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Trump Victory Odds Soar As The Hillary Clinton 'Death Cross' Strikes

ABC, Fox News, and Rasmussen now have polls suggesting Donald Trump leads Hillary Clinton nationally and for the first time during this campaign RealClearPolitics 'tracker' has Trump with a 0.2pt lead - the unofficial "death cross" of Clinton's campaign as Wayne Allyn Root right remarks "Hillary is sinking faster than the Titanic." Voters are putting their money where their polls are too as bookies odds of a Hillary victory in November are tumbling.

Hillary's lead has gone as the blue line "death cross"-es below Trump's rising red line...

Source: RealClearPolitics

And the bookies' odds of a Clinton victory in November are sliding to 2-month lows as Trump's hit record highs...

Source: PredictIt

This comes as Mark Cuban said in an interview with NBC anchor Chuck Todd on "Meet the Press," that he would consider being the running mate for either Democratic presidential front-runner Hillary Clinton or presumptive GOP nominee Donald Trump.

He said he liked that Clinton “had thought out proposals.”


“That's a good thing because at least we get to see exactly where she stands,” he said. "But I think Sen. [Bernie] Sanders has dragged her a little bit too far to the left.”


And Cuban, who called himself an independent, said he would also be open to discussing a vice presidential spot with Trump.


“I’d have the same conversation for Donald,” he said. "I think Donald has a real chance to win, and that’s scary to a lot of people. But what's scary about it to me is that you can see him now trying to do what he thinks is right to unify the party.”

Either way America remains deeply divided...

And try as they might, The Donald does not fit neatly into the liberal/conservative stereotypes beloved by journalists, especially pinko ones. As CLSA's Chris Wood notes,

The pinko paper’s aggregate demand obsessed Martin Wolf stated this week: “Mr Trump is a misogynist, a racist and a xenophobe” (see Financial Times article “An elite at the mercy of its own creation”, 18 May 2016).


Meanwhile, the establishment media’s continuing efforts to disparage The Donald are likely to backfire in GREED & fear’s view because the electorate at large is fed up with politically correct discourse, most particularly white men. On the latter point, GREED & fear’s attention was caught by a poll this week which showed that Trump has a 53% support rating among whites whereas he only has 28% support among Hispanics and a mere 9% among blacks. This is an important point in a country which remains obsessed about “race”, and which politics remains strongly influenced by race, just as Britain remains obsessed by “class” even if no one wants to admit it.


Still if Trump’s lack of appeal outside the white world represents a formidable obstacle in an election, it does not mean it is impossible for him to win since whites, for now at least, are still the majority in America accounting for 66% of the voting-age population. This is why national polls are still showing the race to be very close (see above) while polls also show that Trump has a chance of winning key swing states such as Michigan and Florida.


Clearly all of the above should be seen in the context of the fact that the election is still six months away. Still it has to be said that The Donald looks a lot more energised than Hillary who also faces the irritation that Bernie Sanders has, for reasons best known to him, still chosen not to exit the race. Indeed Trump looks to GREED & fear to have all the momentum with establishment Republicans almost rushing to endorse him.


Remember Americans, more than most cultures, like a winner.


Meanwhile, Democrats are beginning to dare to hope that the continuing FBI investigation of Hillary’s emails will trigger an event which will force her to step down from the presidential race providing an excuse for Vice President Joe Biden to emerge as a last-minute candidate. They are hoping this because they believe, probably correctly, that Biden has better prospects against The Donald. Still the longer this takes to happen, assuming it happens at all, the longer The Donald has to build momentum.

Which leads nicely to Wayne Allyn Root's discussion, via Fox, on the collapse of Clinton...

I’ve predicted publicly for a year now that Hillary Clinton,   although a prohibitive favorite, still may never become the Democratic Party’s nominee.

Don’t look now, but at this moment Hillary is still far from a sure thing to become the Democratic standard-bearer. This week, she lost Oregon and barely squeaked by in Kentucky. Bernie has now won 11 of the last 14 primaries and caucuses.

I ask Democrats, is this your nominee? The winner of your presidential nomination has lost just shy of 80 percent of her races coming down the homestretch. If Hillary were a racehorse with that record, she’d be sent home.

Call me crazy but don’t presumptive nominees usually win about 80 percent of their races? This has to be the first time in history the leader of her party has lost 80 percent of them. I’m not sure you call someone like that a “leader” or “nominee.” Usually you call someone like that…“loser!”

Hillary is certainly still the favorite — if only because of the scam of superdelegates. The Democratic nomination is basically rigged. Because of those superdelegates Hillary already has the nomination locked up. But she appears to be crawling on her knees, over razor blades, towards the finish line.

First, while she’s the clear-cut delegate winner and we all know that everyone loves a winner, it’s gotta be downright frightening for Democrats that she still can’t put away a wild-eyed radical socialist from Vermont who wants tax rates as high as 90 percent and would add an estimated $18 trillion to the national debt.

Then, there’s the FBI. They are closing in. No matter how many times Hillary or her delusional aides claim the investigation is only a “security inquiry” it doesn’t change reality.

FBI Director Comey recently set them straight. Turns out the FBI doesn’t do “security inquiries.” Hillary is the subject of a “criminal investigation.”

Then there’s that millstone hanging around Hillary’s neck — Bill Clinton. Can you become president when your husband’s past behavior with women raises more questions every day? We’re about to find out.

The stories about Bill’s reckless and possibly criminal behavior keep popping out of the closet. First there’s the beautiful blonde “friend” who got $2 million from the Clinton Global Initiative and another $800,000 in government contracts with Bill’s help. Don’t we all wish we had friends like that?

Worse, there’s the new disclosure that Bill took 26 flights on a sex offender’s plane, an aircraft actually called “The Lolita Express.” It flew nonstop to “Orgy Island” where old men cavorted with young (13 to 15-year old) girls.Bill flew five times on this aircraft without his Secret Service detail. This isn’t a scandal, it’s a disaster for Hillary.

It’s already May and now the question is: Can Hillary crawl past the primary finish line? And if she does, will she be so crippled for the general election that she becomes a sitting duck for Donald Trump?

Have you seen the latest polls? Last week the experts were shocked to see Hillary tied with Trump. This week it got even worse. In the latest Fox News poll Trump leads Hillary.

I have close friends in high Democratic Party circles. Trust me, they are beginning to panic. They are starting to think about Plan B… and that doesn’t include either Hillary or Bernie being their nominee.

So let me lay out a very plausible scenario. What if Hillary’s approval ratings slide continues? What if over the next 60 to 90 days she finds herself down by 5 to 7 points to Trump? What if she goes down by double digits? Would the panic become hysteria?

What if the FBI recommends indicting Hillary over the email scandal — my law enforcement sources tell me this is a very real possibility.

But it gets worse. Have you heard that Russia claims to have 10,000 of Hillary’s hacked emails? They say they will release them. If this is the case, Hillary better stop worrying about the White House and start worrying about the Big House.

Would President Obama allow the Justice Department to indict his former secretary of state? I used to think “no.” But I now believe the answer to that question depends on only one factor — is Hillary beating Trump?

Every Washington insider knows that Obama has no love or loyalty for Hillary.

I’m betting if Obama senses Hillary is a sinking Titanic — and he still has time before the convention — he will throw her under the bus.

At this point, I would guess the president gives Hillary a choice that is no choice at all. Be indicted, lose the presidential race, and risk a long jail term, or announce to the world that your cough has become a real medical issue and you will have to decline the nomination, then receive a presidential pardon.

That means all her delegates become free agents and a new nominee can be substituted at the Democratic convention in July.

I’ve always predicted Obama would prefer Joe Biden or Elizabeth Warren as the nominee, or the combination of Biden/Warren. He may yet get his wish. But this much I know:

Hillary is sinking faster than the Titanic.

Introducing The Gotthard Train Tunnel, The World's Longest & Deepest Train Tunnel

On June 1, Angela Merkel and Francois Hollande will take a break from their respective domestic crises and attend a ceremony to inaugurate the Gotthard Base Tunnel (GBT) in Switzerland.

While the US has been focused on resolving LGBT rights issues and deciding whether or not the Confederate flag can fly in cemeteries, Switzerland has focused on something that's actually productive. After 17 years of work, and at a cost of $12 billion, Switzerland has engineered and constructed the world's longest and deepest railroad tunnel. At a depth of 7,500 feet, the 35 mile long GBT cuts underneath the Alps, and will remove natural barriers to trade and tourism, along with easing the burden of freight traffic on Switzerland's ecosystem. For example, freight capacity along the north-south corridor is estimated to increase as a result of the project, going from 22 million tons a year to at least 44 million tons according to NBC News.


In constructing the twin tunnels, one for each direction, more than 31 million tons of rock was excavated (the equivalent of what it would take to build five of Egypt's Giza pyramids) using boring machines that were the length of almost four NFL football fields. Not only was the construction difficult, the design also had to include very precise safety features.

"We had to design doors that can be opened by a child and that at the same time will stop the spread of fire and smoke. They have to work even if there is no electricity, and stand up to the wave of pressure, equal to ten tons, caused by trains going by" said Peter Schuster of the engineering firm Ernst Basler & Partner.


Regularly scheduled rail traffic is set to begin in December 2016, and with speeds of up to 155mph, passengers will find travel time between Zurich, Switzerland and Milan, Italy reduced from just over four hours to two and a half hours.

* * *

It's amazing what can happen if everyone were to stop bickering and come together to design and construct worthwhile projects. We can only hope to see more of this, and less of the other nonsense that inevitably crosses the wire each day.

Here is a short video of the project:

The Washington Post's Modest Proposal To "Fix Democracy": Root Out "Ignorant American Voters"

Presented with no comment, via The Washingotn Post:

Authored by David Harsanyi, a senior editor at the Federalist.

Never have so many people with so little knowledge made so many consequential decisions for the rest of us.

A person need only survey the inanity of the ongoing presidential race to comprehend that the most pressing problem facing the nation isn’t Big Business, Big Labor, Big Media or even Big Money in politics.

It’s you, the American voter. And by weeding out millions of irresponsible voters who can’t be bothered to learn the rudimentary workings of the Constitution, or their preferred candidate’s proposals or even their history, we may be able to mitigate the recklessness of the electorate.

No, we shouldn’t erect physical barriers to ballot access. Let’s purchase more voting machines, hire additional poll workers, streamline the registration process, mail out more ballots for seniors and produce more “Rock the Vote” ads imploring apathetic millennials to embrace their civic duty.

At the same time, let’s also remember that checking a box for the candidate whose campaign ads you like best is one of the most overrated obligations of the self-governed. If you have no clue what the hell is going on, you also have a civic duty to avoid subjecting the rest of us to your ignorance.

Unfortunately, we can’t trust you.

Now, if voting is a consecrated rite of democracy, as liberals often argue, surely society can have certain minimal expectations for those participating. And if citizenship itself is as hallowed as Republicans argue, then surely the prospective voter can be asked to know just as much as the prospective citizen. Let’s give voters a test. The citizenship civics test will do just fine.

How many screeching proponents of the two major candidates would pass this quiz? Here are some of the questions, which run from easy to preposterously easy:

“If both the President and the Vice President can no longer serve, who becomes President?”

“There were 13 original states. Name three.”

“What is one right or freedom from the First Amendment?”

“What is freedom of religion?”

