Facebook Tumbles After Daily Users Miss, Zuck Warns “Users Spending Less Time” On Site

Amid Capitol Hill hearings, shifts in the news strategy, promoting local content, kicking out Russian spies and banning bitcoin ads, Facebook managed to beat Q4 revenue expectations, with Revenue printing st $12.97BN, above the $12.55BN estimate, however EPS missed, coming in at $1.44, below the $1.95 expected as a result of the impact of tax provision on the company, which increased by $2.27 billion.

What is more concerning is that for the first time in years, facebook daily active users missed estimates:

  • Daily active users came in at 1.40 billion, just shy of the 1.41 billion expected.
  • Monthly active users came in line with expectations at 2.13BN
  • Mobile ad revenue as a percentage of total was 89%; Facebook reported that Q4 ad revenue was $12.78 billion.

Commenting on the results, Zuckerberg said that “2017 was a strong year for Facebook, but it was also a hard one. In 2018, we’re focused on making sure Facebook isn’t just fun to use, but also good for people’s well-being and for society. We’re doing this by encouraging meaningful connections between people rather than passive consumption of content. Already last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent.”

But more than the DAU and EPS miss, this is why the stock is tumbling after hours, from Zuckerberg.

“In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term.”

In immediate reaction the stock is sharply lower, and is dragging the Nasdaq along with it.


via RSS http://ift.tt/2DRCEtf Tyler Durden

Dow Soars To Best January Since 1997, Bonds’ Worst Start In 25 Years

January summed up… Bonds worst January since 1992… Dow’s best January since 1997… Dollar’s worst January since 1987…

Phew… that was quite a month…

Records busted everywhere…

And the S&P is now on a 15-month win-streak (never happened before) and is up for 22 of the last 23 months – since The Shanghai Accord in Feb 2016!!

But the month ended ugly with the last few days setting up for the S&P’s worst weekly loss since 11/4/16 (the week before the election)…

Greenspan spooked stocks this afternoon…but they were rescued into the green…


The S&P 500 has had two consecutive 50bp+ selloffs this week for the first time since 2016

Notably, The Dow has dramatically outperformed Trannies in January back to a historical resistance level…


Boeing rescued The Dow by adding around 100 points of gains today…


China continues to suffer with Shenzhen and CSI-300 now down YTD…



And Volatility’s biggest monthly jump since Aug 2015’s China Devaluation Crash…


And vols across all assets spiked in Jan…


Bonds are now the most oversold since the election in Nov 2016…


Which is understandable after the worst start to a year since 1992 (based on Lehman Agg)…



Today saw the long-end rally and short-end dump as the curve flattened dramatically…


2s30s is at its flattest since Oct 2007… January is the 6th monthly flattening in a row (9 of 10 and 12 of 13)



The Dollar Index was monkey-hammered in January – its worst January since 1987

Cable is up 5% in January and the best performing major against the dollar…


Despite the dollar weakness, Copper ended the month lower (worst since Sept) as gold, silver and crude jumped…


As Gold notably outperformed Bitcoin…


Finally, it’s been an ugly month for many cryptocurrencies, but Ethereum managed to gain 45% YTD…



Bitcoin ends back below $10,000 – suffering the worst monthly loss since Dec 2013…




via RSS http://ift.tt/2FxYePK Tyler Durden

This Boring British Cops Clone May Show the Future of American Mass Surveillance

BBC’s popular reality show Traffic Cops is not so far from what a stereotype-inclined American might imagine if told “it’s like Cops, but British.” It also shows a worrying future-that-might-be of mass surveillance in America.

Traffic Cops may not be a montage of helmeted and mustachioed bobbies puffing after pickpocketing orphans on cobblestoned streets. But to American eyes, the constables of Traffic Cops do seem terribly proper and polite. Compared to the show’s ever-controversial American cousin, there’s very little shouting, wrestling, cracking of skulls, or brandishing of firearms.

In fact, to Americans used to seeing copious amounts of such activities in our cop shows, Traffic Cops (and its spinoff, Motorway Cops) can seem downright boring. Sure, you get the occasional familiar chase-bail-run-tackle sequence. But thanks to strict national restrictions on engaging in high-speed chases, pursuits often end with the cops taking down a plate number and letting the fugitive drive away.

