Month: December 2018

Authored by Elizabeth Lea Vos via Disobedient Media,

Earlier today, former Congressional candidate Tim Canova announced that his legal team filed a complaint officially contesting the results of last month’s congressional race, in which Canova faced off against former DNC Chairwoman, Debbie Wasserman-Schultz.

The Canova campaign website announced the move:

“Tim Canova, independent candidate in Florida’s 23rd Congressional District, has filed a motion for a court to invalidate the results of the 2018 general election and declare that a “new election shall proceed with hand-marked paper ballots that are counted by hand in public and reported immediately and publicly at the local precinct level.”

“…In the details of Canova’s court filing, Broward County Elections Supervisor Brenda Snipes [is alleged to have] “engaged in misconduct that was sufficient to change or place in doubt the results of the 2018 election.”

Canova cites Snipes, Dozel Spencer, the SOE Director of Voting Equipment, and other deputy supervisors “violated their oaths to faithfully perform their duties, engaged in repeated misconduct and violations of state and federal laws, including criminal statutes.”

Highlights of the complaint, via the Canova Campaign website, include:

The complaint states in part:

“Unfortunately, this is only the most recent instance of what is now a pattern of misconduct by Snipes regarding paper ballots, as it follows barely a year after Snipes unlawfully destroyed hundreds of boxes of all paper ballots cast in Broward County in the 2016 Democratic primary for Florida’s 23rd Congressional district between Canova and Schultz, in violation of state and federal law and while Canova’s prior lawsuit to inspect those ballots was pending, as already determined on summary judgment by the Florida Circuit Court.”

“In addition to Snipes’ failure to safeguard the integrity of the paper ballots in the 2018 general election for FL-23, the certification of the purported results is based on inadequate and incomplete information, and it is therefore an invalid certification of those results. More specifically, approximately 98,000 votes are reported by Snipes to have been cast for Schultz without any indication as to how and when those votes were cast. To date, Snipes still has not provided this information about the “98,000 votes from nowhere.” These votes alone are enough to change the results of this election, or at the very least to place in doubt these results.”

This latest news comes under 24 hours after the Sun Sentinal reported that Florida’s Governor Rick Scott had fired Brenda Snipes, effective immediately. The report states:

 “Florida Gov. Rick Scott suspended Broward County elections supervisor Brenda Snipes on Friday and installed a close ally to lead an office that could play a pivotal role in the next presidential election. Peter Antonacci, president and CEO of the state’s business-recruitment agency Enterprise Florida, will serve for the remainder of Snipes’ term until a replacement can be chosen by voters in November 2020, the governor’s office announced.”

Disobedient Media previously covered the disastrous aftermath of last month’s midterm elections, specifically concerning the race between Canova and Wasserman-Schultz. On election night, the official vote count awarded a mere 5% of votes to Canova, despite a previous poll revealing the independent was tied with the former DNC Chairwoman.

This glaring discrepancy prompted vocal calls for the invalidation of the race. Given Snipes’s history of illegal ballot destruction which benefitted Wasserman-Schultz’s interest, as well as the fact that Snipes was photographed campaigning with Wasserman-Schultz days before voters went to the polls, it would be ludicrous if Canova and the public failed to question the validity of the results.

In a previous appraisal of Debbie Wasserman-Schultz’s career, Disobedient Media noted her central role in seeing Bernie Sanders cheated out of the Democratic Party nomination in 2016, as well as her probable involvement in bizarre event surrounding the DNC Fraud lawsuit (voice-modulated phone calls including the phrase “okey-dokey” ), and the grossly underreported Awan scandal.

Disobedient Media additionally noted the furor that erupted after the publication of video evidence of a digital scanner voting machine sending results wirelessly. Some have also accused Snipes and her affiliates of falsifying ballots ‘as needed,’ dubbing the practice the ‘Brenda Snipes Process,’ which was allegedly used routinely in order to ensure a desired election outcome.

Independent journalist and progressive activist Niko House also set the internet on fire when he published a video of purported ballots being illegally and improperly transported. House discussed what he witnessed in Florida on election day with Lee Camp on RT’s Redacted Tonight.

Tim Canova has also called for the resignation of Snipes’s Director, Dozel Spencer. As noted by this author and others, Brenda Snipes is merely the public face of a deeply corrupt political system, and without a massive overhaul, business will most likely continue as usual in Southern Florida – at the expense of its constituents.

Prosecution of those involved in documented, home-grown election interference is also essential moving forward. However, one should be under no illusion that such measures are likely in the near term without massive public pressure.

Regardless, the significance of Canova’s two races against Wasserman-Schultz, as well as his campaign’s quest for transparency, should not be forgotten. He is one of the very few progressive candidates who has opted to fight corruption head-on, from outside the DNC, rather than concede and meekly endorse the perpetrators of it from within the Democratic Party.

Unlike the faux “#Resistance” against fictional Russian-collusion or Russian-hacking, Canova is the singular example of real resistance against actual US election rigging in one of the most corrupt political fiefdoms in the country.

It is for all of these reasons, many believe, that the discrepancy between polling and election results was so extreme in Canova’s latest race. It wasn’t about “safely” beating Canova, it was about making an example of him to such an extent that no one else would follow in his footsteps. With all of this in mind, it is critical that the public support Tim Canova’s efforts in contesting last month’s election results. Donations can be made via the Canova campaign website.