I have tempered confidence that at least a majority of the voting public could pass such a test — though I couldn’t say the same for a majority of presidential candidates. Certainly, this should be a breeze for citizens so intensely involved in the process that they feel compelled to plaster bumper stickers on their cars and attend the rallies of their favorite candidates.

Or am I being too optimistic? When Newsweek asked a thousand voters to take the official citizenship test a few years back, nearly 30 percent couldn’t name the vice president. More than 60 percent did not know the length of U.S. senators’ terms in office. And 43 percent couldn’t say that the first 10 amendments to the Constitution are known as the Bill of Rights.

Only 30 percent knew that the U.S. Constitution is the supreme law of the land.

In another study, by the Annenberg Public Policy Center, we learned that only 36 percent could name all three branches of the U.S. government. Only 62 percent knew that the U.S. Supreme Court was tasked with determining the constitutionality of legislation. Fewer than half of Americans knew that split decisions in the Supreme Court have the same effect as 9 to 0 decisions.

These are the people who pick the people who define the basic fabric of the legal system — and often our lives.

To be fair, the contemporary electorate is probably no less ignorant today than it was 50 or 100 years ago. The difference is that now we have unlimited access to information. As James Madison wrote, “A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or, perhaps both.”

And it literally takes seconds to learn about the fundamentals of our republic and the positions of candidates. If you forsake the power of information, you have no standing to tell the rest of us how to live our lives. Don’t vote.

Now, some of you will accuse me of peddling crass elitism. But I say the opposite is true. Unlike the many who depend on ignorant voters to wield and secure their power, I refuse to believe that working-class or underprivileged citizens are any less capable of understanding the meaning of the Constitution or the contours of governance than the supercilious 1-percenters. I believe this despite the widespread failure of public schools to teach children basic civics. It’s still our responsibility as voters.

Of course, we also must remember the ugly history of poll taxes and other prejudicial methods that Americans used to deny black citizens their equal right to vote. Any effort to improve the quality of the voting public should ensure that all races, creeds, genders and sexual orientations and people of every socioeconomic background are similarly inhibited from voting when ignorant. For the good of our democratic institutions.

Is This The Scariest Chart Out There?

Submitted by Lance Roberts via,

Another week of volatility, but with no real resolution to the burning question of “where do we go next?” 

This past week, the release of the FOMC meeting minutes from April did little to solve the overall confusion. On Friday, I noted some key highlights from the minutes:

Participants generally agreed that the risks to the economic outlook posed by global economic and financial developments had receded over the inter-meeting period.


Participants also raised concerns about “unanticipated developments” associated with how China manages its exchange rate.


Still, Fed officials signaled they weren’t overly worried about the apparent [Q1 GDP] slump, judging it was temporary and “could partly reflect measurement problems and, if so, would likely be following by stronger [gross domestic product] growth in subsequent quarters.


The view wasn’t unanimous. Some officials worried that softness in consumer spending and declines in business investment may be a sign of a more persistent slowdown in economic activity.”

There is a tremendous amount of “hope” built into those statements. And despite the continuing call of economic growth which has remained terminally elusive, the Federal Reserve is faced with numerous challenges ahead.

The central bank already missed the “window of opportunity” for normalizing rates in a manner that doesn’t hamper the recovery. This is evident when you look at Janet Yellen’s proprietary index that Yellen herself has stated as critical for Fed movement.

As I have repeated discussed in the past, since payrolls tend to track corporate profits by about six months AND the small business confidence gauges are in decline, there will be weakening, not strengthening, in employment as the year progresses.

Such a slowing in payrolls will put the Fed in a difficult position since their entire premise on hiking rates has been a rise in inflation to 2% and a fall to 5% in unemployment. Both have now been achieved. This is why, when combined with a forthcoming Presidential election, the Fed will likely remain quite permanently on hold.

As Rick Reider at Blackrock recently summed up:

“To be sure, we live in a world that always has risks and headwinds. But given the many headwinds to Fed movement today, the central bank could have taken the opportunity to move earlier in the year when the headwinds weren’t as strong and it was being aided by historically easy global monetary policy in Europe and Japan.


Now, the central bank is left with a more difficult set of decisions going forward, as it weighs the costs and benefits of maintaining interest rates at ’emergency conditions.’”

For Yellen, it is critical the market holds the current level of support. A break below that level will certainly send markets lower looking to retest February lows once again while completely derailing the Fed’s plans for hiking rates.

The Line In The Sand

As of Friday morning, as I am writing this, the “good news” is the market rebounded sharply off of the critical support level at 2040. That level has been acting as the “line in the sand” since April, and as stated above, a violation of that level will likely send stocks heading rapidly lower.

Furthermore, the markets have returned to a short-term oversold condition which has historically provided a catalyst for high prices. Again, this is a very short-term condition that can be exhausted very quickly. 

The “bad news” is that the rally on Friday failed to break back above the 50-day moving average.  A failure to reclaim that ground by close of business on Monday will return the 50-dma back into resistance versus support.

However, stepping back to a “weekly” price chart, we see the market bouncing off of the short-term moving average putting the new downtrend resistance line at 2090 in focus. 

On a weekly basis, the markets remain extremely overbought following the rally from the February lows. This suggests that on an intermediate-term basis the path for prices is likely lower despite the potential for a short-term rally as shown in the daily chart above.

I realize this is a bit confusing, but this is the nature of the markets. For executing a buy or sell of an asset in the market, I like to use daily analysis to determine the “timing” of the transaction.

However, from a portfolio management perspective, I am a long-term investor. Therefore, I need to understand the intermediate to longer-term TRENDS of asset prices. As long as prices are trending positively, I want to remain invested despite potential short-term volatility that may exist. When asset prices began to trend negatively, I do NOT want to be heavily tilted towards RISK.

Currently, despite all of the volatility since last May, the markets have not fully changed their trend from positive to negative. Not yet, anyway. 

The weekly chart below shows the market versus a 1-year and 2-year moving average. Currently, the 1-year moving average is just 1-point shy of crossing below the 2-year moving average. Historically, this has only occurred at the peak of the last two bull markets and represents the trend change process. The bottom part of the graph is a moving-average convergence divergence indicator (MACD) which acts an an early warning sign that risk should be reduced in portfolios.  That signal was registered in May, 2015 which is when I reduced equity risk in portfolios by 50%. 

Furthermore, if we step back even further and look at a monthly chart we see more signs of ongoing deterioration currently. As shown below, there are many measures of the market currently issuing warning signs. These warning signs should not be readily dismissed against a very short-term advance in the market. The longer-term dynamics act like gravity against extremely short-term, headline driven, price volatility.

While the market is currently holding support, keeping current allocations in place, the “gravity” of longer term price dynamics are dragging markets down to earth. But this is the normal process of a market top in progress. As the old saying goes:

“Bull markets die with a whimper, not with a bang.” – Unknown

Bull Markets Lose Support

Along with this idea that “bull markets” die with a whimper is the loss of one of the major supports of asset prices since 2009. Lu Wang touched on this issue last week for Bloomberg:

“After snapping up trillions of dollars of their own stock in a five-year shopping binge that dwarfed every other buyer, U.S. companies from Apple Inc. to IBM Corp. just put on the brakes. Announced repurchases dropped 38 percent to $244 billion in the last four months, the biggest decline since 2009, data compiled by Birinyi Associates and Bloomberg show.”

 “‘If the only meaningful source of demand in the market is companies buying their own shares back, then what happens if that goes away?’ said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts, which oversees $100 billion. ‘We should be concerned.’”

It is not just repurchases that companies are cutting. As the profits recession continues for a fourth straight quarter, cost cutting will become a “thing” again as companies search for cash.

The number of firms that have slashed dividends are now at a seven year high. As noted by Political Calculations just recently the pace of dividend cuts in the second quarter is now running well ahead of the first quarter of this year. Most importantly, as shown in the chart below, the pace of dividend cuts are more normally associated with recessionary economic environments.

Furthermore, as economic and profit weakness continues to weigh on corporate balance sheets, delinquencies are rising. As noted by Wolf Richter this week:

“Delinquencies of commercial and industrial loans at all banks, after hitting a low point in Q4 2014 of $11.7 billion, have begun to balloon (they’re delinquent when they’re 30 days or more past due). Initially, this was due to the oil & gas fiasco, but increasingly it’s due to trouble in many other sectors, including retail.


Between Q4 2014 and Q1 2016, delinquencies spiked 137% to $27.8 billion. They’re halfway toward to the all-time peak during the Financial Crisis in Q3 2009 of $53.7 billion. And they’re higher than they’d been in Q3 2008, just as Lehman Brothers had its moment.


Note how, in this chart by the Board of Governors of the Fed, delinquencies of C&I loans start rising before recessions (shaded areas). I added the red marks to point out where we stand in relationship to the Lehman moment:”

“Business loan delinquencies are a leading indicator of big economic trouble. They begin to rise at the end of the credit cycle, on loans that were made in good times by over-eager loan officers with the encouragement of the Fed. But suddenly, the weight of this debt poses a major problem for borrowers whose sales, instead of soaring as projected during good times, may be shrinking, and whose expenses may be rising, and there’s no money left to service the loan.”

So, as asset prices remain suspended based mostly on a “fear of missing out,” there is a more distinct air pocket appearing beneath the surface. With support after support disappearing from the market, the risk of a sudden plunge in asset prices has grown markedly in recent months. 

Scariest Chart Out There

The following is an excerpt from a post at Hedgeye by Dr. Daniel Thornton. During his 33-year career at the St. Louis Fed, Thornton served as vice president and economic advisor. He currently runs D.L. Thornton Economics, an economic research consultancy. 

“During the entire period from 1952Q1 to 1994Q4, household net worth tracks the trend line very closely. Since 1995Q1, however, household net worth has been consistently above the trend line and the gap has been getting progressively larger. Such behavior would be a concern in any circumstance, but it is particularly troubling because we know that the previous two boom cycles were followed by busts. The recent rise in household net worth has not been accompanied by a correspondingly large increase in output or the price level. Hence, it too does not appear to be supported by economic fundamentals—it appears to be unsustainable.”

The Fed’s monetary policy has contributed to this problem. First, by keeping the federal funds rate below its own estimates of the normal or natural rate for much of this time and way below the normal rate for nearly a decade. The second, by unnecessarily purchasing a massive amount of government and mortgage-back securities, which Fed Chair Yellen and her colleagues are reluctant to sell. I don’t see the Fed doing anything different anytime soon.


I predict that the current level of household net worth is not sustainable. I believe that some unforeseeable event will prick the bubble, perhaps this year. The result will be recession which will, unfortunately, be accompanied by more misguided monetary and fiscal policies. I call this monetary and fiscal policy insanity: Keep doing the same thing and expect a different result! I would love to be wrong, but I doubt I will be.”

This is not 1995, 2011 or 2012. The dynamics behind the market itself are flashing warning signs where ever you dare to actually look. Being aggressively exposed to equity risk is looking ever more dangerous as we head into the summer months.

The problem is that markets can remain irrational far longer than logic would dictate. Therefore, I continue to urge caution while waiting for the market to finally declare itself either a “bull” or a “bear.”  But, I will say my “bearish spidey senses” are tingling.

“But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions.” – Jesse Livermore

THE MONDAY MORNING CALL The Monday Morning Call – Analysis For Active Traders

I want to update what I wrote last week:

The ongoing correction last week violated the 50-dma which raises short-term positioning alarm bells. However, as discussed above, the market held support and the recent neckline at 2040.

