Month: December 2018

On Thursday all eyes will be on the ECB monetary policy decision announced at 7:45am ET, with the press conference as usual 45 minutes later at 8:30am ET.

The ECB will leave all three key rates unchanged; Mario Draghi is expected to confirm the end of QE, announce next steps for reinvestment policy and a possible extension of the TLTRO. The ECB will likely signal that risks are tilted to the downside, but only do some tweaks on its growth and inflation forecasts. It is most likely that we get a reiteration of what we have heard so far with respects to how it conducts policy: flexible reinvestment policy using the capital key, and perhaps no decision on the TLTRO extension until March/April (which is being used as negotiating leverage with Italy’s populist government). Traders will remain vigilant of any subtle changes that may impact the ECB forward guidance on rates and the pricing of a tightening cycle by markets.

BACKGROUND AND CONTEXT (Via RanSquawk)

PREVIOUS MEETING: October’s ECB policy announcement saw little in the way of fireworks after the central bank opted to maintain their current policy settings before unwinding their PSPP at the end of the year. Heading into the release, analysts speculated over whether recent developments in the Eurozone economy would force the hand of the governing council to suggest that risks surrounding growth are ‘tilted to the downside’. However, the Bank refrained from potentially disturbing markets before the conclusion of its QE programme and maintained its ‘broadly balanced’ viewpoint. Elsewhere, Draghi was quick to bat-away any questions on capital key recalculations, an extension to QE and what the Bank would do if the economic situation deteriorates by stating that they were not discussed.

ECB MINUTES: ECB Minutes stated members considered that the uncertainties related to global factors remained prominent, and the risks related to the external environment were assessed to be tilted to the downside. A remark was made about how the TLTRO maturity falling below 1yr could impact banks’ liquidity position. Furthermore, policymakers generally agreed that data, while weaker than expected, remained consistent with expansion and gradually rising inflation pressures. Finally. It was emphasised that policy remained on steady track in line with market expectations and previous decisions.

SOURCE REPORTS: A bulk of the content of source reports has largely centred around the Bank’s reinvestment policy with sources at the end of November suggesting that policymakers are leaning towards only nuanced tweaks in its reinvestment policy, including an open-ended time horizon, and the Bank adopting a new capital key (revealed last week). In terms of the ECB’s normalisation efforts, sources last week suggested that the Bank is debating ideas for gradual stimulus withdrawal in 2019, with some policy makers in favour of hiking only deposit rate at first, whilst the door for TLTRO is said to be viewed as open.

ECB RHETORIC: During his speech at the European Parliament, ECB President Draghi highlighted that data that has become available since September has been somewhat weaker than expected, adding that the loss in growth momentum mainly reflects weaker trade growth, but also some country and sector-specific factors. Nonetheless, Draghi noted that the underlying strength of domestic demand and wages continues to support the ECB’s confidence that the sustained convergence of inflation to their aim will proceed. On the same day, ECB Chief Economist Praet stated that growth risks are balanced but the extremes in risk assessments are bigger than previous. Last week, ECB’s Vasilauskas opined that he does not expect surprises in growth projections at next week’s policy meeting, but does see a degree of normalisation in the growth cycle.

DATA: In terms of recent data points for the EZ economy, growth metrics have been relatively disappointing with Q/Q growth in the Eurozone slipping to 0.2% in Q3 from the 0.4% seen in Q2 with analysts at Danske Bank suggesting that “early indications for Q4 GDP could suggest that the German car-related backlog will not disappear already in this quarter”. On the inflation front, recent declines in energy prices saw November headline inflation slip to 2.0% from 2.2%, with the super-core reading falling to 1.0% from 1.1%, albeit Goldman Sachs highlights that the core reading of 1.1% appears to be tracking in-line with ECB projections for 2018. In terms of soft data, the final Eurozone Composite PMI came in at 52.7 (Exp. 52.4) vs. the 53.1 seen in October with Danske highlighting that “industrial confidence and business climate have edged up slightly as well, which could be seen as the first sign of bottoming out of macro data in the coming months.”

POTENTIAL ADJUSTMENTS TO ECB FORWARD GUIDANCE (INTRODUCTORY STATEMENT)

RATES: No adjustments expected on this front with any adjustments to rates guidance set to be more of a 2019 story. A few months ago, the next tweak to the ECB’s guidance on rates had been expected to be clarification on timings and the extent of moves. However, recent economic developments have caused markets to assign just a circa 75% of rate lift-off next year and thus, the next change in communication for the Bank might instead have to be pushing back the timeframe from their current “at least through the summer of 2019” level.

ASSET PURCHASES: Goldman Sachs expect the ECB will follow through with its current guidance and confirm the end of net asset purchases by year end. GS add that they “expect the ECB to continue to note that full reinvestments of its bond holdings will take place ‘for an extended period of time’ and in any case ‘for as long as necessary’”.

