Ok, it was a crazy weekend with lots of things sensitive to national security taking place. Let’s get you up to speed.

The fake news main stream media is ignoring the real scandal, which is the unmasking of Trump during ‘incidental’ surveillance by our intelliegence agencies. When Chairman Nunes came out and told you that some very troubling surveillance had been taking place against Trump, which was not related to national security, the DNC controlled media tied themselves into little pretzels of rage because it validated what Trump was saying all along — that he’d been ‘wiretapped.’

What happened next is lunacy prevailed inside the democratic party, amplified by the media. Instead of investigating who ordered the unmasking of Trump and who leaked this information, the media wanted to know who told Nunes. You can’t make this stuff up. Ignore the crime, go after the whistleblower.

But now the pieces are beginning to fall into place.

Fox News is reporting that an ‘unprecedented’ amount of spying was being done on Donald Trump — for up to a year before the inauguration. Think about that for a second. None of this, according to Fox’s sources, was related to national security or MUH Russia.

“Electronic surveillance of Trump and supporters for up to a year before inaugurartion. That information was disseminated through NSA channels.”

.@FoxNews from multiple sources: “There was electronic surveillance of Trump, and people close to Trump. This is unprecedented.” @FBI

— Donald J. Trump (@realDonaldTrump) April 3, 2017

Mike Cernovich broke a story last night that the person to authorize the unmasking of Trump was none other than Obama’s National Security Advisor, Susan Rice. More than that, Katie Walsh, former White House’s deputy chief of staff for Reince Priebus, was, in fact, the conduit working between Rice and Maggie Haberman from the NY Times. Last week, the White House became aware of this connection and summarily fired Walsh. According to Cernovich, the treachery doesn’t end there. In fact, Reince Priebus hired Walsh and might be involved in undermining the Trump team as well.

Now on the conspiratorial end of things, the tweets of some random person imaging what might’ve happened between Russia and the Trump administration garnered the attention of General Flynn, causing him to follow him on Twitter.

His stream of consciousness is posted below. In a nut shell, he said Russia told Trump that Watergate level spying was being done against him by Obama, but the Trump team couldn’t say anything before election because Russia was made toxic by media and democrats.

This all has a feeling of imminence.

Content originally generated at iBankCoin.com

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Authored by Howard Kunstler via Kunstler.com,

It ought to be sign of just how delusional the nation is these days that Elon Musk of Tesla and Space X is taken seriously. Musk continues to dangle his fantasy of travel to Mars before a country that can barely get its shit together on Planet Earth, and the Tesla car represents one of the main reasons for it — namely, that we’ll do anything to preserve, maintain, and defend our addiction to incessant and pointless motoring (and nothing to devise a saner living arrangement).

Even people with Ivy League educations believe that the electric car is a “solution” to our basic economic quandary, which is to keep all the accessories and furnishings of suburbia running at all costs in the face of problems with fossil fuels, especially climate change. First, understand how the Tesla car and electric motoring are bound up in our culture of virtue signaling, the main motivational feature of political correctness. Virtue signaling is a status acquisition racket. In this case, you get social brownie points for indicating that you’re on-board with “clean energy,” you’re “green,” “an environmentalist,” “Earth –friendly.” Ordinary schmoes can drive a Prius for their brownie points. But the Tesla driver gets all that and much more: the envy of the Prius drivers!

This is all horse shit, of course, because there’s nothing green or Earth-friendly about Tesla cars, or electric cars in general. Evidently, many Americans think these cars run on batteries. No they don’t. Not really. The battery is just a storage unit for electricity that comes from power plants that burn something, or from hydroelectric installations like Hoover Dam, with its problems of declining reservoir levels and aging re-bar concrete construction. A lot of what gets burned for electric power is coal. Connect the dots. Also consider the embedded energy that it takes to just manufacture the cars. That had to come from somewhere, too.

The Silicon Valley executive who drives a Tesla gets to feel good about him/her/zheself without doing anything to change him/her/zhe’s way of life. All it requires is the $101,500 entry price for the cheapest model. For many Silicon Valley execs, this might be walking-around money. For the masses of Flyover Deplorables that’s just another impossible dream in a growing list of dissolving comforts and conveniences.