While on Monday of last week the market did rocket above the 50-dma, it was unable to hold that level this week with Friday’s rally failing at that resistance. The 2040 level is now an extremely critical level of support in what appears to be a fairly significant topping process.

As I discussed in Tuesday’s “Technically Speaking” post:

Critically, there is a“head and shoulders” process being formed and the 2040 level is the neckline support of that pattern. A break of that neckline will lead to a more substantial correction process.”

“With the 50-dma trending positively above the 200-dma, we do want to give the markets the benefit of the doubt currently, but I am not dismissing my sense of caution.”

It will be critical for the market holds 2040 next week and rally back above the 50-dma in order to continue the bullish bias.

Sentiment Update

One interesting aspect of the rally over the last couple of months is that it has not substantially changed the outlook of individual investors about the market. While individuals remain skeptical of the recent rally, the sentiment of professionals has rocketed higher. The chart below is the ratio of individual to professional bullish sentiment.

This is interesting because while individuals remain skeptical of the recent rally, they have not changed their asset allocations to a more defensive posture.

In other words, while they are concerned about a potential “bear” market, they are unwilling to do anything about it due to “fear of missing out.”  The Federal Reserve has apparently completed its mission of convincing the vast majority of the population that “stocks can no longer go down.” 

This is potentially a dangerous concept. The chart below is a composite index of both individual and profession net bullish sentiment.

The recent downward spike in net bullish sentiment was quickly reversed. While many have pointed to high levels of “bearish sentiment” as a sign of a “major market bottom,” the quick recovery back to high levels of net bullish sentiment suggest differently.

As noted above, the quick recovery of bullish sentiment is more again to what was seen during the topping process of the market in 2007. During a more protracted “bear market,” net bullish sentiment tends to remain extremely negative as the decline proceeds. 

It is worth noting that the composite bull/bear ratio hit the highest levels in the composite’s history as QE3 ran its final course. The reversal in sentiment, as stated above, seems to be more akin to the previous topping process than just a correction within an ongoing bull market.

But like I said above.

“While investors may indeed be worried about a market crash, they really aren’t doing much about it protecting themselves from it.”

USD Breaks Above Resistance

Two weeks ago, I suggested that the decline in the US dollar had neared completion and that a sharp reversal was likely.

“Of course, one of the main drivers of such a reversion would be a reversal of the recent weakness in the dollar. Like the advance in oil, the decline in the dollar has also been just as extreme. As shown below, denoted by yellow highlights, each previous downside extension of the current magnitude has resulted in a fairly sharp reversal.”

“With the Federal Reserve caught in their own “trap” of “strong employment and rising inflation” rhetoric, the markets may start to worry about a rate hike in June. A perception of higher interest rates would likely reverse flows back into the dollar, and by default U.S. Treasuries, pushing the dollar higher and rates lower.”

Well, with the revelation of the recent FOMC minutes the worries about a June rate hike, as suspected, have indeed surfaced sending the US dollar spiking above resistance.

If this rally in the dollar continues higher, it should coincide with a further decline in the major market averages and specifically the basic materials, industrials and energy based sectors.

British Lord Proposes "Fix" To Pension Crisis: Work Until 70 To Get More Money

In a world of increasingly more negative interest rates, one group is impacted more than most: pensioners who had relied on fixed income to fund their retirement years who are slowly discovering that as pension funds are unable to meet their annual 6-7% return target, that the pensions promised to them will never materialize, or worse be haircut by 50%, 60% or more.

One such example is that of the Central States Pension Fund whose fate we have been following over the past month, and which as we reported yesterday could see the pension benefits for about 407,000 people be reduced to “virtually nothing."

In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn’t enough. Earlier this month, the Treasury Department rejected the plan because it found that it would not actually head off insolvency.

In this increasingly gloomy world for retirees everywhere, one person has come up with a modest proposal: the UK's Lord Jonathan Adair Turner, Baron Turner of Ecchinswell, who based on his title hardly has to worried about his own personal retirement. Turner also happens to be the former chairman of the UK Pensions Commission, and as such his opinion will be closely followed.

What he said is the following: people should work until they are 70 and then be rewarded with a more generous state pension. He was referring specifically to Britons, but the same logic could be applied to the US pension system which is in just as dire shape.

Turner said that reforms to raise the state pension age should be accelerated, with retirement benefits staggered from the age of 65 before the introduction of a larger universal pension from the age of 70 by 2030.

"We have failed to think creatively,” he added.

Actually, no. The world's central bankers thought very creatively in order to save equity investors around the globe. However, in the process they crushed returns on fixed income products, which are critical in funding and generating the much needed returns for pensioners. Of course, when it comes to actual priorities, the immediate capital gains needs of the 0.1% are far more pressing then long-term retirement benefits of the vast majority of workers, whose problems can be solved as simply as haircutting their promised pension obligations by 60% (or more) or simply by forcing them to work until they die or just before.

Turner also said that under his pension proposals, everybody, including the wealthy, would be entitled to the state pension at 70, but those on lower incomes, or with manual jobs, would be able to draw benefits from 65. "There are people on lower incomes, or have done manual jobs, who are worn out by the nature of those jobs or have been unemployed and don’t have jobs," he said.

How generous of Lord Turner: to let those who can barely make ends meet work until their traditional retirement age. As for everyone else, i.e., those who make up what used to be known as the "middle class", they surely won't mind working another 5 years just to let the world ignore the massive errors compounded by central bankers over the past decade.

“I do not think we have been creative enough about creating two slices [between], 65 and 70 where the state pension is available on a means-tested basis and then at 70 by 2030 where it will be available for everybody on a non-means tested basis.”

Meanwhile, as rates turn even more negative and as both banks and pension funds see their long-short carry "net interest margin" trades lead to no profits (or even losses), the retirement age will eventually be hiked to 75, maybe even 80, and then one day, when virtually all actuarial assumptions go out of the window, and every single pension funds admits defeat, the only logical outcome will be to scrap the entire retirement system and force people to work until they die, just so the S&P can hit new all time highs every year and make a subset of the "1%" richer and richer with time.

Gold Fund Inflows Surge To Highest Of The Year

With high-yield bond funds suffering the largest redemptions in their history, this week saw gold fund flows soar to their highest in 2016 as buyers took advantage of the lower prices following the same path as George Soros, Stan Druckenmiller, Jana Partners, and Canada's financial giant CI Financial.


Junk bonds saw the single-biggest daily redemptions in history this last week...


As investors appreaed to seek safe haven in precious metals. Gold saw the biggest week for inflows this year with 1.879 m/oz worth $2,359 million dollars.

Source: ShareLynx

As SputnikNews reports, demand for gold rose by 21 percent in the first quarter of 2016. Recently, billionaire George Soros invested nearly $390 in gold stocks, having decreased investments in other assets. Shortly after, large hedge-funds followed the example of the legendary US investor.

Between January and March 2016, Soros Fund Management established by George Soros increased investments in gold market assets, according to the company’s data.


Particularly, the fund bought shares worth $264 million in Canada’s company Barrick Gold, one of the world’s leading gold producers. It also bought an option for nearly 1.05 million shares ($123 million) in SPDR Gold Trust, the world’s biggest gold exchange fund.


Soros also made bets on a drop in the US stock market, having decreased investments in stock assets. In the first quarter, the value of Soros Fund’s exchange-traded assets dropped by 37 percent, to $3.5 billion.


Other big investors have followed Soros’ course toward the yellow metal. Former Soros partner billionaire trader Stanley Druckenmiller said in early-May that gold became his favorite asset in a time of low interest rates.


According to media reports, Druckenmiller, whose net worth is estimated at $4.4 billion, is making long-term investments in gold while holding short positions on US companies’ shares.


In January-March, investment fund Jana Partners managing assets worth $11.6 billion invested in gold for the first time in 12 months, having bought shares in SPDR Gold Trust for $5.9 million.


CI Investments Inc., the investment subsidiary of Canada’s financial giant CI Financial, bought 2.81 million shares of SPDR Gold Trust. It also purchased 1.5 million shares in Barrick Gold.

*  *  *

Time for BlackRock to start halting creation again soon?


Buy Silver – “Best Precious Metals Trade”

Buy Silver – “Best Precious Metals Trade”

“Buy silver, sell gold” is the bold call of currency, bullion and money analyst Dominic Frisby in the latest edition of best selling Money Week.

Frisby looks at the relative value of silver to gold and comes to the conclusion that silver is a better buy right now. We share his bullish view on silver and hence our current campaign regarding VAT free silver coins.

From the article:

“Today we consider gold and silver.

We suggest that you should buy one and sell the other.

We then advise walking away for a couple of years…

Silver and Mother Nature’s ratio

There is, say the wise old men of geological lore, something like 15 times as much silver in the Earth’s crust as there is gold. Received wisdom is that in days gone by, the value of silver relative to gold reflected the amount of metal Mother Nature has given us: gold was, for hundreds of years, about 15 times the price of silver.

Last year 27,579 tonnes of silver were produced (according to my most reliable of precious metal data sources, Nick Laird of Sharelynx) and about 3,000 tonnes of gold. In other words, just over nine times as much as silver as gold was produced.

However, the gold price – about $1,270 an ounce – is about 75 times silver’s price of $17 an ounce. What gives?”

Dominic kindly mentions us as a bullion dealer who will buy gold bullion from you and sell silver coins and bars to you:

“If you want to buy physical silver, our friends in Dublin, the precious metals dealers GoldCore, have a new scheme whereby you can buy silver coins VAT-free. They’ll also, as most dealers will, buy your gold”.

We make a market in all popular bullion formats from small gold sovereigns to large 400 ounce gold bars and at the risk of doing ourselves out of business, we would caution against selling gold bullion right now.

Sell paper and digital gold, like Bullion Vault, maybe but not physical gold coins and bars. Rather both physical gold and silver bullion should be owned as financial insurance and hedges against currency debasement, bail ins, systemic and counter party risks and the myriad other risks today.

There is the possibility that gold continues to outperform silver in the short term. This is quite likely if we get another bout of severe deflation and the next stage of the global financial crisis. There is also the real chance of the currency reset where gold prices are revalued by the global monetary authorities to $5,000 to $10,000 per ounce. This could see silver underperform in the short term.

Silver remains severely undervalued versus gold but more particularly versus stocks, bonds and other financial – digital and paper – assets and we believe will outperform most assets in the coming years. Allocations to both depend on risk appetite and motivations for buying.

Read the full article by Dominic Frisby on MoneyWeek here.