GROWTH/TRADE: Adjustments on this front heading into the previous meeting were a key source of focus and will continue to remain so this time around given recent economic developments. In October, the ECB stuck to it’s ‘broadly balanced’ assessment and Morgan Stanley expect them to do the same once again this week with the investment bank noting that although they “see downside risks to our [their] and the ECB numbers”, they conclude that “with QE set to be discontinued at year-end we [they] doubt that the central bank will overemphasise any particular downside skew in projections”. SocGen take an opposing view, suggesting that instead of making any adjustments to forward guidance on rates, the ECB will choose to provide some caution to the market by classifying risks as now ‘tilted to the downside’, thus giving the Bank more time to gather data at the beginning of 2019 before making any potential adjustments on their expected rate path. Interestingly, Goldman Sachs suggest that the ECB could opt for a compromise move by inserting a line stating that ‘risks are moving to the downside’.

INFLATION: Consensus is largely for the Bank to maintain current guidance on inflation with Morgan Stanley explaining that “the ECB will likely stay in a ‘wait-and-see’ mode, observing how underlying inflation performs in the coming months, before making any further shift to its communication, either to the dovish or hawkish side”.

WHAT TO WATCH OUT FOR

Staff economic projections: Note, the December forecasts will see the inclusion of 2021 forecasts

Inflation: Given the recent pirce action in energy markets, the ECB are widely-touted to have to downgrade their oil price assumption that underpinned the September forecasts. With this in mind, Morgan Stanley believe that 2018 through 2020 inflation will have to be lowered to 1.6% before rising to 1.7% in 2021. Conversely, RBC think that the oil price assumption forecast by the ECB will miss some of the recent sell-off in energy markets given the cut-off date for the projections. As such, they argue that the impact of oil on inflation prospects will be relativley limited and offset by wage growth, which they believe will will need to be revised higher. Therefore, RBC expect 2019 and 2020 projections to remain unchanged and tout a potential upgrade for 2018 inflation (see box below)

Growth: On the growth front, given recent economic conditions in the Eurozone, the ECB are widely expected to make some downward revision of their GDP projections. In terms of the specifics, Goldman Sachs look for a 0.1pp downgraded to 2018 and 2019 growth citing the dissapointing Q3 outturn, lack of spare capacity and signs of slowing rowth from abroad. Elsewhere, ABN AMRO look for deeper eventual cuts of 0.1-0.2pp for 2018, 0.4pp for 2019 and 2020, albeit suggest that these downgrades will take place over the course of several meetings and thus done in stages. Morgan Stanley also look for across the board cuts with 2018 set to be lowered by 0.2pp with smaller 0.1pp cuts for 2019 and 2020 as lower oil prices softens the blow for the Eurozone economy.

TLTRO

In terms of other things to watch out for, any mention of TLTRO 3 will be a focus for markets amid speculation that the ECB could embark on another round of refinancing operations to help soothe the transition of policy normalisation and shield some of the more fragile Eurozone economies (particularly Italy) next year. SocGen argue the case for another round of TLTROs by stating “The euro area economy is currently fragile with high uncertainty and would need a boost to investment to support short-term growth and avoid medium-term bottlenecks in production”. However, in terms of the timing of a potential announcement, source reports last month stated that no decision on the TLTRO will be made at this meeting, instead, markets will be looking to Draghi for any signs over what discussions if (any) have been held thus far and how probable such an outcome is. In terms of a timeframe for a decision by the governing council, Goldman Sachs expect an announcement to be made at some point in H1 2019.

Reinvestments

Elsewhere, the Bank’s approach to its reinvestment plan remains a key source of focus for market participants as the ECB’s PSPP draws to a close. Barclays outlines three key aspects of the policy that will ultimately need to be adressed by policymakers. 1) Reinvesment period: Barclays anticpated that the ECB will signal that “reinvestments will last for “two to three years and in any case for as long as needed”. 2) The average maturity profile of the portfolio: Barclays see “no solid case for maturity extensions yet given accommodative longer rates”. 3) Composition of reinvestment across assets and geographies: Barlcays “assume the ECB does not actively change the country composition of its APP programmes (to deliberately support weaker economies), or re-activate any programme (PSPP, CSPP, CBPP3 or ABSPP) to support any specific asset class”. In terms of other perspectives, Morgan Stanley suggest that the Bank will opt for a stance which sees its reinvestment policy linked to liquidity conditions and overall policy stance rather than any specific time horizon. Note, the ECB recently announced its 2019 capital key, however, there is currently a lack of specificity over whether this will be applied to future reinvestments and/or on the existing stock of purchases; clairty on this matter will likely be sought out during the press conference. That said, RBC caution that even if new purchases by the Bank shift towards the weighting stipulated by the 2019 capital key, the overall size of the Bank’s balance sheet (EUR 2trl) relative to the tweaks would mean that any such changes would be “so subtle as to not really matter for the market”.

MARKET REACTION:

see below for Danske Bank’s ECB scenario analysis chart:

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Progress in the United States/China trade war seems to be happening at just the right time.

