Month: June 2016

Three weeks ago a mini scandal erupted, when the State Department was accused of purposefully altering a briefing video to remove a portion of a discussion about the Iran nuclear talks. The missing clip involved then spokeswoman Jen Psaki, who was asked in 2013 whether officials ever lie to the public to protect national security interests. Psaki indirectly confirmed that this happens. “James, I think there are times where diplomacy needs privacy in order to progress. This is a good example of that,” Psaki replied to Fox News reporter James Rosen. Or, as Jean-Claude Juncker would openly admit, “when it gets serious, you have to lie.”

When it was revealed that the video had been edited to remove those comments, the State Department quickly restored the entire video, and blamed the missing video on a “glitch.”

Well, as market participants know too well, any time a “glitch” is used as an excuse, it is to protect one or more guilty parties who have enough power and/or money to blame their action on a technical error, usually in the passive voice.

This is what happened this time as well.

As Reuters reports, a portion of said briefing video that was archived online was deliberately deleted at the request of an unknown person, possibly the day the video was made, spokesman John Kirby said on Wednesday after an investigation. As noted above, “the deleted video segment dealt with whether a State Department spokeswoman had misled reporters at an earlier briefing about whether U.S. and Iranian officials had directly discussed the Iran nuclear deal.”

Only while one lie was confirmed, another quickly took its place when Kirby said the office of the legal adviser “learned that a specific request was made to excise that portion of the briefing. We do not know who made the request to edit the video or why it was made.” Instead, Kirby insisted that the person who made the edit only remembers that he or she got a call from someone at the State Department, who was passing on a request from the departments’ Public Affairs Bureau. But he said the person who received the call didn’t remember who the caller was, and doesn’t know who in that bureau made the request.

We have some ideas.

Kirby said the video had been replaced some time ago with a full version that was archived with the Defense Department. He said the transcript of the briefing had always been available online and had not been modified. He said it was unclear why the video had been edited. “There were no rules in place at the time to govern this sort of action, so while I believe it was an inappropriate step to take, I see little foundation for pressing forward with a formal investigation,” he said.

In other words, Kirby said that while it was wrong to edit the video, there’s no basis for investigating the issue further.

And just like Hillary’s email, er, problems, the only solution to the problem is that measures will be taken. Quote Kirby: “To my surprise the Bureau of Public Affairs did not have in place any rules governing this type of action. Therefore, we are taking immediate steps to craft appropriate protocols on this issue as we believe that deliberately removing a portion of the video was not and is not in keeping with the State Department’s commitment to transparency and public accountability,” he added.

He said it with a straight face.

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Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Bernanke and the Federal Reserve are nothing but criminal butlers for the oligarchy. The proof is undeniable at this point. While this unaccountable banking cartel promised us that 0% rates would help the economy, America’s growing underclasses are paying 100% rates for loans to buy sofas and pay for food, more than five years into this so-called “recovery. Meanwhile, the only segment of society with access to low interest rates are the very wealthy financial oligarchs who leverage this cheap money to speculate on financial assets and real estate. So yes, the Fed (Central Banking in general) is completely to blame for the world’s growing inequality, as are their submissive, compliant defenders in academia, “journalism” and within the halls of power in Washington D.C.

 

From the post: Another Tale from the Oligarch Recovery – How a $1,500 Sofa Costs $4,150 When You’re Poor

There is no recovery. The only thing we’ve experienced over the past eight years of Obama is a historic plundering and strip mining of the U.S. economy by a handful of oligarchs and their political and bureaucratic minions.

The evidence has been clear for years. Fully employed Americans have been borrowing from payday lenders at egregious rates in order to pay for normal everyday living expenses, while a small group of executives grab as much as possible for themselves. You can see this in corporate profits margins at historically high levels and in the use of cash to buyback shares as opposed to paying employees a living wage. To see just how grotesquely out of whack the economy has become under the crony policies of Obama and the Federal Reserve, let’s revisit what I like to call the “Serfdom Chart.”

 

If the above chart looks like the inverse of the S&P 500 index to you, this is no illusion. Share prices in America aren’t at all time highs because the country is doing well. Share prices are at all time highs because executives and shareholders are extracting a historically dangerous piece of the overall economic pie. If this trend continues, someone like Donald Trump will be the least of our concerns.