Market Updates This Week

Bank Bail-Ins Pose Risks To Depositors, Investors & Economies
Take Delivery of Gold and Silver Coins, Store Gold Bars – Hobbs
George Soros Buying Gold ETF And Gold Shares In Q1
Hedge Funds Take Record Long Silver Position As Silver Bullion Deficit Surges


Gold and Silver Prices and News
Gold down 1.4% for week on Fed rate views – Reuters
Asian shares set for weekly loss, Fed talk lifts dollar – Reuters
Gold Takes ‘Brunt of the Selling’ as Fed Primes Markets for Hike – Bloomberg
Philly Fed index dips to negative 1.8 in May – Morning Star
Gold jewelry is getting pricier – CNN Money

Warning signs everywhere that the British housing bubble is about to go POP! – This Is Money
English Farm Prices Fall Most Since 2008 on Brexit Fears – Bloomberg
Rating agencies highlight the gloomy Brexit scenarios – Irish Times
Market Impact of Brexit Is Key Concern for G-7 Finance Chiefs – Bloomberg
George Soros Takes Massive Gold Position, Fears of a Crisis Grow – Value Walk

Gold Prices (LBMA AM)
20 May: USD 1,256.50, EUR 1,120.18 and GBP 862.75 per ounce
19 May: USD 1,253.75, EUR 1,117.74 and GBP 857.37 per ounce
18 May: USD 1,270.90, EUR 1,127.21 and GBP 882.05 per ounce
17 May: USD 1,270.10, EUR 1,121.43 and GBP 877.50 per ounce
16 May: USD 1,281.00, EUR 1,132.04 and GBP 892.87 per ounce

Silver Prices (LBMA)
20 May: USD 16.60, EUR 14.81 and GBP 11.35 per ounce
19 May: USD 16.60, EUR 14.81 and GBP 11.35 per ounce
18 May: USD 17.05, EUR 15.13 and GBP 11.77 per ounce
17 May: USD 17.08, EUR 15.09 and GBP 11.80 per ounce
16 May: USD 17.32, EUR 15.30 and GBP 12.07 per ounce



Read Our Most Popular Guides in Recent Months

WWIII? A "Hybrid Geo-Financial War" Between NATO and Russia Is Dangerously Escalating

Submitted by Mac Slavo via,

Russia is preparing for war against the West.

Putin is being urged to do so because the U.S. and NATO have been preparing for war themselves.

Syria and Ukraine have just been warm ups. The real thing could be around the corner, and other proxy flashpoints are ready to line up.

The rising tensions for military conflict are sharply complicated by the stealthier financial war that is nonetheless taking a serious toll across the globe, in particular as collapsing oil prices put incredible pressure on those regimes who have cast a big social benefits net financed primarily by $100/barrel oil.

As SHTF previously reported, that made Venezuela the most vulnerable, and it is plain today that the oil rich nation is collapsing. However, the manipulation of these prices was also meant to put pressure on Russia (as well as other countries)… while the attempt to undercut Russian natural gas by taking over Ukraine and have NATO supply gas to Europe instead of Russia has so far failed.

It is a sophisticated geopolitical gamble that perhaps no one is winning, apart from who manages not to topple over.

A detailed, but nonetheless alarming article by Alastair Crooke reports that there is significant pressure on Putin from other Russian leaders to take a hard line in the days ahead.

via the Huffington Post:

Putin carries, at one end of his balancing pole, the various elites more oriented toward the West and the “Washington Consensus“ and, at the pole’s other end, those concerned that Russia faces both a real military threat from the North Atlantic Treaty Organization and a hybrid geo-financial war as well. He is being pressed to come down on the side of the latter, and to pry the grip of the former from the levers of economic power that they still tightly hold.


In short, the issue coming to a head in the Kremlin is whether Russia is sufficiently prepared for further Western efforts to ensure it does not impede or rival American hegemony. Can Russia sustain a geo-financial assault, if one were to be launched? And is such a threat real or mere Western posturing for other ends?


What is so important is that if these events are misread in the West, which is already primed to see any Russian defensive act as offensive and aggressive, the ground will already have been laid for escalation. We already had the first war to push back against NATO in Georgia. The second pushback war is ongoing in Ukraine. What might be the consequences to a third?


In mid-April, General Alexander Bastrykin, the head of Russia’s Investigative Committee (a sort of super attorney general, as Cohen describes it), wrote that Russia — its role in Syria notwithstanding — is militarily ill prepared to face a new war either at home or abroad, and that the economy is in a bad way, too. Russia, furthermore, is equally ill prepared to withstand a geo-financial war. He goes on to say that the West is preparing for war against Russia and that Russia’s leadership does not appear to be aware of or alert to the danger the country faces.


[…] A retired Russian general entered the fray to confirm that the West is indeed preparing for war — he pointed to NATO deployments in the Baltics, the Black Sea and Poland, among other places — and underlines again the unpreparedness of the Russian military to face this threat. “This is a heavy indictment of Putin,” Cohen says of the revelations from this analysis. “It is now out in the open.”




The government’s economic policy is being criticized. The opposing faction wants to see an immediate mobilization of the military and the economy for war, conventional or hybrid. This is not about wanting Putin ousted; it is about pushing him to wield the knife — and to cut deeply.

There is every reason to think that the clashing interests of NATO and Russia can and will spark more flashpoints across the map and around the arc that generally surrounds the former Soviet empire, which the United States hopes to contain in order to maintain its own crumbling empire.

While President Obama, now officially the president to oversee the longest period of war (albeit somewhat contracted), may be reluctant to pursue in form of open conflict with Russia, a president like Hillary Clinton may be all-too willing to do so. She has already called in recent days for an escalated ‘war against ISIS,’ which handily also gives an open ended pretext to challenge NATO-Russian conflict points wherever they might appear.

Donald Trump’s positions here are as yet unclear, but he is beginning to surround himself with the same type of advisers – including Henry Kissinger –  that have brought us to this point.

With economic decline and a definite fatigue for war, Americans face an end of the dollar as the world currency standard and an era where the BRICS nations, and in particular the militaries of Russia and China, pose an existential threat to the world that the U.S. and Britain carved out in the WWII era and which they essentially won away from the Soviets by the end of the Cold War.

These waxing and waning empires are dangerous as their vulnerabilities and short-comings become exposed, and their territories challenged.

That fact that Putin is being prodded from within Russia to be less diplomatic and more aggressive in posturing for war is downright unsettling. Many of our most dangerous American leaders are all-too willing to poke the bear and evoke a reaction.

Ukraine and Syria, as well as the Georgian conflict before it in 2008, prove that the U.S. will continue waging war and posturing for global domination in spite of the lack of a coherent narrative (but there’s ISIS), or any convincing pretext for sending troops and sponsoring proxy armies.

The American people are sick of war, but the misleaders in Washington are eager enough to reinvigorate their sense of power and entitlement to control the affairs here and abroad. After all, war – in a sick kind of way – is good for the economy, and a big one means a mandate of emergency powers and a period of unquestioning obedience from the domestic population.

The threat is all-too real, and a serious provocation, like the false flag attacks that have sparked most of the wars in the past, could be on the horizon.

That all basically points to WWIII… or at least a full second Cold War. It could be a long way off, but the sense is that the scent is in the air.

Stock Share Buybacks Now Bought Out — American Enterprise in Decline

Published originally on The Great Recession Blog

by David Haggith


I have pointed out in previous articles how most of the growth in stocks over the past few years has been due to stock share buybacks. Without this hideous (and at one time illegal) practice, there would have been no bull market over the last few years.

That’s right. Research from no other place than Wall Street, itself, indicates that almost all of the returns since 2009 have been due to stock share buybacks!


Liz Ann Sonders, chief investment strategist and perma-bull at Charles Schwab, recently acknowledged that "... there has not been a dollar added to the U.S. stock market since the end of the financial crisis by retail investors and pension funds...." Since every buyer has a seller (and vice versa), what group or groups had enough of a buying presence to push the S&P 500 14.2% off of the February closing lows? Corporations. (Seeking Alpha)


Most people assume what has kept the market afloat this year after sinking 11% at the start of the year was a mixture of better news out of China, oil prices stabilizing, and indications that the Fed won’t raise rates as much as thought. But the real thing bouying the market could be something else: Stock buybacks…. The stock buybacks come at a time when major investors including individuals, foreign investors, and pension funds have been selling off their shares, according to a note from Goldman Sachs, amid market volatility and weak oil prices. (Fortune)


Stock share buybacks may be winding down


But you cannot do share buybacks forever. Companies have been using profits and loading up on debt to make these share buybacks for so long that the law of diminishing returns is kicking in here, too.

First, it is kicking in because companies are nearing the end of their capacity to keep eating themselves. Earnings have been falling while debt has been stacking up, and so the capacity just isn’t there any more. (And I mean even the doctored earnings — as almost all major corporations have moved away from GAAP reporting policies — have been falling badly.)

Secondly, buybacks have gone insane to the point where the practice is even starting to reek of death to market bulls who are growing wary of them.

Over the past five weeks, the value of shares bought back has fallen 42% (yoy). The number of scheduled buybacks has fallen off substantially this year (35% below last year’s pace). So, we can anticipate the market will lose some of the hot air that once kept it aloft.



Here are two confusing headlines for you, released this week within 24 hours of each other: First comes Bloomberg’s “Bull Market Losing Biggest Ally as Buybacks Fall Most Since 2009.” Ah, but then came the Financial Times, with “US companies step up share buybacks in the first quarter of 2016….” At face value this would seem difficult. However, Bloomberg and the FT are in fact measuring two different things. Bloomberg has been looking at buyback announcements so far in 2016…. The FT meanwhile has been looking at preliminary numbers for the first quarter from S&P/Dow Jones indexes. These suggest that US buybacks were actually up 20% in this year’s first quarter, compared to the old year’s last…. So, what’s the upshot? …As David Lefkowitz, senior equity strategist at UBS, puts it: “earnings per share were down around 6% in the first quarter so it’s not terribly surprising that there should be a slowdown in buyback announcements.” He stressed however that buyback announcements are just that – announcements not activity. He also pointed out that the oil sector’s early-year wrestle with ever-lower crude prices, and profit worries at the major banks, have left corporate America with a lot less cash to flash…. Corporate buybacks may not continue at the pace we’ve seen since about 2011, but it seems unlikely that they’re going to fade away either. (News.Markets)


In other words, leftover buybacks from last year’s announcements are still unfolding, but announcements of additional buybacks are diminishing quickly as corporate cash drops.


Stock share buybacks have transformed America into the Alzheimer’s ward of enterprise


We are now a nation full of companies with much bigger piles of debt and much less capacity to keep propping up their share prices with buybacks because those companies are rotting from within. Buybacks syphoned money away from capital expansion and research and development in order to deliver candy to investors now at the cost of crippling the company down the road.

All of that was smiled upon (until now) by Wall Street and government for saving the day while losing the decade. Yes, a decade of potential recovery has been consumed by milking corporations dry, and there will be hell to pay as a result of this self-consuming greed.

Former Republican presidential candidate, Carly Fiorina, championed this kind of corporate management during her stint at Hewlett-Packard until the Crowned Executive Officer was forced off her throne. During her brief reign, HP bought back $14 billion of stocks, which was more than its entire profits during that same period ($12 billion).

That was total self-cannibalism, as during that time HP practically eliminated research and development, caving in to the idea that it was no longer capable of innovation and dominance in the consumer electronic field that it had long dominated. They gave up and walked away from their staple market of personal computers and home printers. Then they rejigged this plan into severing off separate companies. Contrasting this to Apple, can you even think of the last thing HP invented? Can you even remember the last thing that someone else invented that HP successfully produced and popularized?

Because of her great accomplishment at HP, Fiorina believed she was qualified to become president of the United States. Having successfully gotten rid of her, did HP learn anything? Of course not. Her successor tripled down on all of this, buying back $43 billion in shares on $36 billion in profits! Following him, Leo Apotheker did the same thing, buying back nearly a billion dollars in stock every month of his brief eleven-month reign. This is a company that knows how to eat itself one leg at a time.


