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It’s Time To Care Again About Gold & Silver

Authored by Adam Taggart via PeakProsperity.com,

Fundamentals and technicals are signaling extreme undervaluation…

It’s been a while since I’ve covered the precious metals in an article. They’ve been range-bound for much of the past year, with few notable sector developments to report.

But I feel compelled to write about them today for two reasons:

  1. The probability of an upwards re-pricing of the precious metals is rising, and

  2. Both gold & silver are quite over-sold right now, technically-speaking.

With technical and fundamental indicators flashing green simultaneously like this, now is an advantageous time to consider increasing your PM exposure (I did so myself yesterday).

The Human Factor

Before I go into further detail on the current conditions of the PM market, here’s a recent personal experience that underscores how few people have any real familiarity with gold & silver as an asset class, let alone own any (beyond, perhaps, a bit of jewelry).

A good friend moved and needed help transporting some bullion from his old town to his new one. Most of it was silver, several thousand ounces worth.

That much silver is pretty friggin’ heavy.

So we huffed and strained, hauling that load out of one bank vault, into his car, and from there into the vault at his new bank. While we did our best to be as discrete as possible, our sweaty, grunting 2-man production was hard for the bank staff to ignore.

Managers at both banks figured out what was going on, as it was pretty obvious. And both separately asked us out of genuine curiosity, “Is that real silver?”.

My friend briefly handed over a 100-oz bar so they could see for themselves, sparking conversations about the merits of owning physical bullion.

It turns out that neither manager had ever held a bar of silver before. This was pretty shocking to me. Even though they know that the safe deposit boxes in their own vaults very likely store some bullion, neither own it personally, nor even come into contact with it. It’s just not a part of their world.

Anyways, later on I mentioned this story to another buddy who shared my surprise. “Man, if the bankers aren’t familiar with silver and gold, then who the heck is?”, he asked. A very good question, I agreed.

But then he jolted me by asking: “So, one of those 100oz bars — what’s it worth, anyways? $150?”

This is an otherwise intelligent, math-competent person. But like most folks, as well as those bank managers, he doesn’t own any precious metals and so his knowledge of them is pretty limited. Limited enough to underestimate the price of silver by over 90%.

This reminded me of Mark Dice’s videos, which show just how woefully ignorant the average person is when it comes to the value of bullion. In this one, street passersby decline a free gold coin in favor of a Snicker’s bar:

Simply put: gold and silver, in the West at least, are underappreciated assets. As Grant Williams famously put it in his excellent synopsis, when it comes to public and institutional sentiment of the precious metals, “Nobody cares.”

Which is a big factor why the prices of PMs have languished for the past seven years. And why the flow of bullion has been uni-directional from West to East over that period.

Time To Care

But there are gathering signs that it’s now time to start caring again.

Looking at the just techinical side for a moment, both gold and silver have been in a prolonged downtrend for the past two months. They’re now at extreme undersold levels.

Both RSI and MACD indicators are signalling that the recent declines have likely been played out at this point:

And both metals have now broken below their Bollinger bands (a sign of extreme oversold conditions). Here’s gold:

While a break below the Bollinger bands could indicate that something fundamental has suddenly changed in the PM market to merit a materially lower repricing, there just don’t appear to be any credible candidates for that argument. Yes, the dollar has risen over this period; but there are solid reasons that the USD and gold/silver need not always trade inversely to one another. And as we’ll get to in a moment, conditions are actually becoming more PM-favorable.

Technically-speaking, it seems much more likely that the current downtrend is long-in-the-tooth and that, as prices dip down to 18-month lows, a recovery is soon due. In fact, we may be seeing the start of such today, the first material up day for the PMs in a while.

Fundamentally-speaking, world events are providing more and more reasons to own gold and silver — from stratospheric asset bubbles threatening to burst, to a long-overdue return of market volatility, accelerating de-dollarization, slowing global economic growth, increasing credit market risk in both Asia and Europe — the list goes on and on.

The full set of PM-positive drivers are covered in our recent excellent interview with Ronald Stoerferle summarizing the insights of his exhaustive 230-page annual report titled In Gold We Trust. If you haven’t listened to it yet, carve out 49-minutes to do so soon:

To the many reasons Stoerfele gives in support of his conclusion that gold is “dirt cheap” right now, we can add the multiplying macro data points predicting market turmoil and economic recession later this year, as well as the building uncertainty of further rate hikes by the Federal Reserve — all potential developments that should lead to higher PM prices.

