Roberts,

Those of us who have exited The Matrix are concerned that there are no checks on Washington’s use of nuclear weapons in the interest of US hegemony over the world.

Washington and Israel are the threats to peace. Washington demands world hegemony, and Israel demands hegemony in the Middle East.

There are two countries that stand in the way of Washington’s world hegemony—Russia and China. Consequently, Washington has plans for preemptive nuclear strikes against both countries. It is difficult to imagine a more serious threat to mankind, and there is no awareness or acknowledgment of this threat among the Congress, the presstitute media, and the general public in the United States and Washington’s European vassal populations.

Two countries and a part of a third stand in the way of Greater Israel. Israel wants the water resources of southern Lebanon, but cannot get them, despite twice sending in the Israeli Army, because of the Lebanese Hezbollah militia, which is supplied by Syria and Iran. This is why Syria and Iran are on Washington’s hit list. Washington serves the military/security complex, Wall Street and the over-sized US banks, and Israel.

It is unclear if the Russians and Chinese understand that Washington’s hostility toward them is not just some sort of misunderstanding that diplomacy can work out.

Clearly, Russia hasn’t interfered in the US presidential election or invaded Ukraine, and does not intend to invade Poland or the Baltics. Russia let go the Soviet empire and is glad to see it gone, as the empire was expensive and of little benefit. The Soviet Eastern European empire comprised Stalin’s buffer against another Western invasion. The Warsaw Pact had no offensive meaning. It was not the beginning, as misrepresented in Washington, of Soviet world domination.

I see a lack of clarity about the threat that Russia faces in Russian media reports and articles posted on Russian English language websites. I see a lack of clarity in Russian Foreign Minister Lavrov’s continued efforts to work out an accommodation with Washington. How can Lavrov work out an accommodation with Washington when Washington intends to dominate or isolate Russia?

Lavrov and Russian media organizations do not always show awareness that it is not Washington’s intention to accommodate other national interests.

It cannot be otherwise for these three reasons:

  1. The budget for the US military/security complex is the largest in the world. It is larger than the Gross Domestic Product of many countries. It includes not only the Pentagon’s budget but also the budgets of 16 US intelligence agencies and the Department of Energy, which is the location of the Oak Ridge nuclear weapons plant and 16 other national laboratories. When all the elements are added together, the military/security complex has annually the power and profit from $1,000 billion. An empire of this sort just doesn’t give up and go away because some president or some part of the electorate want peace. The “Russian Threat” is essential to the power and profit of the military/security complex, about which President Eisenhower warned Americans 56 years ago. Just imagine how entrenched this power is now.
  2. The neoconservatives, who control both US foreign policy and the Western media’s explanation of it, believe that the collapse of Soviet communism means that History has chosen the United States as the socio-politico-economic system, and that the US government has the responsibility to assert the hegemony of America over the earth. Just read the neocon documents. They assert this over and over. This is what it means that America is the exceptional and indispensable nation. If you are the indispensable nation, every other nation is dispensable. If you are exceptional, everyone else is unexceptional. The claim that the neoconservatives make for the US is similar to the claim that Hitler made for Germany.
  3. As Israel controls US Middle East policy, Israel uses its control to have Washington eliminate obstacles to Israel’s expansion. So far Israel has achieved the overthrow of Saddam Hussein’s government and chaos in Iraq, Washington’s war on Syria, and Washington’s demonization of Iran in the hope that sufficient demonization will justify war.

For the Russian Foreign Minister to believe that it is possible to reach an accommodation with Washington, other than a Russian surrender, is nonsense. Perhaps this is Lavrov’s use of diplomacy to delay the US attack while Russia prepares. Or perhaps Lavrov is just a diplomat who sticks to his last, despite the facts.

Much of the Russian media, both in Russian and foreign language broadcasts and websites, thinks that the Western misrepresentation of Russia is just a mistake and that that facts, once they are established, can rectify the mistake. These Russian journalists don’t understand that Washington could not care less about facts. Washington desperately needs an enemy, and Russia is the enemy of choice.