This might sound like a pleasant alternative to American civil libertarians, but there’s a sinister twist that sours the picture: mass surveillance. The really boring thing about the show is how much time the constables spend just waiting for alerts from Britain’s driver surveillance network to pop up on their squad-car screens.

Some background: Britain’s major roads are among the most heavily surveilled on earth. Every day, more than 8,500 Automated Number Plate Recognition (ANPR) devices placed along the country’s roads and in police vehicles read and store the location of between 25 and 35 million license plates, potentially capturing more than half of Britain’s entire population of 65 million.

Driving in the United Kingdom is also regulated more heavily than in many parts of the U.S. In addition to being licensed and insured, British drivers must pay an annual per-vehicle excise tax meant to discourage private car ownership. The Ministry of Transportation is also supposed to inspect each car annually for compliance with environmental standards.

The Ministry of Transporation and the United Kingdom’s tax collection service share all their vehicle data with a vast law enforcement data management system called the Police National Computer (PNC). All private car insurers are required to do this as well.

And the PNC is connected, of course, to the ANPR network. As such, the ANPR cameras are able to determine, within moments, the license, insurance, tax, and inspection status of every car they see. When the system spots a violation, it alerts the Traffic Cops.

Occasionally, the ANPR helps the cops recover a stolen vehicle or locate a missing person. At other times it flags cars “known to be associated with drugs,” cars possessed by people with unpaid tax debt, and cars whose owners have a history of “anti-social driving,” whatever that is.

But the great majority of the infractions it uncovers seem to involve skirting the high costs of compliance with Britain’s burdensome driving regulation scheme. To judge from the show, the typical penalty seems to be a stiff fine and seizure of the car—a punishment the cops readily explain (with exquisite politeness) is imposed purely as a deterrent.

In straight-to-camera bits filmed in the backs of police cars, “outlaw drivers” often confess that they haven’t paid their road tax or renewed their inspection because they can’t afford to, but still need to drive to get to work, take children to school, and so on. The cops nod sympathetically while writing out the ticket and calling the tow truck. These encounters typically end with frustrated driver and passenger standing by the side of the road as the constable, driving off, shakes his head sadly and reminds the audience that “driving is a privilege, not a right.”

What’s perhaps most unsettling about this routine is how mundane it all is. The whole process, played out time and time again onscreen, is swift, sanitary, official, and polite. There’s an insight here on how a whole nation quietly acquiesced to such snooping. Not only is it “for your safety,” it’s just really, really dull.

Will America’s roads be this surveilled some day? Don’t assume it can’t happen. Forty-one states already use some form of license plate reader technology, often storing the data they collect in databases that other agencies can access. If those systems were to become a British-style integrated spying system, the results would probably look a lot like Traffic Cops.

from Hit & Run http://ift.tt/2Er6txG

Shrinkage & The Fed’s Balance Sheet Promises

Authored by Kevin Muir via The Macro Tourist blog,

Remember all the hullabaloo back in September about the Federal Reserve’s decision to shrink their balance sheet? Believe it or not, it was somewhat of a big deal and many strategists were warning about the lack of support for risk markets from this action.

Here is the actual announcement from the FOMC’s press release:

Effective in October 2017, the Committee directs the Desk to roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing during each calendar month that exceeds $6 billion, and to reinvest in agency mortgage-backed securities the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $4 billion. Small deviations from these amounts for operational reasons are acceptable.

At the time I wasn’t too fussed about the action as reducing a $4.4 trillion balance sheet by $10 billion a month didn’t seem all that important.

But $10 billion is just a start. The Fed’s goal is to eventually reach $50 billion a month, with the program ending in 2020 having hopefully shrunk the balance sheet to $3 trillion.

Now as Jim Bianco likes to remind his readers, no modern economy has successfully retracted their quantitative easing program and significantly reduced their balance sheet, so if the Fed actually follows through with their plan, it will be a first.