Whether you’re amassing bullion for the long term (which we’ve long recommended) or speculating in the paper markets for the short term (something we don’t encourage for the average investor), you want to buy low and sell high. With precious metals trading near 18-month lows and close to the “all-in” production cost for many miners, prices are unlikely to get much lower than this.

Taking Action

So while prices remain at current lows, we recommend considering the following:

  • Creating your core physical precious metals position if you have none. Many PeakProsperity.com readers already have their core positions in place, should an abrupt crisis occur that suddently sends demand for ‘safe haven’ assets spiking. But if you haven’t built yours yet, don’t panic. But also don’t delay too long in taking action. A good first step is reading our free guide Buying and Storing Gold & Silver, which details the various forms you can purchase bullion in.

  • Setting up an ongoing purchase program. The easiest and most affordable way to build exposure on top of your core position to set up an automatic purchase program that buys a consistent amount of bullion each month at a volume that fits within your budget. The MetalStream service offered by the Hard Asset Alliance is a good example of such a program, through which you can set up automatic purchases of as little as $100 per month.

  • Nibbling into the miners. The stock prices of precious metal mining companies are much more sensitive to the spot price of gold and silver than the actual metals themselves. They can yield fantastic returns during bull markets, as well as widow-making losses in bear ones. And widow-makers they have been for the past seven years. But, for the above-mentioned reasons, that long winter may be thawing. For investors with the constitution and resources to speculate, it’s an opportune time to consider adding or increasing exposure to the miners. That said, when doing so, we *strongly* urge to you work with a profession financial advisor with longtime experience with this asset class *as well as* demonstrated expertise with using hedges to protect these high-risk positions to the downside. If you’re having difficulty finding an advisor who meets these conditions, consider scheduling a consultation with the firm we endorse (it’s completely free). 

Remember, right now, nobody still cares about the precious metals. Which is why it’s estimated that only 1-3%of US households own any (jewelry aside).

So even if you only hold a few ounces, that’s still more than 97-99% of everyone else — which may make a tremendous difference to your prospects when the world starts caring again.

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“Truly An Embarrassment”: Ex-CNN Producer Calls Out Jim Acosta For Heckling Trump During Annapolis Eulogy

A former CNN producer has called out Jim Acosta for giving “all good journalists a bad name” after he heckled President Trump during remarks about the five journalists who lost their lives in Thursday’s deadly newsroom attack in Annapolis, Maryland. 

“This attack shocked the conscience of our nation and filled our hearts with grief. Journalists, like all Americans, should be free from the fear of being violently attacked while doing their job,” President Trump said.  

This prompted CNN’s Jim Acosta to start heckling Trump – asking the President “Will you stop calling the press the enemy of the people?

A man in front of Acosta is visibly annoyed, turning around several times to shush the CNN employee. 

For that, former CNN digital producer Steve Krakauer took Acosta to task for drawing links between Trump’s criticism of the media and the shooting – even after it was known that the shooter had a long-standing grudge against the paper, had been reported to police at least twice, and that a restraining order against the suspect had been taken out against him by a journalist. 

“Truly an embarrassment, on multiple levels. Jim Acosta’s self-serving antics give all good journalists a bad name,” tweeted Krakauer. 

As John Nolte of Breitbart points out – Acosta was literally manufacturing fake news, as there’s no way Trump could have heard him

Acosta is clearly too far away to be seen or heard by the president.

Nevertheless, although there is no way he will be heard, Acosta drops all pretense of professionalism to still holler a question to the president

In other words, Acosta knows Trump cannot hear him, but like a heckler out to spoil the moment for everyone else, he still screams his question at him.

Watch as Acosta turns around to look at his cameraman and appears to ask if they got the shot. Then the camera lights are shut off, which again reveals just how staged and artificial all of this is. –Breitbart

“This is not journalism,” concludes Nolte.  

Nearly three weeks prior, Acosta decided to insert himself again – heckling Trump and Kim Jong Un during their historic Singapore summit. 

On one hand, it would be easy for the White House to yank Acosta’s press pass. Then again, watching CNN perpetually embarrass itself has become an American pastime. 

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Trump Reportedly Weighing Withdrawing Troops From Germany, White House Denies

The Trump administration is evaluating the costs of transferring or withdrawing troops from Germany, where the United States has its biggest contingent outside the country, The WaPO reported on Friday adding that President Donald Trump has already discussed the proposal, which has worried European Nato allies, with military officials.

Citing anonymous sources, the Post stressed that the study was only an internal examination of options at this stage.

Among the options under consideration are repatriating a large contingent of the approximately 35,000 active duty troops, or a full or partial move of the military personnel from Germany to Poland, AFP notes.