Disobedient Media will continue to report on the corrupt dealings surrounding Debbie Wasserman-Schultz, as well as the efforts of Tim Canova and his campaign.

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Submitted by Eric Peters, CIO of One River Asset Management

“American politicians lack ambition. Buy them for pennies. Blind them with billions. But the game is for trillions,” whispered the world’s richest man, staring out the window enroute to Buenos Aires. “To the owner of Russia, what’s a $50mm penthouse?” continued Putin, the Atlantic curving below, beautiful blue. “But such an offer from an American candidate and his children is an extraordinary gift,” laughed Vladimir, pleased to finally have an opponent fluent in the language of mutual benefit.

“I’m weeks from putting this mess all behind,” mumbled Mohammed bin Salman, daydreaming, alone in his Dreamliner. “All it cost me was delivering the Trump organization a $10 drop in oil,” continued the world’s richest Arab, his stock market still outpacing the S&P 500 this year.

“What must I pay?” wondered Asia’s richest man, jetting to G20, ready to sign something, but unable to tally the bill. “Do the American’s even want a deal?” continued Xi Jinping, resigned to an expensive war.

“It cost me next to nothing,” sighed President AMLO in deep relief. His Mexican-made autos rolled north, the caravan returned south. “Never have so few impoverished Hondurans held such value,” marveled AMLO, his cooperation in the timely election hysteria ingratiating him to America’s administration.

“Which is Air Force One?” wondered Powell, looking up, contrails crisscrossing Washington. “Never seen so many damn planes,” grumbled the Fed Chairman, breaking into renewed sweat, the unnatural economic heat inescapable. “What will this cost?” wondered Powell. You see, no Fed Chairman is independent, and the price of protecting his institution in this era of transactional politics is that Jay had to slow his rate hikes.

“No way they dare impeach with my economy this hot,” whispered Trump, repeating the mantra, reassuring himself, Air Force One southbound. “Low rates, low oil, every world leader frightened, unsteady, transacting, paying me. No way they impeach. No way. Not possible. No way.”

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Theresa May is still in Argentina engaging in “productive” talks with her fellow G-20 leaders, but back at home, some interesting developments in the interminable odyssey that is the Brexit talks have taken shape. Yesterday, we reported that a handful of May’s most senior cabinet ministers had nearly completed a ‘secret’ “Plan B” Brexit deal that is said to closely resemble the “Super Norway” framework that many Brexiteers have said they would prefer. This “alliance”, which has reportedly been meeting in secret for about a month now, is reportedly working with sympathetic EU ministers to try and build a consensus for selling the deal during the chaos that would likely follow a Parliamentary defeat of May’s draft plan.

Meanwhile, May herself has reportedly backed away (at least, to a degree) from her insistence that her deal is the only and best possible deal. To wit, she is said to be considering holding a “meaningful vote”, which would allow MPs to propose amendments that could eventually be brought to a vote – in essence allowing Parliamentary to forge a more palatable deal by consensus.

Of course, both of these alternatives are still in the trial balloon stage, and May’s official line hasn’t changed since EU members voted to finalize the draft plan an its attendant (nonbinding) political ‘statement’ last week. At least 100 Tory MPs have said publicly that they would oppose May’s deal. And while May narrowly escaped a leadership challenge from within the Conservative Party last month, it appears her opponents across the floor are preparing to capitalize on this broad-based discontent (not just within the conservative party, but crucially, within the DUP and SNP, two regional parties that have helped prop up May’s government) by preparing to call for a vote of no confidence in the government should May’s deal fail, according to Bloomberg.

Labour’s Brexit spokesman Keir Starmer said Sunday during an interview with Sky News that, if the deal vote fails, it would be “inevitable” that Labour would call for a vote of confidence in her government. Conservatives have every reason to take these threats seriously. In fact, in what looks like a dry run for a no-confidence vote, Labour has joined with the DUP to demand that May’s government release Attorney General George Cox’s legal advice in full – not just the detailed summary that May committed to releasing following a vote last month that requires her government to be ‘transparent’ about the attorney general’s findings, according to the Guardian. This could be hugely problematic for May because Cox has reportedly warned that the EU could be tied to the UK ‘indefinitely’ through the backstop. And if Cox’s official legal advice substantiates this view, the odds of winning over even some of the rebellious Brexiteers in the European Research Group faction would plummet to near-zero.

But amid the chaos, the glimmer of a second chance has emerged for May’s doom Brexit deal. As conservative leaders grow increasingly anxious about the possibility that Labour leader Jeremy Corbyn could force a general election – presumably, he would do this by successfully winning a no confidence vote following the defeat of May’s Brexit plan as UK financial markets exhibit a TARP-like reaction (see our handy Brexit guide for more) – potentially resulting in Labour winning a majority, some senior ministers who had previously opposed May’s deal have apparently decided that there really is no palatable alternative.

During a Sunday appearance on Andy Marr, Environment Minister Michael Gove (who just weeks ago reportedly turned down the Brexit Secretary post) has, in a remarkable reversal, thrown his support behind the deal, saying that backing the “imperfect” deal is “the right thing to do”.

