Month: February 2017

Chair Of House Intel Committee: No Evidence Of Contact Between Trump Campaign, Russia

In what will likely be a setback to the ongoing press campaign to portray the Trump administration and campaign as a Kremlin puppet, on Monday the chairman of the U.S. House of Representatives intelligence committee said he has seen no evidence of contact between Donald Trump’s campaign and the Russian government during the 2016 presidential election, Reuters reported.

Devin Nunes, head of the House Permanent Select Committee on Intelligence, said the panel is expanding an ongoing investigation into Russian activities to include Moscow’s efforts targeting the U.S. election. Nunes said he had been briefed on a transcript of a phone call that former Trump national security adviser Michael Flynn had with a Russian envoy after the election. He said he did not hear anything worrisome about that call.

During a press conference with reporters on Monday, Rep. Nunes downplayed claims that the White House had asked members of the CIA and FBI to squelch reports of contact between Russia and members of Trump’s presidential campaign, saying that there was “nothing wrong” with what he characterized as attempts to have a better working relationship with the press. He also said that the committee wanted evidence of any American citizens who may have talked to Russian officials, implicitly broadening the issue beyond the Trump campaign and administration. He characterized the FBI as being “very upfront” with his committee about what they know about Trump’s potential connections with Russia, although he admitted that he’d like to know more.

When asked if they have any evidence of contacts specifically from the Trump campaign, Nunes replied: “It’s been looked into and there’s no evidence of anything there. Obviously we’d like to know if there is.” He also dismissed concerns that Flynn had violated the Logan Act as “ridiculous” and said that they would not subpoena Trump’s tax returns, which puts him at odds with Senate Intelligence Committee member Susan Collins, R-Maine. Throughout the press conference, Nunes insisted that both he and the White House were simply trying to be “transparent” and claimed to be confused as to why the Trump administration providing his phone number to a reporter would be a news story. He also repeated his earlier statements about wanting to avoid “McCarthyism” and “witch hunts” based on reports that Americans may have connections to the Russian regime.

“This is almost like McCarthyism revisited,” Nunes told reporters at the California Republican Party’s spring convention on Saturday according to Politico. “We’re going to go on a witch hunt against, against innocent Americans?”

Nunes added: “At this point, there’s nothing there. Once we begin to look at all the evidence, and if we find any American that had any contact with Russian agents or anybody affiliated with the Russian government, then we’ll be glad to, at that point, you know, subpoena those people before the House and let the legislative branch do its oversight and then we would recommend it over to, you know, the appropriate people.”

Nunes concluded, saying, “we can’t go on a witch hunt against the American people, any American people who have not had any contact, just because they appeared in a news story.”

Also on Monday, while speaking to a gathering of health insurance executives he was meeting with at the White House, president Trump on Monday dismissed a question about his aides’ alleged ties to Russia by saying he hasn’t spoken to the country in a decade.

“I haven’t called Russia in 10 years,” he told a reporter who asked him whether a special prosecutor should carry out an investigation.

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Citing Judicial Deference, Conservative Federal Judge Upholds Maryland ‘Assault Weapons’ Ban

Last week the U.S. Court of Appeals for the 4th Circuit upheld a Maryland gun control law that bans “assault weapons” and detachable large-capacity magazines, holding that the Second Amendment offers no impediment to such legislation.

Among the judges who joined the 4th Circuit’s 10-4 decision in this case, Kolbe v. Hogan, was a highly respected legal conservative named Judge J. Harvie Wilkinson III.

What led a respected conservative judge to uphold a sweeping gun control law? In addition to joining the majority opinion, Wilkinson filed a separate concurrence in which he explained his thinking. According to Wilkinson, the matter boiled down to the core principle of judicial deference. “It is altogether fair,” Wilkinson wrote, “to argue that the assault weapons here should be less regulated, but that is for the people of Maryland (and the Virginias and the Carolinas) to decide.”