It appears companies are coming to the realization that their employees are so broke they’re resorting to payday lenders just to survive. Rather than boost wages, many are resorting to offering loans.

The Wall Street Journal reports:

Pam Dimitro, the controller at JNET Communications LLC, realized employees were often turning to payday lenders or high-interest credit cards in a financial pinch.

 

So the Warren, N.J., employer of call-center workers and cable installers began offering employees a new benefit: low-interest loans to help pay for things such as car repairs and health expenses.

 

Worried about their financially strapped workforce, a handful of companies are stepping in to offer employees alternatives to payday loans and other expensive financial products.

 

While few other employers go that far, managers know that financial worries are taking a toll on U.S. workers. A recent PwC survey of 1,600 full-time employed adults found that 40% find it difficult to meet monthly household expenses and 51% consistently carry balances on their credit cards.

 

Payday loans, which are typically made in small amounts and come due on a person’s next payday, can carry fees equivalent to an annual percentage rate of almost 400%, according to the federal Consumer Financial Protection Bureau.

 

 

Some 12 million Americans use payday loans each year, according to Alex Horowitz, senior research officer with the Pew Charitable Trusts’ small-dollar loans project.

 

Retirement borrowing remains common, too. According to the Employee Benefit Research Institute, 20% of all eligible 401(k) participants had loans outstanding against their 401(k) plan accounts at the end of 2014, up from 18% in 2008.

 

As an alternative, employers are joining with firms such as Kashable LLC, Ziero Financial Inc. and Zebit Inc. to help fund and service loans. Some companies are offering those products in conjunction with employee-focused seminars about saving, budgeting and debt.

 

Such loans could end up putting employees further into debt, critics say, especially if workers are unable to keep their spending in check. Loans “need to be utilized with some caution,” said Kent Allison,national leader of consulting firm PwC’s employee financial wellness practice.

 

Some employers aren’t eager to offer loans, either, but say their employees lack other good options.

 

Barbara Snyder, vice president of human resources at Atlantic American Corp, said she didn’t want to get into the loan business.

 

Many of the 100 employees of the Atlanta insurance provider “live paycheck to paycheck,” she said, and were borrowing against their 401(k)s. After realizing the company wouldn’t be liable if employees defaulted, she signed up with Kashable about two years ago.

 

Kashable’s interest rates typically range from about 6% to the high teens, lower than what people with middling or low credit might get on their own, said founder Einat Steklov.

While a far better option than payday loans, “6% to the high teens” is still a huge interest rate considering pension funds can’t find anywhere to reasonably invest and earn such a return. It also shows you that the 0% interest rate targeted by the Federal Reserve doesn’t trickle down to the peasants. It only further enriches the financial parasite class.

Loan payments are deducted from employee paychecks, with loan terms lasting from six months to three years. If employees leave their jobs, they continue paying from their own bank accounts, said Ms. Steklov.

 

“Not offering a low-cost loan option is not going to prevent people from getting a loan,” she adds. “By not offering, we are going to force them to do something worse.”

Perhaps the above is true. Perhaps many of these companies really are trying to help. That’s actually besides the point. The much bigger point is that employed American citizens are so destitute they can’t survive without taking out loans for everyday expenses.

If nothing else, this should prove to everyone that the U.S. economy has become a grotesque, unsustainable, cancerous monster. It’s an unethical creation of oligarchy for oligarchy; a parasitic blob that solely exists to reward the already rich and powerful. What no longer benefits the nation’s citizens in any meaningful way needs to be fundamentally transformed before the entire fabric of society snaps and we are left with a far worse outcome. The clock is ticking.

For more on this very disturbing and well established trend, see:

The Status Quo Plan – Convince the American Public to Accept Serfdom

Americans Have Been Turned Into Peasants – It’s Time to Fight Back

Black Economic Lives Don’t Matter – Examining the African American Plight Under Obama’s Fake Oligarch Recovery

The Oligarch Recovery – U.S. Military Veterans are Selling Their Pensions in Order to Pay the Bills

The Oligarch Recovery – 30 Million Americans Have Tapped Retirement Savings Early in Last 12 Months

Another Tale from the Oligarch Recovery – How a $1,500 Sofa Costs $4,150 When You’re Poor

It’s way past the time to stop being suckers.