Perhaps Gove has finally realized that the Conservatives have so thoroughly damaged their relationship with the DUP and SNP – both of whom feel betrayed by the deal – that anything short of passage would risk a defeat of the conservative majority, or at least a “People’s Vote” on the deal that could function like a second Brexit referendum. Wall Street has attached high odds to either outcome.

Or maybe Gove has simply recognized that time is running out.

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Authored by John Mauldin via MauldinEconomics.com,

In an increasingly divided world, we all share one great desire: self-preservation. Not just humans, either. The survival instinct exists in almost every living thing. Humans simply have greater ability to do something about it.

In fact, we have been doing something about it for many thousands of years. An inverted pyramid of geniuses and giants, modern medicine, nutrition, sanitation, and assorted other innovations has extended our lifespans and helped more of us live to ripe old ages. That’s wonderful… but it’s also a problem many of us still don’t fully understand.

I have mixed feelings myself. At 69, I truly believe I’ll live well past 100 and stay as healthy and independent as I am now. But sometimes I wonder. For instance, in the past few weeks I had a growing adverse reaction to a new (to me) medicine. It made me tired and slowly lowered my blood pressure to a dangerous level. I didn’t recognize it and just thought the years and miles were finally beginning to take their toll. Finally, in consultation with my doctor, we figured out what was going wrong, changed course and the major symptoms improved quickly. But for about a month, I felt much older, almost invalid at times. It was kind of like the Hemingway line, “How do you go bankrupt?” The answer: “Slowly, and then all at once.”

Of course, I’ve helped my elderly parents and others but this poignant experience gave me new awareness of my own age. It also increased my determination not to go gently into that good night. And, to today’s topic, it helped draw my attention to aging and demographics as they relate to my series on debt.

Aside from death, aging brings financial and cultural problems. We are simply not prepared for a world in which old people outnumber the young. But it may be coming, thanks to life extension at the upper end and falling fertility rates below. National pension systems—what we call Social Security in the US but similar elsewhere—are not designed for that combination. They presume a high ratio of working young to retired old citizens. That is no longer happening and is increasingly hard to ignore.

Today I want to review these issues, and then tell you about a new initiative to help you live well and even prosper in this new, longer-lived world.

This Is Nuts

A dwindling minority of us has long warned that demographic changes are making Social Security unsustainable. Here’s a chart I shared earlier this year in The Pension Train Has No Seat Belts.

Source: Peter G. Peterson Foundation

The chart doesn’t show the full progression. In 1940 the Social Security system had 159.4 workers per beneficiary then went off the rails quickly. By 1945 the ratio was down to 41.9 and a decade later was in single digits. A variety of measures, from higher tax rates to (slightly) raising the retirement age, have flattened the trajectory but it is still slipping lower.

We usually think this is a result of the Baby Boom generation turning 65, and that’s a big part of it. But rising life expectancy is equally and maybe more important. People now live longer, which lowers the ratio and means they collect more years of benefits than previous generations.

Let’s stop here and think about this “retirement” concept. It is, in the history of man, relatively new. For millennia, the idea that a physically able person of “non-royal” blood would simply stop working and enter a life of leisure was unthinkable. You worked as long as you could, declined quickly and then died. Very simple and, more to the point, financially sustainable most of the time.

Note also, in much of the world “retirement” is still a dream. Even the elderly are expected to contribute something to the community, as long as they are able. What we have in the developed countries is still not the norm globally.

It was not coincidence that the modern concept of retirement developed alongside the Industrial Revolution. Technology made food production far less labor-intensive, reducing the need for less-productive older people to contribute. Societies around the world decided to let the oldest members take some final time off before their end. A good and humane practice, I think, one I think we should continue as long as we have the elderly.

However, it has limits. I don’t know of anyone who, when the retirement systems were created, thought it made sense for average people to spend the last 30% or 35% of their lives in retirement, at the broader society’s expense. They would’ve expressed that concept in words along the lines of, “That’s nuts!” And yet we are trying to do it. No surprise, the seams of our retirement dream are beginning to unravel.

From Pyramid to Rectangle

The problem is not simply that there are so many Baby Boomers. It is that we have so many Baby Boomers and they’re living longer than previous generations did. Not in every single case, obviously, but the aggregate difference is dramatic.

We can illustrate this with “population pyramid” charts, which show age distribution in graphic form. Here’s the US in 1950. That widest bar at the bottom is the beginning of the Baby Boom, including me.

Add up the male and female sides of the top four bars and we see 8.4% of the population was over 65, and 1.2% was aged 80 or above. Now, let’s roll forward 50 years to the year 2000.

Notice a few things here. First, the pyramid’s base is narrower because there are relatively fewer children. That bulge in the 35-54 brackets is the Baby Boom. But for our purposes, look especially at the top. The 65+ share of the population went from 8.4% in 1950 to 12.3% in 2000. The 80+ category—all in one bar 50 years earlier—now gets split into five bars and is 3.2% of the population, almost tripling since 1950.

But wait, that’s not all. Here’s the same chart projected forward to 2050.

If this estimate is right, then in 2050 some 22.3% of the US population will be over 65 and 8.3% will be over 80. Both would be huge increases since 2000… but I think the chart is probably wrong, and not in a helpful way, at least in terms of paying for unfunded liabilities.