The automobile industry in China has been crippled, partly as a result of this trade war, partly due to the ongoing domestic economic slowdown in the mainland, and absent major subsidies – which don’t appear to be coming – the outlook for the rest of 2018 and 2019 is not promising. The collapse has been historic and according to new data, continued through November.

November data confirmed a continuation of the ugly trends that we discussed last month. For instance, passenger vehicle wholesales were down 16.1% on the year, according to the China Association of Automobile Manufacturers. This data includes sedans, SUVs and crossover utility vehicles.

November vehicle wholesales were also down well into the double digits, dropping 13.9% to 2.55 million units year-over-year. Total retail passenger vehicles fell 18% on the year and SUV sales fell 20.6% year-over-year to 854,289 units, according to the Passenger Car Association.

As a result, CICC now expects China’s full year production and sales to drop more than 5% year-over-year for 2018. This would be the first annual decline in Chinese car sales in nearly three decades.

They also predicted that inventory levels at dealerships across the country will likely continue to rise as automakers “stuff channels” in hopes of fooling investors that sales are stronger than they are. The sales data for November suggested “much weaker demand in lower end segments and fears [of] competition in the SUV market” according to the CICC note.

They association concluded that a turnaround for the sector is only likely after Spring Festival, which occurs in the beginning of February. CICC found that domestic brands are becoming more competitive in new energy vehicles and SUV’s, while Japanese carmakers still have the advantage in sedans.

To be sure, this should not come as a surprise to regular readers as we have been reporting on the anemic numbers coming out of China in both October and November, although the severity of the slowdown has caught even the optimists by surprise.

Last month we also noted that China was mentioned very cautiously by automakers, many of whom offered pessimistic forecasts for the remainder of this year. Renault recently blamed its poor numbers on a global slowdown in sales in places like China and Europe, as well new emissions standards. Volkswagen also recently cut its sales forecast for China, citing a slowdown in the country as well as the looming trade war with the United States. 

China’s slowdown has also hit names like General Motors which last month reported a 15% drop in China deliveries for the three months ended Sept. 30, the first quarterly report since the trade tensions with the U.S. began escalating in July.

That said, on Tuesday morning it was reported that China is considering cutting its tariffs on US autos, which could potentially serve as a short-term boost to demand.

Bloomberg said China is planning to cut tariffs on US-made cars to 15% from the current 40% has been submitted to China’s Cabinet to be reviewed in the coming days. China boosted tariffs on US-made cars to 40% as part of a raft of retaliatory measures against the US imposed over the summer. To be sure, nothing is set in stone just yet. The decision is being reviewed, and could still change.

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Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Clues from the Fed II, an RIA Pro article from November 28, 2018, provided important insight into one of Jerome Powell’s most important speeches as the Federal Reserve Chairman. We share the article to provide context to this article as well as to demonstrate the benefits of subscribing to RIA Pro.

Since the latter stages of Chairwoman Janet Yellen’s term and including the beginning of Powell’s term, the Fed has been on monetary policy autopilot. As a result of policy actions taken following the financial crisis, the fed funds rate was so far below the rate of inflation and economic growth that they felt comfortable raising rates on a steady basis without much regard for economic, inflationary and financial market dynamics. In Fed parlance, they were not “data dependent.”

Based on Powell’s most recent speech and policy trial balloons floated in the media, the fed funds rate is now much closer to the expected rate of economic growth, therefore it is much closer to what is known as the neutral fed funds rate. As a result, future Fed rate moves are expected to be increasingly influenced by incoming economic data. If true, this change in monetary policy posture is one to which the market is far less accustomed.

Powell’s Abrupt Change

On October 3, 2018, Jerome Powell stated the following: “We may go past neutral. But we’re a long way from neutral at this point, probably”

On November 28, 2018, he said: “Funds rate is just below the broad range of estimates of the level that would be neutral for the economy.”

In less than two months, the Fed Chairman’s perspective about the proximity of the fed funds rate to neutral shifted from a “long way” to “just below.” Clearly, something in Mr. Powell’s assessment shifted radically. We have some thoughts about what it might be, but we decided to canvas the opinions of others first.

We created a Twitter poll to gauge our follower’s thoughts on Powell’s pivot, which came despite very little evidence that economic conditions have meaningfully changed in the interim.

The poll results from over 1,400 respondents are telling.

Accordingly, we provide a brief discussion of the respective implications for monetary policy and the stock market.

“Trump persuaded Powell”

President Donald Trump, a self-described “low-interest rate guy”, has been openly displeased with Jerome Powell and the Federal Reserve for raising rates. To wit:

• CNBC 11/27/2018– Trump told the Post, “So far, I’m not even a little bit happy with my selection of Jay,” whom he appointed earlier this year. The president told the newspaper that he thinks the U.S. central bank is “way off-base with what they’re doing.” — “I’m doing deals and I’m not being accommodated by the Fed,” Trump told the Post. “They’re making a mistake because I have a gut and my gut tells me more sometimes than anybody else’s brain can ever tell me.”

