The Fed Was Hacked More Than 50 Times Between 2011 And 2015

In the aftermath of the bizarre SWIFT hack that supposedly allowed brazen Asian hackers to steal $81 million from the account of the Bangladesh central bank held at the Fed, attention has predictably shifted to the question of whether there was just “one cockroach.” As it turns out there were at least 50. As Reuters reports, citing Fed records, “the U.S. Federal Reserve detected more than 50 cyber breaches between 2011 and 2015, with several incidents described internally as “espionage.”

The cybersecurity reports, obtained by Reuters through a Freedom of Information Act request, were heavily redacted by Fed officials to keep secret the central bank’s security procedures. Reuters notes that in all, the Fed’s national team of cybersecurity
experts, which operates mostly out of New Jersey, identified 51 cases of
“information disclosure” involving the Fed’s board. Separate reports
showed a local team at the board registered four such incidents.

According to Reuters, the records represent only a slice of all cyber attacks on the Fed because they include only cases involving the Washington-based Board of Governors, a federal agency that is subject to public records laws. Reuters did not have access to reports by local cybersecurity teams at the central bank’s 12 privately owned regional branches. Hacking attempts were cited in 140 of the 310 reports provided by the
Fed’s board. In some reports, the incidents were not classified in any
way.

The central bank’s staff suspected hackers or spies in many of the incidents. Or just petty criminals, who after figuring out how the system works, figured out how to also submit SWIFT requests on others’ behalf and steal tens of millions. “Hacking is a major threat to the stability of the financial system. This data shows why,” said James Lewis, a cybersecurity expert at the Center for Strategic and International Studies, a Washington think tank. Lewis reviewed the files at the request of Reuters.

Curiously, in eight information breaches between 2011 and 2013 – a time when the Fed’s trading desk was buying massive amounts of bonds – Fed staff wrote that the cases involved “malicious code,” referring to software used by hackers. One wonders if the NY Fed trading desk had any malware loaded up on it while Simon Potter’s crack bond buyers were executing trillions in purchases.

Four hacking incidents in 2012 were considered acts of “espionage,” according to the records. Information was disclosed in at least two of those incidents, according to the records. In the other two incidents, the records did not indicate whether there was a breach.  It was unclear if the espionage incidents involved foreign governments, as has been suspected in some hacks of federal agencies. Beginning in 2014, for instance, hackers stole more than 21 million background check records from the federal Office of Personnel Management, and U.S. officials attributed the breach to the Chinese government, an accusation denied by Beijing.

While the usual hacking suspects are foreign governments, Reuters notes that espionage might also refer to spying by private companies, or even individuals such British activist Lauri Love, who is accused of infiltrating a server at a regional Fed branch in October 2012. Love stole names, e-mail addresses, and phone numbers of Fed computer system users, according to a federal indictment. The redacted reports obtained by Reuters do not mention Love or any other hacker by name.

* * *

We have previously reported that the Fed has its own private police force; as it turns out the Fed also has its own national cybersecurity team – the National Incident Response Team, or NIRT – which created 263 of the incident reports obtained by Reuters.  NIRT operates in a fortress-like building in East Rutherford, New Jersey that also processes millions of dollars in cash everyday as part of the central bank’s duty to keep the financial system running, according to the New York Fed’s website. The unit provides support to the local cybersecurity teams at the Fed’s Board and regional banks, which process more than $3 trillion in payments every day.

The NIRT handles “higher impact” cases, according to a 2013 report by the Board of Governor’s Office of Inspector General. One of the two former NIRT employees interviewed by Reuters described being on a team that once worked around the clock for five-straight days to patch software hackers had used to gain access to Fed systems in an attempt to obtain passwords. The former employee worked through several of those nights, taking naps at a desk in the office.

In that case, Fed security staff found no signs that sensitive information had been disclosed, the former employee said. Information about future interest rate policy discussions is isolated from other Fed networks and is more difficult for hackers to access, the former NIRT worker said. But the Fed was under constant assault, much like any large company, the former employee said, and was “compromised frequently.”

An internal watchdog has criticized the central bank for cybersecurity shortcomings. A 2015 audit by the Fed board’s Office of Inspector General found the board was not adequately scanning databases for vulnerabilities or putting enough restrictions on system access. “There is heightened risk of unauthorized disclosure and inappropriate use of sensitive board information,” according to the audit released in November.