“HP was the poster child of an innovative enterprise that retained profits and reinvested in the productive capabilities of employees. Since 1999, however, it has been destroying itself by downsizing its labor force and distributing its profits to shareholders….” HP declined to comment. (Reuters)


And this is the new corporate norm for America. Last year, corporations spent almost a trillion dollars on share buybacks and dividends, even though it was largely a year of declining profits. Maybe I should say because it was a year of declining profits. So, they weren’t doing it because they had the money to spend. Like HP, many spent money they didn’t earn.

That’s what you do when your business stinks so bad no one wants your stock because you have started to smell like the toe fungus and old urine that odorizes a bad nursing home. When the company is selling its own limbs on the meat market, it might not be in the healthiest of shape.

When profits are in perpetual decline, you cover the stink of your own slow death with the sweet smell of candy. You throw grain (dividends) to the market bulls to get them to gather.


What have stock buybacks gotten us?


No wonder corporate stock buybacks were illegal until Reagan changed that during his tenure of deregulation. Yes, that deregulation did wonders for the stock market for a long time. It’s amazing how rich shareholders can become (especially the board members and CEOs) when they dine for years on their own company. It’s also amazing how rich you can become when no one is paying for the largess because it is bought on credit.

However, greed and self-delusion among America’s corporate leaders has finally reached the zenith that comes just before self-annihilation. That is what happens when you get carried away with taking the regulations off of avaricious activity. Greed gets bolder and bolder as it explores the outer limits of its success. Evil contains the seeds of its own destruction. It always reaches too far.

Responsible use of credit buys innovation (research and development) or production expansion for the future. Greedy and irresponsible use buys profit sharing for the present when profits are down. That lack of rigorous self-discipline is the new American leadership norm.

For all of this, corporate bosses get bigger and bigger pay and eventually rise to become presidential candidates. That’s because they are best suited to run a country that advocates this kind of business by stripping away the laws that once governed such greed. Those laws were created because past experience taught us that humans couldn’t be trusted to act in the company’s (and the nation’s) long-term best interest, instead of their own immediate self-interest. Left on their own, many would reap and run. We always forget the lessons of the past, so we ditch those laws when they seem to restraining our progress.

However, the buybacks aren’t yielding the returns they once were, and the corporations have already taken on a load of debt for past buybacks that is even threatening the credit rating of some. Earnings have declined steadily as money spent on building for the future has dropped dramatically. It looks like the golden years when companies buy themselves are winding down, and we shall all convalesce together.


International Business Machines Corp. (IBM) is a poster child for questionable buybacks…. Over five years, IBM bought back $59.1 billion in common shares, while its stock returned only 5%. Meanwhile, the S&P 500 returned 81%…. There have been plenty of solid arguments that IBM could have made much better use of that money by investing in its business. After all, the company’s annual sales have declined 24% over the past five years, while its earnings have dropped 16%. (MarketWatch)


With so many American corporations on their sickbeds, it’s a good thing we have Obamacare.

Visualizing 200 Years Of US Immigration

While the common narrative is now that Donald Trump is dividing the United States along racial lines, it would appear that 200 years of widespread immigration (some more integrative and some less) - as the following stunning animated graphic shows - the proverbial melting pot, after 8 years of an African-American president, during which black inequality has worsened dramatically, is boiling over by its own volition.

Here is everyone who has emigrated to the United States since 1820 (1 dot = 10,000 people)

Full interactive version here at


And after 200 years, this is what America has become...

"Government Ain't Fixable But It Will Correct!"

Via Monty Pelerin's World,

As the next Presidential election nears, optimism regarding candidates and political parties ebbs and flows. Voters like to believe their candidate sees the problems and will fix them. This fundamental belief drives voting. But what if it isn’t true? What if government ain’t fixable? Or can’t be changed? What then?

Government Ain’t Fixable and People Are Sensing It

The public increasingly recognizes that the opportunity to choose between two candidates is not working very well. The election process allows for a peaceful transfer of power but if the only change is in the the names and placeholders that media refer to as “leaders” But government continues to grow, become more expensive, more intrusive, less responsive and more burdensome. That is the way of government in this country for the half century I have been paying attention.

The quadrennial event that is the Presidential election cycle is akin to Charlie Brown, Lucy and the football. Voters play the role of the hapless Charlie Brown. Lucy represents the political class and the football plays the role of campaign promises. The football is never kicked, altered or used. Yet hapless Charlie falls for the promise again and again.

This election seems different. The public is beginning to understand the game. Some are rebelling. How else does one explain the popularity of Donald Trump and Bernie Sanders? H. L. Mencken’s wisdom regarding democracy, politics  and politicians is gaining followers. Mencken’s litany of disgust is too prolific to deal with other than to suggest that the public may be realizing that:

Every election is a sort of advance auction sale of stolen goods.

Increasing numbers understand this observation and that they are the victims in the game.

Government is too large and entrenched to be changed by elections. The political establishment considers themselves to be privileged and pretends to like and tolerate citizens. The truth is that the citizenry are nothing more than a commodity to the rulers. Their votes and pocketbooks are mined so that political lifestyles can be continued.

This reality is becoming apparent to more and more citizens who recognize the government as Lucy and themselves as Charlie Brown. The football is always promised but never delivered. The story of this election is the number of people dissatisfied with Lucy and her behavior. In a sense this election is beginning to look like a protest similar to the Boston Harbor tea party. It is likely a precedent that will not directly change anything,  although the retrospective of history may recognize it as the first shot fired in the coming rebellion against oppressive government.


Government Will Correct

No one can fix government. Even if Donald Trump or Hillary/Bern were the best managers in the world, they could only have a marginal impact even if they were inclined.

Government is too far gone and too deeply entrenched. It is a gigantic blob immune to common sense, cost control or the will of the citizens it pretends to serve. People are expected to serve it, a complete contradiction of the stated goal of the Founders. It grows and enriches itself (and its members) simply because it can.  It is no different from an unaccountable criminal enterprise, exempting itself from laws it imposes on others. In point of fact, it is less efficient than organized crime which must generate a profit under less than ideal circumstances. Most Mafia-run businesses provide a service or value to their customers in excess of what it costs. Government has no need to do so and is especially ineffective and inefficient.

Government is Leviathan. It looks out for itself and no one person or small group can alter that condition. Government will correct, but not willingly. Today it is at the point where the plant from Little Shop of Horrors was in this clip:

The conflicted Seymour represents the citizens of this country, subject to increasing demands and monetary contributions. Both the plant and the government demand contributions while provide little service or benefits in return. Government is as addicted to more every bit as much as the demanding plant. It knows no other way other than to spend to continue its scam.

Government ain’t fixable but it will correct because there are limits to what people and economies will bear. Government is out of money and hopelessly indebted. Yet it continues to spend as if it had the money. It has seriously wounded the host on which it parasitically survives. The golden goose no longer can shake off the effects of the government burden. The economy is stagnant. Confiscatory taxation and regulatory burdens prevent private capital formation. Without capital, standard of living and employment stagnate. The economy will continue to deteriorate and people will continue to become poorer until the system collapses of its own weight or the people revolt. Either represents a cataclysmic event!

For a time monetary printing can disguise the deterioration. States and municipalities are unable to print money. Their unnecessary and wasteful schemes are surfacing. Puerto Rico demands a bailout. So will Illinois and dozens of other governmental entities. California is driving its productive class away. That is also happening at the Federal level where both people and companies are voting with their feet. The renouncement of US citizenship is exploding as is the relocation of corporate headquarters out of this country.

Government as we know it is doomed. It will not recognize this reality until markets and/or citizens force it. This time is likely close and the process will not be painless. The more government ignores what is inevitable the greater the pain will be. One hopes that civilization does not enter an economic and anarchical Dark Ages. To the extent that government refuses to respond to the fantasy world they have created, the more likely that is to be the outcome.

While many still think their vote matters, others are beginning to recognize the futility of voting.

Government is Bad at Almost Everything

Everyone has heard more than their share of stories about government inefficiency and stupidity. It is difficult to point to any government agency run effectively or achieving the ends for which it was created. The War on Poverty has increased poverty. The Department of Education was formed at the peak of educational effectiveness and everything has gone downhill since. What does the Department of Energy do besides make it more difficult to achieve more energy? The Internal Revenue Service has become a political tool to hammer opponents who do not hold the presidency. Hasn’t the Veteran’s Administration done a wonderful job for the medical care of our veterans? ObamaCare has driven health-care costs through the roof and put a damper on the creation of jobs like nothing else.

And now this inefficiency seems to be reaching new heights in the TSA, the agency that fails miserably on routine tests to find contraband and other items prohibited. Now we are told that this agency is going to impose the loss of millions of hours of wait time because it cannot do its job properly. The following video shows what is coming:

All the money being spent on preventing terrorism has not stopped one terrorist act at an airport. If you are a traveler, you are more likely to become a terrorist as a result of treatment by your own government than to be protected from terrorism.

The Secret (US-Instigated) History Of ISIS

It appears, once again, Donald Trump is correct...

Crooked Hillary Clintons foreign interventions unleashed ISIS in Syria, Iraq and Libya. She is reckless and dangerous!

— Donald J. Trump (@realDonaldTrump) May 21, 2016

As the following controversial Frontline documentary exposes - for the first time to the mainstream and average joes of America - the inside story of the the radicals who became the leaders of ISIS, the many missed warning signs and the U.S. failures to stop the terror group's brutal rise.

"We created chaos. We abandoned that chaos... We created ISIS!"


“I said: ‘Mr. President, it isn’t just a simple matter of going to Baghdad. I know how to do that. What happens after? You need to understand, if you take out a government, take out a regime, guess who becomes the government and regime and is responsible for the country? You are. So if you break it, you own it.'


-Colin Powell

Full documentary here (no embed, click image for link)

Taliban Leader Mansour Killed In US Drone Strike Inside Pakistan

Earlier today, a veteran White House correspondent laid out his version of how Obama "gets away with it" in a news cycle when everyone's attention should be glued to the economic failures of the lame duck president. One thing he forgot to mention, however, was the use of such conventional "rally around the flag" tactics as taking out a key symbolic nemesis of the US to drum up patriotic fervor.

Just over five years ago this function was served by Osama bin Laden, who then died anywhere between the 3rd and 5th time (depending on who was counting). Then, earlier today, it was Mullah Akhtar Mansour, the leader of the Taliban in Afghanistan, who was killed by a US drone strike around 6 a.m. EDT Saturday
while Mansour was riding in a vehicle in a remote area near the town
of Ahmad Wal, Pakistan, along the border with Afghanistan, according to
Defense Department officials.

Mansour has been seen as the leader of the Taliban since it was revealed last year that famed leader Mullah Mohammad Omar had died in 2013. Since the disclosure of Omar’s death and under Mansour’s leadership, Taliban fighters have conducted numerous attacks that have resulted in the death of tens of thousands of Afghan civilians and Afghan security forces as well as a number of U.S. and coalition personnel, Pentagon spokesman Peter Cook said in the statement.

As a reminder, the last time the US conducted a strategic mission deep inside Pakistan (to executed Osama bin Laden), it led to a furious reaction by the local government which had not preapproved the operation. We expect this time will be no different as the US once again shows that "sovereignty" means absolutely nothing to the printer of the world's reserve currency.

Mullah Akhtar Mohammad Mansour, Taliban militants' leader

While still unconfirmed, the death of Mullah Akhtar Mansour could further fracture the Taliban - an outcome that experts cautioned might make the insurgents even less likely to participate in long-stalled peace efforts. In other words, it would push Afghanistan that much further from some semblance of peace. It will , however, likely lead to an escalation of Taliban retaliation which will likely focus on US assets in both Afghanistan, Pakistan and all other neighboring countries where US presence is not exactly "welcome."