• WSJ 10/23/2018– “Every time we do something great, he raises the interest rates,” Mr. Trump said, adding that Mr. Powell “almost looks like he’s happy raising interest rates.” The president declined to elaborate, and a spokeswoman for the Fed declined to comment. — Asked an open-ended question about what he viewed as the biggest risks to the economy, Mr. Trump gave a single answer: the Fed.

• NBC 10/16/2018– “I’m not happy with what he’s doing because it’s going too fast,” Trump said of Powell. “You look at the last inflation numbers, they’re very low.”

• AP News 10/16/2018 – Stepping up his attacks on the Federal Reserve, President Donald Trump declared Tuesday that the Fed is “my biggest threat” because he thinks it’s raising interest rates too quickly.– Last week, in a series of comments, Trump called the Fed “out of control,”

The Fed is under increasing pressure from the White House to halt interest rate hikes. While we like to think Fed independence means something and the President’s pressure is therefore futile, there is a long history of Presidents taking explicit steps to influence the Fed and alter their actions.

29% of poll respondents believe that Trump’s comments made in the open, and those we are not privy to, are the cause for Powell’s change in tone. If this is the case, it likely means that Powell will shift towards a more dovish monetary policy going forward. This would entail fewer rate hikes and a reduced pace of Fed balance sheet normalization. Since the financial crisis, the precise combination of low interest rates and expanded balance sheet (QE) has proven extremely beneficial for stocks. Looking forward, excessive monetary policy amid a smoothly running economy is a recipe for inflation or other excesses which would not bode well for stocks.

We think this scenario is short-term bullish, but it could easily be diminished by higher interest rates or growing inflationary pressures.

Before moving on, it is important to note that Trump’s remarks above (and many other of his comments) are a first of their kind. This isn’t, because other Presidents haven’t said similar things but because Trump’s comments are in the public for all to see.

Economy Slowing Quickly

Votes that a quickly slowing economy produced Powell’s shift represented 42% of all responses. If correct, this is the worst case scenario for the stock market. Global economic growth is already decelerating as witnessed by the declining GDP growth posted by Germany, Canada, Italy, Japan and Switzerland in the most recent quarter. Further, China, the main engine for global economic growth since the financial crisis, is sputtering.

In addition to the global forces affecting the economy, the growth benefits seen over the last year from a massive surge in fiscal spending and corporate tax cuts are waning. Lastly, higher interest rates are indeed taking their toll on our debt-burdened economy.

It goes without saying that stocks tend to do very poorly during recessions, regardless of whether the Fed is dovish and lowering rates. During the past two recessions, the S&P 500 dropped over 50% despite aggressive interest rate cuts.

We think this scenario is decidedly bearish.

Stock market woke him up

The “Greenspan Put” is a phrase that was used to describe Fed Chairman Alan Greenspan’s preemptive policy moves to save the stock market when it was headed lower. While Greenspan’s name is on the term, it goes back even further. Following the crash of 1929, for instance, the Fed made enormous efforts to halt stock market declines to no avail. In recent years, the Greenspan Put has taken on more significance as Ben Bernanke and Janet Yellen followed in his footsteps and spoken repeatedly about a beneficial wealth effect caused by higher share prices.

In the past, Powell has expressed reservations about the policy measures taken by his predecessors and has openly worried about the risk of high stock valuations and other potential imbalances. He has generally demonstrated less concern for protecting the stock market. With the market falling and the proverbial rubber hitting the road, we are about to find out if a 10% decline from record highs is enough to scare Powell into a dovish stance. If so the Greenspan, Bernanke, Yellen, Powell put is alive and well.

As previously mentioned, there have been several occasions in years past when the market suffered steep declines despite the presence of the Fed Put.

We think this scenario is bullish on the margin, but it may not be enough to save the market.

Summary

As judged by the voting, the most likely explanation accounting for Powell’s sudden and aggressive change in tone involves some combination of all three factors. Like most central bankers, he probably believes that he can engineer a “soft landing.” In other words, he can allow the current global and domestic economic pressures to reduce economic growth without causing a recession.

While such a plan sounds ideal, the ability to execute a soft landing has eluded central bankers for decades. Some will say the Fed, by delaying plans for rate hikes and reducing their balance sheet, avoided a hard landing in 2015 and 2016. They may have, but since then global economic and political instabilities have risen markedly. This makes a repeat execution of a soft landing much more difficult. A second concern is that the Fed, with rates still historically very low, does not have enough fire power to engineer a soft landing.

We will continue to pay close attention to the Fed for their reaction to what increasingly looks like a changing economic environment. We also leave you with a reminder that, while the Fed is powerful in igniting or extinguishing economic activity, they are simply one of many factors and quite often throughout their 105-year history they have fallen well short of their goals.