In Wilkinson’s view, if the federal courts enter the business of invalidating democratically enacted gun control measures such as the ones at issue here, the end result will be to “empower the judiciary and leave Congress, the Executive, state legislatures, and everyone else on the sidelines.” As far as Wilkinson is concerned, the federal courts “are not impaneled to add indefinitely to the growing list of subjects on which the states of our Union and the citizens of our country no longer have any meaningful say.”

Wilkinson’s concurrence offers the classic argument for judicial deference, or judicial restraint: If you don’t like what your lawmakers have done, take your complaint to the ballot box, not to the courthouse. For decades this was a dominant view among legal conservatives. Indeed, as recently as twenty years ago, Wilkinson’s ode to judicial minimalism would have placed him squarely within the mainstream of conservative legal thought, even though it arose in the context of a Second Amendment case.

But the times are changing. Judicial deference is no longer quite as popular among legal conservatives as it once was, and this particular case helps to illustrate why. After all, doesn’t the Second Amendment itself suggest that there are some subjects on which democratic majorities should not have any meaningful say? Doesn’t the Constitution place certain rights beyond the reach of lawmakers, and isn’t it sometimes the job of the federal courts to enforce those constitutional limits and strike down overreaching legislation, even when such judicial action requires the courts to act in an anti-democratic fashion?

As a principled advocate of judicial deference, Wilkinson effectively answers no to such queries. The big question going forward is how many legal conservatives are still willing to side with Wilkinson.

Related: Conservatives v. Libertarians: The debate over judicial activism divides former allies.

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Illinois Appeals Court Says Banning Sex Offenders From Parks Is Unconstitutional

A few years ago, Marc Pepitone was arrested at a park in Bolingbrook, Illinois, a Chicago suburb, for walking his dog there. The problem was not the dog; it was Pepitone, who in 1999 was convicted of sexually assaulting a child, a crime for which he received a six-year prison sentence. A law enacted more than a decade later made it a crime for sex offenders like Pepitone to be present in “a park, forest preserve, bikeway, trail, or conservation area under the jurisdiction of the State or a unit of local government.” Pepitone said he was unaware of that retroactive rule, but that did not matter: He was convicted of a Class A misdemeanor and sentenced to 24 months of conditional discharge, 100 hours of public service, and $400 in fines and costs. This month a state appeals court overturned Pepitone’s conviction after concluding that the law he broke “is unconstitutional on its face because it bears no reasonable relationship to protecting the public.”

The decision by the Third District Appellate Court of Illinois is unusual because courts generally defer to legislators’ judgments about the best way to protect the public from sex offenders, no matter how dubious the judgment. The ruling is especially striking because the appeals court concluded that the park ban fails the “rational basis” test, a very permissive standard of judicial review. “To satisfy this test,” the Illinois Supreme Court has said, “a statute need only bear a rational relationship to the purpose the legislature sought to accomplish in enacting the statute.” That means “a statute will be upheld if it ‘bears a reasonable relationship to a public interest to be served, and the means adopted are a reasonable method of accomplishing the desired objective.'”

Two other Illinois appeals courts have concluded that banning sex offenders from public parks makes enough sense to satisfy this requirement. “By keeping sex offenders who have committed offenses against children away from areas where children are present (e.g., school property and parks),” the First District said in a 2012 case, “the legislature could have rationally sought to avoid giving certain offenders the opportunity to reoffend.” The Fifth District adopted the same reasoning last year. But the Third District argues that the rational basis test (which applies in this case because Pepitone made a substantive due process claim but did not argue that the park ban affects a “fundamental liberty interest”) requires more than such an “incomplete and truncated” analysis. “While we acknowledge that under the rational basis test, ‘[a] statute need not be the best means of accomplishing the stated objective’ and ‘[i]f there is any conceivable set of facts that show a rational basis for the statute, the statute will be upheld,'” the court says, “we also recognize that ‘[a]lthough this standard of review is quite deferential, it is not ‘toothless.'”