The Chinese government seems to think that Wall Street and US corporations are too dependent on the cheap Chinese manufacturing labor, which keeps the US system fueled with profits, to jeopardize these profits by going to war.

By underplaying the risk of war, Russia and China fail to mobilize world opposition to Washington’s recklessness and, thereby, enable Washington’s move toward war.

The presstitutes serving the National Security State continue to drive toward conflict. Consider Newsweek’s May 26, 2017, cover story with Putin on the cover and the caption: “The Plot Against America: Inside Putin’s Campaign to Destroy Democracy in the U.S.”

It is difficult to imagine such ignorant nonsense from a mainstream news magazine. Democracy in America has been destroyed by special interest groups, by a US Supreme Court decision that gave the reins of power to special interest groups, and by a hoax war on terror that has destroyed the US Constitution. And here we have the presstitutes saying that Putin is destroying American democracy. Clearly, there is no extant intelligence anywhere in the Western media. The Western presstitutes are either corrupt beyond belief or ignorant beyond belief. Nothing else can be said for them.

Consider Time magazine’s cover. It depicts Trump turning the White House into the foundation for the Kremlin and St. Basil’s Cathedral, which rise above the White House, symbolizing America’s subservience to Russia under President Trump. This extraordinary propaganda seems to be readily accepted by the bulk of the Western populations, peoples who will die as a result of their insouciance.

Even writers critical of Washington, such as Paul Street’s recent article on CounterPunch and the English language Russian website, Strategic Culture Foundation, cannot bring themselves to state the truth that the US military/security complex needs a major enemy, has elected Russia for that role, and intends to defend this orchestration to the end of humanity on earth.

Street writes about “How Russia Became ‘Our Adversary’ Again.” According to Street, Russia became the enemy of choice because Russia protected part of the world’s population and resources from being exploited by global capital. Russia became the number one enemy of the US also because Putin stopped the American exploitation of Russia economically. Putin is in the way of Washington’s exploitation of the world.

Much of what Street says is correct, but he is hesitant to state it in a straightforward manner. He has to dilute his message by repeating the obligatory propaganda. Street calls Trump, who originally wanted normal relations with Russia, an “orange-haired brute . . . [who admires] Putin’s authoritarian manliness.”

Trump’s problems originated in his goal of normalizing relations with Russia. Hillary is the brute who intended to worsen the relations.

Putin is a democrat, not an authoritarian. The authoritarians are in Washington. Surely Paul Street and CounterPunch know this. But Street has to protect himself from speaking some politically incorrect truths about the US and Russia by throwing in some anti-Putin propaganda and denigrating President Trump.

That peace with Russia and China would undermine the justification of the $1,000 billion military/security budget, and that the military/security complex is the American government, is too much truth for most writers to state.

Truth is the most rare element in the Western world, and we will not be permitted to have much of it much longer. Increasingly, truth is difficult to find. Soak it up while it is still available.


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$100 Increase In Monthly Mortgage Payment Would Sink 75% Of Canadian Homeowners

According to a new survey from Manulife Bank, nearly 75% of Canadian homeowners would have difficulty paying their mortgage every month if their payments increased by as little as 10%.  And, given that the average house in Canada costs roughly $200,000 and carries a monthly mortgage payment of $1,000, that means that most Canadians couldn’t incur and $100 hike in their monthly mortgage payments without possibly going under.  Per CBC:

The bank polled 2,098 homeowners — between the ages of 20 to 69 with household incomes of $50,000 or higher — online in the first two weeks of February.

 

Fourteen per cent of respondents to Manulife’s survey said they wouldn’t be able to withstand any increase in their monthly payments, while 38 per cent of those polled said they could withstand a payment hike of between one and five per cent before having difficulty. An additional 20 per cent said they could stomach a hike of between six and 10 per cent before feeling the pinch.

 

Add it all up, and that means 72 per cent of homeowners polled couldn’t withstand a hike of just 10 per cent from their current record lows.