There’s all sort of hope that both the ECB and the BoJ, will also reduce their balance sheet expansion in the coming quarters. So on a net basis, global Central Banks will go from stimulating through net quantitative easing, to quantitative tightening.

Here is a chart from BofA Merrill Lynch that predicts G4 Central Bank balance sheet expansion will peak in the 1st quarter of 2018 and then gradually shrink.

Now you might believe this is a good thing, and shouldn’t affect risk markets. In fact, you might even argue that Central Bank quantitative easing is sending the wrong signal to private sector participants, and its removal will allow the economy to grow on its own naturally. That might be the case, and for those of that persuasion, you can probably stop reading now.

I don’t believe that for one second. Although the US economy is finally standing on its own, there is no doubt in my mind that quantitative easing goosed risk assets higher in the years following the Great Financial Crisis. I still remember the initial days of quantitative easing. I would start trading and then mid-morning the stock market would get a strange bid out of nowhere. For a while I couldn’t figure out why it occurred some days and not others. Eventually, I got the Federal Reserve’s Permanent Open Market Operations schedule (POMO) and noticed a direct stock market outperformance on the days when the Fed was injecting liquidity into the system through bond purchases. I don’t know how it was so direct, but after watching and analyzing the data myself, I am 100% convinced that the Fed’s POMO gave a considerable lift to risk assets.


So if I am so sure that quantitative easing caused risk assets to be bid, why hasn’t quantitative tightening caused the opposite effect? With American stocks running like they stole something, it’s tough to argue there is any relation to the Fed’s balance sheet and US stocks recently. And yeah, for a while I assumed that the ECB and BoJ’s balance sheet had overwhelmed the Fed’s scheduled shrinkage.

But then Franz Lischka wrote this terrific post in his blog My Personal Forward Guidance that illuminated the nuances of the Fed’s balance sheet reduction.

As I wrote so often, the Fed’s QT program should be pretty negative for stocks (and high yields) and be pretty positive for US Treasuries. So far, the impact has been limited. BUT, and this may sound like a completely weird statement, I claim that QT, though running for almost 4 months now, has not yet really started. That may sound strange. The Fed has claimed that it would reduce its balance sheets, or rather its security holdings by $10 billion/months from October and $20 billion from the start of January.

So, you would expect bond holdings to be down now by almost $50 billion, which would already be somewhat significant. Well, think again. If you would look at the Fed balance sheet and you wouldn’t know that the Fed claims to reduce its size, you just wouldn’t see it.

Because instead of what you would expect, security holdings since the end of September are down merely $18 billion instead of the expected $50B (the balance sheet as a whole is down by just $14 billion). Bond holdings are still higher than they were at the end of QE and within the range where they had been ever since (shaded blue area). So, all that fuzz about QT has so far been just noise. Nothing else.

How is that possible? Well, 60% of the reduction should have come from US Treasuries ($6 billion / months in Oct-Dec, $12 billion in January). And here the Fed is actually pretty close to its plan. You just have to know that in the first and last month of each quarter the bulk of US Treasuries expires on the last trading day. Holdings are down 18.4B. That’s because most of the $12B reduction planned for January will occur on Jan. 31st. (Which may become the day when QT might actually start in honest.)

The trouble lays with the MBS holdings, which should account for 40% of the reductions. ($4B in Oct-Dec, $8B from Jan). They should now be down by almost $20 billion. Instead they are UP (!!!) by $3 billion!!! Official reason is that MBS bonds usually don’t expire on a planned day, but are most of time redeemed much earlier. (Actually, most of the MBS bonds which the Fed holds have expiry dates in the 2040s. Hardly anything would expire now.) You don’t know when and how much will be redeemed early. So, the Fed relies on estimates. And “unfortunately” the Fed estimated that much more of their holdings would be redeemed than actually where and they therefore reinvested much more than they should have. By such an amount that their holdings actually increased instead of decreased. Sounds strange? Well, for me as well. Especially if that happens not just 1 months, but for 4 months running. And with that QT has still become a non-event even towards the end of its 4th month. That may now change, as the Fed’s Treasury holdings next Wednesday should fall by almost $11 billion, which then would mark the first real noticeable change in the balance sheet. And by a huge coincidence, it would be just in Janet Yellen’s final days. She has successfully started the QT program and presided over it for months. And everything was running smoothly. Do I sound suspicious? Would you blame me if I were?