In fact, the mass motoring paradigm in the USA is already failing not on the basis of what kind of fuel the car runs on but on the financing end. Americans are used to buying cars on installment loans and, as the middle class implosion continues, there are fewer and fewer Americans who qualify to borrow. The regular car industry (gasoline branch) has been trying to work around this reality for years by enabling sketchier loans for ever-sketchier customers — like, seven years for a used car. The borrower in such a deal is sure to be “underwater” with collateral (the car) that is close to worthless well before the loan can be extinguished. We’re beginning to see the fruits of this racket just now, as these longer-termed loans start to age out. On top of that, a lot of these janky loans were bundled into tradable securities just like the janky mortgage loans that set off the banking fiasco of 2008. Wait for that to blow.

What much of America refuses to consider in the face of all this is that there’s another way to inhabit the landscape: walkable neighborhoods, towns, and cities with some kind of public transit. Some Millennials gravitate to places designed along these lines because they grew up in the ‘burbs and they know full well the social nullity induced there. But the rest of America is still committed to the greatest misallocation of resources in the history of the world: suburban living. And tragically, of course, we’re kind of stuck with all that “infrastructure” for daily life. It’s already built out! Part of Donald Trump’s appeal was his promise to keep its furnishings in working order.

All of this remains to be sorted out. The political disorder currently roiling America is there because the contradictions in our national life have become so starkly obvious, and the first thing to crack is the political consensus that allows business-as-usual to keep chugging along. The political turmoil will only accelerate the accompanying economic turmoil that drives it in a self-reinforcing feedback loop. That dynamic has a long way to go before any of these issues resolved satisfactorily.

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Judge Gorsuch’s confirmation vote, expected to be held in the Senate later this week, could have far-reaching legislative consequences well beyond the make up of the Supreme Court.  With Democrats vowing to “fight tooth and nail,” as Chuck Schumer would say, to filibuster Gorsuch, Republicans are likely to pursue the “nuclear option” to secure his nomination, a move that would eliminate the 60-vote threshold for Supreme Court nominees.

But several senators are warning that bypassing the Senate’s filibuster rules for Gorsuch’s vote, a move that Democrats utilized multiple times as well, is a slippery slope that would inevitably lead to calls to eliminate the filibuster for legislation as well so that bills could pass with a simple majority. Such a change would remove the last vestige of the Senate’s long tradition of protecting minority views, turning it into a smaller version of the House and fundamentally transforming the way laws are made.  Per The Hill:

“The thing I worry most about is that we become we like the House of Representatives. What’s the next step? Legislation?” said Sen. John McCain (R-Ariz.).

 

“I’m convinced it’s a slippery slope.”

 

Sen. Bob Corker (R-Tenn.) warned last week on the Senate floor that growing pressure from the right and the left will make it difficult to withstand calls to eliminate the legislative filibuster.

 

“If we continue on the path we’re on right now, the very next time there’s a legislative proposal that one side of the aisle feels is so important they cannot let their base down, the pressure builds, then we’re going to vote the nuclear option on the legislative piece,” he said.

 

“That’s what will happen. Somebody will do it.”

Of course, the likelihood of Gorsuch being confirmed absent the “nuclear option” are looking fairly slim with Senators McCaskill (D-MO) and Tester (D-Mont.) both confirming they’ll oppose his nomination.

Republicans need 60 votes to overcome the filibuster backed by Senate Democratic Leader Charles Schumer (N.Y.), who on Sunday said it is “highly, highly unlikely” that Republicans will get there.

 

Sen. Claire McCaskill (D-Mo.) on Friday and Sen. Jon Tester (D-Mont.) on Sunday said they would oppose Gorsuch and back a filibuster. The decisions by the two senators, who both face reelection next year in states won by Trump, seem to back Schumer’s words up.

 

Republicans need to find another six votes to invoke cloture, and they have few options left.

 

Sen. Patrick Leahy (D-Vt.), a former chairman of the Judiciary Committee, has sent mixed signals over whether he’d back the filibuster.