 

Of course, such a huge sensitivity to small budget fluctuations isn’t a great sign when we’re in the midst of record-low interest rates and about to enter a period of sustained hikes.

“What these people don’t realize is that we’re at record low interest rates today,” said Rick Lunny, president and CEO of Manulife Bank.

 

If mortgage rates increase by as little as one percentage point, some borrowers could be facing a hike of 10 per cent on their monthly bills. A bigger mortgage rate hike would bring more pain.

Meanwhile, 45% of millennials in the same survey said they had to borrow money from their parents to purchase their home and 25% admitted they have no savings.

 

Well, at least Americans aren’t the only ones that have no idea how to save.


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“He Wanted Revenge”: The Story Of The Manchester Suicide Bomber Emerges

As the investigation into Salman Abedi’s deadly suicide bombing expands, discrete details about his motives and state of mind emerge with the most expansive analysis to date just released by the WSJ, which shows the ISIS sympathizer, terrorist and mass killer as a confused young man, the byproduct of a destroyed nation, who – when all is said and done – wanted revenge according to his sister, who is quoted as saying that “he saw children—Muslim children—dying everywhere, and wanted revenge. He saw the explosives America drops on children in Syria, and he wanted revenge.”


An undated photo of Salman Abedi made available on Wednesday: AP

As the WSJ chronicles, just days before Salman Abedi blew himself up and killed 22 people outside a Manchester concert on Monday, he told his parents he was leaving their home in Libya to go on a pilgrimage to the Muslim holy city of Mecca, despite having other plans. “Abedi grew up in a world that straddled middle-class Britain and the Libya of his parents, both before and after the chaotic collapse of strongman Moammar Gadhafi’s regime” is how WSJ authors describe his troubled formative years.

And while he may have had a troubled childhood, aside from some traumatic encounters it is difficult to see just what set him off over the edge, and what, if anything, was the moment that defined his fracture.

In 2011, when Abedi was still a teenager, he traveled to Libya and fought alongside his father in a militia known as the Tripoli Brigade to oust Gadhafi as the revolts of the Arab Spring swept North Africa and the Middle East, a family friend said. The militia battled in Libya’s western mountains and played an important role in the fall of Tripoli to rebel forces that year.

 

Abedi and his mother returned to Britain in 2014, the family friend said. The young man enrolled at Manchester’s University of Salford in 2015 to study business administration. He studied for a year before effectively dropping out, according to a university spokesman.

Few were as surprised by Abedi’s transformation from a troubled youth to a deadly monster as Abedi’s sister, Jomana Abedi, who said her brother was kind and loving and that she was surprised by what he did this week. She said she thought he was driven by what he saw as injustices.

“I think he saw children—Muslim children—dying everywhere, and wanted revenge. He saw the explosives America drops on children in Syria, and he wanted revenge,” she said. “Whether he got that is between him and God.

Abedi suffered a personal tragey in May 2016 when an 18-year-old friend of Salman’s, Abdul Wahab Hafidah, also a Briton of Libyan descent, died after being run down by a car and then stabbed in Manchester.

“Abedi viewed the attack as a hate crime, the family friend said, and grew increasingly angry about what he considered ill-treatment of Muslims in Britain.”

That may well have been the moment when Abedi fell into the abyss: “I remember Salman at his funeral vowing revenge,” the Abedi family friend said. After that the soon-to-be-killer became increasingly religious and interested in extremist groups. A cousin, who declined to be named, said Abedi’s parents worried he was headed toward violence.

“We knew he was going to cause trouble,” the family friend said. “You could see that something was going to happen, sooner or later.”

More details from the WSJ:

Born in Manchester on New Year’s Eve in 1994, Abedi grew up playing soccer with his brothers in the street and went to school at the local Burnage Academy for Boys.

 

In Manchester, neighbors remember a family that didn’t mix much with others. On Fridays, they could be seen walking out of their house in traditional Muslim dress to attend a mosque in a converted church nearby. People at the mosque remember Abedi’s father, Ramadan, sometimes performing the call to prayer, and his brother, Ismail, attending. They said Abedi wasn’t a regular.