You see, the current mortality tables don’t include the age-extending technologies I believe are coming in the next decade. Lots of folks aren’t going to die on schedule and, absent a major fertility increase to grow the younger population, those top rows will widen further. The pyramids are becoming more like rectangles.

That means by 2050 the working-age population will be less than half the total, and yet have to support its children and elders? I don’t think so. Something will break first.

The most likely (and most benign) candidate is a redefinition of “working age” at the upper end. There’s nothing magical about retiring at 65 or 67. Those were legislative choices, rooted in times when few people lived that long and most of those who did were physically incapable of going much longer. That is rarely the case now. I’m knocking on 70 and still work as full-time as I ever did, and I’m surrounded by friends my age and older who are just as active or more active than I am.

What should have happened, years ago, was an increase in the Social Security eligibility age to 70 or beyond, to reflect rising life expectancy and better health. People would have known to expect it and been able to plan accordingly. That didn’t happen so now we have to scramble for solutions.

Though it’s not all that popular, I wouldn’t oppose means testing (no Social Security income over X income level) as part of a “solution.” Whatever we do is going to disappoint many folks. The only question is whom.

Redefining Retirement

This certainty that major changes are coming, but uncertainty about what they will be, greatly complicates retirement planning. Preparing for it would be far simpler if you could know in advance when you will get sick and die. That means you must either

• Save too much and possibly check out with a surplus, or  

• Outlive your savings, then fall back on Social Security and the kindness of family for your final years.

The first option is obviously better, but is it feasible? For most people, no, even at today’s life expectancies. A surprising number of people die with negative assets, i.e. debt, having never repaid money borrowed earlier in life.

Longer lifespans make this harder. Say you finish your education and start making money at age 25. If you retire at 65 your career was 40 years, during which you probably had to buy a house, help children with college, maybe repay your own student loans and otherwise live a normal and hopefully comfortable life. You use whatever is left for retirement savings.

Now, is it mathematically possible to save enough in those 40 years to fund another 30 or 40 years of retirement? Probably not. Sure, you might build a business or invent a new technology, but the average working person can only save so much of their income, and basic retirement living costs will consume most of it in less than 30 years. Then what? Traditional “retirement” will grow increasingly out of reach, available only to the very highest-earning tier of the population.

At the other end, outliving your savings will be as easy as ever but the likelihood that Social Security will be there for you, in anything like its current form, is diminishing rapidly. Extended lifespans further complicate the problem.

This is what my British friends call a “sticky wicket.” The good news is we will soon be living longer. The bad news is we will soon be living longer. Since the technology is coming regardless, we need ways to reconcile the costs and benefits. It is not at all clear how we will do so. My editor and long-time friend/associate Patrick Watson and I have been discussing this for years. He expects some kind of Soylent Green solution. My sunny nature makes me more optimistic; I think we’ll find better answers that reduce the costs and spread the benefits widely.

*  *  *

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Fired FBI director James Comey tweeted on Sunday that he has reached a deal with GOP lawmakers regarding his upcoming testimony before congress regarding allegations of political bias at the FBI and DOJ. 

Comey had previously rejected an October request by the House Judiciary Committee to appear at a closed door hearing – stating instead that he would only testify in public. After a Thanksgiving subpoena, the former FBI director vowed to “resist” unless the testimony was in an open setting – tweeting that he had “seen enough of their selective leaking and distortion,” in reference to the Judiciary Committee – and filed a motion to quash the subpoena. 

On Sunday, it appeared that an acceptable arrangement had been reached, as Comey tweeted: “Grateful for a fair hearing from judge. Hard to protect my rights without being in contempt, which I don’t believe in. So will sit in the dark, but Republicans agree I’m free to talk when done and transcript released in 24 hours. This is the closest I can get to public testimony.”

Grateful for a fair hearing from judge. Hard to protect my rights without being in contempt, which I don’t believe in. So will sit in the dark, but Republicans agree I’m free to talk when done and transcript released in 24 hours. This is the closest I can get to public testimony.

— James Comey (@Comey) December 2, 2018

House Judiciary Chairman Bob Goodlatte (R-VA) made the offer last week, tweeting: “I have just offered to Director Comey that the Committees will publicly release the transcript of his testimony following the interview for our investigation. This ensures both transparency and access for the American people to all the facts.”

Mr. Comey should agree to these terms and see that we have the same purpose, which is to find the truth and seek transparency. In order to do so, he must appear before the Committees and answer our questions.

— Bob Goodlatte (@RepGoodlatte) November 28, 2018

We look forward to reading all about [redacted]. 

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A homeless man can walk in off the street take a sink shower and drop a massive cabbage dump in a Starbucks’ bathroom (so long as they don’t actively antagonize the customers). But starting early next year, Starbucks is adding something to the list of things they can’t do: Watch pornography.

That’s right. After years of pressure from anti-pornography groups, Starbucks has finally developed its own “custom solution” to block pornography from its in-store free Wi-Fi.

Here’s more from Business Insider:

Next year, the coffee giant plans to introduce a new tool meant to prevent customers from viewing pornography or other explicit content in stores. While watching pornography is banned at Starbucks locations, the chain does not have content blockers on its Wi-Fi service.

“To ensure the Third Place remains safe and welcoming to all, we have identified a solution to prevent this content from being viewed within our stores and we will begin introducing it to our US locations in 2019,” a Starbucks representative told Business Insider in an email on Wednesday.

