Month: February 2019

Just days after we reported of the dismal start to 2019 for the U.S. auto industry, General Motors will begin involuntary layoffs that will leave at least 4,000 workers without a job.

According to the Detroit Free Press, the Detroit auto manufacturer is planning to begin layoffs just days before its fourth quarter earnings report. These layoffs are one of the first pieces of a larger restructuring that CEO Mary Barra announced in November. Five plants in North America are planned to halt production and 14,000 total jobs are slated to be cut.

Part of the restructuring is to realign the company’s infrastructure to produce more electric vehicles. People familiar with the matter stated that the company was actively trying to complete as many layoffs as possible before earnings. GM hasn’t confirmed this, stating: “We are not confirming timing. Our employees are our priorities and we will communicate with them first.”

“We’ve indicated that the involuntary reductions would happen in the first quarter,” a GM spokesman said.

David Kudla, Chief Investment Strategist of Mainstay Capital, stated on Twitter that the upcoming week would start with “Black Monday at General Motors”. 

In a recent note, he wrote that “GM’s CEO Mary Barra is clearly not timid about making bold decisions to implement radical change, whether it be forging new technologies or the gut-wrenching shuttering of factories. GM is ahead of the pack when it comes to restructuring the business to focus on the future of (electric vehicles) and autonomous.”

Back in November, General Motors offered buyouts to 17,700 employees in North America that had at least 12 years working for the company. It was aiming for about 8000 voluntary buyouts, but as of November 19, only about 2250 workers had accepted them. About 1500 contract jobs have also been eliminated. By rough calculation, this leaves behind about 4200 salaried workers and 6000 hourly employees that will still be targeted for layoffs. General Motors said that half of the hourly employees were located in Canada.

Some of the restructuring also takes place as a result of SUV popularity continuing. Many of the cuts being planned in the United States and Canada are at factories that make sedans and compact cars, which have fallen out of favor. As GM makes these cuts, it has been pumping cash back into mobility, autonomous driving and electric vehicles. The restructuring targets savings of $6 billion for the company by 2020.

“Everyone’s waiting for the ax to fall,” one Detroit-based employee told the Detroit Free Press. “You don’t know if you should plan ahead for anything or not?” 

via ZeroHedge News http://bit.ly/2t4LPP5 Tyler Durden

Not a month seems to pass any more without a major bank or hedge fund getting in hot water for using CDS in a way that was never intended, and now it’s Goldman’s turn, again.

Three months ago, when the loan market was freezing up,  Goldman struck an unusual deal with a group of hedge funds to offload a buyout loan from its books, saving the bank and the funds from potential losses. What was odd, is that Goldman was also serving as the underwriter to the company issuing the loans…while at the same time arrenging a “kicker” to loan buyers by having them bet on the potential insolvency of its own client.

Now, this bizarre arrangement is at the center of a lawsuit accusing the Wall Street giant of gorging on fees while also exposing the acquirer in the buyout, United Natural Foods, to hedge-fund sharks who stand to reap major profits if the company collapses as a result of the incremental debt: according to Bloomberg, United Natural had hired Goldman Sachs for the takeover and is now demanding at least $52 million – and potentially much more – from the bank.

Worse, the distributor of natural and organic foods, specialty foods is absolutely furious at the bank that until recently was its strategic advisor:

“I have never experienced this kind of egregious and immoral behavior from a bank in my entire life,” United Natural Chief Executive Officer Steve Spinner told Bloomberg in an interview after his company filed the suit Wednesday in a state court in New York. Goldman, which until that moment had been retained by United Natural, vowed to vigorously fight the case, calling it “entirely without merit.”

As hinted above, Wall Street’s latest drama once again revolves around the increasingly dysfunctional credit-default swaps market, where hedge funds and others wager on the ability of companies to keep up with their borrowings, only the traditional role of CDS as bankruptcy hedges has long ago given way to more “creative” applications. Indeed, as Bloomberg notes, “again and again, the contracts have played strange roles in debt transactions, sometimes straining allies or encouraging unlikely alliances.“

According to the lawsuit, Goldman adjusted the terms on a $2 billion financing deal in a way that allowed hedge funds to reap a windfall from their CDS bets, as first reported by Bloomberg in October. United Natural said it initially heeded Goldman’s advice, agreeing to the changes so it could complete the takeover of grocery chain Supervalu.

Where things got complicated, is that Goldman enlisted the help of hedge funds that had been betting on Supervalu’s demise. Those funds now stand to benefit if United Natural struggles to repay. That was just the beginning: United Natural also alleges that the bank unfairly withheld fees, burdened it with additional interest expenses and relied on “scare tactics” by a senior banker to back it into a corner.

In the beginning it was nothing but rainbows and roses: United Natural, which is a supplier to Whole Foods, announced the $2.9 billion Supervalu acquisition in July, and with the market soaring and credit and loan spreads near all time tights, not a cloud appeared on the horizon. And, as so often happens, the company announced that Goldman Sachs would act as lead underwriter to sell the billions in debt needed to fund the deal. But just a few months later, as equities first tumbled and shortly thereafter credit markets – especially in the leveraged loan market – froze up, the investment bank faced the prospect of being saddled with millions in losses unless it found a way to offload the loan from its books.

Meanwhile, hedge funds were facing major losses too after having bet against Supervalu’s debt by loading up on CDS, but the company’s sale threatened to create a situation known as an orphaned CDS contract, a situation similar to the infamous McClatchy fiasco (one which we profiled extensively in “Orphan CDS, Manufactured Credit Events, Insufficient Deliverables: What The Hell Is Going On In The CDS Market?”). Because new debt being issued to purchase Supervalu would have paid down the grocer’s obligations, it could have made swaps linked to Supervalu effectively worthless – referencing an entity with no significant borrowings – even as the default risk of the purchaser, United Natural, soared. However, due to the specific nature of the CDS contract, there was no continuity in tracking the referenced entity, as such those who were betting on a Supervalu default would end up with nothing, even if the successor company did eventually file for bankruptcy.

It is here that Goldman had an “epiphany”, one which would kill two birds with one stone.

The key was to restore the value of the roughly $470 million of net CDS wagers linked to Supervalu’s debt. While the cost of the Supervalu derivatives had plunged through most of last year, by tweaking the loan docs to make Supervalu a co-borrower on the new financing, Goldman sparked a surge in the value of the swaps.

That, along with several other concessions, not only rescued hedge funds from getting wiped out on their SVU CDS, but more importantly, helped Goldman fill its order book for the loan and eliminate its exposure risk.

And while Goldman was the clear winner here, helping a couple of millionaire credit PMs avoid major losses for 2018 while avoiding taking a loss on its buyout loan exposure, United Natural claims that Goldman left it exposed to a group of lenders whose interests are at odds with its own and who are motivated to create roadblocks aimed at forcing a default so that they can notch further gains in the CDS market.

That may be difficult to prove, especially since Goldman can claim that without the contract fudge, the deal may never have been funded. Still, United Natural alleges that it never received a final list of funds participating in the loans and, had it known, would’ve raised concerns, even though without making the concessions to hedge funds, Goldman would have struggled to place the deal.