Anyway, I will look with interest what will happen in the coming weeks. Will we finally see some impact from QT? Like weakening stock prices, rising credit spreads? Stronger US Treasuries and a stronger USD? We will see. And if things will get rough later on, when QT is running at $50B /months (and planned MBS reductions far too high to continuously misestimate their redemptions in such a way that it completely changes the outcome), it will be Powell’s problem, not Yellen’s.

Even though Janet Yellen had scheduled the balance sheet to already be shrinking on her last Chairing of the FOMC meeting, it turns out that the technicalities of running a $4.4 trillion balance sheet do not allow that to be quite as easily accomplished as the Federal Reserve would like. Actually, if they were serious about reducing it, they could execute a POMO that involved a pink ticket instead of a blue one. But nah… That’s never going to happen.

And I must admit, I am partial to Franz’s thinking when he argued that quantitative tightening would be positive for US treasuries. Most pundits think the opposite. They figure that if the Fed is selling treasuries (or not buying as many), then it must be negative for bond prices. But let’s think about quantitative tightening. It’s right there in the name. Monetary tightening should be positive for long term bonds as it reduces the risk of inflation – which is a long term bond holder’s worst nightmare.

Still don’t believe me? Check out this chart of US 10-year yields with quantitative easing periods highlighted.

Notice how the QE periods had rising rates? And then as soon as the QE program ended, rates plummeted back down?

Now of course it’s not that simple. There is more that goes into the pricing of rates than whether the Fed is engaging in QE or not. But the direction is clear. QE is bond negative, and I think QT will be bond positive.

What does this mean?

I have made arguments that the monetary bonfire might finally be showing signs of igniting. There is no doubt that the amount of monetary fuel poured into the system has the possibility of exploding in an incendiary melt up. And I am not backtracking from that line of reasoning. Yet I am aware that the inflation-is-coming-better-sell-bonds-and-buy-stocks trade is crowded.

And given that the Fed is about to play catchup with their quantitative tightening program, it is probably smart to be on the lookout for a surprise that catches everyone off guard. Now don’t mistake this as a change of heart about Central Banks willingness to inflate or die. That’s going to continue. But from a shorter term trading perspective, it’s likely we are going to see some opposite action for a little while.

Everyone hates the US dollar and bonds, and is completely enamoured with equities. If the Fed finally follows through with some actual quantitative tightening, market participants could be surprised with a reversal of recent trends. I don’t know if the QT will be large enough to affect the markets. But just be open to this possibility. After all, everyone was convinced quantitative easing would never work, yet here we are. Why shouldn’t quantitative tightening have the exact opposite effect?

via RSS http://ift.tt/2npNcp7 Tyler Durden

It’s Back: “January Was The Most Volatile Month Since The Election”

If it seems like it was just two days ago that Goldman was writing about a Great-er moderation, and showing a chart of macro volatility – across virtually everything, not just stocks – reaching V-fib levels, it’s because it was.

A lot has happened inbetween, most notably that volatility which just on Sunday night was left for dead, has made a stunning comeback, leading to another note published overnight by Goldman which breaks dramatically with the previous one, pointing out that not only did the S&P just have two consecutive 50bp+ selloffs for the first time since 2016, but that – at a time when the VIX is at a 5 month high despite the near-all time high in the S&P – January has been, on a realized vol basis, the most volatile month since Nov-2016.

Below are the detailed observations from Goldman’s Rocky Fishman:

Largest drawdown in months. While hardly a sustained drawdown, the past two days’ moves mark the largest selloff since August’s 2.2% dip and the first time the SPX has sold off 50 bp or more on consecutive days since 2016 (by far the longest ever between two such events).

Strong VIX reaction. Monday’s move drew an outsized reaction of the VIX, with the spot VIX rising 2.8 points on the 67bp S&P 500 selloff (typically the VIX would rise just over 1 point on such a move). The VIX moved less on Tuesday’s larger S&P 500 move, but the still-large two-day 3.7 point VIX move leaves the VIX at a 5-month high.