The Fed cybersecurity records did not indicate whether hackers accessed sensitive information on the timing or amounts of bond purchases or used it for financial gain.

Readers can make their own conclusion if someone who hacked the Fed used the data for “financial gain.”

As for the question what is behind this ongoing onslaught by authorities to “expose” the countless hacks of both commercial and Federal Reserve banks, including the all important SWIFT, we can only assume it is to streamling the implemntation of blockchain as the new architecture of global funds flow, an architecture that has been vocally espoused by both Goldman and JPMorgan.

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American Serfdom – Companies Are Offering Loans for Living Expenses to Their Destitute Employees

Screen Shot 2016-05-05 at 10.20.07 AM

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.”

continue reading

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If you believe this, I have a bridge to sell you

All governments make absurd claims. But North Korea definitely wins the award for the most comical.

Kim Jong-Il, North Korea’s “Dear Leader” from 1997 through 2011, had some priceless gems, including:

  • He never once in his life needed to urinate or defecate
  • He wrote over 1,500 books for North Korea’s universities
  • He could control the weather with his mind, making rain or shine as his mood suited
  • He learned to walk at the age of 3 weeks, and talk at the age of 8 weeks

And my favorite (this one is actually true)– Kim Jong-Il once kidnapped two South Korean film directors and forced them to remake a version of Godzilla in North Korea.

You can see the movie here.

His son and current ruler, Kim Jong-Un, has also made a number of bold claims, including that he invented the cure for HIV, SARS, MERS, and Ebola.

And according to his research, North Korea is apparently the second happiest country in the world after China.

These claims are all obviously fictional and completely incredulous. And yet, somehow the US government seems to believe at least one of them.

You see, Kim Jong-Un also claims to be a genius hacker, and that his people are genius hackers too. It almost seems like a headline ripped from the Onion.

North Korea At Night

The reality, of course, is that there’s almost no Internet in North Korea and the population has more experience with land mines than land lines.

And yet while we can all agree that the Kims’ other claims are preposterous, for some reason the US government believes the hacker threat to be real.

Now every major hack that occurs is automatically blamed on the North Koreans.

Recently one of the biggest bank heists in history transpired after the SWIFT messaging system was hacked, and $81 million was stolen from the central bank of Bangladesh’s US dollar account at the New York Federal Reserve.

The finger was immediately pointed at North Korea.

So now western governments, including the United States and the UK, have sprung into action to defend the financial system against North Korean hackers.

Work has already begun on more obtuse banking regulations and procedures that will force you to jump through bizarre hoops in order to prove that you’re not a nefarious North Korean hacker.

This is so typical. Years ago they made people afraid of men in caves ‘who hate us for our freedom’. Then they proceeded to dismantle many of those freedoms in order to protect us.

It’s the same cycle, only they’ve created a new enemy for us to fear: the North Korean hacker.

And now, in order to protect us from the new boogeyman of the week, they have to create new rules and dismantle more financial freedom.

All of this nonsense is based on the supposed technological prowess of North Korea.

Yet just a few days ago North Korea had a failed missile launch attempt that was so screwed up it was almost comical. This, after four other failed missile attempts last month.

Oh yeah, and these guys are such network security experts that an 18-year old kid from Scotland was able to hack North Korean servers in just minutes.

How’d he do it? By correctly guessing the server login information—username: “admin”, and password: “password”.

Yes, you read that correctly. This crack squad of North Korean hackers used “password” as their server password.

So we’re supposed to believe that these guys are the guys that hacked $81 million out of the Federal Reserve system?

Either they’re fabricating this stuff entirely to justify restricting our freedoms even further, or government incompetence truly has reached an all-time low.

Both ways, a healthy bit of skepticism is in order.

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Baylor University Is a Perfect Example of Why Universities Shouldn’t Police Rape

BaylorThe recently released report detailing Baylor University’s significant missteps in handling sexual assault cases is an impressive document. It argues persuasively that university administrators ignored the complaints of female students in order to protect Baylor’s football team. 

Baylor’s Board of Regents has fired Head Football Coach Art Briles and demoted President Ken Starr. They have implemented a plan to bring the university into full compliance with Title IX—the federal statutes that requires colleges to police sexual harassment and assault—and have apologized to the Baylor community. 