United Natural meanwhile claims that it went along with the changes after warnings from Stephan Feldgoise, who helps oversee Goldman’s mergers business in the Americas. The bank allegedly warned that if the company didn’t adjust the terms, it might “scare off” investors, trigger “blowback” from its own shareholders and “things would get ugly.”

What Goldman apparently did not explain is that the one entity most on the hook – in terms of both P&L and reputation – was Goldman. Which is why Feldgoise and Bank of America, to co-lead arranger on the loan, are also named as defendants.

As Bloomberg concludes, it’s another twist in Feldgoise’s time at Goldman Sachs, which ironically, included a stint as chairman of the firm’s global fairness committee. Curiously, in mid-2017, division chiefs announced he would be departing the bank, stepping down from his post in senior management to become an advisory director. Yet he’s still at the bank, now in a heated battle with a client for whom he’s handled various deals. That said, with the millions in fees from the United Natural-Supervalu deal, at least Feldgoise’s tenure at Goldman is secure. Worst case, he can always get a job at one of the many hedge funds that made a killing on SVU CDS thanks to the Goldman fudge.

via ZeroHedge News http://bit.ly/2S8peAl Tyler Durden

Though millennials catch the most flack for taking out hundreds of thousands of dollars in student loans to pay for worthless college degrees that do little to improve their financial prospects in the “real world,” for older Americans who take out loans to finance their education later in life, the repercussions can be ten times worse.

Ante Grgas-Cice

While it might not seem like much compared with the overall $1.4 trillion mountain of student loan debt rattling around the American economy, according to the Wall Street Journal, Americans over the age of 60 are struggling to pay down an aggregate $86 billion in student loan debt.

Student loan borrowers in their 60s, on average, owed $33,800 in 2017, up 44% from 2010, according to data compiled by credit-reporting firm TransUnion. Total student loan debt for people aged 60 and older rose 161% between 2010 and 2017, the biggest increase of any age group.

Rising student debt is the biggest contributor to the overall increase in the debt burden. for Americans aged 60 and older. US consumers who are 60 or older owed around $615 billion in credit cards, auto loans, personal loans and student loans as of 2017, up 84% since 2010, the largest increase of any age group.

And for many, the results are nothing short of ruinous. Take Ante Grgas-Cice, 66. After a restaurant venture failed, he took out loans to go back to school, a decision he said “will haunt him for the rest of his life.” Because he has had difficulty paying down his $30,000 debt burden, the government garnished his social security check for a period last year.

At 66, Ante Grgas-Cice owes about $29,000 in student loans. His only income is a roughly $1,600 monthly Social Security check, which the federal government garnished for a period last year because he wasn’t paying his student loans.

Mr. Grgas-Cice said his decision to go back to school continues to haunt his life.

He signed up for student loans to attend the Art Institute of New York City in 2003 and 2004, after a restaurant venture failed. At the Art Institute, he studied culinary art and restaurant design and layout to upgrade his skills, he said. Subsequent restaurant ventures didn’t work and he’s currently unemployed.

To try and save money, Grgas-Cice traveled back to Croatia to live with his elderly mother for a period of time. He now relies on financial help from relatives to survive, and limits his food purchases to $7 a day.

“I put all my money to better myself,” Mr. Grgas-Cice said, adding that he was cautious in his spending. He says it’s painful to think about his current conditions.

But most Americans who find themselves in this predicament took out loans on behalf of their children. In recent years, Sallie Mae and Citizens Financial Group have been marketing “Parent Plus” loans to concerned parents who want to help out with their children’s college education, but who don’t have the money to pay outright. The upshot of these loans is that parents often get stuck with a tab they can’t afford.

An interesting loophole has contributed to this situation. The federal government caps the amount that undergraduate students can borrow, but there’s no limit on the money that can be borrowed by their parents.

Hence, the “Parent Plus” loan, one of the most economically harmful consumer debt products of its time.

The federal government disbursed $12.7 billion in new “Parent Plus” loans during the 2017-18 academic year, up from $7.7 billion a decade prior and $3.3 billion in 1999-2000, according to an analysis of Education Department data by Mark Kantrowitz, publisher of Savingforcollege.com.

Its underwriting standards are generally looser than banks and other private lenders, making it easier for more applicants to qualify. Parents on average owed an estimated $35,600 in these loans at the time of their children’s college graduation last spring, according to Mr. Kantrowitz. They owed nearly $6,400 on average (not adjusted for inflation) in the spring of 1993.

One parent who falls into this category is Christopher Raymond of North Danville, Vt., who was a high-school history teacher for 32 years.

One parent who spoke with WSJ described how “Parent Plus” upended their retirement after he signed up for $136,000 in loans to pay for the education of his two children.

Each month, he and his ex-wife pay a combined $1,900. They believe they will be stuck paying off these loans into their 70s. “It’s a very dark cloud that’s always in the back of my mind,” he said.

Another parent described how payments toward his Parent Plus loans led him to rack up $40,000 in credit card debt. Living with this debt isn’t only financially ruinous, he said. It impacts his ability to live a health life.

Raymond Abdullah, 65 years old, has around $40,000 of credit-card debt and a balance of about $11,000 on a federal Plus loan he signed up for to pay for his son’s tuition about 22 years ago.

The credit card debt grew over the past decade after he retired from work as a jeweler. He finds himself turning to cards more often to pay for everyday expenses including gas and groceries. He says he needs to keep cash on hand to pay for other expenses, including the $400 monthly payment towards the college loan.

The debt, he says, “affects your blood pressure, it affects your overall well-being,” he said. “At this age you don’t expect to be in debt. It’s not where you want to be.”

For some, relief can be found through various federal programs that can halt the garnishing of wages or social security checks. But while most millennials with loans can at least hope that one day they will eventually conquer this burden, older Americans must live with the knowledge that the dark cloud of their debt will follow them for the rest of their natural lives.

via ZeroHedge News http://bit.ly/2SjXKXJ Tyler Durden

Authored by Andrew McCarthy via National Review,

There was no crime until the investigations started…

Special Counsel Robert Mueller’s indictment of Roger Stone may be the most peculiar document to emerge from the Trump–Russia “collusion” saga. It is an instant classic in the Mueller genre: lots of heavy breathing, then sputtering anti-climax.

After a 20-page narrative about Russian cyber-ops, WikiLeaks’ role as a witting anti-American accomplice, and Trump supporters enthralled by thousands of hacked Democratic emails and visions of the Clinton campaign’s implosion, Stone, a comically inept hanger-on, ends up charged with seven process crimes. No espionage, no conspiracy, no commission of any crime until the investigations started.

This is not to say that obstruction of congressional investigations is trifling. Nor is it to say the accused has a good chance of beating the case. Some of Stone’s alleged lies were mind-bogglingly stupid. Why deny written communications with people you’ve texted a zillion times? Why deny conversations with interlocutors (such as Trump-campaign CEO Steve Bannon) who have no reason to risk a perjury charge to protect you? And don’t even get me started on the witness-tampering count, which, if I were Mueller, I’d have hesitated to include for fear of suggesting an insanity defense. (Do it for Nixon? Pull a “Frank Pentangeli”?)