However, a White House National Security Council spokesman denied any such analysis. Pentagon spokesman Eric Pahon also denied any plans for a withdrawal.

“The Pentagon regularly reviews force posture and performs cost-benefit analyses,” he said in a statement.  “This is nothing new. Germany is host to the largest US force presence in Europe — we remain deeply rooted in the common values and strong relationships between our countries. We remain fully committed to our Nato ally and the Nato alliance.”

Trump due to attend the transatlantic group’s summit in Brussels on July 11-12, when he is sure to pressure allies to spend at least two percent of their GDP on defense, in accordance with a target Nato members agreed to reach by 2024.

Germany, which has had tense ties with the US in recent months, has already indicated it will be unable to meet that goal. Poland, however, has met the target. Trump insists that Washington is shouldering too much of the group’s financial burden.

US troops have been stationed in Germany since World War 2, and the presence there serves as a base for US operations in Africa and the Middle East.

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The CNY Conundrum – Has The PBOC Deliberately Weakened Yuan As Part Of The Trade War?

Via Nordea

HAS THE PBOC DELIBERATELY WEAKENED CNY AS PART OF THE TRADE WAR?

It has been another trade war week, as the market has been looking for clues on the Chinese retaliation measures against the Trump tariffs that are planned to go live on 6 July.

Global trade momentum started to weaken even before the trade conflict escalated. The three months from February until April marked the weakest running 3-month period for world trade since early 2015. A bad sign given that the period included a temporary cease-fire between Trump and Xi Jinping. Usually it adds downwards pressure on 10yr bond yields, when world trade is slowing (at least initially). A further slowdown of global trade in June/July/August could keep long bond yields under pressure over the summer. In other words, the trade war fog needs to dissipate for the 10yr US Treasury yield to unfold its upside potential to the range between 3.25%-3.50% (Major Forecast Update: USD to remain in the driving seat)

CHART 1: LESS GLOBAL TRADE, LOWER LONG BOND YIELDS

Last week we wrote that we found trade-based Chinese retaliation measures more likely than attempts to retaliate via the financial markets. The fact that Trump is threatening with new tariffs on goods worth a total of USD 450bn makes the retaliation process trickier for China. It is simply not possible to retaliate symmetrically, as there are not enough US exports into China to tax. This leaves an elevated risk of unorthodox retaliation measures being used. Prohibiting symbolic US products from entering Chinese territory could be one way of doing it. Expect more clarity on whether Xi Jinping will deliver an ALL-IN answer as early as this weekend.

Earlier in the week, stories emerged that the PBoC had been told by Xi’s administration to stop buying or even off-load Treasuries. While it is hard to prove whether that was actually the case this week, there are signs that especially the Chinese market is discounting a marked escalation of the conflict. The Shanghai Composite is down almost 23% since its peak in January. The general risk off and lack of faith could be the reason for the weakening CNY.

We wrote earlier this year that 10yr bond yields in China and US rarely move out of tandem for prolonged periods (not observed since 2008), but this time around it could be that markets are sending a signal that US growth momentum holds up much better than Chinese growth trends. Just this week the PBoC cut its reserve requirements in the attempt to add some needed stimuli to the Chinese momentum.

CHART 2: 10YR BOND YIELDS IN CHINA AND US RARELY MOVE OUT OF TANDEM FOR LONG

This is another sign that US economic performance and market variables look substantially more resilient to the trade war than in the Euro area and China, which Trump is currently targeting. This is sadly something that will likely increase Trump’s appetite of continuing down the current path and also a sign that Trump has the upper hand on both China and Europe currently.

No matter whether or not the PBoC has been a part of weakening the CNY (some Chinese sources indicate that the PBoC has helped the weakening trend), the current market situation may not be too bad for China, as a market-based upside pressure on USD/CNY allows China to 1) sell USD, 2) sell Treasuries and 3) ride the impulse from a slightly weaker currency.

We ultimately think that the PBoC will safeguard the 6.70 level in USD/CNY, as it would otherwise risk spurring another round of massive capital outflows as was seen after the devaluation in the autumn of 2016 (Read: CNY: Too weak too fast)

CHART 3: WEAKER CNY AND TREASURY SELLING? A COMBO THAT WAS POSSIBLE IN THE AUTUMN OF 2016

Should USD/CNY at 6.70 be seen as an issue for global growth in general? It could be if it is a sign of broader tightening of financial conditions in EM due to outflows or EM central banks combatting these outflows.

CHART 4: WEAKER CNY, STRONGER USD. A GENERAL PROBLEM FOR PMI MOMENTUM?