 

Sen. Michael Bennet (D-Colo.), who represents Gorsuch’s home state, is an unknown, as are Sen. Chris Coons (D-Del.), Mark Warner (D-Va.) and Angus King (I-Maine).

 

And while a couple of Democrats from key swing states have said they’ll support Gorsuch, their support is not enough to get Republicans the 60 votes they need.

Sen. Joe Manchin (D-W.Va.), one of only three Democrats who have explicitly said they’d oppose a filibuster of Gorsuch, warns the Senate is in danger of becoming a smaller version of the House, where the minority party has few rights.

 

“People who have been here for a long time know that we’re going down the wrong path here. The most unique political body in the world, the United States Senate, will be no more than a six-year term in the House,” he said.

 

“I’m doing whatever I can to preserve he 60-vote rule,” he said.

 

Sen. Heidi Heitkamp (D-N.D.), who like Manchin says she will vote to allow Gorsuch’s nomination to move forward, said she is also concerned about the legislative filibuster.

 

“This erosion that seems to be happening, of course I’m worried about it,” she said. 

 

Gorsuch picked up a third Democratic vote on Sunday when Sen. Joe Donnelly (Ind.) said he would back him.

But, not everyone is opposed to “going nuclear”.  Former Representative Matt Salmon (R-Ariz.) said the filibuster was created to protect the minority party “in extreme circumstances” but has morphed into a partisan tool that simply creates deadlock in Washington D.C.  “It’s become so common place to block just about everything including even appropriation bills so that the Congress can’t get its work done. The filibuster as it’s currently used has really worn out its welcome,” he said in an interview.

Meanwhile, Wisconsin Governor Scott Walker (R) has also called on Republicans to ditch the filibuster saying “my biggest concern is that they not allow some of these arcane rules that have nothing to do with the Constitution.”

Harry Reid was also a big fan of eliminating the filibuster, saying “You can’t have a democracy decided by 60 out of 100, and that’s why changing the rules is one of the best things that has happened to America in a long time.”

Of course, as the saying goes, “what’s good for the goose is good for the gander”…so Republicans may be best served to remember they won’t hold control of the Senate forever.

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US equities have erased all the gains since the pulled-Obamacare-repeal vote as VIX pushes well above 13…

 

 

It appears reality is setting in that perhaps a fractured GOP is not the best environment for a tax reform package that is more than priced in.

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Welcome to a new financial quarter.

As part of the usual review of last month and Q1 asset performance, it is worth nothing one surprising element of Q1 we showed over the weekend, namely that the VIX index had its lowest average quarter since Q4 2006.

According to Jim Reid, who is perplex by this collapse in equity vol, “data best predicts where equity vol will trade but we’ve been surprised that there hasn’t been the odd spike up given the political uncertainties on both sides of the Atlantic. Data is winning out for now.” We will have more to say on the technical aspects of why equity vol appears to have gone on a permanent sabbatical shortly, but for now, here is a recap of March and Q1 2017 performance:

The month of March has been another mixed to positive one for our sample of assets. While political developments and particularly those related to the Trump presidency have continued to drive the performance and sentiment of assets to some degree, global economic data continues to hold up well which in turn is helping to support a positive backdrop for most risk assets. In addition, the incredibly low level of volatility throughout markets has remained a major theme throughout the month. Indeed the VIX had its lowest average in Q1 since Q4 2006. In summary we have seen 20 of our 39 assets finish the month with a positive return in local currency terms but a greater number (26 out of 39) finish with a positive return in dollar terms, given the stronger euro (+1%), yen (+1%) and sterling (+1%) during March.

Looking closer at the performance in March first, there’s a fairly consistent theme which plays out across the top of our leaderboard and that is the strong performance for European equities, likely reflecting solid economic data and reduced political concerns, particularly in France. Indeed in dollar terms the IBEX (+10%), FTSE MIB (+9%), Portugal General (+8%) and European Banks (+7%) are our top 4 performers in March. Closely following these markets are the DAX (+5%) and Stoxx 600 (+4%), with EM assets not far behind with EM equities (+3%) and EM bonds (+2%) having a strong month also. This likely reflects broadly stable economic data in China and the emphasis of a gradual profile of tightening by the Fed and lower Treasury yields. In contrast, the S&P 500 ended the month flat in total return terms.