That said, the case is overcharged. The tampering count carries a 20-year penalty. Adding an obstruction or false-statements count (five years each) would have given Stone (who is 66 years old) prison exposure of up to 25 years. The most central “colluder” in the Mueller firmament to be bagged so far, George Papadopoulos, was sentenced to a grand total of two weeks’ imprisonment. Surely a quarter-century of “potential” incarceration would have sufficed to give prosecutors the “this is serious stuff” headline they crave while allowing for the more representative sentence Stone will eventually receive — who knows, maybe three weeks? But true to form, Mueller instead included six of these five-year counts — so the press can report that Stone faces up to 50 years in the slammer.

This inflated portrait of Stone as a major criminal was further bloated by the scene of his arrest: a well-armed battalion of FBI agents sent to apprehend him as the media, conveniently on hand at 6 a.m., took it all in. But Stone is just a cameo. The big picture is the overarching Trump–Russia investigation. It’s still being inflated, too.

Prosecutors ordinarily do not write an elaborate narrative about crimes they cannot prove. Here, though, Mueller uses Stone as the pretext to spell out the Big Collusion Scheme: Candidate Donald Trump instructs Stone to coordinate with WikiLeaks on the dissemination of Clinton dirt stolen by Russia; Stone directs his associate, Jerome Corsi, to have Corsi’s man in London, Ted Malloch, make contact with WikiLeaks chief Julian Assange, who is holed up at the Ecuadorian embassy in London. Malloch must have succeeded, because next thing you know, Corsi is reporting back to Stone: Our friends the Russian hackers have given WikiLeaks all this damaging information on Hillary, including the Podesta emails; it will all be rolled out in October, right before the election.

It’s a sensational story. Only . . . it’s just a story.

Mueller doesn’t even pretend he can prove it. No shame in that: During a long investigation, prosecutors always develop a theory of the case. Often, the hypothesis doesn’t pan out. No problem. You narrow your indictment down to what you can prove and call it a day. In Stone’s case, that would dictate omitting the ambitious collusion narrative and stripping down to a two-page obstruction-of-Congress indictment. Instead, Mueller gives us the fever dream: Stone as a key cog in the collusion wheel. Where reality intrudes, the prosecutors float suggestions they cannot prove or leave out key details that blow up the narrative.

The special counsel could have contented himself with easy-to-prove false-statements charges against Stone: lying about whether his WikiLeaks communications were documented in writing; lying about whether he asked his friend Randy Credico to pass a request for specific Hillary Clinton information to Assange; lying about whether he ever told the Trump campaign about his WikiLeaks conversations with Credico.

But no, Mueller strains to accuse Stone of falsely denying that he had a second WikiLeaks “intermediary” — whom the indictment indicates was Jerome Corsi, Stone’s Infowars associate. Depending on how charitable you want to be, this claim is either risibly weak, flatly wrong, or dependent on a distortion of the word “intermediary.” To repeat, the “intermediary” thread adds nothing to the case against Stone. It is a pretext for weaving the collusion narrative without having to prove it.

To amplify the indictment a bit with reporting by the Daily Caller’s Chuck Ross, Credico — a left-wing comedian and radio host — got access to Assange through a radical lawyer, Margaret Ratner Kunstler, who has done work for WikiLeaks. That apparently did not happen until shortly before August 25, 2016, when Assange appeared as a guest on Credico’s radio show. According to the indictment, Credico first texted Stone about Assange’s imminent appearance on August 19.

Prosecutors, however, suggest that Stone had a line into Assange and WikiLeaks starting at least two months earlier. “By in or around June and July 2016,” goes the slippery allegation, Stone was telling Trump officials he had information that WikiLeaks possessed damaging Hillary Clinton documents. In Mueller’s telling, this makes Stone seem like a potentially valuable WikiLeaks insider when, on July 22, WikiLeaks began publishing thousands of DNC emails. Immediately, a “senior Trump campaign official was directed to contact STONE about any additional releases and what other damaging information [WikiLeaks] had regarding the Clinton campaign.”

If not from Credico, from whom, pray tell, did Stone learn what WikiLeaks was up to? Who is the other intermediary?

In truth, he didn’t need one. He had two sources of information about WikiLeaks — neither of them Corsi, neither of them sensibly thought of as an “intermediary.” These sources go unmentioned in the indictment. Worse, while the prosecutors finger Corsi as Stone’s hidden “intermediary,” their evidence does not support this claim — and they know it, so they fudge it.

Let’s start with the two sources Mueller omits.

Turns out it is not just Stone who was alerted long before the Democratic convention that WikiLeaks might have damaging information on Clinton. Everyone on the planet who cared to be informed about such things knew. On June 12, 2016, in an interview that was widely reported, Assange said that WikiLeaks planned to expose documents relating to Hillary Clinton that could affect the 2016 election. Was Stone, the self-styled dark-politics devotee, pressing sources for an entrée into WikiLeaks? Sure he was. But that doesn’t mean he had one. And he didn’t need one in order to direct the Trump campaign’s attention to WikiLeaks; Assange was calling the world’s attention to himself.

The second omitted source? It was James Rosen, then a top reporter at Fox News — though Rosen seems to have had no idea he was playing that role. To understand what happened, we need to consider the July 25 Stone–Corsi email that the indictment treats like a smoking gun — but consider it in the context of an earlier July 25 email that the indictment fails to include.

As noted above, on July 22, someone very high up in the Trump campaign — perhaps the candidate himself, though we are not told — ordered a top campaign official to reach out to Stone. Just three days later, Stone sent Corsi an email with the subject line “Get to [Assange].” Stone exhorted Corsi to try to reach the WikiLeaks leader “at Ecuadorian Embassy in London and get the pending emails . . . they deal with the [Clinton] Foundation allegedly” (emphasis added).

So why did Stone believe WikiLeaks had Clinton Foundation documents? Well, Stone is acquainted with Charles Ortel, an investor who dabbles in investigative journalism and has focused intently on the Clinton Foundation. Ortel has occasional correspondence with James Rosen. In an email exchange on July 25, Rosen told Ortel, “Am told WikiLeaks will be doing a massive dump of HRC emails related to the CF [i.e., the Clinton Foundation] in September.” Ortel proceeded to forward this email to Stone. Only after seeing Rosen’s email did Stone contact Corsi to say that Assange “allegedly” had Clinton Foundation emails that Corsi should try to acquire.

Obviously, Stone did not need a WikiLeaks intermediary to give him a heads-up about a possible Clinton Foundation dump. He happened upon that information indirectly from a member of the press (Rosen), through an acquaintance (Ortel). And he did not need Corsi as an intermediary — Stone is the one who alerted Corsi, not the other way around.

The indictment says that, shortly after receiving Stone’s July 25 email imploring him to make contact with Assange, Corsi forwarded it to a “supporter of the Trump campaign” in the United Kingdom — reported by Chuck Ross to be Ted Malloch, a London-based American who used to be a business professor at Oxford and has ties to British populists. Subsequently, on Sunday July 31, Stone emailed Corsi to “call me MON,” stressing that Corsi’s associate should “see [Assange].”