Starbucks declined to give details on the solution but said the company tested multiple tools, hoping to avoid accidentally blocking unoffensive sites.

Though we imagine this will disappoint thousands of rough sleepers accustomed to cranking one out to their favorite Porn Hub clip in the cleanest “all access” bathroom in town (yes, thousands of homeless people have smartphones now), groups like Enough is Enough, which circulated a petition calling on Starbucks to ban porn, will surely be pleased. The decision follows similar moves by McDonald’s and other fast-food restaurants that offer Wi-Fi to any and all who walk through their doors.

A petition from Enough Is Enough calling for Starbucks to filter pornography was signed by more than 26,000 people as of Wednesday. Earlier this week, Enough Is Enough CEO Donna Rice Hughes attacked Starbucks for not following through on a commitment it made in 2016 to block explicit websites.

“By breaking its commitment, Starbucks is keeping the doors wide open for convicted sex offenders and others to fly under the radar from law enforcement and use free, public Wi-Fi services to access illegal child porn and hard-core pornography,” Hughes said in a statement.

“Having unfiltered hotspots also allows children and teens to easily bypass filters and other parental control tools set up by their parents on their smart phones, tablets, and laptops,” Hughes continued.

Still, Starbucks’ announcement has triggered some unintended blow back. In retaliation, YouPorn is banning Starbucks’ at all of its offices.

Starbucks to ban access to porn from free wi-fi in stores; in response, porn website YouPorn says it is banning Starbucks coffee from its offices. https://t.co/CfjN9RKpJK

— Jim Roberts (@nycjim) November 30, 2018

What’s more, Pornhub has also developed a workaround (well, sort of) to the Starbucks’ ban by introducing its new “Safe for Work” category, which will provide an offering of less-explicit content to enjoy while comfortably sipping a Chai Tea Latte.

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Authored by Lance Roberts via RealInvestmentAdvice.com,

Did The “Powell Put” Change Anything?

On Friday, I discussed the market surge on Wednesday following comments from Fed Chair Jerome Powell:

“All it took was two 10% stock market corrections in a single year and some heavy ‘browbeating’ from President Trump to reverse Jerome Powell’s hawkish stance on hiking interest rates.

On Wednesday, Powell took to the microphone to give the markets what they have been longing for – the ‘Powell Put.’ During his speech, Powell took to a different tone than seen previously and specifically when he stated that current rates are ‘just below’ the range of estimates for a ‘neutral rate.’ This is a sharply different tone than seen previously when he suggested that a ‘neutral rate was still a long way off.’

Importantly, while the market surged higher after the comments on the suggestion the Fed was close to ‘being done’ hiking rates, it also suggests the outlook for inflation and economic growth has fallen. With the Fed Funds rate running at near 2%, if the Fed now believes such is close to a ‘neutral rate,’ it would suggest that expectations of economic growth will slow in the quarters ahead from nearly 6.0% in Q2 of 2018 to roughly 2.5% in 2019.”

This weekend, Presidents Trump and Xi are going to the table to discuss trade and tariffs. While I don’t expect much to actually come from the meeting, I would expect some smiles and handshaking between the two with some positive overtones on “progress being made.” 

Regardless of the fact the outcome will have “no teeth” to it, and will ultimately wind up back in a trade dispute over “technology rights” before long, it should be enough to rally the bulls in the short-term.

However, I agree with Goldman Sachs assessment on Friday via Zerohedge:

“Goldman writes that it sees three basic scenarios for what happens after this weekend.

• The first and in Goldman’s view most likely outcome is continuing on the current path of ‘escalation’— tariff rates rise to 25% on all imports currently under tariff, and tariffs are extended to remaining Chinese imports.
• A close second is a ‘pause’, where existing tariffs remain in place but the two sides agree to keep talking with escalation put on hold.
• A ‘deal’, which Goldman thinks is unlikely in the near term, would involve complete rollback of the current tariffs.

The reason why Goldman is surprisingly pessimistic on the outcome is because there has been a growing sense among US policymakers that China has benefited disproportionately from the bilateral economic relationship, effectively supporting a hard-line stance against Beijing.”

While Goldman is leaning more towards an “escalation,” President Trump has staked his entire Presidential career to the stock market as a measure of his success and failure.

If President Trump was heading into the meeting this weekend with the market at record highs, I think a “hard-line”stance on China would indeed be the outcome. However, after a bruising couple of months, it is quite possible China will see an opportunity to take advantage of a beleaguered Trump to keep negotiations moving forward.

This is also particularly the case since the House was lost to the Democrats in the mid-term. This is an issue not lost on China’s leadership either. With the President in a much weaker position, and his second tax cut now “DOA,”there is little likelihood of any major policy victories over the next two years. Therefore, the risk to the Trump Administration is continuing to fight a “trade war” he can’t win anyway at the risk of crippling the economy and losing the next election.

But moving to the technical picture, other than the “one day” super rally, much like we saw immediately following the elections in November, the underlying breadth and technical backdrop has not improved much. The chart below shows the Advance-Decline Percent, TRIN, TICK and McClellan Summation Index all of which have failed to show the improvement needed to establish a bottom has been put into place.