At the bottom of our leaderboard, despite a rebound into the end of the month, both WTI (-7%) and Brent (-6%) have suffered sharp declines perhaps from fading optimism around the effectiveness of the OPEC production cut deal. In fact commodities largely dominate the bottom of the leaderboard with Copper (-2%), Corn (-1%), Silver (0%), Wheat (0%) and Gold (0%) all flat to slightly down. It’s worth noting however that these moves follow what has generally been a strong start to the year for the commodity complex.

Meanwhile performance across fixed income assets has been much more muted in March. In sovereign bond markets both European bonds and Treasuries sit in the 0% to +1% range with yields still continuing to remain fairly range bound. With credit spreads already tight, total returns for credit markets were fairly subdued through March. European credit has outperformed the US though with Fin Sub and HY +1% to +2% and Fin Sen and IG Non-Fin up to +1% higher. In contrast US credit sits in the bottom half of our leaderboard with total returns in the 0% to -1% range. US HY has recently seen large outflows and renewed energy concerns given lower oil prices.

That takes us to performance for Q1 which was a positive one for the vast majority  of our assets. Indeed in dollar terms 33 out of our 39 assets in our sample ended the quarter with a positive total return. While Silver (+15%) actually led the way the dominant theme was the strong performance for equities, particularly in the periphery, EM and Asia. Indeed the IBEX (+14%), EM Equities (+12%), Bovespa (+12%) and Hang Seng (+10%) were all up double digits in Q1. That’s not to say that it hasn’t been a strong quarter for DM equities. The Stoxx 600 (+8%) and S&P 500 (+6%) have both provided investors with  healthy returns while it’s also worth highlighting the decent performance for European Banks (+8%) over this period. Credit returns have been a lot more muted. Still, returns across European and US indices have been +1% to +3% in total return terms, led by higher beta HY and Fin Sub. In contrast Treasuries and Bunds have returned less than +1%.

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Interested in precious metals investing or storage? Contact us HERE 

 

 

 

 

Trudeau to Trump: Drop Dead! (Implications for Gold)

Written by Peter Diekmeyer (CLICK HERE FOR ORIGINAL)

 

 

Forty years ago, the Daily News published its famous Ford to City: Drop Dead headline, which dealt with President Gerald Ford’s response to a New York City handout request.

 

 

The article recalls Canadian Prime Minister Justin Trudeau’s message to US President Donald Trump, who has been seeking help to relieve America’s defence forces.

Trudeau’s blunt reply, delivered in last week’s Liberal budget, came in the form of vast cuts to Canada’s military spending. Just as important as the scale of the cuts was the timing, which came shortly after the US President had demanded an increase.

This sharp rebuttal has important implications for how a Trump Administration’s policies could play out on the world stage, the US economy, and yes, for gold.

First, a little background.

 

Donald Trump’s threats

America is widely criticized for its wars, occupations, and bombings. However, the country also plays a crucial role as a global cop, which on balance, does a lot more good than bad, particularly for rich Western economies.

American soldiers guard the world’s sea lanes, keeping commerce safe. Its bases in more than 100 countries help keep a range of governments in power, which are favorable to US (and Canadian) interests.

But that costs a lot of money, and American taxpayers have been footing much of the bill. American military spending, as a percentage of GDP, is roughly triple that of what other NATO counties pay, possibly more.

(The precise total is hard to determine, because reported US defence outlays exclude items such as nuclear weapons, military pensions, supplemental allocations, and the like).

Trump has demanded that NATO allies, which have been freeloading on the back of US protection, ante up. His key demand is that they abide by a target set more than a decade ago: to spend 2% of their GDPs on defence.

More important, Trump threatened to withdraw protection for laggards by hinting that the United States might not feel bound to defend countries that didn’t meet their 2% commitments.

There’s method to Trump’s madness. Lost in his bellicose rhetoric is the fact that if NATO members adhere to his demands, it would generate huge business for American defence contractors, who produce much of the world’s best equipment.

Trump’s request, in short, is for foreign help to bail out America’s military industrial complex.