Well, did that happen? Did Corsi’s man Malloch make contact with WikiLeaks?

If you read nothing but Mueller’s indictment, you assume he must have. After all, the next thing we are told about is Corsi’s email report to Stone on Tuesday, August 2. Corsi (then vacationing in Italy) wrote: “Word is friend in embassy [i.e., Assange] plans 2 more dumps, one shortly after I’m back [which was to be in mid August]. 2nd in Oct. Impact planned to be very damaging.” Corsi added:

Time to let more than [Podesta] to be exposed as in bed w enemy if they are not ready to drop HRC [Clinton]. That appears to be game hackers are now about. Would not hurt to start suggesting HRC old, memory bad, has stroke — neither he nor she well. I expect that much of next dump focus, setting stage for foundation debacle.

The implication is clear: Malloch must have reached Assange, gotten the critical information, and passed it along to Corsi so it could be communicated to Stone and the Trump campaign. Corsi is the intermediary! Coordination! Collusion!

But Mueller is hiding the ball again. The indictment makes no mention of the facts that Malloch denies knowing anything about WikiLeaks, that Corsi denies having any sources with inside knowledge about WikiLeaks, and that prosecutors appear to accept these denials.

So how did Corsi get the “2 more dumps” of information (or gossip) that he dished to Stone? He made it up — or, more benignly, he claims to have figured it out on his own. Reportedly, Mueller’s prosecutors were as frustrated as they were incredulous over Corsi’s unlikely claim. But they don’t have a better explanation. In the negotiations over a plea offer (on a charge of lying to investigators), which Corsi has resisted, Mueller’s prosecutors drafted an agreed-upon “Statement of the Offense.” In it, Corsi was to admit that “his representations to [Stone], beginning in August 2016, that he had a way of obtaining confidential information from [WikiLeaks] were false.”

Corsi is another strange character in this drama. He is a notorious bomb-thrower, and his memory is spotty. But one can understand why the special counsel seems to accept his story about not having a WikiLeaks source: His information was spectacularly wrong. He surmised that Assange would release information that Mrs. Clinton and her husband, former president Bill Clinton, had serious medical problems; this would be a prelude to devastating disclosures about the Clinton Foundation. Corsi’s fever dream never came true, either.

But how can Corsi have been Stone’s intermediary to WikiLeaks if he had no way of obtaining confidential information from WikiLeaks?

Stone, meantime, points out that neither he nor Corsi made reference to Podesta’s emails. He denies any awareness that Assange had them, and plausibly contends that the reference to Podesta in his conversation with Corsi (and in his later tweet on August 21 that “the Podesta’s [sic] in the barrel” was coming) related to a lobbying company started by John Podesta and his brother Tony. That company had done work for the same Kremlin-backed Ukrainian political party served by Paul Manafort — Trump’s campaign manager, and Stone’s former business partner. It was at the very time when Stone and Corsi were discussing WikiLeaks and Podesta that a July 31 New York Times exposé appeared, outlining Manafort’s lobbying entanglements with these Ukrainians. Tellingly, Mueller does not contend that Stone’s denial of foreknowledge about WikiLeaks’ Podesta dump is false.

Again, understand: It is not just that Mueller can’t prove Corsi was Stone’s intermediary. Mueller has no need to try to prove it. He has an overwhelming obstruction and witness-tampering case against Stone without it. The indictment’s “intermediary” plot line is just a device for prosecutors to spin the Trump–Russia–WikiLeaks collusion yarn. They are careful not to plead it in a conspiracy count; just an “introductory” narrative — no formal charge, no burden to prove it, and no need to reveal stubborn facts that undermine it. Since it is superfluous to the process charges against Stone, he may not even challenge it. Maybe he will plead guilty, and the narrative will stand as the government’s unrebutted version of events.

And this is just the indictment of a bit player. Makes you look forward to the special counsel’s final report, no?

via ZeroHedge News http://bit.ly/2DQ2TOX Tyler Durden

After last week’s earnings deluge, 46% of the companies in the S&P 500 have now reported actual results for Q4 2018. And according to Factset data, so far earnings season is mediocre at best with the percentage of companies reporting EPS above estimates (70%) below the 5-year average. Companies are also reporting earnings that are 3.5% above the estimates, which is also below the 5-year average. The silver lining is that in terms of revenues, the percentage of companies reporting actual revenues above estimates (62%) is above the 5-year average, and on aggregate, companies are reporting revenues that are 0.8% above the estimates, which is also above the 5-year average.

Separately, the blended year-over-year earnings growth rate for the fourth quarter is 12.4% today, which while is above the earnings growth rate of 10.9% last week, if well below the Q3 earnings growth, with positive earnings surprises reported by companies in multiple sectors – led by the Energy sector – responsible for the increase in the earnings growth rate during the week.

While hardly a disaster, if 12.4% is the actual growth rate for the quarter, it would mark the first time the index has not reported earnings growth above 20% since Q4 2017 according to Factset. However, it will also mark the fifth straight quarter of double-digit earnings growth for the index (although this is unlikely to persist, see below). Ten of the eleven sectors are reporting year-over-year earnings growth. As shown in the chart above, five sectors are reporting double-digit earnings growth, led by the Energy, Industrials, and Communication Services sectors.

Looking at the top line, the blended, year-over-year revenue growth rate for the fourth quarter is 6.6% today, which is above the revenue growth rate of 6.2% last week. Positive revenue surprises reported by companies in multiple sectors (led by the Health
Care sector) were responsible for the increase in the revenue growth rate during the week. Ten of the eleven sectors are reporting year-over-year growth in revenues. Three sectors are reporting double-digit growth in revenues: Communications Services, Energy, and Real Estate.

Some more key metrics on Q4 earnings season courtesy of Factset:

• Earnings Revisions: On December 31, the estimated earnings growth rate for Q4 2018 was 12.2%. Six sectors have higher growth rates today (compared to December 31) due to upward revisions to EPS estimates and positive EPS surprises.
• Earnings Guidance: For Q1 2019, 33 S&P 500 companies have issued negative EPS guidance and 9 S&P 500 companies have issued positive EPS guidance.
• Valuation: The forward 12-month P/E ratio for the S&P 500 is 15.7. This P/E ratio is below the 5-year average (16.4) but above the 10-year average (14.6).

So on net, earnings season is progressing generally in line with expectations. That’s the good news.

The bad news is that while companies are still reporting generally strong earnings, the good days are about to end with a bang as a result of the recent barrage in profit warnings and negative preannouncements, first and foremost starting with Apple, which issued a shocking guidance cut one month ago for the first time since 2001.

As a result, during January, analysts lowered earnings estimates for companies in the S&P 500 for the first quarter, and the Q1 bottom-up EPS estimate dropped by 4.1% (to $38.55 from $40.21) during this period.

How significant is a 4.1% decline in the bottom-up EPS estimate during the first month of a quarter? How does this decrease compare to recent quarters? Here are some troubling answers from FactSet which notes that during the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.6%.