However, with that said, the market did reach extremely oversold levels during the October/November correction which provided the necessary “fuel” for a short-term rally. However, as shown below, the impending “resistance”from both the 50- and 200-dma will likely prove to be a fairly formidable obstacle for the markets to breach in the near-term.

However, notice that in 2015 the market did briefly break above the 50-dma just before the crossover occurred which dragged prices back down with it. The trend of the market is still negative currently, so risk remains to the downside for now. As Victor Dergunov penned last week, the headwinds to the market continue to mount.

• Former leaders are now laggards and are overwhelmingly in deep bear market territory.

• Many sectors are approaching bear market declines.

• Defensive sectors such as consumer staples, healthcare, real estate, and others are outperforming.

• Utility, staples, and real estate stocks are experiencing heavy demand and are behaving much differently than in the prior correction.

• Valuations are still extremely high.

• SPY would need to decline by 33% just to reduce valuations to long-term historical median average.

• Corporate earnings may peak as soon as early to mid-next year.

• Debt levels are extreme and are becoming increasingly difficult to manage and service.

• Future credit is becoming more expensive and more difficult to come by, which is slowing ,economic growth.

• The Fed’s unsupportive policy is putting enormous pressure on asset prices, threatening to deflate multiple bubbles.

• Stocks don’t necessarily need a recession to go into a bear market. Nevertheless, bear markets almost always precede peak earnings and recessionary environments.

With the Fed out of the way until mid-December, the focus for the markets will be any hint of a “roll back” on Trump’s positioning with respect to China, trade, and tariffs.

After having reduced equity risk a couple of weeks ago, we are looking for opportunities as they present themselves. However, for the most part, our bond positions have continued to carry the bulk of the load as of late.

Daily View

The rally over the past few days has virtually exhausted a bulk of the “oversold” condition which previously existed. While such doesn’t mean the market can’t move higher, it simply suggests that most of the “fuel” available for a rally has been utilized. With the markets still on a “sell signal” currently, and below major points of resistance, remaining a bit cautious until the underlying technical backdrop improves seems prudent.

Action: After reducing exposure in portfolios previously, and portfolios much heavier in cash currently, we will sit with our winners and core positions and allow the markets time to figure out what it wants to do next.

Weekly View

On a weekly basis, the story remains much the same. With a sell signal registered for only the 7th time in the past two decades, we will just allow the markets to figure out what they want to do before getting more aggressive. The recent violations of long-term moving averages suggest a change in market conditions that should not be dismissed. However, should the market improve, and ultimately reverse the relative “sell signals,” we will gladly increase exposure back to target weights.

Action: Hold higher levels of cash and rebalance risk as necessary on this rally.

Monthly View

Like the daily and weekly analysis above, the market has confirmed a “sell signal” on a monthly basis as well. The good news here is that the long-term moving average, which is a critical level of bullish trend support, has NOT been violated as of yet. This suggests the longer-term bullish trend remains intact and we should not get overly conservative just yet.

Nonetheless, the deterioration in the markets is extremely concerning, and while the official “bull market” is not dead as of yet, there are more than enough warnings which suggest erring to the side of caution, for now, is warranted.

Action: Use the current rally to reduce risk and rebalance portfolios accordingly. 

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French President Emmanuel Macron will hold an emergency meeting of senior ministers on Sunday following the worst unrest Paris has seen in a decade on Saturday. Government spokesman Benjamin Griveaux told France’s Europe 1 radio that a state of emergency may be imposed to prevent “serious outbursts of violence” after thousands of masked “Yellow Vest” protesters fought with police, and set fires to cars, houses and banks.

The Jeu de Paume – one of best art galleries in Paris – is on fire. A mob is storming through the Tuleries Garden. pic.twitter.com/pHaPJxI3Yt

— Peter Allen (@peterallenparis) December 1, 2018

Griveaux said that around 1,000 and 1,500 protesters joined Saturday’s demonstrations “only to fight with the police, to break and loot,” and that the violent element “have nothing to do with the yellow vests” (aside from wearing yellow vests?). 

Demonstrators on Saturday were filmed destroing a police van and other vehicles, while other videos showed burning cars and police firing tear gas to break up the protests. 

The reported size of the protest has varied between 36,000 and 75,000 yellow vests, while last week saw over 110,000 protesters at the Champs-Elysées in central Paris. Over 400 arrests were made and 113 injured in Saturday’s unrest which began three weeks ago over a hike in diesel taxes, but has grown to a general protest of Macron and his government. Macron’s popularity rating has plummeted to just 26%, while opinion polls for the 2019 parliament elections predict that right-wing Marine Le Pen’s Nationall Rally party will be level – or far ahead – from Macron’s La République En Marche. 

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The most important, and much-anticipated dinner date between Trump and Xi in years, which concluded amid loud applause and brief celebrations by both sides, ended in a three-month truce to the ongoing trade war between the two superpowers, with the US agreeing to postpone a planned tariff hike on January 1 and to keep the rate on existing tariffs at 10% for another 90 days in return for greater purchases of American goods.

While the arrangement provides breathing space to both leaders as they face slumping stock markets and economic warning signs, and will likely result in a brief jump in the market in the coming days, the two sides failed to make any tangible progress on the fundamental divide and core issues separating the world’s biggest economies.