And as a side-effect, the weakness of the CNY has added to the downside pressure on other Asian EM currencies, as the capital flows continue to leave Emerging Markets broadly. The Indian central bank, which pleaded with the Fed for help a few weeks back, has been forced to support inventions in the rupee.

Read the full report as pdf here.

Read Nordea’s financial forecast here.

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Turkey Defies Trump, Will Keep Importing Iranian Crude

Defying the Trump administration, Turkey said it would ignore the State Department’s call on US allies to stop importing Iranian crude oil by November 4, when the latest sanctions against Iran are set to kick in. Earlier this week, the State Department called on all US allies to completely stop buying Iranian crude, sending the price of oil to 4 year highs in the process. While many are trying to find a way around the sanctions, it is for now proving tricky, and many buyers are winding down their purchases of Iranian crude.

But not Turkey.

The decisions taken by the United States on this issue are not binding for us. Of course, we will follow the United Nations on its decision. Other than this, we will only follow our own national interests,” Turkey’s Economy Minister Nihat Zeybekci said according to Turkish daily Hurriyet, adding that “we will pay attention so our friend Iran will not face any unfair actions.”

Turkey is hardly alone in its defiance: oil importers including Japan, South Korea, and India, as well as European countries have said they will continue buying Iranian crude, although whether they will really do that remains to be seen – French oil giant Total has already stopped purchasing Iranian products.

The European Union is particularly concerned about the situation because not only because it relies on substantial Iranian imports, but because there is only so much that the three European signatories to the Iran nuclear deal could do to prevent Tehran from exiting it, which might happen if it stops seeing benefits from it, President Hassan Rouhani said.

The nuclear deal, which Iran signed with the US, France, Germany, the UK, Russia, and China, ended the international sanctions that Iran was subjected to because of its nuclear program, and gave it access to international markets, especially oil markets. Yet, if the unilateral US sanctions lead to a closure of this access, Iran will indeed be locked out of any economic benefits from the nuclear deal. Although Tehran still maintains that the nuclear program was not geared towards the weaponization of uranium, Rouhani—and Ayatollah Ali Khamenei before him—said Iran will ramp it up if the deal with the West falls through.

* * *

There is another notable consideration: Last Friday during Friday’s OPEC meeting, Iran’ss petroleum minister said he wants to increase exports of Kirkuk’s oil 10-fold to 300,000 barrels per day.

“We have started to receive the Kirkuk oil to Iran. I hope to be able to continue it as the program we have agreed to with the oil ministry of Iraq,” Iranian Minister Bijan Namdar Zangeneh told Rudaw on Friday.

“But for continuation of this swap, and to we need to increase the level of this swap, we need to build a pipeline between Kirkuk and Iran,” emphasized Zangeneh. “Currently it’s at 30,000 bpd, could be increased it to more than 300.”

Iraq’s State Organization for Marketing of Oil (SOMO) currently sends Kirkuk oil by tanker truck to a refinery in Kermanshah. In return, Iran sends the same amount of oil to southern Iraq. Iraqi Oil Minister Jabbar al-Luaibi reiterated to Rudaw at OPEC that talks are underway between all players to re-open the Ceyhan pipeline.

“The pipeline is owned by Rosneft, BP, and a Kurdistan Region company. Now we are in talks with them and God willing this issue will be resolved. Talks with Rosneft, BP and the Kurdish company are ongoing,” Luaibi said.

Should the Ceyhan pipeline to Iran be completed, and Tehran get access to Turkish export markets, then US attempts to limit Iranian exports would be substantially diluted.

Iran has another potential white knight: According to Jefferies analysts, with Chinese oil demand set to expand by 1 million b/d this year and more next year, the country can mop up whatever Iranian barrels others leave due to U.S. sanctions.

According to Jefferiies, China, with a new oil futures exchange, can exploit sanctions to institutionalize RMB-denominated trade in oil:

“China is capitalizing on the unintended consequences of Trump’s aggressive policies, from institutionalizing the petro- RMB to splitting alliances”

“While some buyers have cut purchases from Iran in fear of losing access to U.S. markets and dollar settlement systems, they are doing so grudgingly and resentfully.”

In 2017, China imported ~650k b/d from Iran in 2017 — 5.1% of its total demand and 7.4% of imports; notably, this was down from 13% in previous years. In other words, if the trade war between China and the US indeed escalate, China would be more than happy to shift excess demand to Iranian exports, while leaving some legacy producers in the cold.

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Could Germany Fracture?

Authored by Charles Hugh Smith via OfTwoMinds blog,

All sorts of centralized organizations that appear rock-solid may well melt into air as the disintegrative dynamics gather momentum.