According to Reuters, the assassination mission, which included multiple drones, demonstrated a clear willingness by Obama to go after the Afghan Taliban leadership in Pakistan now that the insurgents control or contest more territory in Afghanistan than at any time since being ousted by a U.S.-led intervention in 2001.

The WSJ adds that a second man who was with Mr. Mansour and was considered a combatant is also believed to have been killed in the strike. The strike was authorized by President Obama, Pentagon officials said. Pentagon spokesman Peter Cook confirmed an air strike targeting Mansour in the Afghanistan-Pakistan border region but declined to speculate on his fate, although multiple U.S. officials, speaking on condition of anonymity, told Reuters he likely was killed. 

Another Pentagon official said that there were no unintended casualties or other damage because of the remoteness of the area in which the strike occurred.  He probably felt obliged to add that in light of the thousands of innocent civilians that the US has "droned to death" in its pursuit of radical militants whose every step and location it knew well in advance.

"We are still assessing the results of the strike and will provide more information as it becomes available," Cook said.

Not surprisingly the locals have denied the story:  a Taliban commander close to Mansour, speaking to Reuters on condition of anonymity, denied Mansour was dead. It's unclear why the Taliban was anonymous: it's not like he is exactly leaking insider trading information.

"We heard about these baseless reports but this not first time," the commander said. "Just wanted to share with you my own information that Mullah Mansour has not been killed."

This is not the first time Mansour has been "killed" - in December, Mansour was reportedly wounded and possibly killed in a shootout at the house of another Taliban leader near Quetta in Pakistan. Well, not reportedly killed if he has been reportedly killed again, although as a reminder this is precisely what happened to none other than Osama bin Laden who also was "reportedly" killed numerous times before Obama finally took credit for his "final" killing.

Bruce Riedel, an Afghanistan expert at the Brookings Institution think-tank, described the U.S. operation in Pakistan as an unprecedented move but cautioned about possible fallout with Pakistan, where Taliban leadership has long been accused of having safe haven.

In other words, with ISIS cells in Europe carrying out suicide bombing missions every few months, the US decided it was a good idea to poke yet another hornets' nest and create more chaos and retaliation. A State Department official said both Pakistan and Afghanistan were notified of the strike but did not disclose whether that notification was prior to it being carried out.

"The opportunity to conduct this operation to eliminate the threat that Mansour posed was a distinctive one and we acted on it," the official said.

Reuters adds that the U.S. drones targeted Mansour and another combatant as the men rode in a vehicle in a remote area southwest of the town of Ahmad Wal, another U.S. official said, speaking on condition of anonymity.

U.S. special operations forces operated the drones in a mission authorized by Obama that took place at about 6 a.m. EDT (1000 GMT), the official said. That would have placed it at Saturday at 3 p.m. in Pakistan.

Cook branded Mansour "an obstacle to peace and reconciliation between the government of Afghanistan and the Taliban" and said he was involved in planning attacks that threatened U.S., Afghan and allied forces.

Ironically, those who actually grasp what is about to happen, completely disagree. Take for example, Michael Kugelman, a senior associate for South and Southeast Asia at the Woodrow Wilson Center, said the strike was unlikely to bring the Taliban to the negotiating table any time soon. In fact, it will likely make the Taliban far less likely to want to sit down and discuss peace, assuming of course that Mansour is dead.

"The Taliban won't simply meekly agree to talks and especially as this strike could worsen the fragmentation within the organization," he said.

Kugelman said the most important target for the United States remained the top leadership of the Haqqani network, which is allied with the Taliban. Mansour had failed to win over rival factions within the Taliban after formally assuming the helm last year after the Taliban admitted the group's founding leader, Mullah Omar, had been dead for more than two years.  It was unclear who Mansour's successor might be. "If Mansour is dead it will provoke a crisis inside the Taliban," Riedel said.U.S.

It will also likely provoke another major diplomatic incident between Pakistani leadership and the Obama administration.

Meanwhile, the neocons in the US were giidy with delight: John McCain, the Republican head of the Senate Armed Services Committee, said he hoped the strike would herald a change in the Obama administration's policy against more broadly targeting the Taliban.

The new U.S. commander in Afghanistan is currently reviewing U.S. strategy, including whether broader powers are needed to target insurgents and whether to proceed with plans to reduce the number of U.S. forces. "Our troops are in Afghanistan today for the same reason they deployed there in 2001 - to prevent Afghanistan from becoming a safe haven for global terrorists," McCain said. "The Taliban remains allied with these terrorists, including al-Qaeda and the Haqqani network, and it is the one force most able and willing to turn Afghanistan into a terrorist safe haven once again."

As the WSJ concludes, under the current authorities, U.S. military operations against the Taliban can only be taken under three broad circumstances: when U.S. or coalition forces are under threat, when U.S. officials deem that the Taliban is providing direct support to al Qaeda or when the Taliban pose a “strategic threat” to Afghan forces.

U.S. officials said the strike Saturday was considered a “defensive” operation because the U.S. believed that the Taliban leader was actively plotting attacks against U.S. forces in neighboring Afghanistan. Even though there is clearly nothing defensive about an offensive drone assasination.

The White House has called for shifting control of U.S. drone operations from the CIA to the Pentagon, but officials said the shift wouldn’t apply anytime soon to Pakistan because of political opposition there to the U.S. conducting overt strikes on Pakistani soil.

Suddenly Trump And Hillary Is All Goldman's Clients Want To Talk About

A little over a month ago, conventional wisdom (and overrated pundits) said that Trump has no chance of being the republican nominee. They were all wrong, but so was the market which continued to ignore the possibility of a Trump presidency until well after the fact. And, as always happens, now is when if not the market, then certainly Goldman's clients are finally trying to catch up. As Goldman strategist David Kostin (who just one week ago warned that there is now a substantial risk of a market drop ahead of the year end), writes "Politics is now a topic in every client discussion."

Kostin remains short-term bearish, and still sees the S&P sliding as low as 1850 in the next several months, but he appears more focused on the the impact of the next president on the market and the economy, now that suddenly the market is starting to price it in.

So for all those curious, this is how Kostin is responding to all of Goldman's clients questions about the upcoming presidential election and how to trade it.

* * *

United we stand, divided we fall: Equity strategies ahead of a rise in political uncertainty

The US Presidential election will take place in 170 days on November 8, 2016. Politics is now a topic in every client discussion. Last week we argued the S&P 500 was vulnerable to a 5%-10% drawdown and the index could fall to 1850-1950 during the next several months although it would end the year at 2100, roughly 3% above the current level. Rising political uncertainty was one of the risks we identified as a potential catalyst for a market drawdown.

Prediction markets assign a 60% probability that Hillary Clinton will win the general election. Polls tell a different story: the Real Clear Politics (RCP) average of the most recent national polls shows a 3.1 point spread in favor of presumptive Democratic nominee former Secretary of State Clinton (45.8) versus presumptive Republican nominee businessman Donald Trump (42.7). The RCP spread has narrowed from 9.3 points just one month ago (48.8 vs. 39.5 on April 20, 2016). Some polls such as the May 18th Rasmussen Reports show a spread of 5 points in favor of Trump (42) vs. Clinton (37).

Polls in prior presidential elections tightened as voting day approached. But thus far 2016 has hardly followed a regular election playbook. Our view is the closeness of the current race is underpriced by the market. We believe that the contest will become more competitive – or at least will be perceived as more competitive – than it is currently. The upcoming party conventions (Republicans on July 18-21 and Democrats on July 25-28) will raise political uncertainty as the competition enters the home-stretch.

Equity market uncertainty will almost assuredly climb during the next several months in concert with rising political uncertainty. The US Equity Market Uncertainty Index tracks articles in more than 1,000 domestic newspapers that use the terms “uncertainty,” “economics,” and “equity market” or “stock market”. Exhibit 1 shows the path of stock market uncertainty during the past seven US presidential election years. The 2016 path is tracking below any previous election year since 1988. But the trend will soon reverse and equity uncertainty will rise as Election Day approaches.


When equity market uncertainty rises, Consumer Staples typically outperforms while Information Technology lags (see Exhibit 2). From a factor perspective, the past decade shows that when equity market uncertainty increases, stocks with high dividend yield and low volatility outperform. In contrast, both high growth stocks and low valuation companies underperform their respective counterparts (see Exhibit 3)

Equity portfolio managers should focus on the investment implications of the economic, trade, and tax policies of the presumptive nominees. A rise in protectionism would represent a broad risk to the stock market because 33% of aggregate S&P 500 revenues is generated outside the US.

Donald Trump has stated that if elected President he would threaten to impose tariffs on various imports to offset what he deems unfair competition in the form of state subsidies and currency manipulation. A protectionist US trade policy raises the risk of retaliation by other countries.

The Trans-Pacific Partnership (TPP) is a multilateral trade agreement with 11 other nations on the Pacific Basin that awaits Senate approval. The Office of the US Trade Representative believes the agreement will facilitate the sale of Made-in-America products abroad by eliminating more than 18,000 taxes and trade barriers on US products across TPP nations. The US Chamber of Commerce supports the deal. Hillary Clinton supported the trade agreement while it was being negotiated but now she opposes it.

Protectionist rhetoric will become louder as election season progresses and stocks with high US sales will outperform firms with foreign sales. Our sector-neutral basket of 50 stocks with 100% US sales (GSTHAINT) will outperform our corresponding basket of stocks with 72% non-US revenues (GSTHINTL). The long US sales/short foreign sales trade benefits from a strengthening US Dollar, which explains why the strategy has returned -350 bp YTD as our basket of high US sales (-1.3%) has trailed our foreign sales basket (+2.2%). Domestic stocks have faster growth and a lower P/E. Looking forward, a hawkish Fed relative to expectations will boost the USD.

Taxes are a perennial election year debate topic. However, any tax reform plans would require Congressional approval. According to the independent Tax Foundation, Donald Trump proposes to reduce the federal corporate tax rate to 15% from the current rate of 35% and repeal most preferences. Hillary Clinton seeks to impose an “exit tax” on tax inversions and limit earnings stripping via interest deductions. In general, firms with high effective tax rates would benefit most from any changes in the tax code while companies with low tax rates would be more at risk. Constituents in our high tax rate basket (GSTHHTAX) have a median effective federal and state tax rate during the past 10 years of 38% compared with 18% for firms in our low tax rate basket (GSTHLTAX) and 31% for the median S&P 500 stock. See Exhibit 5 for a list of 16 stocks that are constituents of both our high US sales and high tax rate baskets that should outperform the 11 stocks with both high foreign sales and low tax rates as Election Day draws near.

Meet AnBot: China's Tireless, Unquestioning, Taser-Wielding "Robocop"

China is developing a robotic security officer that can sniff out bombs, grab suspects with a mechanical clamp and deliver a jolt of electricity to neutralise threats.

 Xiao Xiangjiang, who leads the development team at the defence university, told the People’s Liberation Army mouthpiece PLA Daily that AnBot had undergone test runs at a military camp, airport and museum in Changsha with “very positive” user feedback.



Xiao said the robot, which moves on wheels, could carry out a non-stop patrol for eight hours, hitting speeds as high as 18km/h. Its cameras can recognise and track faces, and it is equipped with sensors that can detect explosives, drugs and weapons.