 

His older brother, Ismail, worked as a computer engineer at the headquarters of the Park Cake Bakery, a big British baker with around 2,000 employees. He lived with his wife in an apartment near the Abedi family home in south Manchester. The building was searched by police on Tuesday and Ismail Abedi was arrested nearby.

 

Akram Ramadan, 49, who lives upstairs, said Ismail Abedi “was a talkative guy who would always say hello.” He described Ismail as “a regular Joe,” adding that he was “definitely a Manc”—a local colloquialism for people from Manchester.

As reported earlier, Abedi’s younger brother, Hashem, was arrested in the Libyan capital Tripoli on Wednesday, and confessed that the pair were members of Islamic State and involved in the attack. Investigators are also looking into the possibility that Abedi went to Syria before the attack, one Western security official said.

Abedi’s radicalization was a shock to those close to him: in an interview before being detained, Abedi’s father, Ramadan, told the Associated Press: “We don’t believe in killing innocents. This is not us.”

Ramadan also told the AP his son had never been to Syria. It was impossible to independently confirm the Libyan authorities’ assertion about Hashem Abedi’s confession, or to ascertain the conditions under which it was made. One thing appears certain: for whatever reason, Abedi did it. On Monday evening, Salman Abedi was captured on security cameras, carrying a bag and walking in the foyer of the Manchester Arena where American pop star Ariana Grande was wrapping up her concert.

Which brings up the eternal question, at least among libertarians: would Abedi have engaged in Monday’s tragic mass if, as the WSJ notes, he had not witnessed the sequence of events that was started with the US overthrow of the Libyan regime, and culminated with the US proxy war in Syria meant to overthrow Assad just so a Qatari gas pipeline can cross the nation, and free Europe from Gazprome’s quasi-monopolistic clutches. And if so, while one can debate who is fundamentally at fault for the terrorist incident, especially if it was indeed “revenge”, the bigger question is how and when does the sequence of mindless deaths ever end. The answer, not just in this case but in countless generational vendettas in both the Middle East and across the world, remains elusive.

As for whether Abedi got his revenge by killing 22 innocent people, among them many children, his sister was laconic: “that is between him and God.”


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“Secret” Russian Document Influenced Comey’s Probe Into Hillary Clinton: Report

As part of Wednesday's late day bombshell dump, the Washington Post has revealed that former FBI Director James Comey’s decision to unilaterally announce the closure of the investigation into whether Hillary Clinton intentionally mishandled classified information was inspired by a "secret, dubious" Russian document, that FBI officials now believe was “bad intelligence.”

The secret document, which purported to be a piece of Russian intelligence, claimed that former Attorney General Loretta Lynch had privately assured someone in the Clinton campaign that the investigation into Clinton’s handling of classified information would go nowhere, "a conversation that if made public would cast doubt on the inquiry’s integrity."

Here’s WaPo:

Current and former officials have said that document played a significant role in the July decision by then-FBI Director James B. Comey to announce on his own, without Justice Department involvement, that the investigation was over. That public announcement — in which he criticized Clinton and made extensive comments about the evidence — set in motion a chain of other FBI moves that Democrats now say helped Trump win the presidential election. 

But according to the FBI’s own assessment, the document was bad intelligence — and according to people familiar with its contents, possibly even a fake sent to confuse the bureau. The Americans mentioned in the Russian document insist they do not know each other, do not speak to each other and never had any conversations remotely like the ones described in the document.

Whil FBI Investigators have long doubted the document's veracity, by August the FBI had concluded it was unreliable.Comey

The “document” in question is an email allegedly written by disgraced former DNC Chairwoman Debbie Wasserman Schultz and sent to Leonard Benardo, who is an official with the George Soros organization Open Society Foundations. According to the document, Wasserman Schultz claimed Lynch had assured senior Clinton campaign staffer Amanda Renteria that the investigation would not go too far

Supporters of Comey claim that the document gave him good reason to take the microphone in July, without consulting with Lynch, to announce the close of the Clinton probe in great detail.