Rising political and social discord that is generally being attributed to “populism” may actually be the re-emergence of ancient geographic and cultural fault lines. An often-overlooked manifestation of this might be the nation-state of Germany, a possibility fleshed out by longtime correspondent Mark G.

It’s both convenient and expedient for politicos to blame “populism” for the fracturing of the status quo. Given the unsavory undertones of ethnic/religious bias of “populism,” this allows the media-savvy politico (and aren’t they all media-savvy?) to paint his/her opponents as racist via the code-word “populist.”

Labeling dissenters “populists” doesn’t explain or predict anything. In terms of economic classes, it’s more insightful to distinguish between the Protected Class (insiders and favored elites) who benefits enormously from the status quo and the Unprotected Class (outsiders, marginalized workers, those without privilege or access to cheap capital).

But this doesn’t exhaust the sources of profound social discord. As historian Peter Turchin explained in his recent book Ages of Discord, historical eras are either integrative periods in which people find reasons to cooperate and join forces, or disintegrative periods in which reasons to split apart become dominant.

Clearly, the world-system of this era is entering a disintegrative phrase, and dismissing dissenters as “populists” solves nothing. For insight on how the disintegrative phase may manifest in Germany, let’s turn to Mark G.’s commentary: 

Merkel faces own ‘German BREXIT’ Chancellor’s immigration crisis is ‘Threat to Europe’

The breakdown of the Bavarian CSU and German CDU center-right coalition (refounded post WWII by Konrad Adenauer) is historic. And it has definite regional implications. I think we could be watching the beginning moves not in a “German Brexit” but in the political collapse of the modern German state into multiple components. As I mentioned last year, I personally expect this because modern Germany is a rump survival of Bismarck’s Wihelmine German Empire. It has lost all strategic rationale for its existence. And under Frau Merkel it has almost no military forces and no control of its own borders. Such a ‘state’ cannot long endure.

“Mr Seehofer – who is also the chairman of coalition partner the Christian Social Union (CSU) – has agreed to give Mrs Merkel two weeks to try and thrash out a Europe-wide migration policy with other leaders at the European Council meeting at the end of the month.”

Merkel has zero point zero chance of reaching any Europe-wide agreement on immigration given the present composition of the governments of Austria, Italy, Hungary, Slovakia, Czechia and Poland. Since 2015 all of them have been electorally remodeled into populist based governments with fundamental anti-refugee and anti-migrant views. As an example, when we passed through the Sudetenland last year in Czechia the highway billboards openly proclaimed “No Islam – No Terrorism”.

Their thinking is vastly closer to Seehofer’s than to Merkel’s. Merkel can’t even control her primary CSU coalition partner any further. What is more likely to occur is the German government, or multiple successor German governments, will move much closer to the eastern European position.

And if Merkel attempts to construct a hard left domestic coalition consisting of the CDU, the SDP, the Greens and “The Left” (Die Linke) to continue her present policies, then I expect the CDU itself to experience an internal split and also further hemorrhaging to Alternativ fur Deustschland. Its difficult to see her retaining her position in the CDU after presiding over the collapse of the historic CDU/CSU coalition.

New elections are highly likely in these circumstances. And in the last elections the main Center parties – CDU/CSU and also SDP – all lost significant numbers of supporters to the AfD and Die Linke. Another round at this point will probably produce a much larger AfD, plus political gridlock as the Establishment attempts to ignore the democratic result.

On an anecdotal basis, last year I again met individuals in Rheinland-Pfalz who in 2015 had been members of The Greens. Come 2017 they all had left the Greens and were wavering between the CDU & AfD.

On a related issue: it seems to me the present migration induced political crisis in German politics will cause the PIGS to attempt to rebid and renegotiate the terms of their ECB/IMF bailouts.

Thank you, Mark. I think it is fair to say that Marx’s famous summary of the disintegrative forces inherent in capitalism–“Everything solid melts into air”– aptly describes the core dynamics of disintegrative phases.

It’s instructive to study a map of proto-Germany circa 1866 and ask if the geographic, political and cultural lines visible on this map still pertain beneath the surface of a monolithic modern state. All sorts of centralized organizations that appear rock-solid may well melt into air as the disintegrative dynamics gather momentum.

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“Frantic, Nervous, Upset, Emotional” Rosenstein Was “Overwhelmed” During Comey Firing, Mueller Appointment

Deputy Attorney General Rod Rosenstein was deeply conflicted about recommending that former FBI Director James Comey be fired, according to the New York Times, citing four people “familiar with his outbursts.”