Higher SPX realized volatility, large absolute moves, and higher cross-asset volatility are consistent with a higher VIX. January will end up being the most volatile month for the S&P 500 since the 2016 presidential election. A VIX in the 14’s is reasonable given January’s 9.9% realized volatility.

Furthermore, the current VIX level is on the low extreme when compared with periods when the S&P 500 has had a 7% one-month trading range. Increased volatility in rates, credit, and FX markets is also contributing to higher SPX implied vol.

Goldman’s advice? The same as Morgan Stanley‘s: hedge before the drop, not after it.

SPX hedges remain good value; implied vol is not high in the context of recent realized. Implied volatility remains well  below its historical average and at a reasonable premium to realised vol, and the SPX has traded in a wider range recently than other underlyings with higher implied volatility. Though its implied vol has risen, China stands out from this perspective: HSCEI puts are good value.

So is Goldman doubling down on its imminent correction call and is its reco to buy putsThe answer:

Although we see no catalyst for a near-term correction, substantial drawdowns within bull markets are not uncommon, so hedging is prudent. The increased implied vol level combined with a spot price that’s still up substantially YTD points toward collars as our preferred zero-premium alternative to buying puts and put spreads.

via RSS http://ift.tt/2BGoNjB Tyler Durden

Game Over? Adam Schiff Says Memo Could Lead To Firings Of Mueller, Rosenstein

Stocks are red. Trey Gowdy is abruptly retiring from Congress. Everybody is laughing at what looks like drool dribbling from the edge of Joe Kennedy’s mouth during his rebuttal to last night’s State of the Union.

And along comes Reuters, dropping a bombshell report that, if accurate, could shift the narrative of the multiple investigations involving Russia and obstruction of justice.

Reuters exclusively reported that Adam Schiff, the top Democrat on the House Intel Committee, believes the contents of the four-page memo about allegedly egregious FBI abuses of FISA could lead to the firing of Special Counsel Bob Mueller, or more likely Deputy AG Rod Rosenstein.

Game Over? Adam Schiff Says Memo Could Lead To Firings Of Mueller, Rosenstein

via RSS http://ift.tt/2Er1e0Y Tyler Durden

The Yield Curve Is Crashing

Since the hawkish Fed statement, things have escalated quickly…

The dollar has rolled over from kneejerk gains.

Stocks have tanked (not helped by Green’s “bubble” comments).

And the yield curve has collapsed…

2s30s is down over 5bps now, back below the critical 80bps level and set for its flattest close since Oct 2007.


via RSS http://ift.tt/2BHCxuj Tyler Durden

WSJ Editorial Board Calls On Trump To Release The Memo

In an editorial that appeared in today’s paper, the Wall Street Journal editorial board officially called on the Trump White House to release the infamous “FISA memo” – something that conservatives have been demanding for weeks now, with little luck.

Fortunately, shortly after the editorial was posted online last night, Trump promised that the memo was “100%” going to be released – despite pleas from Rod Rosenstein, the deputy AG who appointed Mueller and is purportedly named in the four page memo – that its release could compromise existing investigations. This morning, Chief of Staff John Kelly revealed in a Fox radio interview that he had seen the memo, and that it will be released “pretty quick.”

It’s unsurprising that Democrats have opposed the memo’s release at every turn – accusing Republicans of distorting the truth for political ends. The hypocrisy here is glaring because, of course, Democrats have an enormous political stake in whether this memo sees the light of day, or not.

But tellingly, in their criticisms, Dems have chosen to ignore the central question: Is the FBI guilty of “egregious abuses”, like the Nunes has claimed?


Suddenly, it seems, progressives who went into hysterics following Snowden’s decision to expose the NSA’s shockingly pervasive – and legally dubious – domestic surveillance programs – are no longer concerned with abuses of power by federal law enforcement or intelligence agencies, and apparently no longer believe that FISA decisions should be subject to more oversight. Many also vociferously opposed the ratification of Section 702 of the FISA Act, which Congress voted to renew earlier this month.