“It was a very powerful factor in the decision to go forward in July with the statement that there shouldn’t be a prosecution,” a person familiar with the matter told the Post. “The point is that the bureau picked up hacked material that hadn’t been dumped by the bad guys involving Lynch. And that would have pulled the rug out of any authoritative announcement.”

As the Post explains, that decision set off a chain of events that Democrats believe contributed to Clinton’s shocking loss in November. The White House has also cited Comey's handling of the close of the probe in its official rationale for the former director's dismissal earlier this month.

In other words, this is reportedly yet another angle which casts the blame for Hillary's loss on Russia, even if in this case it was mediated by alleged FBI incompetence.

The report is the second within a week’s time to raise serious doubts about the competence of U.S. intelligence agencies, the first being the NYT report about how China’s Communist Party murdered or imprisoned nearly two dozen CIA operatives between 2010 and late 2012 while outspoken Clinton Supporter MIke Morell was in charge of the agency.

According to WaPo, Comey believed he had “little choice” but to announce the closure of the Clinton investigation and detail the nature of the evidence against her without the involvement of the AG because if the document leaked, he feared that the legitimacy of any announcement by the AG would be questioned.

It's hard to imagine the outpouring of support and sympathy for Comey that Democrats exhibited following his firing by President Trump will continue now that WaPo has revealed that the director's strategy for publicizing information about nature of the Clinton investigation – something liberals believe cost her the election – was based on unreliable Russian intelligence.

Comey's decision to announce the closure of the Clinton investigation back in July set off a chain of events that eventually led to him announcing, just a week before the Nov. 8 vote, that the FBI had reopened the investigation after finding some of Clinton's emails on a laptop owned by Anthony Weiner, the then-husband of top Clinton aide Huma Abedin, the paper reported. Wapo also notes that the veracity of the document was under suspicion from the moment the bureau received it in early March 2016.

But as is typical of the leaks that have trickled out from the intelligence agencies since the election, this one too contains an important caveat. To wit:

Comeys defenders still insist that there is reason to believe the document is legitimate and that it rightly played a major role in the director's thinking.

Earlier today, the Daily Caller reported that DWS reportedly threatened the chief of the U.S. Capitol Police with “consequences” for holding on to a laptop she says belongs to her. The police are holding the computer as evidence in a case against a Congressional staffer accused of wide-ranging data breaches. So a parallel question is: what is on that laptop that DWS doesn't want us to see?


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Six Terrifying Graphs That Simplistically Summarize America’s Public Pension Crisis

A new report from the Hoover Institution written by Senior Fellow Joshua Rauh and entitled “Hidden Debt, Hidden Deficits: How Pension Promises Are Consuming State And Local Budgets,” does a masterful job illustrating the true severity of America’s public pension crisis, a topic to which we’ve dedicated a substantial amount of time over the past couple of years. 

As part of the study, Rauh reviewed, in detail, 649 state, county and local pension systems in the United States and ranked them based on funding status and impact on local budgets.  What he found was a hidden taxpayer debt burden, in the form of underfunded pensions liabilities, totaling over $3.8 trillion.  Of course, as we’ve pointed out multiple times as well (see “An Unsolvable Math Problem: Public Pensions Are Underfunded By As Much As $8 Trillion“), Rauh argues that that $3.8 trillion taxpayer obligation is actually much larger if you apply some “common sense” math as opposed to “pension math.”

As of fiscal year 2015, the latest year for which complete accounts are available for all cities and states, governments reported unfunded liabilities of $1.378 trillion under recently implemented governmental accounting standards. However, we calculate using market valuation techniques that the true unfunded liability owed to workers based on their current service and salaries is $3.846 trillion. These calculations reflect the fact that accrued pension promises are a form of government debt with strong rights. These unfunded liabilities represent an increase of $434 billion over 2014, as realized asset returns fell far short of their targets.