In public, Mr. Rosenstein has shown no hint that he had second thoughts about his role — writing a memo about Mr. Comey’s performance that the White House used to justify firing him. “I wrote it. I believe it. I stand by it,” Mr. Rosenstein said to Congress last year.

But in meetings with law enforcement officials in the chaotic days immediately after Mr. Comey’s dismissal, and in subsequent conversations with colleagues and friends, Mr. Rosenstein appeared conflicted, according to the four people. –NYT

Rosenstein “alternately defended his involvement, expressed remorse at the tumult it unleashed, said the White House had manipulated him, fumed how the media had portrayed the events and said the full story would vindicate him,” according to the four people (familiar with his outbursts). 

Another person familiar with Rosenstein’s state of mind during that time period said he sounded “frantic, nervous, upset and emotionally dis-regulated,” while becoming “visibly upset” with former acting FBI Director Andrew McCabe at one point.

His public and private views demonstrate the dueling forces pulling at Mr. Rosenstein in the special counsel’s investigation of the president and his associates.

Mr. Rosenstein is both the ultimate supervisor of that case — and will determine what information is eventually provided to Congress — and a key participant in the matter being investigated. Mr. Trump’s lawyers also regard him as one of the essential witnesses for the president’s defense because Mr. Rosenstein, they say, wanted to get rid of Mr. Comey. –NYT

DOJ spokeswoman Sarah Isgur Flores disputes the accounts of Rosenstein’s behavior – stating that if he was agitated, it was only because Andrew McCabe hid the existence of the Comey memos detailing his interactions with President Trump. 

“To be clear, he was upset not because knowledge of the existence of the memos would have changed the DAG’s decision regarding Mr. Comey, but that Mr. McCabe chose not to tell him about their existence until only hours before someone shared them with The New York Times,” Ms. Flores said.

Late night texts

The Times also reports that Rosenstein has been concerned about his reputation – texting people at all hours of the night to discuss people who are targeting him, “according to people who spoke to him.” 

Stepping on Sessions’ toes

Attorney General Jeff Sessions says he felt “blindsided” by Rosenstein’s decision to appoint Robert Mueller as Special Counsel. 

On the afternoon that Mr. Mueller’s appointment was announced, Mr. Sessions was in the Oval Office with the president discussing candidates to be F.B.I. director when they both learned that Mr. Rosenstein had made his decision. Mr. Trump erupted in anger, saying he needed someone overseeing the investigation who would be loyal to him. Mr. Sessions offered to resign.

Mr. Sessions felt blindsided by Mr. Rosenstein’s decision. After leaving the White House, Mr. Sessions’s chief of staff, Jody Hunt, confronted Mr. Rosenstein, demanding to know why he had not given them advance warning, according to a lawyer briefed on the exchange. Mr. Rosenstein has told others that he was worried at the time he would be fired by the president. –NYT

“The White House put Greyhound tire tracks on his back,” said Andrew White, a former federal prosecutor who has worked with Rosenstein and remains close. “They threw him under the bus.”

During Thursday’s Congressional testimony, Rosenstein angrily pushed back against suggestions that he lacked integrity. 

“You should believe me because I’m telling the truth and I’m under oath,” he said.

Poor Rod, just a misunderstood Deputy AG trying to make the world a better place.

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“These Guys Are Like Diamonds” – America’s Trucker-Shortage Hits A Crisis Point

Nearly every consumer product – from food, to textiles to electronics – sold in the US at some point touches the bed of a truck. Which is why the shortage of truckers to ferry goods across the US has become such an intractable problem for American companies – and unemployment at 3.8% isn’t helping.

A shortage of workers is forcing trucking firms to raise wages and provide other incentives as they seek to fill an “official” shortage of 60,000 jobs that some industry insiders say is really closer to 100,000.

Shipping

And as companies become more desperate, they’re willing to take a look at applicants who never would’ve had a chance under normal circumstances, according to the Washington Post.

At TDDS Technical Institute, an independent trucker school in Ohio where Blocksom has considered enrolling, veteran teachers say they have never seen it this bad. They say there may be closer to 100,000 truck driver openings.

“As long as you can get in and out of a truck and pass a physical, a trucking company will take a look at you now,” said Tish Sammons, the job placement coordinator at TDDS, whose desk is full of toy trucks and fliers from the companies that call her daily begging for drivers. “I recently placed someone who served time for manslaughter.”

WaPo‘s story opens with an anecdote about Bob Blocksom, an 87-year-old retired insurance salesman who is searching for a job after having not saved enough money for retirement.