The market is a highly complex global system influenced more by the unseen than by the obvious. Jay Powell, like most of his predecessors who thought they could control market outcomes, apparently suffers from this same critical handicap. Of all the moral hazards the Fed sponsors, their hubris is certainly the most destructive. The stability of the last ten years and the shared perception of Fed control will lead many to forget the sheer panic that occurred only a decade ago.

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The White House announced late in the day Wednesday that Russia will withdraw its long range nuclear capable bombers parked in Venezuela since Monday which flew to Caracas on a 10,000km mission in a show of support for socialist President Nicolás Maduro. White House spokeswoman Sarah Sanders stated “the planned departure came after the Trump administration spoke with Russian officials,” according to a breaking WSJ report. 

The departure is planned for Friday, however, the WSJ also noted a Russian embassy representative in Washington said Moscow has not announced a departure date. Instead the Russian military touted a ten hour flight carried out over the Caribbean Sea on Wednesday while accompanied at times by Venezuelan fighter jets, announcing the provocative lengthy flyover in America’s backyard via official Russian media. Perhaps it was Moscow sending a big middle finger just before departure of the aircraft from Venezuela? 

The Russian Defense Ministry’s press service announced via TASS:

During the international visit of the Aerospace Defense Forces’ delegation to the Bolivarian Republic of Venezuela, pilots of strategic bombers Tu-160 conducted a flight in the airspace over the Caribbean Sea. The flight lasted for about 10 hours.

“In certain parts of the route, the flight of Russian bombers was conducted together with Su-30 and F-16 fighter jets of the Venezuelan National Bolivarian Military Aviation. The pilots from the two countries practiced air cooperation when fulfilling air tasks,” the defense ministry added.

Perhaps anticipating widespread condemnation from the United States and the West, press release added that “the flight was performed in strict accordance with international rules of using airspace.”

The flight of the pair Tu-160 strategic bombers and support aircraft from Russia to Venezuela drove world headlines early this week after the bombers touched down at Simon Bolivar International Airport in capital Caracas on Monday. Russian state media promoted the flight, which involved training in areas such as aerial refueling. It was the first time Russian bombers touched down in Venezuela since prior visits in 2013 and 2008.

The internationally isolated Maduro regime has found itself increasingly reliant of Russia for aid. Last week the Venezuelan president visited Moscow and signed an estimated $6 billion deal with Putin, involving Russian commitments of major investment in the oil and mining sectors, with military modernization aid a focus of the agreement. 

During last week’s trip to Moscow, Maduro had called Russia a “brother country” with which Venezuela had “raised the flag for the creation of a multipolar and multicentric world.”

Meanwhile Secretary of State Mike Pompeo had slammed Russia for sending the pair of bombers “halfway around the world” to Venezuela in comments posted to Twitter late Monday. “The Russian and Venezuelan people should see this for what it is: two corrupt governments squandering public funds, and squelching liberty and freedom while their people suffer,” Pompeo stated. The tweet set off a war of words and condemnation from Russian counterparts, which called Pompeo’s words “undiplomatic” and “unprofessional”.

No doubt the image of Russian nuke-capable bombers and allied Venezuelan fighter jets circling for ten hours over the Caribbean — smack dab in America’s own backyard — will surely be taken by White House and Pentagon officials as a major provocation.

But the United States can also already claim the victory given reports that Russia has now agreed to withdraw the aircraft and and will send them packing back home.  

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Venezuelan President Nicolas Maduro unleashed a hailstorm of serious accusations against the Trump administration and specifically National Security Advisor John Bolton on Wednesday, telling a press conference that Bolton is currently planning to overthrow and to kill him. 

Maduro said at the press conference, which was broadcast on his Facebook page, that Bolton is in the midst of “preparing a plan of my assassination” using “mercenary and paramilitary” forces from neighboring countries. 

The embattled and globally isolated Venezuelan president went into some degree of detail during the remarks outlining what he says is a conspiracy against him: 

John Bolton leads the plan to unleash violence and conduct a coup to introduce a transitional government. Bolton is preparing a plan of my assassination. He is training, in various places, mercenary and paramilitary units’ forces jointly with Colombia, whose president Ivan Duque is an accomplice of this plan.

Maduro has made the charge that Washington is seeking his assassination a number of times, especially after only months ago in early August he evaded a bizarre assassination attempt involving C4-laden drones at a military ceremony in Caracas. 

A constant theme of Maduro’s has been that the United States would use Columbia to carry out the plot, which he emphasized in allegations made in October.

His Wednesday remarks followed prior weekend comments claiming a coup attempt was in the works. Venezuela’s official AVN news agency quoted him on December 9 as saying, “An attempt to undermine Venezuela’s democratic life and to carry out a coup d’etat against the constitutional, democratic regime in our country has been launched under the coordination from the White House.” 

The president announced that in the coming days he would hold another press conference to reveal further details of the alleged assassination plans, which should be interesting considering international reports are nothing his consistent lack of evidence when he brings forth such charges. 