As Bloomberg recaps this morning, “negotiations have long been stuck over U.S. demands for deep structural reforms such as stopping forced technology transfers, enforcing intellectual property rights and ending state subsidies for strategic industries – all of which China sees as an American strategy to thwart its rise as a global power.” It is on these most thorny of issues that there was no real progress during the Trump-Xi dinner.

In fact, as Michael Every, head of Asia financial markets at Rabobank said overnight, “I will eat my hat if this means anything substantive” as “neither side is fully ready for the war, but neither side will budge.“

Despite the lack of material progress on the fundamental divide, the market will cheer that the deal helps to alleviate immediate concerns that trade tensions would further stoke geopolitical tensions, a prospect that has raised worries of a new Cold War. The White House emphasized that Xi agreed to continue pushing for a nuclear-free North Korea, while Beijing said Trump would respect the One-China policy regarding relations with Taiwan — one of the biggest potential flashpoints between the nations.

More importantly, the summir showed that both sides could be pragmatic when needed, and refuted Goldman’s bearish forecast that more escalation would be the immediate conclusion.

Here’s the breakdown:

Xi won at least another three months before punitive tariffs on $200 billion in goods rise to 25 percent, allowing Chinese policy makers more time to offset the blow as growth slows. That said, all Xi got was a reprieve, because as SCMP editor Chungyan Chow writes, “Xi Jinping hasn’t really defused the Trump bomb. He just bought 3 month breathing space. Interesting to see what will happen next before the Chinese national congress sessions in March.”

Xi Jinping hasn’t really defused the Trump bomb. He just bought 3 month breathing space. Interesting to see what will happen next before the Chinese national congress sessions in March. https://t.co/CN85Kp8X6K

— Chungyan Chow (@ChungyanChow) December 2, 2018

Trump, meanwhile, got China to buy more American agricultural, energy and industrial goods while still maintaining the leverage of a tariff increase to pressure Xi into making greater concessions on structural issues. China also pledged action to clamp down on the synthetic opioid fentanyl, and Trump said Xi was open to approving a possible $44 billion deal for Qualcomm Inc. to purchase NXP Semiconductors NV if the companies are still interested.

So what does the truce achieve? With less than a month left in the year, the one most likely outcome is the greenlight of a strong Santa Rally, both in the US and China, where overnight the China Financial Futures Exchange sent a strong hint to investors to get back in the market by cutting margin requirements for stock index trading to 10% for the CSI300 and SSE50 and 15% for the CSI500, the first such cut since Sept. 2017.

From Monday, CSI 300, SSE 50 index futures trading margin requirements will be adjusted to 10%, 15% for CSI 500, China Financial Futures Exchange said on Sunday. pic.twitter.com/wOhqNvDAhL

— Global Times (@globaltimesnews) December 2, 2018

“The presidents want the markets to enjoy Santa rallies first,” Junheng Li, the founder of the China-focused research company JL Warren Capital told Bloomberg. “And when February comes we can start worrying again.”

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In addition to traders, another immediate beneficiary from the truce is the US business community as well as US farmers, particularly those growing soybeans in states he needs to win to get re-elected in 2020. As Bloomberg notes, Trump hailed the “incredible deal” on Air Force One while heading back to the U.S., telling reporters that China will buy “a tremendous amount” of agricultural goods.

“Trump doesn’t give up much by a short pause and gets a chance to ship the soybean harvest to China while the negotiations are ongoing,” said Brad Setser, a former Treasury official and now a senior fellow at the Council on Foreign Relations in Washington. “The hard part is finding the basis for a real deal that settles the broader issues rather than agreeing on a pause.”

It is there that little progress is expected absent a material deterioration in markets and economies.

Meanwhile, signs of discord continued, and the most notable was the failure to issue a joint statement laying out the framework for talks. Each side gave its own readout of the outcome, and they contained key differences: China, for instance, made no mention of the 90-day time frame, while the U.S. didn’t reference the One-China policy regarding Taiwan ties.

China’s omission on the deadline indicates it has reservations on how to handle U.S. demands, according to Wang Peng, an associate research fellow of the Chongyang Institute for Financial Studies, Renmin University of China.

Making the type of domestic reforms sought by the U.S. is “extremely difficult as such moves involve the country’s reputation, the party’s authority and the structure of the domestic economy,” he said.

But the biggest hurdle and the crux of Trump’s deeper concerns with China is found in the 53-page report issued by Trade Representative Robert Lighthizer’s office about 10 days before the Trump-Xi meeting. It accused China of continuing a state-backed campaign of intellectual property and technology theft, downplayed its moves to ease foreign investment restrictions and raised alarm about its “Made in China 2025” policy to lead the world in sectors such as artificial intelligence and robotics.

Meanwhile, Chinese officials have repeatedly countered by saying moves to ease rules on foreign ownership of financial firms and automakers show they are opening up to the world, when in reality Beijing is merely looking for international bagholders as China suffered a burst of record defaults which has made local investors shy away from risky local assets. At the same time, they also strictly rule out dropping government support for companies in strategic Made in China industries over fears that would undermine China’s future economic prospects and threaten the power of the ruling Communist Party.