 

Trudeau’s response: smile, shake hands and cut defence spending

Like Gerald Ford before him, Justin Trudeau never actually voiced the words “Drop Dead.” In fact Trudeau’s recent meeting with the US president was characterized by smiles, much-publicized handshakes, and a co-announcement with a swooning Ivanka Trump of a new initiative to advance women’s rights.

Then Trudeau got on a plane, went home, and did exactly the opposite of what Trump demanded. Worse, the $8.4 billion in “re-profilings” that Trudeau’s government announced amount to the largest defence cuts in recent history.

Canada has no enemies to defend against, Trudeau is betting. Even if it did, with time and winter as our allies, Canada could defeat any invading force, the thinking goes.

 

Implications for gold and the economy

Trudeau’s slap in the face of a nascent Trump Administration has huge implications for its agenda going forward. The most obvious of these relates to Trump’s “America First,” trade policies.

As previously highlighted (see Smoot-Hawley, Donald Trump’s economic mentors), the idea that the United States can set up trade barriers without encountering serious retaliation is a pipe dream.

Unless Trump changes his bullying tactics, he is similarly unlikely to get his way with Congress. Like Trudeau, US Senators (both Republicans and Democrats) will simply smile at his tax cut, health care, and deregulation proposals, play along, and then filibuster to ensure they never make it to the floor.

There’s even a takeaway for investors worried that Trump, who is facing the same liquidity trap that Franklin Delano Roosevelt faced during the 1930s, might similarly respond by seizing Americans’ gold.

Because a Trudeau government that ignores Trump’s threats on defence provides a strong signal that it would also be unlikely to comply with US expropriation requests related to American gold stored in Canada.

Trump is a quick learner. But whether he can adjust his tactics fast enough to force a shift in Canadian policy remains an open question.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

Trudeau to Trump: Drop Dead! (Implications for Gold)

Written by Peter Diekmeyer (CLICK HERE FOR ORIGINAL)

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OPEC’s progress in reducing the oversupply in global oil markets relied on contributions from Nigeria and Libya in March, two countries that are exempt from the group’s deal to rein in production.

The Organization of Petroleum Exporting Countries pumped 32.095 million barrels a day, down 200,000 a day from February, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Supply from Nigeria and Libya dropped by a combined 210,000 barrels a day to 1.55 million and 620,000 a day, respectively.

Among the 10 members bound by production caps, compliance weakened to 89 percent of pledged reductions from 104 percent, the survey showed. As well as the two African countries, Saudi Arabia buoyed the group’s effort by cutting its own output by more than it agreed late last year.

Which raises the question, as Rakesh Upadhyay of OilPrice.com asks, is this the end of OPEC?

OPEC, which has far exceeded the average life of cartels, is on the brink of failure. Though cracks have been developing in the cartel since the start of the current oil crisis, the group has managed to stay together so far. Nevertheless, the success of the current OPEC deal for production cuts will decide its future as a cartel.

What is a cartel?

A cartel is a group of like-minded producers, who act in concert—or collusion—to achieve a shared goal of increasing their profits by means of restricting supply, fixing prices, or destroying their competition by illegal means. The average life of the 20th Century cartels has been 3.7 to 7.5 years, according to various studies by Margaret Levenstein and Valerie Suslow. In the past two centuries, cartels have been able to influence prices by an average of 25 percent.

History of OPEC’s success in boosting oil prices

Since its inception, OPEC has been fairly successful in boosting prices by various means. A few of the price increases, however, were due to reasons other than direct OPEC action, nevertheless benefitting their members.

Though the 1973 oil embargo was brought on by political reasons, OPEC used the production cuts of the embargo to boost oil prices from $3 a barrel in 1973 to $12 a barrel in 1974.

The 1979 energy crisis was not a brainchild of OPEC. The production dropped due to the Iran-Iraq war, and the price of oil doubled in about 12 months, again benefitting OPEC members.

OPEC was able to boost prices using production quotas and production cuts following the Asian Financial Crisis in 1997.

What has OPEC done to support oil prices in the current oil crisis?

OPEC, as any cartel would, has used two strategies to influence oil prices. However, both have been unsuccessful in achieving their objectives.