The appeals court emphasizes the “overly broad sweep” of the law challenged by Pepitone, which imposes “an outright ban on all individuals with certain sex offense convictions from public park buildings and public park property without any requirement that anyone—particularly a child—be actually, or even probably, present.” Because the law does not require any unlawful intent, it criminalizes “a wide swath of innocent conduct,” including not only dog walking but “attending concerts, picnics, rallies, and Chicago Bears games at Soldier Field; or expeditions to the Field Museum, the Shedd Aquarium, the Art Institute, the Adler Planetarium, or the Museum of Science and Industry, all of which are public buildings on park land; bird-watching; photography; hunting; fishing; swimming at a public beach; walking along riverwalks; cycling on bike trails; [and] hiking at Starved Rock.”

Dissenting Justice Robert Carter thinks the majority goes too far by expecting legislators to be fair or logical. “As long as the statute has a rational relationship to the government objectives, it is valid even if it is to some extent overinclusive or underinclusive,” he says. “By keeping sex offenders who have committed sex offenses against children away from areas where children are present, the legislature could have rationally sought to avoid giving those sex offenders an opportunity to reoffend. Whether the statute could be more finely-tuned to accomplish that goal is a question for the legislature, not for the courts.”

This dispute comes down to a question of what the rational basis test actually requires. In 2015 Kimberly Mueller, a federal judge in California, rejected a challenge to marijuana’s legal status under the Controlled Substances Act, which she said easily passed rational basis review. “The law may be overinclusive, underinclusive, illogical, and unscientific and yet pass constitutional muster,” Mueller wrote. Last year Phyllis Hamilton, a federal judge in San Francisco, quoted that same gloss while upholding the International Megan’s Law, which requires special markings on the passports of registered sex offenders. A test that permissive is hard to distinguish from no test at all.

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Saudi Arabia Offers To Deploy Special Forces In Syria To Fight ISIS

Saudi Arabia’s foreign minister, Adel al-Jubeir, better known to the US public for his threat last April 2016 to sell US Treasuries should the US press with a probe of Saudi involvement in the Sept 11 attacks,  made a rare visit to Baghdad over the weekend in an attempt to mend the kingdom’s tense relations with Iraq. al-Jubeir’s surprise trip on Saturday marked the first official visit by a Saudi foreign minister since 1990, and the first high-level visit since the 2003 US-led invasion.

“It’s the hope of the Kingdom of Saudi Arabia to build excellent relations between the two brotherly countries,” said Jubeir. “There are also many shared interests, from fighting extremism and terrorism [to] opportunities for investment and trade between the two countries.”

Jubeir, who met his Iraqi counterpart Ibrahim al-Jaafari and Prime Minister Haider al-Abadi, also announced Saudi plans to appoint a new ambassador to Iraq. An Iraqi foreign ministry official said the kingdom supported the resumption of direct flights between the two countries. Abadi, who has been in power since 2014, has supported efforts to improve strained ties, but the road to normalization has been rocky.

The visit follows a recent diplomatic spat between the two nations, when Thamer al-Sabhan, Saudi Arabia’s previous ambassador to Iraq, was removed in August.  Sabhan’s comments about Iran’s involvement in Iraqi affairs and the alleged persecution of Sunni Muslims had angered Iraq’s local Shia politicians and militia leaders. Sabhan had also called on Iraq to exclude Shia paramilitary groups from its military campaign against the Islamic State of Iraq and the Levant (ISIL, also known as ISIS), in order to avoid abuses against Sunnis in the country.

Sabhan was the first ambassador appointed by Saudi Arabia after it reopened its embassy in Baghdad in 2015, following a 25-year break.

Saudi has long accused Iraq of being too close to Iran, its main regional rival, and of encouraging sectarian discrimination against the Sunnis, a charge the Shia-led government in Baghdad denies. Previously, Jubeir himself accused the Hashd al-Shaabi militia, a main partner of the Iraqi army in its fight against ISIL, of being a proxy force for Iran, prompting Baghdad to accuse him of meddling in Iraqi affairs.