It can also be ordered via a remote human controller to deliver an electric jolt with its mechanical clamp to disable a target.

When the system is automated, as SHTFPlan's Mac Slavo notes, the robotic enforcers will quite literally do what they are told.

If the governing powers-that-be enforce a tyranny, and ask the robots to do something against the people that human law enforcement officers would know to be illegal and/or immoral, they will simply obey. It is in their programming.


As such, robot enforcers stand to be a formidable obstacle to freedom and justice. They can choose targets and make decisions automatically, without the need for human oversight. So just what will happen when civil unrest, riots or other emergencies take place? These machines can and will restore order at all costs.

Mainland China has seen a spate of large-scale violent attacks erupt in key cities in recent years, including bombings, knife attacks and arson, according The South China Morning Post.

The government does not make public the number of such “mass incidents”, but sales of security hardware hit about 500 billion yuan last year and the market has been growing by 17 to 20 per cent annually, the fastest in the world, according to the association.


“Many soldiers and security personnel are working in torturous environments beyond the imagination of ordinary people. Security robots will end the pain,” he said.


But some human rights researchers have expressed concern over an authoritarian state using robots to help maintain public security. Flesh and blood officers might refuse to carry out orders if they felt conflicted.

And that's why, as The Daily Sheeple's Joshua Kearse explains, the governments of the world are very interested in developing robots for military and law enforcement applications...

Over the past few years, the police in America and around the world have been facing more scrutiny than they ever have before. Their abuses and arrogant demeanor are now easily recorded, and displayed on the internet for all to see. As a result, it’s never been so easy to criticize the police.

But it’s important to remember that not all cops are bad. It may seem that way, because people are much more likely to turn on their smartphone cameras when a cop is being an intolerable tyrant. There are still plenty of police officers out there who have a conscience, and no doubt, the government is afraid of these officers more than anyone else. They’ll never be able to crackdown on the population, unless they have near 100% obedience from their enforcers.

That’s why the governments of the world are very interested in developing robots for military and law enforcement applications. They need yes men more than ever, and if they can’t get enough yes men to enforce their onerous rules, then they’ll turn to yes robots to fill the gap, and replace all the cops and soldiers who don’t toe the line.

They’ll do it for a lot of the same reasons that private companies are trying to automate their respective industries. In any given workforce, there are humans that complain. There are people who need time off and benefits. There are people in positions both high and low, who can blow the whistle on crimes and labor violations. Ultimately, running a business means appeasing a bunch of ornery humans, each with individual needs, wants, and agendas. And let’s not forget, they all need to be paid.

But more importantly, the government needs people who are willing to control the population. Robots simplify everything for people who are control freaks, and as it just so happens, control freaks tend to gravitate into positions of higher authority in both the public and private spheres. In the case of our government and other governments around the world, the control freaks are eager to clean out all the do-gooders and conscientious individuals who are less than willing to carry out their orders to brutalize the population. If they can replace these people with robots and promote the remaining yes men to higher positions, then they no longer have to answer to anyone.

And don’t think for a second that this is going to happen many years down the road. It’s happening right now in countries like China. While the US has been leading the charge for military robots, China’s autocratic regime may be ahead of the rest of the world when it comes to law enforcement robots. In fact, they’re about to introduce one of the world’s first policing robots, complete with a tazer for shocking non compliant citizens.

Take note. This is the future. There’s no reason why robots like this won’t show up in your neighborhood someday. Pretty much all governments have the same desire to control their population, and technology knows no borders.

A Retired White House Correspondent Explains "How Obama Gets Away With It"

Authored by Richard Benedetto, a retired USA Today White House correspondent and columnist, who teaches politics and journalism at American University and in the Fund for American Studies program at George Mason University. Originally posted in the WSJ.


How Obama Gets Away With It

At a time when large numbers of Americans say they are fed up with politics and politicians, why is it that the nation’s chief politician, President Obama, seems to skate above it unscathed?


Usually when an incumbent president is leaving office and a slew of candidates are battling for his job, that departing chief executive’s record is a major campaign issue.

But not this year, even though two of three Americans say the country is on the wrong track, job creation is sluggish, income inequality continues to rise and Mr. Obama’s job approval barely tops 50%. Moreover, approval of his handling of the war on terror and Islamic State is underwater, and a majority of Americans—white and black—say race relations are getting worse, not better.

When Mr. Obama ran for office in 2008, a central part of his campaign strategy was to heap blame on George W. Bush. How has Mr. Obama dodged similar treatment? One reason: Donald Trump’s bombastic candidacy is a huge distraction and often blocks out or obliterates more-substantive issues. That was the case even when his now-vanquished rivals tried to address serious topics. When Mr. Trump does criticize the president, it gets far less news play than his attacks on his opponents and critics, Republican or Democrat. As for Bernie Sanders and Hillary Clinton, they both are angling for a third consecutive Democratic administration, so are not eager to criticize Mr. Obama.

But another reason—a big one—why Mr. Obama is able to avoid being a target is that he is a deft manipulator of the media, probably more skillful at it than any president ever. He heads a savvy public-relations machine that markets him like a Hollywood celebrity, a role he obligingly and successfully plays. One of the machine’s key tactics is to place Mr. Obama in as many positive news and photo situations as possible. Ronald Reagan’s advisers were considered masters of putting their man in the best possible light, but they look like amateurs compared with the Obama operation—which has the added advantage of a particularly obliging news media.

A sampling over the past few weeks: A Washington Post photo captures President Obama blowing giant bubbles “At the final White House Science Fair of his presidency.” A New York Times photo shows the president mobbed by women admirers at a ceremony designating the Sewall-Belmont House on Capitol Hill as a national museum for women’s equality.

An ABC News video gives us Mr. Obama’s helicopter landing on the rainy grounds of Britain’s Windsor Castle, and then we visit the president and first lady lunching with Queen Elizabeth II on her 90th birthday.

In other news clips, we see a doctoral-robed Obama speaking to graduates of Howard University, a tuxedoed Obama yukking it up at the White House Correspondents Association dinner, a brave Obama drinking a glass of water in Flint, Mich., a cool Obama grooving with Aretha Franklin at a White House jazz concert, a serious Obama intently listening to Saudi King Salman, a jubilant Obama on his showy trip to Cuba.

A picture may be worth a thousand words, but with Mr. Obama you also get the thousand words.

Yet at the same time we were seeing those nice photos, videos and articles, a lot of other important stuff was going on where Mr. Obama was hardly mentioned, seen or questioned. For example, the U.S. economy grew at a meager 0.5% in the first quarter of 2016; Russian military planes lately have been buzzing U.S. Navy ships; and China is building its military forces and expanding their reach in the South China Sea. Early in May, a Navy SEAL was killed in Iraq (the president has assured the American public that U.S. troops there, increasing in numbers, are not in combat roles). Islamic State terrorist attacks in Baghdad in recent weeks have killed scores of civilians. The Taliban are on the march in Afghanistan. The vicious war in Syria continues. The Middle East refugee crisis shows no sign of diminishing. Military provocations by Iran and North Korea keep coming.

President Obama’s media handlers try to keep the president as far away from these crises as possible, leaving others in his administration such as Press Secretary Josh Earnest, Vice President Joe Biden, Secretary of State John Kerry, Defense Secretary Ash Carter and Joint Chiefs Chairman Joseph Dunford to be their public face. That way the problems don’t appear to be Mr. Obama’s problem, and he is free to bask in the good news.

One of the news media’s main jobs is to hold public officials accountable, from the president on down. But Mr. Obama is the beneficiary of news-media managers and reporters who mostly like his style and agree with his policies, from his reluctance to make strong military commitments to his advocacy for LGBT rights, fighting climate change and supporting tougher gun-control laws. Case in point: The administration’s easy orchestration of the media story line about the Iranian nuclear deal, recently revealed by Deputy National Security Adviser Ben Rhodes, only scratches the surface of the White House’s skill at managing a media happy to be managed.

Given such a congruence of opinion, Mr. Obama’s policies don’t receive the scrutiny and analysis they should. Reporters who criticize or dig too deep are cast by the administration as spoilsports or, worse, cut off from sources.

With Donald Trump now the media obsession—and most in the media don’t like him—it is easy to see why Mr. Obama’s performance over the past seven-plus years is still not a major issue in the 2016 campaign. And that’s the way he likes it.

PE Legend Leon Black Is Buyer Of Tom Cruise's $40 Million Bevely Hills Mansion

When it comes to financial assets, Apollo's legendary founder Leon Black has been gloomy for years, and said in a recent Milken Conference that his firm has been "selling everything that is not nailed down." The billionaire (who at last check was worth around $4.7 billion) however appears to have a soft spot for Hollywood A-lister real estate. Because we were surprised to learn that the buyer of Tom Cruise's $40 million 10,000 square foot Beverly Hills home is none other than Leon Black.

As TMZ reports, Tom Cruise has decided to leave Los Angeles because he's saying goodbye to the estate he called home for nearly a decade.

Tom has sold the mansion he shared with Katie Holmes for $40 million. Cruise first offered the house for $50 million in September 2015, and then lowered the price to $45 million but could find no buyers at even the reduced price. Nonetheless, he still cashed in: he bought the house from real estate guru Kurt Rappaport, who owed it back in 2007, for $32.5 million.

As for the house, it has 7 bedrooms, 9 bathrooms, a tennis court, a swimming pool (of course), a children's playground and a couple of guesthouses. The heavily fortified, 1.3-acre spread includes a roomy motor court with swimming-pool-sized fountain, a lighted tennis court with basketball hoops, a lap-length swimming pool, a children’s playground, and a couple of guesthouses.

Meanwhile, the world's most famous scientologist is clearly getting out of the city of angles: Cruise recently sold a Hollywood Hills compound back in October for $11.4 million to Eva Longoria.

And this is what $40 million will buy any self-respecting private equity billionaires.

State Of The States: New Jersey's Problems Are Not "Mathematically Solvable"

While the warning flags are raging in Illinois and Connecticut, JPMorgan's Michael Cembalest states that New Jersey's problems are "not mathematically solvable." The stunning admission from a status-quo-sustaining bank that is “very focused on the total indebtedness of US states," should be worrisome enough but as Cembalest explains the answer to a debt problem is not always piling up more debt; the issue is to address the root of the problem, which can be a delicate and at times politically incorrect topic.

Reviewing the JPMorgan research might lead to several conclusions, one of them being that when any government starts to get ahead of logical debt ratios investors might best be advised to proceed with caution. As's Mark Melin continues, Cembalest takes a step back and looks at the servicing cost for the mounting state debt.

What he does is look at unfunded liabilities and given several formula factors, including an allowance to return 6% on assets. Using this formula, he projects what starts are currently paying and what they might be paying on a 30-year accrual basis. Such forward modeling helps investors determine debt sustainability much more so than does an institutional research report that might seem to omit or de-emphasize material facts.

Using this as a measure a group of bad-boy states that have been abusing their debt privileges appears to emerge. On top of this list and over the projected danger threshold of 25% are heavyweight states such as Illinois, New Jersey, Connecticut who sit next to relatively rural Kentucky.


In these states, a unique battle is being fought with very real and legitimate arguments on each side.


State debt requires understanding “The Arc of The Covenants”

When he starts to look at state debt and the economic reality, Cembalest has deft insight to recognize that while math is unemotional, he is about to wade into a deeply emotional argument involving trust and promises made to government employees.