Note that the report is the Regents’ summary of the results of an independent investigation conducted by law firm Pepper Hamilton. The lawyers did not prepare their own written report, which lead my colleague Anthony Fisher to cry foul: 

Keeping secret the highly relevant names and deeds of those responsible for this situation is bad enough. The fact that this investigation hasn’t even yielded a written report works very much in favor of an institution which would like the public to believe that it has found religion (so to speak) and will never stray from the path again. 

There’s a whole lot of “transparency and accountability” not being pursued here. 

Baylor’s myriad failings are obvious, and it’s not at all clear things will get noticeably better for victims of sexual assault at the university, although Title IX is infamous for encouraging universities to over-correct their rape adjudication procedures. 

Slate‘s Nora Caplan-Bricker thinks the Baylor situation makes a great argument for getting universities even more involved in policing rape. In a provocative piece titled “The Crisis at Baylor Proves Colleges Should Handle Rape Cases, Not Leave Them to the Courts,” she writes: 

The courts eventually fulfilled their role—but if Baylor had listened to the first woman who spoke up, it may have been able to prevent a string of horrendous crimes. 

This is one key reason why schools must be involved in adjudicating sex crimes. It can take years for a criminal case to wind its way through the courts. Schools can move faster to investigate serious charges and remove perpetrators who pose a demonstrated harm to other students. The criminal justice system is also poorly equipped to handle cases of rape and sexual assault: Because so many rapes have no third-party witness, its often difficult to provide evidence “beyond a reasonable doubt.” An estimated three in every 100 rapes result in punishment through the criminal system, and many survivors of sexual violence decide they will face less trauma staying silent than seeking justice in court. Victims can receive a fairer hearing under the “preponderance of evidence” standard that schools employ—though it’s important to note, as legal experts have argued, that this lower evidentiary standard must be paired with careful investigation and legal representation in order to preserve the rights of both accuser and accused. 

As slow and awful as the criminal justice system is—and there’s specific evidence the Waco police screwed up here, too—there’s just no reason to expect poorly-trained university administrators to handle these things better, and lots of reasons to expect them to behave even worse. Baylor is an example of this very phenomenon: the school evidently cared more about its football team than about justice for victims. While it’s possible Baylor can be reformed, why on earth would we hold up this model—the administrative investigation model—as superior to courts? 

Anti-rape activists come across as impatient about the pace of justice, and it’s easy to see why. The way the criminal justice system treats rape victims has improved dramatically over time, but it’s still far from perfect. Yes, it’s a difficult allegation to prove. Yes, it takes a lot of time. But shouldn’t advocates work to improve that system—the one designed to administer justice to violent criminals—rather than investing time and effort in a system doomed to failure? 

The more the activists—including those in the federal Office for Civil Rights, which ensures Title IX compliance—get their way, the more one-sided these campus rape investigations become. Note that this is by design: these people want it to be easier for colleges to punish accused students. They favor reducing the burden of proof, vesting investigatory powers in a sole (and often biased) administrator, and violating the rules of evidence precisely because these things are an impediment to their preferred outcome. 

But this strategy has consequences of its own, and we are seeing them unfold before our very eyes. Accused students who were disciplined under standards of relaxed fairness are now suing the institutions that deprived them of due process, and they are winning

This puts universities in a difficult position. On one hand, the federal government has threatened them with loss of funding for failing to comply with its strained interpretation of Title IX. On the other hand, lawsuits brought by wrongfully expelled students could cost the institutions a lot of money. But then again, lawsuits brought by students who say their Title IX right to a sexual-harassment-free environment was violated could also cost a lot of money. Still, complying with Title IX is itself quite costly: universities have to hire scores of coordinators and investigators that grow the administration and drain financial resources. For many colleges, sexual assault is a lose/lose/lose/lose issue. 

Ad it’s easy to see why: universities are not neutral institutions. They are not impartial. Their incentive is to protect their reputations, not merit out justice to trauma survivors. Trying to change the incentives has caused a number of other disasters, as we have seen. 

It’s possible to believe that universities should do more to accommodate students involved in sexual assault disputes—provide them different housing options, for instance—without accepting the wholesale replacement of the criminal justice system with a frequently inept and unfair jury-by-educrat procedure. University-led adjudication might make life easier for some rape victims in the short term, but the public should want these accusations carefully vetted by trained professionals in the courts—not because the women are lying, but because we want charges against actual rapists to stick. It’s not enough to shuffle them around from campus to campus. 