During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.8%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.7%. Thus, the decline in the bottom-up EPS estimate recorded during the first month of the first quarter was larger than the 5-year, 10-year, and 15-year averages.

In fact, the first quarter marked the largest decline in the bottom-up EPS estimate during the first month of a quarter since Q1 2016 (-5.5%).  At the sector level, all eleven sectors recorded a decline in their bottom-up EPS estimate during the first month of the quarter, led by the Energy (-22.5%) and Information Technology (-7.3%) sectors. Overall, seven sectors recorded a larger decrease in their bottom-up EPS estimate relative to their 5-year average and their 10-year average for the first month of a quarter.

What is striking is just how fast Q1 earnings have been slashed lower, with the S&P expected to post a 3.3% growth as recently as Dec 31, a number which is now down to -0.8%, as consensus for the first time expects Q1 EPS to post an annual decline due to downward revisions to EPS estimates during the month.

The collapse is even more pronounced if one extend the period under observation: on September 30, the estimated earnings growth rate for Q1 2019 was 6.7%. On December 31, the estimated earnings growth rate for Q1 2019 was 3.3%. Six of the eleven sectors are now predicted to report a decrease in earnings for the first quarter, curiously led by the Information Technology (-8.9%) sector which until recently had been the fastest growing sector for years.

And, as noted above, if the index reports an actual decline in earnings for the first quarter, it will mark the first year-over-year decline in earnings since Q2 2016 (-3.1%).

Furthermore, the after peaking in October, forward EPS for 2019 has been declining ever since and in January recorded its biggest sequential decline since January 2016.

What about beyond Q1, which is now expected to be the first quarter since 2016 to post negative earnings growth? Well after the earnings decline in Q1 2019 analysts now expected – at best – low, single-digit growth in earnings in Q2 2019 and Q3 2019. For Q1 2019, analysts are projecting a decline in earnings (-0.8%) and revenue growth of 5.7%.

• For Q2 2019, analysts are projecting earnings growth of 1.6% and revenue growth of 5.1%.
• For Q3 2019, analysts are projecting earnings growth of 2.7% and revenue growth of 4.9%.
• For Q4 2019, analysts are projecting earnings growth of 9.9% and revenue growth of 6.0%.
• For CY 2019, analysts are projecting earnings growth of 5.6% and revenue growth of 5.3%.

Incidentally the 5.6% EPS growth for the full year 2019 is already a 30% haircut to the 7.8% EPS growth that was expected on Dec. 31… and we are only 1 month into the new year.

What does all of this mean for stocks?

Well, the current consensus year-end target price for the S&P 500 is 3044.19, which is 12.6% above the closing price of 2704.10. At the sector level, the Energy (+18.8%) sector is expected to see the largest price increase, as this sector has the largest upside difference between the bottom-up target price and the closing price. On the other hand, the Utilities (+1.8%)  sector is expected to see the smallest price increase, as this sector has the smallest upside difference between the bottom-up target price and the closing price.

Meanwhile, from a valuation standpoint, the forward 12-month P/E ratio – assuming 2019 EPS grows 5.6% Y/Y – is 15.7x. This P/E ratio is below the 5-year average of 16.4 but above the 10-year average of 14.6. It is also above the forward 12-month P/E ratio of 14.4 recorded at the end of the fourth quarter (December 31). Since the end of the fourth quarter (December 31), the price of the index has increased by 7.9%, while the forward 12-month EPS estimate has decreased by 1.1%.

At the sector level, the Consumer Discretionary (20.1) sector has the highest forward 12-month P/E ratio, while the Financials (11.4) sector has the lowest forward 12-month P/E ratio.

Finally, as clearly shown in the chart beow, the only reason stocks have surged nearly 15% from their mini bear market lows on Dec 24 is due to multiple expansion, as Forward EPS have continued to decline, however the Fed’s dovish reversal has been quite successful in boosting forward PE multiples.

As the chart above clearly shows, the Fed’s dovish flip has made earnings largely irrelevant for the market’s near term direction, as Powell’s stated intent to pause hiking and ostensibly slow the Fed’s balance sheet shrinkage has taken priority over everything else. In any case, now that Q4 earning session is over the hump, during the upcoming week, 103 S&P 500 companies (including 1 Dow 30 component) are scheduled to report results for the fourth quarter. Expect even more market upside irrelevant of what historicals companies report or what guidance they deliver.

 

via ZeroHedge News http://bit.ly/2Gk2k1D Tyler Durden

Collusion, right under your nose…

In December, a Democratic operative who hatched a Russian “false flag” scheme against Republican Roy Moore in last year’s Alabama special election promoted his own propaganda on the dubious “Hamilton 68” website – which purports to track Russian “bot” activity, yet refuses to disclose how they do it. 

In January, an online disinformation campaign conducted by a former Obama administration official leading up to the 2018 midterm elections was bankrolled by left-wing tech billionaire Reid Hoffman, according to the Daily Caller‘s Peter Hasson. Hoffman, who co-founded LinkedIn, admitted in December to funding American Engagement Technologies (AET) – which is currently embroiled in a “false flag” scandal stemming from the 2017 Alabama special election. Now, AET and its founder Mickey Dickerson have come under fire for meddling in the 2018 midterm elections. 

And now, as the Democratic establishment faces an onslaught of potential presidential candidates that are not toeing-the-line of radicalism, The Intercept’s Glenn Greenwald exposes  the pure propaganda that the liberal media will resort to, in order to please their Democratic, deep state overlords and keep to “The Plan.”

NBC News published a predictably viral story Friday, claiming that “experts who track websites and social media linked to Russia have seen stirrings of a possible campaign of support for Hawaii Democrat Tulsi Gabbard.”

But the whole story was a sham: the only “experts” cited by NBC in support of its key claim was the firm, New Knowledge, that just got caught by the New York Times fabricating Russian troll accounts on behalf of the Democratic Party in the Alabama Senate race to manufacture false accusations that the Kremlin was interfering in that election.

To justify its claim that Tulsi Gabbard is the Kremlin’s candidate, NBC stated:

“analysts at New Knowledge, the company the Senate Intelligence Committee used to track Russian activities in the 2016 election, told NBC News they’ve spotted ‘chatter’ related to Gabbard in anonymous online message boards, including those known for fomenting right-wing troll campaigns.”

What NBC – amazingly – concealed is a fact that reveals its article to be a journalistic fraud: that same firm, New Knowledge, was caught just six weeks ago engaging in a massive scam to create fictitious Russian troll accounts on Facebook and Twitter in order to claim that the Kremlin was working to defeat Democratic Senate nominee Doug Jones in Alabama. The New York Times, when exposing the scam, quoted a New Knowledge report that boasted of its fabrications: “We orchestrated an elaborate ‘false flag’ operation that planted the idea that the [Roy] Moore campaign was amplified on social media by a Russian botnet.’”

At the same time that New Research’s CEO, Jonathan Morgan, was fabricating Russian troll accounts and using them to create a fraudulent appearance that Putin was trying to defeat the Democratic Senate candidate, he was exploiting his social media “expertise” to claim that Russians were interfering in the Alabama Senate election. In other words, Morgan used his own fake Russian accounts to lie to the public and deceive the national media into believing that Kremlin-linked accounts were trying to defeat the Democratic Senate candidate when, in fact, the accounts he was citing were ones he himself had fabricated and controlled.