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By Douglas Schoen, former political adviser and pollster for President Bill Clinton in the years1994-2000. Originally posted in the WSJ

Clinton Might Not Be the Nominee

There is now more than a theoretical chance that Hillary Clinton may not be the Democratic nominee for president.

How could that happen, given that her nomination has been considered a sure thing by virtually everyone in the media and in the party itself? Consider the possibilities.

The inevitability behind Mrs. Clinton’s nomination will be in large measure eviscerated if she loses the June 7 California primary to Bernie Sanders. That could well happen.

A recent PPIC poll shows Mrs. Clinton with a 2% lead over Mr. Sanders, and a Fox News survey found the same result. Even a narrow win would give him 250 pledged delegates or more—a significant boost. California is clearly trending to Mr. Sanders, and the experience in recent open primaries has been that the Vermont senator tends to underperform in pre-election surveys and over-perform on primary and caucus days, thanks to the participation of new registrants and young voters.

To this end, data from mid-May show that there were nearly 1.5 million newly registered Democratic voters in California since Jan. 1. That’s a 218% increase in Democratic voter registrations compared with the same period in 2012, a strongly encouraging sign for Mr. Sanders.

A Sanders win in California would powerfully underscore Mrs. Clinton’s weakness as a candidate in the general election. Democratic superdelegates—chosen by the party establishment and overwhelmingly backing Mrs. Clinton, 543-44—would seriously question whether they should continue to stand behind her candidacy.

There is every reason to believe that at the convention Mr. Sanders will offer a rules change requiring superdelegates to vote for the candidate who won their state’s primary or caucus. A vote on that proposed change would almost certainly occur—and it would function as a referendum on the Clinton candidacy. If Mr. Sanders wins California, Montana and North Dakota on Tuesday and stays competitive in New Jersey, he could well be within 200 pledged delegates of Mrs. Clinton, making a vote in favor of the rules change on superdelegates more likely.

Another problem: In recent weeks the perception that Mrs. Clinton would be the strongest candidate against Donald Trump has evaporated. The Real Clear Politics polling average has Mrs. Clinton in a statistical tie with Mr. Trump, and recent surveys from ABC News/Washington Post and Fox News show her two and three points behind him, respectively.

Then there is that other crack in the argument for Mrs. Clinton’s inevitability: Bernie Sanders consistently runs stronger than she does against Mr. Trump nationally, beating him by about 10 points in a number of recent surveys.

The worries about Mr. Sanders’s strength have stirred the beginnings of a capitulation to him—by the Clinton camp, in league with the Democratic National Committee—at the convention. To placate him, they have already granted Mr. Sanders greater influence over the party platform. Two divisive figures, Cornel West and Rep. Keith Ellison, have been added to the platform committee, ensuring that the party will be pulled further left. In addition to putting Mr. Sanders’s socialist nostrums on display, the platform negotiations are likely to spur an ugly fight over the U.S. relationship with Israel.

Mrs. Clinton also faces growing legal problems. The State Department inspector general’s recent report on Mrs. Clinton’s use of a private email server while she was secretary of state made it abundantly clear that she broke rules and has been far from forthright in her public statements. The damning findings buttressed concerns within the party that Mrs. Clinton and her aides may not get through the government’s investigation without a finding of culpability somewhere.

With Mrs. Clinton reportedly soon to be interviewed by the FBI, suggesting that the investigation is winding up, a definitive ruling by the attorney general could be issued before the July 25 Democratic convention in Philadelphia. Given the inspector general’s report, a clean bill of health from the Justice Department is unlikely.

Finally, with Mrs. Clinton’s negative rating nearly as high as Donald Trump’s, and with voters not trusting her by a ratio of 4 to 1, Democrats face an unnerving possibility. Only a month or two ago, they were relishing the prospect of a chaotic Republican convention, with a floor fight and antiestablishment rebellion in the air. Now the messy, disastrous convention could be their own.