Since the fall of Saddam Hussein’s government in 2003, Iran has advanced its influence in Iraq, which has further strained relations with Saudi Arabia. Iran has helped Iraq in the fight against ISIL, while supporting the powerful Shia militias in the country. In turn, Iraq has often suffered from being turned into a battlefield where the rivalry of its neighbours are played out.

Ali Khedery, the former special assistant to five US ambassadors to Iraq, told Al Jazeera that Iran was likely to be suspicious of Jubeir’s visit. “[Iran] will possibly move to guard the gains they consolidated in [Iraq], which might lead to outbursts of additional violence that target Arab Gulf states’ interests in the country,” Khedery said.

* * *

But the biggest highlight of the meeting was the proposal by Saudi Arabia to “discuss cooperation” in the fight against ISIL.

Jubeir expressed his country’s support for an ongoing US-backed Iraqi campaign aimed at dislodging the group from Iraq, according to Abadi’s official statement. A day earlier, Iraqi forces punched through the defences of the last ISIL stronghold in Mosul. Defeating ISIL in Mosul would roll back the self-styled caliphate it declared in Iraq and Syria in 2014 after seizing large parts of both countries. About 100,000 Iraqi soldiers, security forces, Kurdish Peshmerga fighters, and mainly Shia paramilitary forces are participating in the Mosul campaign that began on October 17.

It wasn’t just cooperating with Iraq to “eradicated” ISIS, but also the US.  As quoted by the Saudi Embassy in the US, al-Jubeir said the following:

“The Kingdom and other Gulf nations have expressed that they are ready, in cooperation with the United States, to send special forces. Even other nations that are part of the Islamic Coalition against Terrorism and Extremism are ready to send troops. We are cooperating with the United States to see what the plan is and what is necessary to take action.”

The reason why this statement is particularly notable, not to mention amusing, is that according to an email released as part of the Podesta leaks, none other than Hillary Clinton admitted that Qatar and Saudi Arabia “are providing clandestine financial and logistic support to ISIL and other radical Sunni groups in the region.“

In other words, having spent billions on funding ISIS, Saudi Arabia – sensing the tide of war changing adversely for the Islamic State – is now willing to make a complete 180, and fight the very organization it had helped conceive and fund. As to the ulterior motive behind this “generous” proposal, perhaps another tweet by the Saudi embassy will explain it: such a military pivot could provide Saudi Arabia with the means to eventually engage its key nemesis in the region: Iran.

We eagerly look forward to the response from Trump’s administration to this generous proposal.

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Former IMF Chief Sent To Jail As Spain Prosecutes 65 Elite Bankers In Enormous Corruption Scandal

Via Matt Agorist of ActivistPost.com,

In many other countries, excluding the United States, corrupt bankers are often brought to task by their respective governments. The most recent example of a corrupt banker being held accountable comes out of Spain, in which the former head of the International Monetary Fund (IMF), Rodrigo Rato was sentenced to four years and six months behind bars.

According to the AFP, Spain’s National Court, which deals with corruption and financial crime cases, said he had been found guilty of embezzlement when he headed up Caja Madrid and Bankia, at a time when both groups were having difficulties.

Rato, who is tied to a slew of other allegations was convicted and sentenced for misusing €12m between 2003 and 2012 — sometimes splashing out at the height of Spain’s economic crisis, according to the AFP.

The people of Spain were outraged over the scandal as it was discovered during the height of a severe financial crisis in which banks were receiving millions in taxpayer dollars. Bankia was eventually nationalized and given 22 billion in public money.

Although he was sentenced, Rato, who is also a former Spanish economy minister, remains at liberty pending a possible appeal because of highly connected elite status.

Rato was brought down in a massive effort by Spain to get rid of corruption within the banking system. The problem had gotten so bad, that Spain decided to clean house, and 65 people, include Rato, were brought to task.

According to the AFP, they were accused of having paid for personal expenses with credit cards put at their disposal by both Caja Madrid and Bankia, without ever justifying them or declaring them to tax authorities. These expenses included petrol for their cars, supermarket shopping, holidays, luxury bags or parties in nightclubs.