 

Governmental accounting standards for pensions underwent some changes in 2014 and 2015 with the implementation of Governmental Accounting Standards Board (GASB) statements 67 and 68, procedures which require state and local governments to report on the assets and liabilities of their systems with a greater degree of harmonization. However, these standards still preserved the basic flaw in governmental pension accounting: the fallacy that liabilities can be measured by choosing an expected return on plan assets. This procedure uses as inputs the forecasts of investment returns on fundamentally risky assets and ignores the risk necessary to target hoped-for returns.

 

Specifically, the liability-weighted average expected return chosen by systems in 2015 was 7.6 percent. A 7.6 percent expected return implies that state and city governments are expecting the value of the money they invest today to double approximately every 9.5 years. That means that a typical government would view a promise to make a worker a $100,000 payment in 2026 as “fully funded” even if it had set aside less than $50,000 in assets in 2016; a similar payment in 2036 would be viewed as “fully funded” with less than $25,000 in assets in 2016.

With that intro, here are the stats on the worst funded public pension plans by state, county and city.

At the state level, it should come as little surprise to our readers (see “Illinois Pension Funding Ratio Sinks To 37.6% As Unfunded Liabilities Surge To $130 Billion“) that Illinois is at the very top of the list for the worst funded pension system in the country.

 

Meanwhile, the worst funded state pensions will continue to see their underfunded liabilities continue to grow as they would have to dedicate anywhere from 15%-25% of their entire revenue base just to maintain their current funding levels…which, of course, is not likely.

 

At the city level, again it should come as little surprise to our readers that Illinois was able to claim the top spot for worst State and City when it comes to pension liabilities.  Here are a couple of recent posts on Chicago’s pension disaster:

 

Meanwhile, Chicago would have to spend nearly 45% of its annual budget on pension contributions just to avoid losing additional ground.

 

Finally, Illinois nearly completed the coveted state, county and city trifecta but was narrowly ‘bested’ by Wayne County, Michigan.

 

But when it comes to pension underfundings relative to county revenue sources, California clearly ‘wins’ the day with 10 of the worst 11 counties based in Cali.

 

Of course, as we’ve said many times before, these public pension problems can be ignored for a very long time as managers pursue the “kick the can down the road” strategy.  That said, eventually each and every one of them will face an actual funding crisis that can only be solved with actual cash rather than funky pension math.  When that day comes, people will look back and fondly reminisce about the “mild” recession of 2009.


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Crispin Odey: “Why Do I Remain Stubbornly Bearish?”

It was over half a year ago that many predicted, this site included, that Crispin Odey’s double down, all in bet on central bank failure would be his “make it or break it” swan song, which if incorrect would also lead to the shuttering of his hedge fund. Well, rumors of Odey’s demise appear to have been greatly exaggerated again, because despite being down 9.9% YTD and down 31.1% LTM in his Odey Mac fund, not only is Crispin Odey still around, but he is bearish as ever, as he explains in his latest April letter to clients.

His full letter:

Manager’s Report

 

This last quarter saw the first synchronised upturn in global economic growth for three years. Stock markets also, in profits terms, had the wind behind them because 1Q 2017 was being compared to 1Q 2016 when the world looked like it was falling apart. Ever since central banks pushed credit through the system a year ago, with China leading the way, asset prices, commodity prices and eventually consumer confidence have lifted up towards the sky.

 

So why do I remain stubbornly bearish?

 

Firstly because what got the developed world into its crisis in 2008 was “large widespread borrowing by individuals who could not repay their debts” and now what has got us out of our crisis, is luckily, “large widespread borrowing by individuals who could not repay their debts.”

 

In 1942 when Hitler’s Germany was at the gates of Kiev as well as Moscow, and Britain was on its own just surviving, Todt, Hitler’s Minister of Supply, startled Hitler by saying that the German war effort would stall. For his prescience he disappeared a week later when his plane fell to earth unexpectedly. But what he could see was that the lines of supply were at breaking point. Success was the necessary ingredient of failure.