This is one of those cases where the easy thing isn’t the right thing. The long-term public interest is better served by investing actual cops and courts with the power to police rape. If reforms are needed, those reforms should be targeted at the institution that can do the most good, and that institution isn’t higher education. 

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More Americans Enjoy Same-Sex Experiences

SameSexHoldingThumbsA new study published in the current issue of the journal Archives of Sexual Behavior finds that Americans accept and engage in same-sex experiences more than ever. Using survey data collected since 1972 by the General Social Survey involving more than 33,000 participants, the researchers report that “same-sex sexual experience has doubled, and acceptance of same-sex sexual experience has quadrupled.” From the study’s press release: 

The percentage of men who have had sex with at least one man increased from 4.5 percent to 8.2 percent; the percentage of women who have had sex with at least one woman increased from 3.6 percent to 8.7 percent. The percentage of adults who have had both male and female partners (bisexual behavior) increased from 3.1 percent to 7.7 percent. Among 18 to 29 year olds in the 2010s (Millennials), 7.5 percent of men have had a gay sexual experience, and 12.2 percent of women have had a lesbian sexual experience. The increases in same-sex experiences were largest among whites and in the South and Midwest.

Since more Americans are evidently engaging in same-sex sexuality, it is not too surprising that acceptance of it has substantially increased:

Those who believed that “sexual relations between two adults of the same sex” was “not wrong at all” hardly changed between 1973 and 1990 (from 11 percent to 13 percent). Acceptance then steadily rose, reaching a near majority in 2014 at 49 percent. Among 18 to 29 year olds, acceptance rose from 15 percent in 1990 to 63 percent (a clear majority) in 2014.

Based on their findings, the researchers conclude that the “cultural change of the last few decades extends beyond simple tolerance of gay, lesbian, and bisexual individuals and their civil rights to include acceptance of same-sex sexuality and the freedom to engage in same-sex sexuality–or at least the freedom to report one has done so on a survey. Either way, Americans have experienced a fundamental shift toward acceptance of same-sex sexual behavior and a greater willingness to engage in it.”

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New “AlternativePAC” to Launch Supporting Johnson/Weld from Grassroots Free-Market Advocate Matt Kibbe

Matt Kibbe, a longtime grassroots activist in the small government field as chieftain of FreedomWorks from 2004-15 and more recently a Rand Paul supporter via the SuperPAC Concerned American Voters, will be launching a new SuperPAC to promote the Libertarian Party candidacy of Gary Johnson and William Weld, to be called “AlternativePAC.”

“I have been talking to donors for several weeks as the reality of a Trump vs. Clinton ticket really sunk in. There is real interest in the Libertarian ticket, and Gary Johnson has an historic opportunity,” Kibbe said in an exclusive email this morning. 

“So I am launching a new SuperPAC to help raise awareness, drive messages, and change the conversation on social media. I think I can raise significant funds for this,” he wrote. In a later phone interview, he was not able to name specific donors who might give big money to the PAC. 

“The potential is bigger, I think, than just a ‘libertarian moment,'” Kibbe wrote in the email. “Done well, we can trigger a political realignment that’s been brewing for a long time. We will offer an attractive alternate to the two flavors of authoritarianism, cronyism, and all-war-all-the-time foreign policies of the other two candidates. For the first time, millions of voters will Google the word ‘libertarian’ in their quest to find a better political choice.”

While Kibbe did not this morning lay out his specific tactics, he wrote that “the power of the two-party duopoly is waning, and insurgent candidates with different ideas now have a seat at the table. Our PAC will use data, technology, narrative and cutting edge social media to target disaffected constitutional conservatives, independents, and Bernie progressives looking for something different, something hopeful, with a message of personal liberty, economic opportunity, and justice for all.”

On abortion, though Johnson is verbally pro-choice, his record is more nuanced and might not be a total deal killer to social conservatives. Johnson signed a partial birth abortion ban as governor of New Mexico and said in a May 2011 Republican Party presidential debate in South Carolina that “I’ve always favored parental notification, I’ve always favored counseling and I’ve always favored the notion that public funds should not be used for abortion.”

Even rock-ribbed social conservative Republicans, Kibbe anticipates, can look at the Libertarians and understand the difference between “personal opinions and the role of the federal government.”