According to the indictment, Rato maintained the “corrupt system” established by his predecessor Miguel Blesa when he took the reins of Caja Madrid in 2010, reports the AFP. He then replicated the system when he took charge of Bankia, a group born in 2011 out of the merger of Caja Madrid with six other savings banks, prosecutors said.

According to the report:

Rato was economy minister and deputy prime minister in the conservative government of Jose Maria Aznar from 1996 to 2004, before going on to head up the IMF until 2007. His subsequent career as a banker was short-lived — from 2010 to 2012 — but apart from the credit cards case, it also led to another banking scandal considered the country’s biggest ever.

 

Thousands of small-scale investors lost their money after they were persuaded to convert their savings to shares ahead of the flotation of Bankia in 2011, with Rato at the reins. Less than a year later, he resigned as it became known that Bankia was in dire straits.

The state injected billions of euros but faced with the scale of Bankia’s losses and trouble at other banks, it asked the EU for a bailout for the banking sector and eventually received €41bn.

Rato and others were probed, accused of misleading small investors in the listing of Bankia, which has since paid out €1.2bn in compensation.

To highlight the utter corruption within the banking cartel that is the IMF, Rato is the third former chief to be ousted for illegal activity.

For those who don’t remember, Rato’s successor, Dominique Strauss-Kahn, was tried in 2015 on pimping charges in a lurid sex scandal. Naturally, he was acquitted — in spite of the fact that he admitted to engaging in illicit sex with prostitutes at a series of orgies that supposedly took place at the Hotel Carlton in the northern French city of Lille. The court sided with DSK and agreed that he had no idea the women he repeatedly filled the orgies with were being paid.

Christine Lagarde, who took over from Strauss-Kahn and is the current IMF chief, In December, was found guilty of “negligence” for approving a massive government payout to business tycoon Bernard Tapie during her tenure as French finance minister.

Despite being found guilty of corruption, Lagarde was not sentenced to a single day in jail. She has since been meeting with Trump’s Goldman Sachs-connected Treasury Secretary, Steven Mnuchin, noting that they’ve had “some very positive discussions.”

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The Solutions Are Sitting Around a Campfire, Not In Congress: New at Reason

Everything’s going to be more or less OK.

A. Barton Hinkle writes:

“Our Miserable 21st Century” is the headline on a recent piece in Commentary, not to mention a pretty good summation of the general mood these days. Economic malaise, an opioid crisis, climate change, spiking crime rates in major cities, a political atmosphere that’s about as chummy as a prison riot…

Nobody should dismiss these grim signs of impending societal collapse, or the many others that, while equally important, have not yet received sufficient attention. (I refer of course to the use of “concerning” as an adjective—as in “The president’s behavior is very concerning”—along with the appalling, yet apparently proliferating, belief that “to include” is a suitable replacement for “including.” It isn’t.)

At the same time, it is possible to make too much of our current troubles. A little perspective is in order.

One way to regain that perspective is to spend a few minutes on HumanProgress.org, which tracks the generally meliorating conditions of human existence over the short, medium, and long term. It is filled with data showing how much better things today are than they once were: Hundreds of millions of people have climbed out of poverty. Literacy rates are rising, the gender wage gap is shrinking, child mortality is falling. Air travel is both cheaper and far less dangerous, food is more plentiful, malaria deaths have plunged, and on and on.

View this article.

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Trump’s Mythical Crackdown on Sex Trafficking

At Townhall.com, sex-crime victims’ advocate and author Liz Crokin accuses the mainstream media of “ignoring Trump’s sex trafficking busts.” In Crokin’s reality, “authorities have arrested an unprecedented number of sexual predators involved in child sex trafficking rings in the United States” since Donald Trump took office on January 20. “There have been a staggering 1,500-plus arrests in one short month; compare that to less than 400 sex trafficking-related arrests in 2014 according to the FBI,” Crokin writes.