 

The US economy is now operating above its operating capacity. Free capacity in the workforce is less than 3 months of growth. This is why Yellen and the Fed are keen to raise rates in June. The UK already has a gross savings rate of 6% against a necessary investment rate of 11% of GNP. Such a shortfall should call for higher interest rates to encourage savings to grow but no. With the Bank of England’s encouragement, consumer debt is rising at 8% per annum whilst wages are only rising by 2%. How long this madness? Japan will start in the second half of this year to eat its savings – whether sushi or tempura – as spending is financed by asset sales.

 

Subprime lending both facilitates and is driven by employment. Lend the man the loan for his car and the demand induced gives him the job that keeps the payments current. When that goes into reverse, and from a position of full employment it can only go one way, the consequences are easy to see.

 

At the same time, whilst the Chinese have been enjoying 10.6% consumer spending growth and 7.6% economic growth, it came because they pushed 40% of GNP in new credit into the economy last year. An attempt to rein in this misallocated credit since March has immediately impacted economic growth and spending by 1% of GNP, to say nothing of the 20% falls in Chinese involved commodity prices. All of these instances of slowdown since March are threatening the reflation trade which has driven stock markets up and bond markets lower.

 

What if we are not in a normalising cycle? What if last year was a rally in a bear market? What if China can no longer be the font of growth? What if the USA is not going to experience the economic boom attendant with tax cuts for the corporates, which rerated that market since November?

 

So far political worries have made no dent upon markets. Nothing has. But QE is now due to end over the next two years.

 

Venezuela signifies all that I think about today’s markets. The country is rightly enveloped in riots and misery. Individuals were forced to import $30 billion less in an economy of $150 billion of GNP. So individuals took a 20% hit to their already low living standards. This year they are forced to hand over $10 billion of precious dollars to both service their $110 billion of external debt and repay some. So where does the 135/8% of August 2018’s trade? I would have expected in the low-30’s. No, it trades in the mid-80’s. Remember that the only important lodestones for the investor have been: Is credit growing faster than nominal GNP? Is productivity growth accelerating or slowing? Is productivity growth at or around 2.5%? Because otherwise politicians are in trouble? Well, on all these measures the world is not getting out of its problems.

 

And then when it comes to markets, we have to watch for ‘the Minsky moment’. Minsky argued that periods of low volatility, presaged crises because they encouraged excessive risk taking. Well, we are into the risk taking. But this fund truly does not demand that the end of the world comes tomorrow. The Chairman of EOG inc. in the USA said that 10 years ago it was necessary to invest $48 billion to extract a million barrels a day. Today it can be done with under $7 billion. Ten years ago it costs $55m to build a 15 megawatt solar plant. Today it costs $15m and it produces 40% more electricity. Disruptive technologies are everywhere. Anyone who built their plants 10 years ago using debt is in trouble. A bull market in equities has hidden the scale of that trouble. It will not just be subprime that undermines this cycle, disruptive technologies will do their bit too.

* * *

And here for those curious, is Odey’s latest exposure and Top 10 long holdings:


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Two Simple Charts Explain The Devastating Consequences Of Obamacare

As the mainstream media and the original Affordable Care Act (ACA) architects attempt to saddle the Trump administration with the blame for Obamacare’s epic implosion, we thought the following two charts, which highlight the staggering increases in premiums from 2013 through 2017, were a timely reminder that Obamacare’s ‘implosion’ occurred long before people even thought Trump had a shot at the White House. 

Per the chart below from the Department of Health and Human Services, the average individual purchaser of health insurance across the United States saw their premiums increase from $232 per month in 2013 to $476 per month in 2017, a ‘modest’ increase of over 100% in just a few years.  To put that into perspective, that’s nearly $3,000 per year and roughly 9% of what the median American earns each year.

 

And while many will try to blame the Trump administration for the 2017 increases, recall that 2017 rates were set in the summer of 2016, a time when most viewed Trump as a long-shot for the White House.

Meanwhile, as if a 100% average increase isn’t bad enough, residents of many states incurred even more devastating increases of over 200%.

 

But sure, it’s all Trump’s fault.

 

Here is the full report from the Department of Health and Human Services:

http://ift.tt/2riGc16


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