Even worse, Morgan’s firm is behind one of the recent Senate reports on Russian social media election interference as well as the creation of “Hamilton 68,” the pseudo-data-driven dashboard constantly used by U.S. media outlets to claim that its enemies are supported by the Kremlin (that tool has so been abused that even some of its designers urged the media to stop exaggerating its meaning). During the Alabama race, Morgan – in a tweet he deleted once his fraud was exposed – cited the #Hamilton68 data that he himself manipulated with his fake Russian accounts to claim that Russia was interfering in the Alabama Senate race:

In response to this scam being revealed, Facebook closed the accounts of five Americans who were responsible for this fraud, including Morgan himself, the “prominent social media researcher” who is the CEO of New Knowledge. He also touts himself as a “State Dept. advisor, computational propaganda researcher for DARPA, Brookings Institution.”

Beyond Morgan’s Facebook suspension, the billionaire funder and LinkedIn founder who provided the money for the New Knowledge project, Reid Hoffman, apologized and claimed he had no knowledge of the fraud. The victorious Democratic Senate candidate who won the Alabama Senate race and who repeatedly cited New Knowledge’s fake Russian accounts during the election to claim he was being attacked by Russian bots, Doug Jones, insisted he had no knowledge of the scheme and has now called for a federal investigation into New Knowledge.

This is the group of “experts” on which NBC News principally relied to spread its inflammatory, sensationalistic, McCarthyite storyline that Gabbard’s candidacy is supported by the Kremlin.

While NBC cited a slew of former FBI and other security state agents to speculate about why the Kremlin would like Gabbard, its claim that “experts” have detected the “stirrings” of such support came from this discredited, disgraced firm, one that just proved it specializes in issuing fictitious accusations against enemies of the Democratic Party that they are linked to Russia. Just marvel at how heavily NBC News relies on the disgraced New Knowledge to smear Gabbard as a favorite of Moscow:

Experts who track inauthentic social media accounts, however, have already found some extolling Gabbard’s positions since she declared.

Within a few days of Gabbard announcing her presidential bid, DisInfo 2018, part of the cybersecurity firm New Knowledge, found that three of the top 15 URLs shared by the 800 social media accounts affiliated with known and suspected Russian propaganda operations directed at U.S. citizens were about Gabbard.

Analysts at New Knowledge, the company the Senate Intelligence Committee used to track Russian activities in the 2016 election, told NBC News they’ve spotted “chatter” related to Gabbard in anonymous online message boards, including those known for fomenting right-wing troll campaigns. The chatter discussed Gabbard’s usefulness.

“A few of our analysts saw some chatter on 8chan saying she was a good ‘divider’ candidate to amplify,” said New Knowledge’s director of research Renee DiResta, director of research at New Knowledge.

What’s particularly unethical about the NBC report is that it tries to bolster the credentials of this group by touting it as “the company the Senate Intelligence Committee used to track Russian activities in the 2016 election,” while concealing from its audience the fraud that this firm’s CEO just got caught perpetrating on the public on behalf of the Democratic Party.

The only other so-called “expert” cited by NBC in support of its claim that Russian accounts are supporting Gabbard is someone named “Josh Russell,” who NBC identified as “Josh Russel.” Russell, or Russel, is touted by NBC as “a researcher and ‘troll hunter’ known for identifying fake accounts.” In reality, “Russel” is someone CNN last year touted as an “Indiana dad” and “amateur troll hunter” with a full-time job unrelated to Russia (he works as programmer at a college) and whose “hobby” is tracing online Russian accounts.

So beyond the firm that just got caught in a major fraudulent scam fabricating Russian support to help the Democratic Party, that’s NBC’s only other vaunted expert for its claim that the Kremlin is promoting Gabbard: someone CNN just last year called an “amateur” who traces Russian accounts as a “hobby.” And even there, NBC could only cite Russel (sic) as saying that “he recently spotted a few clusters of suspicious accounts that retweeted the same exact text about Gabbard, mostly neutral or slightly positive headlines.”

NBC also purported to rely on its own highly sophisticated analysis by counting the number of times Gabbard was mentioned by RT, Sputnik and Russia Insider, and then noting what it seems to regard as the highly incriminating fact that “Gabbard was mentioned on the three sites about twice as often as two of the best known Democratic possibilities for 2020, Joe Biden and Bernie Sanders, each with 10 stories.”

But in contrast to Gabbard, who announced her intent to run for President almost a month ago, neither Biden nor Sanders has done so. Perhaps that fact, rather than – as one of the NBC reporters adolescently gushed: “The Kremlin already has a crush on Tulsi Gabbard” – is what explains the greater amount of coverage?

The Kremlin already has a crush on Tulsi Gabbard https://t.co/bCpTdWG0Bo

— Ben Popken (@bpopken) February 2, 2019

In any event, NBC News, to smear Gabbard as a Kremlin favorite, relied on a group that it heralded as “experts” without telling its audience about the major fraud which this firm just got caught perpetrating in order – on behalf of the Democratic Party – to fabricate claims of Kremlin interference in the Alabama Senate race.

That’s because the playbook used by the axis of the Democratic Party, NBC/MSNBC, neocons and the intelligence community has been, is and will continue to be a very simple one: to smear any adversary of the establishment wing of the Democratic Party – whether on the left or the right – as a stooge or asset of the Kremlin (a key target will undoubtedly be, indeed already is, Bernie Sanders).

To accomplish this McCarthyite goal, this Democratic Party coalition of neocons, intelligence operatives and NBC stars will deceive, smear and even engage in outright journalistic deception, as NBC (once again) just proved with this report.

*  *  *
So which is it Democrats? Saul Alinsky or Cloward-Piven?

via ZeroHedge News http://bit.ly/2TBF5Uo Tyler Durden

Venezuela’s self-declared president Juan Guaido, who twelve days ago declared himself “interim president” of Venezuela, claiming current President Nicolas Maduro is no longer fit to lead and that he essentially usurped power, said that he wants a “productive and mutually beneficial” relationship with China and is ready to engage Chinese officials in dialogues “as soon as possible”, even though China, along with Russian and Turkey, are among the handful of countries who have refused to recognize his self-proclaimed presidency to succeed Nicolas Maduro.

In an interview with the South China Morning Post,  Guaido extended an olive branch to China, which would continue to play a role in Venezuela’s economic development, adding that Beijing’s deals with Maduro’s government would remain in force so long as they were entered into in adherence to “due process.”

“China is a crucial global player, and we want to establish a productive and mutually beneficial relationship,” he said in an email interview. The 35-year-old leader of the opposition-controlled National Assembly added that “China’s support will be very important in boosting our country’s economy and future development.” It will also be critical for the ongoing soft coup to succeed as without the support of China and Russian, a new administration in Caracas will find it next to impossible to find global recognition, if it is shunned by two of its biggest clients, and creditors.

As we have reported previously, China along with Russia, has remained firm in supporting Maduro, even as international recognition of him as the legitimate Venezuelan ruler has fallen apart over the past week.