This is, as Trump would put it, “fake news.” Every part of it. For starters, the 2014 data she links to is far from a complete account of U.S. sex-trafficking arrests that year. It reflects incomplete state-level arrest numbers from just 26 U.S. states, Guam, and the Virgin Islands. It does not include all state sex-trafficking arrests, by far, nor does it include any sex trafficking arrests by federal agencies such as the FBI and Immigration and Customs Enforcement (ICE), which make thousands of sex trafficking arrests annually (though far fewer trafficking indictments and convictions).

The idea that there have been “an unprecedented number” of sex traffickers arrested since Trump took office has similarly little basis in reality, and there’s zero truth to the claim of law-enforcement busting up child sex-trafficking rings. Meanwhile, many of the arrests Crokin includes in her tally—arrests that include mostly women selling sex and men trying to engage in consensual adult prostitution—are part of annual sting operations, were the result of investigations n the works long before Trump took office, and/or had absolutely nothing to do with federal law-enforcement directives or activities. (That is, when we can check Crokin’s sources; two of the pages she links to as evidence can’t be found.)

Here are the arrests that Croklin credits as Donald Trump-brokered busts of pedophile trafficking rings:

As evidence of these arrests that Crokin doesn’t think are being covered in the mainstream media, she links to news reports on ABC, NBC, and CBS news affiliates, describing events also covered widely by other media in their respective states or regions. The California sting was also reported by mainstream print and broadcast media across the country, as was the broader National Johns Suppression Initiative that resulted in the Texas arrests.

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Ron Paul And Lew Rockwell Discuss “War And Peace In The Age Of Trump” – Live Feed

With the new Administration just over a month old, we are seeing both hopeful and discouraging signs of how the Trump foreign policy is playing out.

Mises Institute Founder Lew Rockwell joins Ron Paul in today’s program to take a look at Trump thus far…

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With “Trillions At Stake” Analysts Hope Trump’s Speech Will Be “More Shining City” Than “Dumpster Fire”

Traders are on edge ahead of tomorrow’s key address by President Trump to Congress, in which as Bloomberg writes “trillions are at stake.”

Since Trump’s election, the S&P 500 has risen by 10%, posting 17 record closes in a rally that’s added $2.8 trillion in value to the U.S. equity market, with economists divided on how much of the rally is due to hopes from Trump’s pro-growth promises, how much due to corporate earnings growth (which are expected to rise 12% from last year’s energy-depressed levels), and how much due to the organic growth of the economy.

While it isn’t considered a State of the Union address since it falls within Trump’s first year, the initial speech to Congress has been no less important to presidents in the modern era.

The biggest wildcard, as documented over the past few months, are the details on Trump’s growth plan, with an emphasis on his proposed tax and spending cuts, offsetting the aforementioned $54 billion increase in defense spending, all of which so far have been sorely lacking.

Indeed, as Ryan Littlestone from ForexLive notes, if you want to trade this, look to see if he can highlight those areas for cuts rather than milking other genuine programs. If he does that then we’ve got a trade on, and possibly one that will really take off. “If he fails to give any real details, the dollar and the Trump trade could be in bigly trouble once again.”

Many others agree: “It’s possible that if the market hadn’t been rising so dramatically, we could wait,” said Quincy Krosby, a market strategist at Prudential Financial Inc., which oversees about $1.3 trillion. “But this is a market that’s pretty impatient and wants results.”

As Bloomberg adds, adding to the anxiety are differing views on how to proceed on tax reform. House Republicans are considering a border-adjustment tax proposal that shifts the burden from exporters to importers, arguing that it would benefit American manufacturing while providing revenue to make up for losses from reducing corporate-tax rates. Trump has called the plan “too complicated.” Meanwhile, as the debate grows, traders have reduced bullish wagers on the dollar, which is expected to soar as much as 15-20% should a BAT be passed. The dolalr has dropped 3.3% since January, after surging 6.5% after the Nov. 8 presidential vote. Hedge funds and other large speculators have cut cut net bullish dollar bets to the least since before the election.

“There is only so long the market will bid the dollar higher on the promise of something,” said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA in London. “They will want detail. And if it’s not forthcoming, then it’s a little bit like the boy who cried wolf.”