There are increasing rumblings within the party about how a new candidate could emerge at the convention. John Kerry, the 2004 nominee, is one possibility. But the most likely scenario is that Vice President Joe Biden—who has said that he regrets “every day” his decision not to run—enters the race.

Mr. Biden would be cast as the white knight rescuing the party, and the nation, from a possible Trump presidency. To win over Sanders supporters, he would likely choose as his running mate someone like Sen. Elizabeth Warren who is respected by the party’s left wing.

Where is President Obama in all this? So far he has largely stayed out of the campaign, other than to say that he doesn’t believe Mrs. Clinton compromised national security with her home-brew email server. But with her poll numbers dropping, her legal headaches increasing, the Sanders candidacy showing renewed vigor, and Donald Trump looming as a wrecking ball for the president’s legacy, Mr. Obama and adviser Valerie Jarrett might begin sending signals to the Democratic National Committee and to the vice president that a Biden rescue operation wouldn’t displease the White House.

All of these remain merely possibilities. But it is easier now than ever to imagine a scenario in which Hillary Clinton—whether by dint of legal or political circumstances—is not the Democratic presidential nominee.

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With price-to-sales at it highest ever for US equities, we thought the following three simple charts may provide some cynical, skeptical, fiction-peddling facts as everyone waits for payrolls this week…

Earnings expectations remain entirely decoupled from equity index price ‘reality’…

 

And While Industrial Production in America mattered for decades… stocks are ignoring the current recession-like plunge in output…

 

And finally, it appears that bonds (the Treasury yield curve) has a far more accurate sense of reality – as GDP growth expectations collapse – than US equities…

 

Do you believe in earnings hockey-stick miracles? Is your faith in The Fed unshaken? Can we really get to November’s election without some event? Trade accordingly (and remember VIX shorts and S&P longgs are the highest in years)

 

Charts: Bloomberg

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Just days after Toyota became the latest investor in Uber, in hopes of boosting car lease transactions, moments ago FT reported that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, is investing $3.5 billion in the ride-sharing company. This would be the largest single investment ever made in a private company. As the FT notes, this brings Uber’s cash holding to more than $11billion at a time when the company is aggressively expanding in nearly 70 countries worldwide. 

As the FT further notes, the deal marks the closing of Uber’s Series G investment round, which began last year and has raised more than $5bn from investors including Russia’s LetterOne and China’s Baidu, At a valuation of $62.5 billion, the PIF will own approximately 5% of Uber, and its managing director, Yasir Al Rumayyan, will join Uber’s board.

In total Uber has raised around $10.7bn from outside investors, excluding a $2.3bn convertible debt facility, making it the best funded start-up in the world.

As FT adds, the news comes just two weeks after Uber’s Chinese rival Didi Chuxing announced a $1bn investment from Apple, raising the stakes in the expensive ride-hailing wars in China. Uber has been pouring money into subsidies in China and India in a bid to gain market share from local rivals.

Ironically, the investment comes shortly after we showed what happened in China when local taxi drivers decided to protest such disruptive ride-sharing platforms as Uber and Didi: “The aggressive ride-hailing company has ruffled feathers in many countries, particularly in Europe, where its low-end Uber Pop service is banned in several countries. However in the Middle East, Uber has been largely embraced, with Cairo of one of its fastest growing cities.”

The Saudi investment is said to not be tied to any specific agreement to expand its services further in Saudi Arabia, where it already operates in five cities. Ride-hailing services have been particularly popular among women in Saudi Arabia, where women are not allowed to drive themselves.

“I think it is an indicative investment of where we are moving for the country, putting our money in a visionary business,” said Princess Reema Bandar al-Saud, who is a member of Uber’s global policy advisory board. “A lot of people were originally quite sceptical of Uber in our region, and the fact that PIF is investing is quite an indicator of how things are changing,” she added.

What is most surprising is that the investment comes at a time when the Saudis are planning on issuing $15 (or more) in international bonds, the country’s first international debt offering. In other words, bond investors will be indirectly purchasing Uber shares however without any of the upside, and all the downside should oil resume it slide.