Following what was effectively an oil blockade by US President Donald Trump last week when the US imposed sanctions on state-run energy company PDVSA, the European Parliament on Thursday recognized Guaido as de facto head of state, heightening international pressure on the socialist president. EU governments, divided over whether to recognize Guaido, also agreed to lead an international crisis group with South American nations to seek new elections, setting a 90-day time limit, and threatening further economic sanctions.

Speaking to SCMP, Guadio said that “Maduro is increasingly isolated and is largely acting alone”, even though China has clearly not isolated Maduro, adding that “China has witnessed at first hand the plundering of our state resources by Maduro’s government. Its development projects in Venezuela have been equally affected and falling due to governmental corruption and debt default.” What he didn’t say is that China is quite delighted with these events as it has allowed Venezuela to become what is effectively a debtor in possession into an insolvent state.

Commenting on whether he plans to allow Venezuela to be part of China’s “Belt and Road” initiative, Guaido said he would improve the relationship with Beijing to stimulate the Venezuelan economy, which has been plagued by hyperinflation and a collapse of investors’ confidence.

“In Latin America and the Caribbean, China continues to promote trade within the framework of the Belt and Road Initiative,” he said. “This initiative gives China a natural space to foster development across the region.”

“There is a lot of work to do in this regard,” he wrote. “Our government will act with strict adherence to the laws and its international duties. We are committed to restoring the rule of law to recover the trust of our investors. All agreements that have been signed with China following the law will be respected. If previous agreements were signed by adhering to the due process of approval by the National Assembly, my government will accept and honour them.”

China’s foreign ministry spokesman, Geng Shuang, said on Friday that China’s deals with Venezuela should not be affected “no matter how circumstances change”. When asked at a press conference if Beijing had contacted Guaido, Geng said China has been in touch with “all sides” in different ways.

China is one of the biggest creditors of the socialist Latin American state, having loaned $50 billion to Caracas over the last decade, which the South American nation has been repaying in oil shipments.

Furthermore, during Maduro’s trip to Beijing in September, President Xi Jinping and other Chinese leaders promised to “provide whatever help it can offer” to cash-strapped Venezuela.

Maduro also secured multiple deals with China worth “billions of dollars”, including another US$5 billion credit line.

So having his work cut out for him when it comes to dialog with Beijing, Guaido conceded that he would need its support too: “Venezuela needs to reactivate its international relations with different global actors based on a solid spirit of cooperation and the interests of our people,” he said. “Given its competitiveness and market, China is a fundamental global player with whom we would like to relaunch our relationship based on mutual respect and cooperation… We are ready to begin a constructive relationship and dialogue with China as soon as possible.”

It’s unclear if Guadio’s olive branch will have an impact on bilateral relations. Jiang Shixue, vice-president of the Chinese Association of Latin American Studies at the Chinese Academy of Social Sciences, said Beijing’s decision about who to recognize as president had nothing to do with commerce or geopolitics.

“By recognising Maduro, China recognises a legitimate choice made by the Venezuelan public, who expressed their will by way of an election,” Jiang said. “If Venezuela holds a re-election, or if a president emerges by peaceful, democratic means, China would recognise the choice made by the Venezuelan public.”

Rough translation: China will back anyone that the US is against.

But Maryhen Jimenez Morales, a politics lecturer at the University of Oxford and an expert on Venezuela, said it made perfect sense for China to switch its support to Guaido.

“The political dimension of the crisis is also hurting the bilateral relationship [between China and Venezuela because] Maduro has basically no popular support any more,” Jimenez said. “Beijing has enough reasons to support Guaido’s presidency without [him] offering any additional economic benefits.” Recognizing Guaido was “a step forward to a more stable and trustworthy relationship”, she added.

We doubt that will happen, especially when Trump continues to threaten to send the US army to Venezuela as he did on Sunday, when he signaled he’s confident a transition of power in Venezuela is under way with the U.S. pressing for Guaido to take over.

Trump also added that the use of U.S. military force in Venezuela remains “an option” and he isn’t inclined to negotiate with President Nicolas Maduro to persuade him to leave, Trump said in an interview on CBS’s “Face the Nation” airing Sunday. At the same time, “I think the process is playing out” as Venezuelans take to the streets to protest, he said.

“If you talk about democracy, it’s really democracy in action,” the U.S. president said, confirming that the soft coup is only taking place thanks to ongoing support from the US.

Turkey confirmed as much on Sunday, when Ankara warned that the states refusing meaningful dialogue with the legitimate authorities of Venezuela – i.e. Maduro – only ‘help’ to plunge the country into more chaos and uncertainty, rather than contribute to resolving the problem.

Turkish Foreign Minister Mevlut Cavusoglu cautioned that “there is a spark that can turn into a fire at any moment.” A crisis like that should be defused “through dialogue,” and Venezuelan authorities have expressed readiness for it – yet foreign states are apparently not interested.

Is that how it happened? No. On the contrary, [the crisis] was fueled from the outside. The people of Venezuela were punished. Millions of people were forced to leave Venezuela.

Turkey’s top diplomat quoted by RT, was speaking on Sunday before the election ultimatum, given to the government of Nicolas Maduro by several European countries, expires.  In a bid to put more pressure on Nicholas Maduro, the UK, Spain, Germany, and France issued a blunt ultimatum, calling on him to announce new elections by the end of Sunday (February 3). If Maduro does not relent, they pledged to automatically recognize Guaido as the president of Venezuela. The ultimatum was slammed by Moscow, which pointed out the “identical” wording of the threat.

On Saturday, amid rallies both in support of and against his government, Maduro proposed snap elections to the national Assembly (a body dominated by opposition). Yet, he did not name any exact date, signaling he is unlikely to cave in to the ultimatum.

Meanwhile, Vice President Mike Pence who is gradually emerging as one of the most ardent neocons in recent years, said “this is no time for dialogue,” but rather the “time for action.” Echoing this sentiment, legacy neocon and National Security Advisor John Bolton doubled down, saying Washington will send “humanitarian aid” to the people of Venezuela, adding: “It’s time for Maduro to get out of the way.”

Firing back, Venezuelan Foreign Minister Jorge Arreaza accused the US of waging “unjust wars” and subjecting “economies to a blockade,” while causing “death, hunger, destruction and suffering.”

via ZeroHedge News http://bit.ly/2G8UNDM Tyler Durden

Authored by Finian Cunningham via The Strategic Culture Foundation,

The brutal murder of Saudi journalist Jamal Khashoggi was preceded a few weeks by a major event that could be the key for why his assassination was ordered. That event was the cancelled stock market sale of Saudi Aramco shares, the kingdom’s state-owned oil company.

The Initial Public Offering of Aramco – the world’s biggest oil company – was the “brainchild” of Crown Prince Mohammed bin Salman (MBS), as told in this recent documentary. When he became heir to the throne in early 2017, the young prince made the partial sell-off of the state-owned asset the “cornerstone” for his far-reaching plans to reform the ultra-conservative desert kingdom.