Inflation expectations have similarly taken a breather in recent months after jumping to the highest in two years in the weeks following the election.

A major risk should Trump disappoint tomorrow, is a waterfall effect across equities, where VIX has recently tumbled near record lows. As a result, complacency has emerged as the biggest risks, according to John Canally, chief economic strategist at LPL Financial in Boston. As Bloomberg notes, the VIX is headed for the lowest yearly average on record.

“Everyone is wondering why equity market volatility is so low given the uncertainty out there,” said Canally. “The economy is not in dire need of a tax cut, but maybe his speech could be a catalyst” for an uptick in volatility, he said.

David Woo, head of global rates and FX at bofA told Bloomberg that Trump’s desire for a tax plan before the August break means it is likely that the president lays out at least a “skeleton” of the program on Tuesday. If Trump does provide more clarity on his tax and growth plans, that raises the risk that the Federal Reserve will be more willing to increase interest rates, Woo said. Traders currently assign about a 40 percent probability for a hike at the Fed’s March 15 policy meeting.

“There is a lot riding on Tuesday,” said Woo. “The consequences for some kind of plan being unveiled will be massive. You will see volatility really going through the roof if he does so.”

* * *

That said, according to a broad consensus of Wall Street analysts, Trump’s Tuesday address to Congress will likely offer more rhetoric than details on policy. Bank shares may move if Trump shows the economy is high on his priority list, and if he reaches across the aisle, which may signal his administration is capable of meeting its goals. Since Trump’s Nov. 8 election, the KBW bank index (BKX) has gained 28%, with top gainers including SVB Financial, BofA, Regions, Huntington and Zions.

Below is an excerpt of what select Wall Street analysts believe will emerge from Trump’s speech tomorrow:

COWEN (Chris Krueger)

  • Speech may feature more optimism than the Inaugural’s pessimism; may be “more Shining City on a Hill than Country = Dumpster Fire”
  • Trump’s “America First” rhetoric may be heavy on adjectives, light on policy details; probably won’t mention a border adjustment tax (BAT)
  • Language in sync with Friday’s CPAC address is likely

CLSA (Mike Mayo, in email to Bloomberg)

  • Investors want to see that the economy ranks high on the to-do list
  • The further up Trump talks about the economy, the better it is for banks
  • Comments related to deregulation, taxes, oversight and economic growth may all impact bank share trading

KBW (Brian Gardner)

  • Doesn’t expect specific policy proposals; sees “broadly thematic” speech similar to inaugural address
  • Tax reform discussion probably won’t contain details
  • Watch for whether Trump reaches out to political opponents; if Trump strikes the right message, markets may rally on renewed optimism about administration’s ability to achieve pro-growth portions of its agenda

CAPITAL ALPHA (Charles Gabriel)

  • D.C., Wall Street have differing expectations
  • Capital Alpha expects little clarity on Affordable Care Act or BAT
  • Investors “may settle” for less stridency on trade/immigration

BEACON POLICY ADVISORS

  • Trump is still “a big picture leader,” and is unlikely to dive too deeply into policy details (despite promises from aides his remarks will be more focused than previous speeches)
  • Speech will be written by Stephen Miller, who wrote Trump’s “dark, and policy non-specific,” inaugural address, and who’s likely more interested in Trump’s base than the media and Congress
  • Watching for potential Democratic “outbursts”

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Here’s one alternative, but it’s extremely unpopular

It’s my usual custom whenever I land at a major airport to stop by the rental car counters and inquire how much it costs to rent a vehicle.

For me this is a sort of informal, albeit imperfect, economic indicator.

High prices suggest strong demand from plenty of business travelers and tourists, which will likely have a positive economic impact.

Cheap prices, conversely, suggest that there’s something wrong.

Well, there’s definitely something wrong in Mexico.

When I stopped by the counter the other day at Mexico City’s airport, I was stunned to learn that my rental car would cost a whopping $1 per day.

$1.

I’m serious, that’s not a type-o. I’m not missing any zeros.