However, a bombshell New York Times report published in September suggested Maduro is perhaps right to be paranoid. The report detailed several secret meetings between the Trump administration and Venezuela military officers to talk about potential coup plans, but according to Times sources “the coup plans stalled”. It had reportedly involved a “clandestine channel” ordered by the White House prior to last summer to set up contacts with “rebellious officers” bent on bringing about regime change with the help of Washington.

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Authored by Michael Snyder via The End of The American Dream blog,

If you want to understand the zeal with which social media platforms are now being censored, all you have to do is to look at what has been happening on our college campuses. 

There is a national movement to combat “offensive speech”, and this movement has been working very hard  “to scrub campuses clean of words, ideas, and subjects that might cause discomfort or give offense”.  And these days, just about anything that you might say or think is probably going to deeply offend someone. 

For example, saying that “America is the land of opportunity” is now considered to be a “microaggression”, and even the act of hanging an American flag in front of your dwelling can also be considered to be a “microaggression” depending on the context. 

It can be tempting to laugh at how ridiculous our college students have become, but it is imperative to remember that these students all eventually enter the real world, and many of them end up in positions of power.  And from those positions of power, they can make life extremely uncomfortable for all the rest of us.  The “social media purge” is a perfect example of this, and the censorship of speech is only going to become more widespread as time goes on.  The next generation of “America’s thought police” is rising, and they intend to make sure that the future belongs to the politically correct.

Things have already reached such absurd levels that even those that are attempting to “raise awareness of microaggressions” are being accused of “microaggressions” themselves.  Just check out the following example…

Some recent campus actions border on the surreal. In April, at Brandeis University, the Asian American student association sought to raise awareness of microaggressions against Asians through an installation on the steps of an academic hall. The installation gave examples of microaggressions such as “Aren’t you supposed to be good at math?” and “I’m colorblind! I don’t see race.” But a backlash arose among other Asian American students, who felt that the display itself was a microaggression. The association removed the installation, and its president wrote an e-mail to the entire student body apologizing to anyone who was “triggered or hurt by the content of the microaggressions.”

We are rapidly getting to the point in this country where a large portion of the population will be deathly afraid of saying or doing anything the least bit controversial for fear that someone might be “offended”.

And even if you are exceedingly careful, you still might end up offending someone and find yourself mired in an endless investigation.  For instance, consider what happened at one community college in New Jersey…

For instance, last year administrators at Bergen Community College, in New Jersey, suspended Francis Schmidt, a professor, after he posted a picture of his daughter on his Google+ account. The photo showed her in a yoga pose, wearing a T-shirt that read I will take what is mine with fire & blood, a quote from the HBO show Game of Thrones. Schmidt had filed a grievance against the school about two months earlier after being passed over for a sabbatical. The quote was interpreted as a threat by a campus administrator, who received a notification after Schmidt posted the picture; it had been sent, automatically, to a whole group of contacts. According to Schmidt, a Bergen security official present at a subsequent meeting between administrators and Schmidt thought the word fire could refer to AK-47s.

This time of year is often particularly bad, because the thought police are particularly active.

Some Americans celebrate Christmas, some celebrate Hanukkah, some celebrate other holidays and some don’t celebrate any holidays at all.

But at schools all across America, the thought police are feverishly working to make sure that everything is in line with the latest standards of political correctness.  At one school, they even banned the colors red and green, because administrators felt that those colors represented Christmas and therefore were not legal.

And students that wish to send cards to the troops are being instructed not to include the words “Merry Christmas”…

Students asked to send seasonal cards to military troops have been told to make them “holiday cards” and instructed not to use the words “Merry Christmas” on their cards.

Many schools have redubbed their Christmas concerts as “winter holiday programs” and refer to Christmas as a “winter festival.” Some schools have cancelled holiday celebrations altogether to avoid offending those who do not celebrate the various holidays.

Honestly, sometimes I don’t even recognize this country anymore.

From the cradle all the way through college, we are raising a generation of overprotected “snowflakes” that have been trained to throw temper tantrums whenever their protective bubbles are somehow pierced by the real world.

When I was growing up, I walked myself to elementary school.  And every day after school, we would play in the streets without any parental supervision whatsoever.

But if you allowed your kids to do those things today, you would be considered an extremely irresponsible parent.

By the time our overprotected children get to college, they have become very accustomed to their protective bubbles, and they believe that anyone that disrupts those protective bubbles should be punished.  Unfortunately, by treating our children this way we are preparing them very poorly for the real world.  A recent article in the Atlantic made this point very well…

But vindictive protectiveness teaches students to think in a very different way. It prepares them poorly for professional life, which often demands intellectual engagement with people and ideas one might find uncongenial or wrong. The harm may be more immediate, too. A campus culture devoted to policing speech and punishing speakers is likely to engender patterns of thought that are surprisingly similar to those long identified by cognitive behavioral therapists as causes of depression and anxiety. The new protectiveness may be teaching students to think pathologically.

In order for freedom of speech to exist, we must be willing to live in a society with people that have different viewpoints from our own.