Bob

Bob Blockson

And trucking companies, as it turns out, are willing to give him a shot – even as most employers wouldn’t consider a man his age. The only thing holding him back? Being away from his wife of 60 years.

LAKE MILTON, Ohio — Bob Blocksom, an 87-year-old former insurance salesman, needs a job. He hasn’t saved enough money for his retirement. And trucking companies, desperate for workers, are willing to give him one.

Age didn’t matter, they said. If Blocksom could get his “CDL” — commercial driver’s license — they would hire him for a $50,000 job. One even offered to pay his tuition for driver training school, but there was a catch: Blocksom had to commit to driving an 18-wheel truck all over the United States for a year.

So far, that has been too big of an ask for Blocksom, who doesn’t want to spend long stretches of time away from his wife of 60 years. “The more I think about it, it would be tough to be on the road Monday through Friday,” he said.

Wages listed in the story ranged as high as $80,000 a year – plus benefits. And some companies say they’re considering raises because that still isn’t enough to appeal to young people. Already, WaPo says, companies like Amazon, General Mills and Tyson Foods are passing higher transport costs onto consumers. Wal-Mart even identified rising transportation costs as the biggest “head wind” facing the company.

“This is slowing down the economy already,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “If it takes me a week instead of two days to ship products from point A to B, I’m losing potential business.”

Even with new federal regulations mandating that truckers log their hours so they don’t breach the maximum 11-hour daily limit, being a trucker is a “hard job” that takes “a special breed” of person. New truckers often gain weight from sitting all day. The periods of separation often strain interpersonal relationships, and divorces are common.

Trucker

Trucking is also surprisingly dangerous: There were more than 1,000 fatalities among motor vehicle operators in 2016, according to the Labor Department. That means being a truck driver is eight times as deadly as being a law enforcement officer. Obtaining a CDL also takes months of schooling and can cost as much as $7,000. Unsurprisingly, a growing number of candidates are failing the mandatory drug tests that are part of the application.

The community around TDDS is full of shuttered factories and bars named “Lucky Inn” and “Horseshoe.” The steel mills closed in the 1980s, and a GM factory just announced more than a thousand layoffs. One of the only industries growing in the area is trucking, yet locals are hesitant to become truckers.

One man, a janitor, hanging out at Larry’s Automotive repair shop in nearby Warren, said his uncles were truckers and told him they would “kill him” if he ever got into the harsh business. The owner of the shop said he had thought about becoming a trucker but decided it wasn’t feasible after he had children.

Trucking jobs require people to leave their families for weeks at a time and live in a small “cabin” with a hard bed. Divorces are common, veteran drivers say, and their children forget them. A life on the road is often costly and unhealthy. Drivers sit for hours a day in diesel trucks and pull into truck stops that typically serve greasy hot dogs and chili.

Weight gain and heart disease are common, says Gordon Zellers, an Ohio physician who spends half his time examining truckers and administering drug tests, which increasing numbers of CDL applicants fail. He advises the TDDS students to see a nutritionist, but he knows most won’t.

Even companies that don’t require their drivers to go “over the road” – that is, make long-term hauls – are struggling to recruit.

“These guys are like diamonds right now,” said Jason Olesh, a vice president at Aim Transportation Solutions who left his family vacation to rush to TDDS to talk to students. “We’re down 90 drivers across our fleet of 650.”

Olesh gave his best pitch to the students: He offered them jobs that pay $70,000 a year with full benefits and regional routes hauling water to oil-drilling sites that would have them home most nights.

“I’m offering you a regular job with a 10- to 12-hour shift so you can see your kids,” Olesh said.

The worker shortage has, unsurprisingly, led to a wave of poaching that has sent the industry’s turnover rate to 94%. At this rate, companies and consumers better hope that Elon Musk succeeds with his goal to launch a fleet of autonomous trucks several decades ahead of schedule.

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Bitcoin Soars Most In 3 Months, Back Above $6,000

After crossing below $6,000 for the 4th time in a week yesterday, Bitcoin surged overnight – jumping by as much as 10% at one point, the most in 3 months.

The 10% surge is a notable outlier after weeks of constant downward pressure, but we note it’s already fading modestly along with the rest of cryptos.

 

And while, with Bitcoin down 70% from its highs, it’s easy for the original naysayers to gloat with the “told you so dance”, we note that Bitcoin is still up 155% YoY and as SovereignMan’s Simon Black writes, it’s important to have some historical context when considering the future of Bitcoin…

On March 29, 1879, a widely circulated newspaper called the American Register published a scathing editorial stating that “it is doubtful if electricity will ever be [widely] used” because it was too expensive to generate.