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With oil traders playing headline-hockey ahead of tomorrow's OPEC meeting, tonight's API data may not be quite as consequential as usual. With sizable draws expected overall and at Cushing, API reported a shocking 2.35mm build (2.5mm draw expected) which, despite a bigger than expected 1.1mm draw at Cushing (twice the expected) sent WTI Crude prices tumbling. Gasoline and Distillates both saw draws with the latter's 7th consecutive week – the longest streak since oct 2015.

API

• Crude +2.35mm (-2.5mm exp)
• Cushing -1.1mm (-500k exp)
• Gasoline -1.48mm
• Distillates -1.15mm

Following last week's bigger than expected draw in crude, this week's build was a big surprise (2nd biggest build in 2 months) and we see 7th consecutive draw in distillates,

Notably, as @EnergyBasis noted, same week last year #API reported #Crude build +1.8 mbbls while #DOE reported draw of -1.948 mbbl

 

The reaction is clear, the pre-NYMEX close ramp was erased and WTI pushed back to a $48 handle…

 

Charts: Bloomberg

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Via TheDailyBell.com,

Hillary and Trump Leave Americans with Angst, Malaise and Little Confidence  … A new poll by the Associated Press-NORC Center for Public Affairs Research finds that the choice of Hillary Clinton or Donald Trump for president leaves Americans feeling frustrated, angry, helpless — suffering from angst and malaise, with little confidence with our political system.  –Red State  

We covered this AP-NORC poll previously HERE but focused on Americans lack of trust when it comes to government.

But there is another aspect to this eye-opening poll.

The poll provides a devastating picture of American fidelity to the larger US system.

Americans don’t believe in their political system anymore. People don’t trust their government and they don’t trust elections either.

Here’s how Red State puts it:

Nine in 10 Americans lack confidence in the country’s political system, and among a normally polarized electorate, there are few partisan differences in the public’s lack of faith in the political parties, the nominating process, and the branches of government.

 

Seventy percent of Americans say they feel frustrated about this year’s presidential election, including roughly equal proportions of Democrats and Republicans.

 

More than half feel helpless and angry.  Americans do not see either the Republicans or the Democrats as receptive to new ideas or the views of the rank-and-file membership.

 

Fourteen percent say the Democratic Party is responsive to the views of the rank-and-file; Eight percent report that about the Republican Party.

Here’s how Americans feel about the branches of government, just to remind you:

Only four percent of US citizens have a great deal of faith in the legislative branch of government.

Americans have very little faith in the executive or judicial branches of government either.

The most trust is expressed for the military, over 50 percent. It is not clear, however, whether the “military” means the organized US military and the Pentagon or the larger military of citizen-service and retired “vets.”

This is a main reason that new treaties are being drawn up.  We wrote about these new treaties HERE in an article entitled Leaked TISA Docs Reveal Secret ‘Global Constitution’

Our point was that three new “secret” trade agreements have been developed over the past years that redefine how corporations relate to nation states.

The intent is very obviously to put corporations into a position where they are the primary drivers not just of commerce but also of politics.

There will still be political systems but it is corporations that will operate most easily in trans-national environments.

Here’s what we explained:

Over the past millennium, societies have been organized around feudalism and democracy. Now we are headed toward corporatism.

 

TISA is one of several global trade agreements now under active negotiations. Another is the Transatlantic Trade and Investment Partnership (TTIP) and a third is the Trans-Pacific Partnership (TPP).

 

… Leaked documents show how stipulations outlined in the TISA documents advanced the “deregulation” of big corporations entering overseas markets.

TISA, along with TPP and TTIP provide a legislative, judicial and commercial environment that will place corporations above nation-states. This is part of a trend to disenfranchise voters and make sure that democracy has less and less power to affect social structures.

The European Union was structured this way. The decision-making bodies do not directly report to Parliament, which has no real influence over the creation of legislation.

This evolution away from democratic control over society may seem abrupt and worrisome. But those organizing it, obviously believe in its necessity.

Surely they are well aware of the increasing disenchantment with current legislative and commercial structures. Instead of fixing these structures, however, a decision has been made to more fully disenfranchise voters.

This allows a new structure to be put in place rapidly. However, it also virtually guarantees civil unrest and worse.

From what we can see, governments and those that stand behind them are getting ready for electoral confrontations that may become violent.

As these trends strengthen and create considerable tension, you would do well to anticipate what can happen and take corrective action.

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