Sadly, an increasing number of Americans don’t want that.  Instead, what they want is for those that hold “intolerable” views to be punished by society.  We see this in the headlines on a daily basis in 2018, and it is getting progressively worse with each passing year.

John Whitehead, the author of Battlefield America: The War On The American People, summed things up quite well in his most recent commentary…

Never forget, the police state wants us to be a nation of snowflakes, snitches and book burners: a legalistic, intolerant, elitist, squealing bystander nation willing to turn on each other and turn each other in for the slightest offense.

Political correctness has become institutionalized, and if you think that the “thought police” are bad now, the truth is that the next generation is going to be even worse.

If our founders could see what we have become they would be rolling over in their graves, because this is not what they intended.

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A day after grabbing headlines with his grandstanding during Google CEO Sundar Pichai’s testimony at a House Judiciary Committee hearing, Rep Ted Lieu ( U.S. Representative for California’s 33rd congressional district since 2015) went on CNN for victory tour and exposed the reality of the Democratic Party’s deep desire to ‘amend’ the First Amendment.

During yesterday’s hearing Lieu quoted Google searches of Republican congressmen Steve Scalise of Louisiana and Steve King of Iowa in an attempt to ‘prove’ that conservative complaints that Google is biased against conservatives are false…

Having scored ‘1’ for the resistance, Lieu was quick to expand on his 15 minutes of fame and joined host Brianna Keilar on CNN. After congratulating Lieu for his “clever” move and pressed him, and his Democratic colleagues, to ask the Google CEO about how it and other tech companies can work to prevent the spread of conspiracy theories and fake news more broadly.

Lieu stepped up to the plate and hit it out of the park:

“It’s a very good point you make,” Lieu said. “I would love if I could have more than five minutes to question witnesses. Unfortunately, I don’t get that opportunity. However, I would love to be able to regulate the content of speech.”

Wait what? Do go on…

“The First Amendment prevents me from doing so, and that’s simply a function of the First Amendment, but I think over the long run, it’s better the government does not regulate the content of speech.“

Watch the full clip here:

So – there is First Amendment, which seems to be very frustrating to the Democrats. And presumably, when Lieu says “over the long run,” he seems to imply that “in the short-run” – perhaps while President Trump is in office, or any conservative American remains alive, government limits on free speech are more than acceptable?

 

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Via Greg Hunter’s USAWatchdog.com ,

Financial and precious metals expert Egon von Greyerz (EvG) says don’t expect the global financial situation to get better anytime soon.

EvG says, “You know what the politicians are doing now? Theresa May is my best example. These politicians are just running around posing and acting, but they are not achieving anything, and they are not achieving anything because the world is in a mess…”

“What we are seeing the beginning of is the decline of the western world economy, which means the whole world economy…

There is no use in putting a time period on it, that it’s going to happen this year or next year. The trend is clear. We know that the world economy is in a mess. It’s going to decline, and in my view, it’s going to be a rapid decline…

Gold will reflect all of this, and currencies will be totally debased…

You don’t need a lot, you might only need another few snowflakes to trigger this avalanche. It could come in a month or in three months time because the system is a fake system…

I count $2 quadrillion in money. If you add debt, unfunded liabilities and the risk of derivatives, you come up to $2 quadrillion of debt and liabilities. The global GDP is $70 trillion…So, you are talking about 30 times global GDP.”

What could go wrong? EvG says, “You don’t need much to go wrong. It will happen. They have no remedy anymore…”

“2007 to 2009, I have said many times that was a rehearsal. The real thing is coming now or in the next few years, and no money printing will ever stop it. They will try, but they will fail. This is why you will get the depressionary hyperinflation, and when that fails you get the implosion of the system. All values will shrink to very low numbers, all assets and debts will shrink together. That is the longer term play. It’s not going to be nice for the world. It’s going to be horrible for the world.”

In closing, EvG says, “Because of the artificial control of the system, the cycles becomes ten times or a hundred times bigger than they would have been by natural forces…”

“We have had a hundred years of excesses in the world and artificial wealth creation. Now, in the coming years, we will have a very long period of the opposite. Wealth will disappear. A lot of people will suffer, and, sadly, there will be famine. There will be misery. The world has gone through this before, but this will be bigger than it ever has been. The world will survive this, but there will be a lot of suffering when this implodes…

The fear hasn’t started yet, but it will, and then there will be a rush into gold and silver. Our clients are increasing their positions…

In my view, 25% of total net worth is the minimum (to invest in gold and silver), and, personally, I would not have any major assets in the bank because I don’t think the banking system will survive. If it survives, it will not be in its present form. Stocks, in relation to gold, will go down 90% to 95%. They went down 90% in 1929 to 1932…

There will be the most massive wealth destruction ever.”

Join Greg Hunter as he goes One-on-One with Egon von Greyerz of GoldSwitzerland.com.