He starts the sometimes delicate task of wading into an issue that rips deep into the social contract by addressing “The ARC and the Covenants.” This refers to the need states have to fulfill their very real obligations to public employees, and Cembalest explains this using an incredible touch:

Public sector workers form a critical part of American civil society. They rescue and protect us when we’re in danger; they make our lives safer, cleaner and more efficient; they educate our children; they enforce the rule of law and provide remedies when laws are broken; they ensure access to clean air, water and food; and they heal us when we’re sick. The legal, medical, environmental and educational problems sometimes found in other countries are a reminder of what life might be like without them. They earned the benefits they accrued and which were granted by state legislatures, and have the right to expect them to be paid.

That said, math and the fiscal responsibility of a lender not to overburden the logical constraints of the borrower can be determined non-emotionally and mathematically.


Cembalest models the problem using shared sacrifice as the solution

The gist of the state debt problem can be summed up in one sentence and it applies to municipal as well as sovereign debt as well.  When debt reaches a certain level, the can kicking is over and difficult decisions need to be made.

For Cembalest this means “states would need to raise substantial funds from increased tax revenues, cuts in non-retirement spending or increases in public sector worker contributions.”

Here Cembalest looks at the solutions and one realizes the difficult task ahead.

Tax increases are difficult on a political level. This is especially true given some states with the highest debt burden already have effective tax rates ranking among the highest in the US, which includes Illinois, Connecticut, Kentucky and Hawaii.

Cembalest then considers the appropriate solution of shared sacrifice – a non-emotional approach but one that, when placed through a political ringer, might come out lopsided in the end.  He looks at the revenue burden given an equal contribution from all participants. He develops a revised ratio that splits the state’s revenue needs equally across tax increases, spending cuts and worker contributions to develop a solution.


“Whether this kind of comprise is feasible will only be revealed with the passage of time,” he says, as residents of most of the states continue to live their wonderful lives as if the problem doesn’t exist. In reality, the problem will be upon them and once they realize it, once the knowledge is widely disseminated into the mainstream, it will likely be too late to act.

Why Deutsche Bank Thinks A Fed Rate Hike Would Unleash A Stock Market Crash

Following this week's FOMC Minutes shows, which violently repriced June rate hike odds from 4% to 30% and July from 20% to 50%, the cries of lenienecy have begun, and nobody is doing so louder than Deutsche Bank which in an overnight credit summary note tries to make it clear that "the market is not ready for a June hike."

Why is Germany's largest bank, whose stock price is trading just barely above 52 weeks lows and level not seen since the financial crisis so worried? Simple: "the hawkish minutes will weigh on risk, bias yields lower, and flatten the curve" for the simple reason that the Fed is so clueless it "seems to be interpreting recent easing in financial conditions as an opportunity to force rate expectations higher." Instead, the Fed is once again confusing cause and effect, and DB says the "ease in financial conditions occurred precisely because of the Fed’s dovish turn earlier this year." Hence why DB is confident a hawkish turn will push markets right back where they were in December and January, prior to the February Shanghai Accord.

Of course, we already gave this explanation last fall, just before the Fed's December rate hike. It's time to give it again, and amusingly, DB agrees because as Dominic Konstam writes, "If you think you’ve seen this movie before it’s because you have."

Alas, it is indeed deja vu all over again:

Like during 2015, the Fed appears bent on pushing rate expectations higher, and the operative question is whether the more hawkish turn to Fed rhetoric will up-end risk and tighten financial conditions to the extent that a rate hike is imprudent if not impossible given the latent fault lines in the global economy.


Last year the Fed attempted to prepare the market for a September hike at the June meeting with a decidedly negative result, and then had another go in October for the December meeting with the result that markets tolerated December lift-off before coming apart early in 2016. The operative question is whether markets are sufficiently calm for the Fed to use the June 2016 meeting to pave the way for a July hike.

And this is why Deutsche Thinks that just like in July/August and January/February, as the market starts to earnestly pricing in a June/July rate hike, everything is about to plunge once more:

We think the answer is no because the issue is not just the timing of a single hike toward some static goal for rate level in 2017. What is at issue is the existence of some Shanghai “accord” whereby global policymakers have agreed explicitly or implicitly that excessive dollar strength is counterproductive and that policymakers should shift their focus to domestic demand and structural reform within an environment of dollar stability, at least through the next G20 in early autumn. If there is no accord then divergent monetary policy could drive the dollar stronger, restarting among other things speculation against CNH versus the dollar rather than CNY versus the entire CNY basket with now very familiar results: reserve loss exacerbating higher Fed expectations for US rates, and downward pressure on risk assets with a non-trivial chance that China might devalue and, worse yet, do so in a lumpy fashion.

Or just as we said on Thursday, it will be all up to China again to stop the Fed's rate hike:

Looks like its up to China again to derail the Fed's June rate hike plans

— zerohedge (@zerohedge) May 19, 2016

Still, assuming the Fed ignores Deutsche Bank's laments for a reprieve - because as we saw in February, DB may well be the first bank to go under should the market be swept by another global round of risk off - this is how a rate hike could take place.

The risk is that the Fed might use the June meeting to pre-announce a press conference around the July meeting, or in some other way “pre-commit” to a July hike. The issue is that with still benign wage pressure and inflation, premature and more aggressive Fed hikes would drive real yields higher for the wrong reason. This is the policy error scenario. Yellen’s timeout drove real yields roughly 70 bp lower from the late 2015 highs, but levels have already more than doubled from the lows by virtue of little more than “why not raise rates for the sake of it” rhetoric. What Fed officials seem to be suggesting is that they might be growing increasingly nervous about low real rates fuelling asset classes like equities, investment grade credit, and gold even though other risky assets such as high yield and emerging markets do not perform  well absent higher breakevens. The risk case is then that an overly aggressive Fed would push real yields up and breakevens down, thus undermining risk assets generally.

But which risk asset is at most, pardon the pun, at risk?

One issue is precisely what risk asset valuations are telling us. If we consider risk asset valuations as a function of Fed-related variables – say, breakevens and real yields –market valuations of HY, IG, and EM are more or less consistent with “fair” levels given these variables and their historical relationship with asset valuations. Note that DXY appears too high from this perspective, while oil appears too low.



The outlier appears to be SPX, where valuations appear excessive given the breakeven/real yield framework.

And while DB's points are mostly valid, its agenda becomes fully transparent with the next sentence:

This is not to say that the Fed can never raise rates because of negative impact on financial variables, but it is far from clear to us that the Fed should be hiking against financial market froth when many asset classes have only partially recovered from losses last year.

Actually that's exactly what it says (ignoring the pleas by all those hundreds of millions of elderly retirees whose only source of income used to be interest income and who have been left for dead under a central bank regime which only caters to its commercial bank owners) and the longer the world eases financial conditions, either via QE or ZIRP or NIRP, the more impossible it will be for the Fed to ever hike; in fact the next big move will be just the one Deutsche Bank has been begging for all along - unleashing helicopter money.

In fact, we are confused by Konstam's note: if indeed DB wants (and needs) a monetary paradrop (recall "According To Deutsche Bank, The "Worst Kind Of Recession" May Have Already Started"), then a policy error is precisely what the Fed should engage in.  Not only will it send markets into a long, long overdue tailspin, one from which the only recovery will be the bubble to end all bubbles, the end of monetarism as we know it courtesy of the quite literal money paradrop, but reset not just the US economy but that of the entire world, in the process wiping out tens of trillions in unrepayable debt, and allowing the system the much needed reboot we have been urging ever since our start in 2009.

We are confident that just like everything else predicted on these pages, it is only a matter of time now before this final outcome is also realized.

How The Deep State's Cronies Steal From You

Authored by Bill Bonner of Bonner & Partners (annotated by Acting-Man's Pater Tenebrarum),

High on the Hog

Much of The Deep State's growth is recorded in the pages of the Code of Federal Regulations (CFR). This tracks all the laws laid down by successive governments.

Lower extremities of typical Deep State enforcer


A privilege, a special tax break, a rule, a prohibition, a piece of meat here, a piece of meat there… and soon the foxes are eating high on the hog.  But what’s meat for the foxes is poison for the economy.


The relentless growth of Leviathan: total pages in the Code of Federal Regulations, 1950-2013 (it has continued to grow since then…). No wonder the economy is in the dumps – click to enlarge.


Each piece requires paperwork, delays, permits, accountants, lawyers. You can’t do this… you can’t do that – with so many hurdles in their way, entrepreneurs think twice, capital investment declines, and the economy slows.

Each favor to the foxes is an act of larceny, taking something away from the people who earned it to redistribute wealth, power, and status to the insiders.


Number of regulatory restrictions – the chart  is a bit dated, but it shows the trend quite well. Once upon a time, none of these restrictions existed. One wonders how the world managed to keep turning!


From fewer than 25,000 pages when President Eisenhower left the White House, the CFR now has nearly 200,000 pages – each one a honeypot for Deep State cronies. And who reads this stuff?

Do you know what rules and regulations you are breaking right now? Most people are too busy earning their money and raising their families to spend much time tracking the federal bureaucracy and its cronies. But the foxes make it their business to pay attention… and make the rules that work for them.

An honest person is at a great disadvantage.


Rules and Regulations

Think you’re going to change this system by voting for Hillary or Trump, Democrat or Republican? Maybe, but there’s no evidence of it in the CFR. The number of pages kept rising, year after year, no matter who was in the White House.


Aggregate word count of Dodd-Frank regulations alone as of 2012 (when about one third of the regulatory implementation was finished!). Has the financial system become “safer” because of this? Not one bit actually – on the contrary, it may well be even more dangerous now. The root causes of the crisis (fractional reserve banking,  fiat money and central economic planning) have remained untouched – click to enlarge.


Twenty-five thousand pages were added during the Kennedy and Johnson years… another 25,000 under Nixon and Ford… and another 25,000 during the Reagan and George H.W. Bush administrations.

Federal spending per capita shows the same basic trend, an almost unbroken uptrend – through Democratic and Republican administrations – stretching back from 2016 to 1952.

Under President Eisenhower, domestic discretionary spending per person was under $500. Today it’s over $4,500. Like the Federal Code, real spending per person has increased about nine times in the last 64 years.


Federal tax rules – from 400 in 1913 to 74,000 in 2012. The cost of compliance alone amounts to $160 billion per year! So why are there so many rules in view of this immense waste? It’s all about cronyism actually. This is why proposals to “simplify the tax code” never get anywhere. Modern-day regulatory democracies are little more than tax farms – and the average citizen fulfills the role of the cattle.


There were two presidents under whom spending went down – Ronald Reagan and Bill Clinton. Go figure. In neither case, however, did it stay down for long. Once Reagan and Clinton were out of the way, the foxes went to work and quickly brought spending back to the trend line.

What will happen to the little foxes under Donald Trump? Or Hillary?  The earnings of the top 5% – the “foxy five” – began to diverge from the earnings of everybody else in the mid-1970s.

Since then, they increased alongside the FCR and government spending. Rules and regulations multiplied. Spending increased. The foxes got richer; everyone else got poorer.


What are foxes? Some say they are evil, wily, conniving and duplicitous… essentially rats in expensive coats.

Photo via


All this happened through both Republican and Democratic administrations. Most likely the foxes will continue to earn more through a Trump or Clinton administration too.