As anybody who can remember when the FBI was run by J Edgar Hoover, the agency’s history is littered with examples of these types of abuses. 

But progressive Democrats like Intel Committee ranking member Adam Schiff apparently have selective amnesia when it comes to abuses perpetrated by their one-time leader, former President Barack Obama.

House Democrats: Please – tell us again about your commitment to social justice?

Read the editorial below:

* * *

The House Intelligence Committee voted Monday night to release a Republican memo that by most accounts reveals how the FBI handled, or mishandled, federal wiretap requests during the 2016 presidential campaign. The White House should now approve its public disclosure as the first of several to help the country understand what really happened.

Democrats are objecting to the release, claiming partisanship and violations of national security. None of this is persuasive. Republican Intelligence Chairman Devin Nunes has followed a long and deliberative process that follows House protocol.

When the FBI finally agreed after months of resisting to answer a committee subpoena for documents, Mr. Nunes deputized former prosecutor and South Carolina Rep. Trey Gowdy to investigate. The subsequent memo was vetted for security concerns, provided to the entire House committee, then made available to the entire House, then shown to the director of the FBI, and is now undergoing White House review. This is hardly a Chelsea Manning-to-WikiLeaks-to-New York Times leak.

Another false claim is that Republicans are “censoring” a rival Democratic memo. The same Democrats howling about national security wanted the committee on Monday instantly to approve the public disclosure of their counter-memo that hasn’t gone through the equivalent reviews that the majority memo has. Committee Republicans voted to start that process by making the Democratic memo available to the full House, and by all means let’s see that memo too.

The House memo is not about “attacking the FBI” or “our law enforcement professionals,” as Democrat Adam Schiff insists. This is about restoring confidence in a law enforcement agency that played an unprecedented role in a U.S. presidential election regarding both the Trump and Clinton campaigns.

Americans deserve to know whether accusations that the Kremlin infiltrated the Trump campaign have any basis, and prosecutors and Congressional committees are investigating. The FBI might well have had cause to believe Russians were targeting the Trump campaign when they sought a Foreign Intelligence Surveillance Court warrant. But Washington also should be able to investigate if and how law enforcement agencies exceeded their remit in seeking wiretaps.

The memo also concerns the integrity of the FISA process. Democrats created FISA in the 1970s to protect against wiretap abuses during the Cold War. We opposed it on grounds that it would dilute political accountability, and what do you know here we are. FISA is supposed to provide a measure of legal assurance against abuse, and FBI and Justice officials appear ex parte before the FISA judges with no competing claimants.

The public should know if as part of its warrant application the FBI used the Christopher Steele dossier that we now know was financed by the Hillary Clinton campaign. The House intelligence memo may answer that question, as well as whether the FBI made other misrepresentations or omissions in its FISA application. In June 2017 former FBI director Jim Comey referred in Senate testimony to the dossier as containing “salacious and unverified” material. Is that what the FBI told the FISA court in 2016?

If the FISA judges weren’t told about the partisan provenance and doubts about the veracity of the memo in the middle of a presidential election campaign, then what is FISA for? To serve as a potted plant so the FBI can get whatever warrants it wants? Are they genuine Article III judges with an independent writ or merely another arm of the executive branch that can be rolled like some deputy assistant secretary of State?

The same progressives who demanded accountability for FISA courts after Edward Snowden exposed federal snooping now want President Trump to shut down the House’s limited attempt at transparency. Don’t buy it, Mr. President. Let it all out—the two House Intelligence memos, Senator Chuck Grassley’s referral letter for a criminal investigation of Mr. Steele, and all other relevant FBI or Justice documents that won’t undermine U.S. security. Our democracy can take the transparency, and after the 2016 fiasco it deserves it.

via RSS http://ift.tt/2GykGK9 Tyler Durden

Greenspan Warns: “We Have A Stock Market Bubble”

US equity markets stumbled notably as former Fed Chair Alan Greenspan told Bloomberg TV that “we have a stock market bubble.”

Greenspan stuck to his usual discussion topics of low productivity and fiscal doomsday inevitability…

Productivity has been dead in the water for the past 10 years

I’ve never believed in the Phillips Curve…

Adding that “we’ve got to confront the budget deficit,” concluding “we’re dealing with a fiscally unstable long-term outlook.”