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As we’ve pointed out time and time again, the notion that going to college guarantees a higher paying job and a better standard of living is a myth (‘millennial Congresswoman’ Alexandria Ocasio-Cortez effectively embodies this myth; she worked as a bartender before launching her upset primary campaign, despite graduating with a degree in economics from Boston University, and has spoken about feeling directionless after graduating with a mountain of student debt).

Generally speaking, data suggests that college graduates earn higher incomes, face lower unemployment and happier and healthier than their peers who don’t have a degree. But these general figures mask the fact that millions of degree holders are defaulting on their student loans (one study published in August said 30% of student loans are in their default, or in arrears) and also struggling with underemployment or being stuck working jobs that don’t require a college degree. One million Americans default on their student loans every year. And if defaults continue at their current pace, roughly 40% of borrowers will have defaulted by 2023.

With so many flashing red warning signs, the fact that the risks posed by this teetering pile of $1.4 trillion in debt have received only glancing coverage in the financial press is astounding. Coverage of the rising cost of higher education always carefully asserts the old conventional wisdom – that, even with the debt, the underemployment and their resulting stressors (reams of data suggest that American millennials are delaying marriage, family formation and buying a home, largely because of their student loan debt), young Americans are still better off with a degree than without one.

Which is why it was almost refreshing to see the Wall Street Journal publish a story deconstructing these myths. A story that acknowledged – in its opening paragraphs, no less – that “college graduates can end up worse off than people who haven’t gone to college at all.”

In fact, 32% of college grads (a group that, we imagine, includes a large number of gender studies majors) end up with jobs that don’t require a degree 10 years after graduation.

But students who start college, but never finish, are worse off than their peers who earn their degrees (regardless of how long it took to finish). But how many students end up in this predicament? A surprising number, as it turns out. For every 100 students who enroll in university, 40 will never finish. Of these 40, 32 will still need to pay off student loans. Roughly 10 of these 32 – roughly 30% – will eventually default. That’s compared with 5 out of 42 graduates who carry loans.

As the chart below shows, students with “some college” struggle with unemployment rates that are nearly as high as students with only a high school degree.

Their earnings potential is also far closer to those with only a high school diploma than students who finish college.

The average student loan burden for Americans has nearly doubled over the past 20 years.

To sum up, while a college degree can bestow higher earning capabilities, students shouldn’t enroll without a clear plan for how they’re going to make a living post-grad.

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Authored by Charles Hugh Smith via OfTwoMinds blog,

The elites’ clever exploitation of politically correct cover stories has enthralled the comatose, uncritical Left, but not those who see their living standards in a free-fall.

A family member who has lived in France for decades summarized the source of the gilets jaunes protests in one sentence: “The government stopped listening to the people 20 years ago. It would be difficult to deny the generalization of this: many if not most governments stopped listening to their people decades ago, preferring instead to listen to financial and political elites and entrenched cultural elites who view commoners with disdain.

Legions of commentators are weighing in on the economic and cultural sources of France’s distemper. Many have characterized the protests as working class, broadly speaking, the multitudes who have seen an erosion in the purchasing power of their wages or pensions while France’s financial, political and cultural elites have feasted on whatever meager gains the French economy has registered in the past 20 years.

The protesters rightly perceive that they are politically invisible: the ruling class, regardless of its ideological flavor, doesn’t believe it needs the support of the I>politically invisible to rule as it sees fit. The ruling class has counted on the cultural elites to marginalize and suppress the politically invisible by dismissing any working-class dissent as racist, fascist, nationalistic and other words expressly intended to push dissent into the political wilderness.

The cultural elites reckoned their ceaseless depiction of working-class dissent as racist-fascist populism would continue marginalizing the commoners, but the worm has turned: the financially, politically and culturally marginalized classes are fed up.

Despite the usual squabbles between factions, the ruling class has long been united behind a simple tool of control: buy complicity with government benefits. Should dissent boil up in a broad-based movement, the solution is buy the protesters off with some new state subsidy or benefit.

This is one of the essential dynamics of Neofeudalism which are:

1. Debt penury and wage-slave loyalty to the New Nobility that owns the debt.

2. The financial-political nobility maximize their skim and justify this exploitation with airy assurances to the politically impotent debt-serfs that this systemic predation magically offers up the best possible outcome for the peasantry.

3. State benefits are used as bribes to buy the complicity and passivity of the wage-slave debt-serfs.

4. The New Nobility offer politically correct cover stories for their exploitation and predation.

Now that this strategy has failed to silence gilets jaunes, France’s ruling class realizes the situation is serious. And as we all know, the ruling class everywhere follows this dictum: when it gets serious, you have to lie.

The lies are now continuous, hence the explosion of elite concern over fake news. The spark that lit the fuse of the current protests was a lie, of course; the fuel tax wasn’t intended to “save the planet”, it was intended to raise revenue so the elites could continue to extract their skim without endangering the economic order.

The elites’ clever exploitation of politically correct cover stories has enthralled the comatose, uncritical Left, but not those who see their living standards in a free-fall.

“We’re fine with being exploited serfs because our Nobility uses politically-correct phrases in public…”

*  *  *

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