The bottom line is that despite much fanfare, the divergence in worldviews makes any lasting solution difficult to achieve unless either Trump or Xi backs down and neither is willing or ready to do so. Still, given the emerging risks to the global economy, and the political costs that entails for each leader, it is likely that both will be motivated enough to concede just enough to keep dragging out the talks without handing the other side a victory.

“Growth is going to slow in both countries,” said TCW analyst David Loevinger,. “While it doesn’t remove the the sword of Damocles hanging over trade, having blinked tonight you’d have to guess that the U.S. will blink again in March.”

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Finally, what does the truce mean for the markets? According to one “base case” which correctly predicted that a Truce – in which existing tariffs stay in place – is the most likely outcome (with a 70% chance), while also accurately predicting a 3 month ceasefire, the agreement will be enough to get the S&P to 2,800…

… so look for a burst of buying in the S&P over the next 24 hours which pushes the stock index higher, but not much higher as trader concerns will next revert back to the Fed which now that trade tensions have been temporarily removed, may promptly revert back to its hawkish bias and resume rising rates well into 2019 which in turn will be the next bearish event-risk to put a damper on any substantial Christmas rally.

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Authored by Tom Luongo,

Israel announced a major pipeline project from the gas fields off its shore involving four countries, terminating in northern Italy.  The EastMed Pipeline could be one of the longest in history as well as one of the most technically difficult to pull off.

The deal was announced on World Israel News a few days ago and has been in negotiation for a couple of years now.

It’s being billed as a counter to both Arab and Russian power but that’s not really true.  This will supposedly deliver 20 bcm annually to Cyprus, Greece and Italy and come at a significant cost because of the challenge of it.  But the first train will be 10 bcm according to IGI Poseiden’s website, the company building the pipeline.  10 bcm is similar in size to the Southern Gas Corridor bringing gas in from Azerbaijan.

The agreement has been some two years in the works, with the four countries’ energy czars signing a memorandum of understanding regarding the pipeline in December 2017. It is considered a technically difficult project to complete not only because of the depth of the undersea route, but also because it will have to pass through a volcanic area in the ocean bottom between Cyprus and Greece.

No discussion of cost was in the announcement.

It was all about the politics.  But, the politics of this is Kabuki theatre.  The Russians don’t care about more pipelines to Italy, now that Turkstream is ongoing and Europe’s gas needs are accelerating.

This is a European Union project developed by IGI Poseidon under the auspice of the EU’s Connecting Europe Facility program.  The EU is footing a lot of the bill for this.

For all the talk about Russia’s monopoly on the European gas market, it’s simply untrue.  Russia supplies between 35% – 40% of Europe’s gas.  That share has increased because of rising demand and no new pipeline developments.

And for Europe, the most economical gas is that delivered by Russian pipes.  Both the STC and EastMed pipelines will be profitable but only after the EU portion of the funding is written off, which it will be.

EastMed, like the STC, has been in development for nearly ten years.  Turkstream went from idea to reality in two.

These are projects force-fed onto European consumers for political purposes, not economic ones.  Diversification of supply is fine if it makes economic sense.  But if it doesn’t all it’s doing it lengthening the time to profit for the people who paid for the project in the first place, the consumers through their taxes.

Moreover, if these projects were fundamentally economic they wouldn’t require such a long time to negotiate.  The negotiations stem from none of the principles wanting to pay for the uneconomic part of the costs.  And that’s where the EU steps in to provide that cost which is then passed onto the consumer.

In the end, none of this will truly matter since the need for gas into Europe is so high and unlikely to be replaced by anything else in the foreseeable future.  Europe is wedded to bad environmental ideas which, in turn, become bad energy policy.

The latest of which is the announcement by French President Emmanuel Macron that France would be shutting down 14 of its 58 nuclear reactors by 2035.  The only thing keeping France’s insanely Marxist economy functioning is its cheap nuclear-generated electricity.

Macron wants to drop this from 72% of current power needs to 50% and spin up unreliable sources like solar and wind.

But, back to Israel and the politics of EastMed, this pipeline, like the SCT from Azerbaijan, doesn’t threaten Russian market share because of its ultimate cost.  Transport costs money, even for piped gas.  And the longer the pipeline the more transport costs matter.

And if Israel finally getting its pipeline to Europe is the price Russia has to pay to help stabilize the region a little bit, then it’s a small one in the end.  The smarter play for Israel, of course, is to develop a pipeline that goes east to Syria rather than northwest to Italy, but don’t hold your breath there.

What I think is interesting is the dichotomy between what Germany gets and what Italy gets in terms of gas supply.  Germany gets the massive Nordstream 2 bringing in more than twice what Italy gets from the more expensive EastMed and SCT will bring.

The Now Dead Southstream Pipeline Project

Remember, SouthStream’s original plan was to go through Bulgaria, across to Austria and a second stream across Greece to Italy.  That was quashed because of U.S. interests in keeping Russia down.  And because Israel wanted EastMed and the Saudis were working for a pipeline through Turkey through Syria.

And Angela Merkel was only too happy to oblige to keep Greece and Italy from accessing cheap Russian gas.

No, they can have expensive Azeri and Israeli gas instead.

This is yet another reason why Italy needs to be done with the EU.  It is obvious  Germany and France want control over energy inflows to ensure political as well as economic dominion over any state that thinks about getting uppity to their rule.

This latest win for European Energy Security is exactly that.

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