Kibbe said in our phone interview that he’s not just reaching to the right. There is also a growing opportunity with “Bernie Sanders supporters upset with their likely nominee Hillary Clinton, who is essentially a neocon crony capitalist.”  

Similarly, Kibbe said in our interview, he hopes Republicans can respect the “only ticket that has Republican governors who have actually governed, balanced budgers, reined in regulatory abuses in very blue states” for years, which he says have traditionally been seen as “key to political success. Even the Bill Kristols of the world should ultimately have to say, of these three choices” Johnson/Weld is the best.

Given Johnson’s framing of himself most recently as a “skeptic” about intervention, not a non-interventionist, and willingness to condemn the Iran nuclear deal, Kibbe feels that the Ted Cruz end of disenchanted Republicans might be able to get over even their usual discomfort with Libertarian foreign policy for a candidate who Kibbe thinks is unique in respect for the Constitution.

Does Kibbe think things like “dancing stripping L.P. national chair candidate” James Weeks II will just make too much big money run from the brand? “I don’t think it matters that much,” Kibbe says. “I will be at the Democratic and Republican conventions as well, and I guarantee you there will be weird, exotic people there as well.”

Concerned American Voters will continue as a Rand Paul-oriented PAC focused on his Senate race. 

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Appeals Court: No Warrant Needed to Get Cellphone Location Data

CellphoneChalk up another win for the third-party doctrine. The 4th U.S. Court of Appeals (in Virginia) has ruled in a 12-3 vote that cellphone users do not have an expectation of privacy with their location data and that police can get that information from phone companies without a warrant.

The majority ruling invoked the third-party doctrine, which has typically been the case in these rulings. In Supreme Court cases from the 1970s, the court ruled that a person has no expectation of privacy for records or information that he or she voluntarily turns over to third parties. Back in the day, these cases were referring to things like very simple phone call records logged by telecoms or bank deposit slips. The amount of information that is available about us through third-party records has dramatically increased, but the precedent has not yet be reconsidered by the top court.

This ruling may end up preserving the status quo. There have been several cases challenging the idea that phone location data should count as a third-party record, but so far courts have been upholding the precedent (eventually in this case, since a smaller panel initially ruled otherwise). Typically, the Supreme Court will take on a case like this when there are split rulings between federal courts. That’s not the situation at the moment. However, in United States v. Jones, a case from 2012 where the Supreme Court ruled that law enforcement must get a warrant to place a GPS tracker on a vehicle, Justice Sonia Sotomayor said in a concurrent opinion that it may be time for the Supreme Court to reconsider or re-evaluate when the third-party doctrine should apply in this new digital age.

In the dissenting opinion in this case, which involved authorities collecting more than 200 days of data and close to 30,000 locations, Judge James Wynn questioned whether all this information was actually “voluntarily conveyed” to third parties. He points out that previous third-party doctrine rulings were based on the idea that a person, for example called a phone number (thus giving the phone company the information about who he wanted to talk to) or deposited money in a bank (thus voluntarily giving the bank information about the transaction). By contrast, we now give out information about ourselves just by having the cellphone on us, without doing anything at all. From Wynn’s dissent:

“[T]here is no reason to think that a cell phone user is aware of his CSLI [cell-site location information], or that he is conveying it. He does not write it down on a piece of paper, like the dollar amount on a deposit slip, or enter it into a device, as he does a phone number before placing a call. Nor does CSLI subsequently appear on a cell phone customer’s statement. …

In sum, because a cell phone customer neither possesses knowledge of his CSLI nor acts to disclose it, I agree with the Third Circuit that he “has not ‘voluntarily’ shared his location information with a cellular provider in any meaningful way.”

He warns:

“What this elucidates is the extraordinary breadth of the majority’s decision today. It is not bounded by the relative precision of location data, by the frequency with which it is collected, or by the statutory safeguards Congress has thought it prudent to enact. The majority’s holding, under the guise of humble service to Supreme Court precedent, markedly advances the frontlines of the third-party doctrine. The Fourth Amendment, necessarily, is in retreat.”

Read the full ruling here.

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BP Oil Cargoes In Limbo At Terminal As Venezuela Can’t Pay Its Bills

Submitted by Charles Kennedy via OilPrice.com,

As Venezuela drowns in debt and takes its state-run oil company, PDVSA, down with it, Reuters is reporting that BP has over 2 million barrels of oil stuck at a terminal in the Caribbean over unpaid bills.