MBS, the favored son of aging King Salman, was given free rein over major policy decisions, including trying to modernize the Saudi economy away from its near-total dependence on oil. The Crown Prince drew up a “Vision 2030” master plan to reinvent Saudi Arabia as a hi-tech business hub for the Middle East. The plan – widely hailed by Western news media as an “ambitious new beginning” – also included social reforms to give women more rights and to open up more lax leisure facilities, such as cinemas and sporting venues. The Western plaudits for the young royal pandered to his ego and vanity.

However, the thirty-two-year monarch has since fallen out of favor among his erstwhile Western backers over the gruesome murder of Jamal Khashoggi. Khashoggi was killed in the Saudi consulate in Istanbul on October 2 in what many believe to have been an assassination plot ordered by Crown Prince MBS. The House of Saud vehemently deny his involvement and claim that the murder was a “rogue operation” by Saudi intelligence agents who were sent to Istanbul to forcibly return Khashoggi to his native country. Few people – most notably US President Donald Trump – believe the official Saudi claim of MBS’ innocence.

The timeline of events is important here.

Khashoggi went in self-exile in September 2017, a few months after MBS became heir to the throne. His next-in-line promotion was seen by many observers as a breach of the kingdom’s succession rules. MBS, with his father’s approval, bypassed other heirs who were higher up the succession ladder. It was a “power grab” by the sharp-elbowed MBS who is known for being arrogant and impetuous.

During his US exile, Khashoggi became a regular columnist for the Washington Post and a prominent guest speaker at various influential think tanks on Middle Eastern matters. A cardinal theme for the dissident was criticism of MBS and highlighting serious policy mistakes. Khashoggi was critical of Saudi Arabia’s war in Yemen, the blockade of Qatar, its destabilizing interference in Lebanon’s political affairs, as well as exposing the darker side of MBS’s authoritarian rule during the round-up and alleged torture of other royals, which the Crown Prince had been claiming was an anti-corruption crackdown. The young royal’s “reformist” image was therefore being marred by Khashoggi’s insider insights.

All this negative publicity – from high-profile media platforms in the US – is bound to have impacted on the strategy concerning the share sell-off for Aramco. The Initial Public Offering (IPO) of Aramco was said to be world’s biggest-ever stock-market listing. It had investors drooling. New York was vying with London for the deal.

The company was valued by the Saudi Crown Prince and his advisors at $2 trillion. The intended 5 per cent sell-off of company shares was calculated to raise $100 billion. That windfall was then supposed to be used to drive forward the ambitious Vision 2030 which MBS was staking his entire reputation and ego on.

But foreign investors began to lose confidence in Aramco’s valuation at $2 trillion – reckoned to be unrealistically high. Secondly, there were growing doubts about MBS as a reliable ruler. The much-vaunted stock-market launch of the company began to fade from the end of 2017 through early 2018. Investors became leery of what had been touted as the most spectacular capital venture ever.

As Aramco’s prospects dwindled, it was reported that King Salman eventually stepped in to pull the plug on whole concept.

Al Jazeera reported:

“The king smoke – and a $2 trillion dream went up in smoke.” The Financial Times commented at the time: “Shelving the Saudi Aramco IPO [sell-off] is a blow to Crown Prince… For the king it maybe was too much to go down as the man who sold the crown jewels.”

The abrupt cancelling of the Aramco stock-market plan came as a severe knock-back to MBS. The young royal is known to see himself in the same mold as global entrepreneurs. When he was on a two-week visit to the US last year, he smooched with Silicon Valley figures and other business leaders. One can easily imagine the personal insecurity of this pampered Saudi heir trying to “prove himself” among what he considers “icons” of success.

With MBS’ Aramco “brainchild” aborted, the whole reform “master plan” of his Vision 2030 was also then thrown into disarray. No exaggeration, his world must have been turned upside down and his reputation badly dented. It’s hard to overstate how bruising the turn of events must have been for the “visionary” royal.

A CIA assessment of Crown Prince MBS, as reported by the Washington Post, refers to him as a “good technocrat” but also an arrogant and impetuous character. “He doesn’t seem to understand that there are some things you can’t do,” quoted the Post.

All this earth-shattering news came at the end of August, 2018, when the Western media revealed that Aramco stock-market plan was being ditched. What’s more, it was also clear that the once-buoyant image of MBS was being checked by his father.

Barely five weeks later, Jamal Khashoggi was lured to Istanbul on false pretenses to collect a legal document from the Saudi consulate. That was on October 2 when it is believed that he was tortured to death inside the consulate, and his body cut up with a bone saw for disposal. His remains have never been recovered.

It is claimed that MBS organized the plan to entice Khashoggi to Istanbul. The journalist was fearful of returning to Saudi Arabia because of his media criticism. MBS’s younger brother, Khalid, who was based in Washington as US ambassador, reportedly phoned Khashoggi to assure him that he would be safe to go to Istanbul. That must have been sometime during September. The Saudi embassy denies the phone call was made.

Jamal Khashoggi is not known to have expressed any public opinion on the proposed Aramco stock-market plan. But it can be fairly deduced that his critical writings concerning the “reformist” Crown Prince and the latter’s lack of credibility dealt a serious downer – at least indirectly – to the whole venture.

In MBS’ egotistical rage over his dream being squelched, Jamal Khashoggi probably emerged as the bane of the Crown Prince’s ambitions. In a five-week period, the journalist’s fate was sealed by a murder plot that bears the hallmarks of rage and revenge.

via ZeroHedge News http://bit.ly/2WMyo4a Tyler Durden

Football is far and away America’s most popular sport (all controversies aside). From high school to college to the NFL, many Americans regard watching football games as something more than just a sport. It’s a sacred American tradition.

But given the costs associated with attending professional – and even college – football games, some might wonder what are the best cities for being a football fan?

Well, in its latest annual survey, WalletHub has compared 240 US cities with at least one college or professional football team across 21 key metrics – including average ticket prices and fan friendliness – to try to arrive at an objective conclusion.

And the winner is…

Pittsburgh, Pennsylvania, home of the Pittsburgh Steelers.

Here’s a ranking of the Top Ten cities:

1. Pittsburgh, PA: 63.49  
2. Boston, MA: 55.24  
3. Green Bay, WI: 55   
4. Dallas, TX: 53.71   
5. New York, NY: 49.2  
6. Miami, FL: 48.25
7. New Orleans, LA: 47.2   
8. Oakland, CA: 44
9. Philadelphia, PA: 43.51   
10. Seattle, WA: 42.79

And the ten worst:

1. West Lafayette, IN    9.44
2. New Britain, CT    9.2
3. Charleston, SC    9.09
4. Bowling Green, KY    7.95
5. Providence, RI    7.93
6. Ithaca, NY    7.7
7. Valparaiso, IN    7.32
8. Corvallis, OR    7.25
9. Davidson, NC    6.9
10. Pine Bluff, AR    6.46        

And a breakdown of the scores on some of the top metrics:

 

While Boston might rank high on the list for top football cities, it’s probably worth keeping in mind that the Patriots took the top spot for No. 1 most hated team in the country.

via ZeroHedge News http://bit.ly/2HQdE7Z Tyler Durden