Several months later, the Select Committee on Lighting and Electricity in the British House of Commons held hearings on electricity, with experts stating that there was not “the slightest chance” that the world would run on electric power generation.

It’s not that electricity didn’t exist at the time. It did. Serious study and research had been devoted to electricity since the 1600s.

But even by 1879 it was still considered an expensive fantasy.

Then on New Years Eve of that same year, Thomas Edison publicly unveiled his incandescent light bulb in Menlo Park, New Jersey.

At the time he allegedly stated “We will make electricity so cheap that only the rich will burn candles.”

Three years later in 1882, Edison would switch on the world’s first public electrical utility.

And by the end of the decade he would go on to found General Electric, which remained one of the most important companies in the world until a bunch of buffoons ran it into the ground in the early 21st century.

We know, of course, what happened with electricity: it eventually became ubiquitous… slowly, then rapidly.

By 1908, 26 years after Edison switched on the first public electric utility, still only about 10% of US households were on the grid.

But then the pace of adoption accelerated. By 1941, 80% of households were on the grid.

So the first 10% took 26 years, and the next 70% took just 33 years.

For subsequent technologies the adoption curve was even steeper.

The refrigerator, for example, took just two decades to increase its prevalence in US households from 10% to 80%.

Mobile phones were even faster, soaring from 10% to 80% in just 14 years, from 1994 through 2008.

This is an important point: newer technologies are being adopted at faster and faster rates… once they reach a minimum critical mass.

The adoption of cryptofinance and distributed ledger technology (DLT) may likely follow this trend.

As we just discussed yesterday, banks are in desperate need of a giant kick in the ass– what technophiles refer to as ‘disruption’.

Banks have had a monopolistic stranglehold on their customer’s money for centuries.

And as we constantly see in the headlines, banks are not shy about abusing this privileged trust.

Crypto and DLT destroy their monopoly by decentralizing and disintermediating financial transactions.

After all, it’s 2018. There’s no reason anymore to put a bunch of middlemen between you and your savings.

Sending money should be as easy as sending an email… and the technology to do so should be as widespread as email itself.

Crypto and DLT make this all possible. And history would suggest that we could see widespread adoption of those technologies just 10-years after they reach a minimum critical mass.

For argument’s sake, let’s suppose that ‘minimum critical mass’ means that roughly 10% of individuals and businesses regularly use the technology for financial transactions.

study from Cambridge University in March 2017 estimated the number of active Bitcoin users at between 2.9 million and 5.8 million.

That’s up from zero in 2009… so impressive growth for sure.

But even an optimistic view of those numbers would suggest that crypto and DLT use is far below a minimum critical mass for their widespread adoption to accelerate.

Clearly there’s still a long way to go until these technologies are as ubiquitous as email or mobile.

The question is– how much longer will it take to reach that critical mass?

The mobile phone industry may be an illustrative example.

The earliest cell phones were developed between 1971 and 1973. But it took more than 20 years for their usage to go from 0% to 10% of the population. (But then just 14 years to go from 10% to 80%.)

So using mobile phones as a benchmark, and given that crypto is already a decade old, it may be another 10 years before we reach that minimum critical mass.

The flip side of this means that we could still have another decade of incredibly compelling opportunities to explore, which I’d categorize as follows:

1) Core technology. In the earliest days of a major technological trend, there are always opportunities to develop, improve, and iterate the core technology that underpins that trend.

It always starts out with individuals– a guy like Steve Wozniak building circuit boards in his garage.

But eventually those opportunities are taken over by huge companies… and as time goes on it becomes more difficult for the little guy to compete.

That’s starting to happen with crypto: niche development opportunities that were once dominated by small teams of programmers are now attracting competition and resources from mega-companies (like JP Morgan).

It’s still possible to succeed in this area. But it will become increasingly difficult over the next several years.

2) Selling shovels to gold miners. These are the people and businesses who build core infrastructure and facilitate the technology’s adoption.

In the early days of the Internet, it was America Online.

This is a very compelling area in crypto right now, and there are a lot of major firms (Fidelity, Goldman Sachs) that are building infrastructure to make it easier to buy and sell cryptocurrency.

3) Application of the technology.

Think Amazon: Jeff Bezos took a new technology (the Internet) and applied it to a 5,000-year old business model (physical retail sales). He’s now the richest man in the world. And some of the most prominent names in retail are going bust.

This is, by far, the most exciting opportunity in the sector.

It’s not about speculating on some coin or ICO anymore; the real opportunity is in applying the technology to other industries.

And given the relatively low rate of adoption for the technology at the moment, this opportunity is WIDE open.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

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