Something we have heard before (in 2016) when Greenspan warned

Entitlements are crowding out savings, and hence capital investment. Capital investment is the critical issue in productivity growth, and productivity growth in turn is the crucial issue in economic growth. We’re running to a state of disaster unless we turn this around.


This should be the central issue of the presidential debate. Unless and until we can rein in entitlements, which have been rising at a nine percent annual rate in the United States and comparable levels throughout the world, we are going to find that productivity is going to maintain a very low rate of increase”

Greenspan also doesn’t really view recession as the biggest problem right now, he is concerned (rightfully so) about the longer term problem of low economic growth and soaring entitlement growth.

“I don’t think that’s our problem. Our problem is not recession which is a short-term economic problem, I think youhave a very profound long-term problem of economic growth at the time when in the Western world there is a very large migration from being a worker to being a recipient of social benefits

But when Greenspan said the following…

“There are two bubbles. We have a stock market bubble and a bond market bubble. At the end of the day, the bond bubble will be the big issue.

Stocks began to stumble…

As a reminder, back in August 2017, Greenspan said this…

We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

It seems some market participants still listen to him?

via RSS http://ift.tt/2FzYGgG Tyler Durden

CFPB Is Constitutional, Court Rules, in Victory for Unaccountable Bureaucrats Everywhere

The structure of the Consumer Financial Protection Bureau (CFPB) was ruled constitutional today.

Unlike other independent agencies not under the direct supervision of Congress or the president, the CFPB was given a single director instead of a panel of three or five commissioners. In theory, that was meant to insulate the bureau from political influence. In practice, it made the director one of the most powerful people in the federal government. Last year, a three-judge panel on the D.C. Circuit Court ruled the CFPB’s structure was unconstitutional, but the bureau was allowed to continue operating while the case was appealed to the full court.

The en banc panel of the court upheld the CFPB’s structure in a split decision issued today. In reversing the earlier ruling, the court accepted the argument that Congress could create a uniquely structured agency as a way to shield the bureau from political influence.

“Congress’s decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will,” Judge Cornelia Pillard wrote for the majority.

Although the court upheld the CFPB’s structure, it tossed out penalties that the CFPB had issued to PHH Corp., a mortgage services firm and the plaintiff in the case.

This ruling might not be the last word on the CFPB. Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute, thinks the Supreme Court should take the case. The D.C. Circuit ruling was disappointing but not surprising, Shapiro says, because the court has a history of being deferential to the government’s case.

“The director of the CFPB reports to no one but himself, and, under the terms of Dodd-Frank, can be removed by the president only for cause,” says Shapiro. “This structure violates core principles of separation of powers and allows the agency to exist unfettered by any accountability to the people.”

The degree of control the president can exert over the CFPB remains an open question. Earlier this year, after Richard Courdray stepped down as director to run for governor of Ohio, there was a week-long legal spat over whether Donald Trump had the authority to appoint a new director to the agency or whether Courdray’s second-in-command would take over. Trump’s pick, Mick Mulvaney, prevailed in the end.

As long as Mulvaney—a longtime critic of the CFPB dating back to his time in Congress—is in charge, the CFPB is likely to take a more limited view of its role as chief enforcer of the rules Congress passed after the 2008 financial collapse. Still, the constitutional question at the heart of the case will remain important for the long term. In just a few short years, the CFPB enforced regulations against mortgage brokers and powerful Wall Street banks but also used its unaccountable power to target small businesses, including payday lenders and community banks.

In the earlier ruling that went against the CFPB, Judge Brett Kavanaugh wrote that “other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power.”

Today’s ruling gives future heads of the CFPB license to wield that power with little restraint, says Iain Murray, vice president at the Competitive Enterprise Institute. Murray’s group has filed its own constitutional challenge against the CFPB.

“This outrage to the spirit of the Constitution needs to be corrected by the Supreme Court and by Congress, which made the original mistake in giving the CFPB so much power with so little accountability,” says Murray.

from Hit & Run http://ift.tt/2E0dyYx