The cargo of 2 million barrels of U.S. light sweet crude sold by BP cannot be discharged at the PDVSA terminal in Curacao until it’s paid for, according to the news agency, which is relying on unnamed sources and Thomson Reuters vessel tracking data.

China Oil and BP reportedly have a tender from PDVSA for the shipment of 8 million barrels of WTI crude for the second quarter of 2016.

PDVSA is struggling to pay its bill as the Venezuelan economy crumbles and unrest becomes riotous. Last week, reports emerged that PDVSA was offering service providers a debt-swap deal in exchange for payments.

A subsidiary of PDVSA has reportedly offered service contractors a deal in which US$2.5 billion in debt would be swapped for dollar bonds, according to the Wall Street Journal.

Venezuela is running out of most basic consumer items as the crisis worsens.

According to the New York Times, power shortages are now so severe that government offices are open only two days a week.

The country’s oil revenues could fall by 40 percent this year, according to NYT, and imports have been slashed to avoid default.

Over the weekend, two major international airlines Lufthansa and LATAM moved to suspend service to the country in the coming months.

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World’s Largest Asset Manager Downgrades Global Equities To Neutral

With one after another bank issuing downgrade reports on global stocks, including such stalwarts as JPM and, most recently, Goldman, overnight a far more important market entity – the world’s largest asset manager – joined the club when BlackRock downgraded U.S. and European stocks to neutral, citing elevated U.S. valuations and the higher probability of a midyear interest-rate increase by the Federal Reserve. 

“We see the odds of a summer Fed rate increase rising if U.S. data this week show solid job gains, rising wages and an inflation pickup,” writes Richard Turnill, BlackRock’s global chief investment strategist in a note Tuesday. The company expects the Fed to raise rates once or twice this year, he says.

Here are the key points:

  • We have downgraded global stocks. U.S. valuations are elevated and a mid-year Federal Reserve (Fed) rate increase appears more likely.
  • Rising expectations of a June or July Fed rate increase sent U.S. Treasury yields higher last week.
  • We see the odds of a summer Fed rate increase rising if U.S. data this week show solid jobs gains, rising wages and an inflation pickup.

And the full note:

We have downgraded global equities to neutral, following a meeting of the BlackRock investors behind our views. The growing likelihood of an imminent Fed rate increase and more elevated U.S. valuations warrant short-term caution.

The chart above shows how U.S. stocks have been in a sweet spot since mid-February, supported by solid economic growth and falling real yields on the back of expectations of a Fed on hold. Yet yields have started rising again. Higher U.S. inflation and hawkish Fed comments have now put a summer rate increase back on the table, increasing investor anxiety and the likelihood of near-term volatility.

Global stocks look vulnerable

Equities no longer look cheap. The MSCI World Index is up 14% from its mid-February low, as stocks have shaken off fears of a global recession, an oil-price collapse and a Chinese currency devaluation.

U.S. equity valuations sit around the 70th percentile of their long-term historical range, according to our calculations. And stocks overall appear more vulnerable to short-term risks. These include a Fed that increases rates too aggressively, a Brexit, a worsening European immigration crisis and a slowdown in global growth. We also see less upside to China’s growth expectations after a recent uptick in activity, and oil prices have rebounded a long way and now reflect improved fundamentals.

We have downgraded U.S. and European stocks to neutral. We do prefer stocks to government bonds, and within equities, we like global dividend-growth and quality stocks. We expect the Fed to raise rates once or twice this year. We also see the potential for a corporate earnings recovery later in 2016. What would make us more bullish? Evidence of reflation, and an emphasis on expansionary fiscal policy and structural reform over monetary policy globally.

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How to Play Amazon (Video)

By EconMatters


Investors and Traders should remember there is a huge difference between a great product or company and a stock. I think oftentimes investors get these two ideas confused in properly evaluating the value of a company`s stock price.

Just remember everything has a price, and at some point valuation concerns come into play regardless of how great a company outperforms in their business segment. And remember all momentum stocks eventually crash and burn if we look back through the history of the stock market.

Pay attention to the key technical levels to the downside as they will become important in the future, trust me on this one. Momentum works both directions, and after a run that Amazon has gone on since the financial crisis, it is going to get real nasty for any bag holders in this stock on the way down.

 

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