In 2014, Saudi Arabia, the de facto leader of OPEC, attempted to stifle the competition of the shale oil drillers by keeping their production intact. As a result, oil prices plummeted to multi-year lows of about $27 a barrel in February 2016. The drop in oil prices saw 119 North American oil and gas producers file for bankruptcy from the beginning of 2015, according to Haynes and Boone, LLP.

U.S. oil production dropped about 883,000 barrels a day by August 2016, after topping out at 9.7 million barrels a day in April 2015. Nevertheless, the price decrease went well below OPEC’s expectations. Meanwhile, many shale oil drillers used a combination of better technology and hedging to continue pumping oil, despite the low prices.

As its first strategy failed to effect the U.S. shale oil production to the extent presumed, OPEC then adopted a second strategy of cutting production. On November 30, OPEC sealed a deal to cut production after months of difficult negotiation. Though prices bounced and broke out of the $52 levels – a strong resistance – they could not reach the $60 levels preferred by OPEC members.

However, this modest rally in crude oil prices rejuvenated the U.S. shale oil drillers, and U.S. oil production is now on the rise. As a result, crude oil has dipped again and is hovering near the $50 per barrel level.

The market believes that if crude oil prices remain above $50 per barrel, U.S. shale oil production will increase. For this reason, OPEC is finding itself in a catch-22 situation: It is losing market share to the U.S. shale oil drillers, but it is unable to propel prices considerably higher. It is losing its ability to influence prices above a certain level. Related: What Gold Can Tell You About Oil Prices

What happens if the Cartel fails in its objective

A cartel is able to hold its members only when it fulfills their objective of higher prices, which has not been the case with OPEC. The member nations will now look to fulfill their objective by cheating and acting individually, according to their requirement.

Saudi Arabia, which was the leader of OPEC and the price setter of the world, is losing its clout in OPEC. Even in the current round of production cuts, most of the work is being done by Saudi Arabia, whereas the other members are shying away from their designated quotas.

OPEC has far outlived the average lifespan of a cartel, but if the OPEC members don’t regroup and act together, chances are that the cartel will come to an end very soon.

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Both VIX (equity protection) and CDX (credit protection) decoupled notably from equity indices late last week and today it appears investors are catching on today…

 

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In addition to Amazon hitting its now daily all time high, today the tech online retail that recently made Jeff Bezos that second richest man in the world was joined by Tesla, whose shares just hit a new all time high above $292, surging over 5% on the day, following Sunday’s report that first-quarter vehicle deliveries jumped 69% from a year ago to a quarterly record of 25,000 vehicles, bouncing back from delays in the previous quarter.

The company said of the total vehicles delivered, about 13,450 were Model S sedan and about 11,550 were Model X sports utility vehicle. Tesla has said it expects to deliver 47,000 to 50,000 Model S and Model X vehicles combined in the first half of 2017, and so far it appears on track even as the rest of March numbers for other OEMs are coming in weaker for the past month.

As a reminder, in Q4, Tesla deliveries had fallen 9.4 percent due to short-term production hurdles from the transition to a new autopilot hardware. Tesla had said production challenges, which started at the end of October and lasted through early December, shifted vehicle production towards the end of the fourth quarter, resulting in delayed deliveries.

According to Reuters, about 2,750 vehicles were missed being counted as deliveries in the fourth quarter either due to last-minute delays in transport or because the customer was unable to physically take delivery. In addition to the first quarter deliveries, about 4,650 vehicles were in transit to customers at the end of the quarter and will be counted as deliveries in the second quarter, Tesla said in a statement on Sunday.

Production in the first quarter also hit a quarterly record at 25,418 vehicles. Tesla Chief Executive Elon Musk has taken big risks repeatedly since going public in 2010, but investors got spooked after he said in February the electric car company could get “close to the edge” as it burns cash ahead of its crucial Model 3 launch.

Last week, China’s Tencent Holdings announced it had bought a 5% stake in Tesla last week for $1.78 billion, providing the company with much needed liquidity and a wealthy ally as it prepares to launch its mass-market Model 3. The midsize, high-volume Model 3 sedan is due to go on sale later this year in the United States.

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