$1 was the daily rate to rent a full-size Mercedes C Class vehicle. It was unbelievable; the car depreciates more than that in a couple of hours.

And the rest of my experience in Mexico has been similar.

Food costs nothing. Rent costs nothing. Everything is just astonishingly cheap… if you’re spending US dollars.

In Mexican peso terms, prices have actually gone up a bit.

But because the peso has lost more than 25% of its value against the US dollar over the past two years (most of that since the November US Presidential election), foreigners get an unbelievable deal here.

This is an anomaly that absolutely will not last.

When I went to Russia last summer at a time when the ruble was just under 70 per dollar (versus its long-time average of 35), I told you that the Russian ruble was unsustainably cheap.

So cheap, in fact, that some of the ruble coins were worth less than their metal content.

Similarly, I wrote to you from South Africa a number of times when the rand had reached an ALL-TIME low against the US dollar and was also unsustainably cheap.

Neither of these anomalies lasted; both currencies are up more than 20%.

It’s highly unlikely that Mexico will stay this cheap indefinitely, and why my analysts and I are looking at assets in the country.

Note- I’m not recommending that you buy anything in Mexico, or even the currency. I don’t even like currency speculation.

I primarily want to point out that there can often be very lucrative opportunities whenever something becomes unsustainably cheap.

Last week I wrote to you a few times about how OVERVALUED, i.e. unsustainably expensive, the US stock market has become.

Big companies have been borrowing billions of dollars to artificially inflate their stock prices and manufacture phony dividends.

And the average company in the S&P 500 now trades at a multiple of 26.5x its annual profits— 70% higher than the long-term average of 15.6.

What’s even more interesting is that Vanguard, the investment management company famous for its low-cost mutual funds, announced two weeks ago that it just hit $4 TRILLION in total assets under management.

This suggests retail investors are piling into the stock market at its all-time high.

Again, few people ever became rich buying what’s popular.

One alternative is to buy what’s UNPOPULAR, i.e. high quality assets that are unsustainably cheap.

In real estate, for example, I always look for properties that are selling for less than the cost of construction.

(We’ve found a number of these in Mexico– Sovereign Man: Confidential members, stay tuned.)

With stocks, we look for profitable companies whose share prices have been beaten down by the market to absolutely absurd levels.

As I explained in a podcast last month, I look for well-managed companies with minimal debt that have a low, single-digit multiple of Enterprise Value to Free Cash Flow.

Our Chief Investment Strategic Tim Staermose is even more strict, sniffing out companies that are selling for less than the amount of cash they have in the bank.

One example we’ve cited in the past was an Asian company called Nam Tai, which had a $261 million bank balance, plus another $200+ million in real estate assets.

Yet the market value of the company was just $204 million– $57 million LESS than the company’s bank balance.

At that ratio it was like buying a dollar for 78 cents.

And, unsurprisingly, Tim and his subscribers doubled their money.

His latest is even more extreme– a profitable Japanese company that pays a healthy 3.6% dividend, yet is selling for an astonishing 48% discount to its bank balance.

It’s like buying a dollar for less than 59 cents.

Even if the stock price simply returns to parity with its net cash, we’re looking at a potential 70% return. Plus we get paid 3.6% while we wait.

But the most important part of this deep value strategy isn’t the prospective returns. It’s the “risk-adjusted” return.

Even though stocks are overvalued and at their all-time highs, it’s possible the market goes up another 20%. Perhaps even 50%.

However it’s also possible it drops 40% or more. At this level the “risk-adjusted” return is not especially compelling.

But if you buy a dollar for 59 cents, i.e. shares of a healthy, well-managed, profitable company whose share price is unsustainably cheap, then most of the downside has already occurred.

This is why deep value investing is a sensible, long-term strategy: you reduce your downside risk while leaving the door open for plenty of upside.

It’s a great alternative to buying expensive, popular investments.

All it requires it requires is a bit of education (try Benjamin Graham’s The Intelligent Investor) and the willingness to put in the work.

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