Month: February 2019

Authored by Victoria Snitsar via Campus Reform,

The American Bar Association rejected a proposal on Monday to require at least 75 percent of law students at accredited schools to pass the bar exam no later than two years after their graduations. 

ABA’s House of Delegates argued that the requirement would “be unfair to institutions that serve minority students,” according to Inside Higher Education. An overwhelming majority of the ABA’s House of Delegates voted against the proposal, with a final tally of 88-334. 

Several ABA leaders concerned with diversity in the legal profession sent a letter, claiming that “proposed changes to Standard 316, the bar passage rule, will have an adverse impact upon diversity within legal education, the legal profession, and the entire educational pipeline.”

The letter also mentions several data points from the past 10 years of ABA-accredited HBCU law schools that were underperforming in bar passage results, noting that if the new standard for bar passage were to be applied to results from 2016 and 2017, the list of schools that would have lost accreditation “could include five of the six HBCUs.”

Aside from the impact on HBCU schools, which significantly contribute to racial diversity in the legal profession, the changes in bar passage standards would also impact other contributors, including “schools in Puerto Rico, most of the schools in California, and other schools across the country,” according to the letter. In 2018, “the first time pass rate for graduates of California ABA-accredited law schools dropped 6 percentage points from July 2017 to July 2018 (70% to 64%),” according to the aforementioned letter. 

The average cost of legal education leaves an average graduate of public law schools $90,217 in debt by the end of education, and private school graduates indebted to their lenders “$130,349 by the time they completed their degree,” according to 2017 data from U.S. News and World Report, 

In a Gallup Study conducted between 2000 and 2015, only 23 percent of law school graduates believed that their education was worth the price that they paid for it and “20 percent of law graduates strongly agree that their degree prepared them well.” 

Those who favored the rejected proposal articulated the perspective that law schools do a disservice to graduates who can not pass the bar exam. The supporters claimed that these graduates end up burdened with tens of thousands of dollars in debt and unable to become licensed attorneys who can practice the legal profession. 

via ZeroHedge News http://bit.ly/2RBxL9w Tyler Durden

Theresa May’s “victory” last week when MPs backed the Brady amendment, giving May a Parliamentary mandate to renegotiate her withdrawal agreement with the EU, has been short-lived. As Irish and EU officials dig in their heels and continue to insist that they won’t allow modifications to the text of the deal, Wall Street banks have been raising the probability of a no-deal Brexit while some analysts have warned that May has inadvertently boxed herself in: By taking a delay of Article 50, and therefore removing the possibility of a “People’s Vote” (second referendum), the prime minister might have set herself up for failure, as Brexiteer MPs appear ready to pull the ripcord on a no-deal Brexit.

As we’ve noted time and time again, thanks to the efforts of No. 10 Downing street and a network of economists and business groups, the British people have been conditioned to believe that a no-deal Brexit will result in Britain transforming into a “Mad Max”-style hellscape complete with shortages of basic goods and civil unrest that could necessitate a declaration of Martial Law.

Warehouses will quickly run out of fresh vegetables, medicine and other basic goods. The UK’s highways will become clogged with lorries waiting for their turn to clear new customs checks. And the financial services industry will struggle to clear trades and perform other basic functions. One recent report even warned that a no-deal Brexit could lead to “thousands of deaths” from mass hunger.

As if all of this wasn’t bad enough, a series of reports published this weekend added to Briton’s anxieties.

The Independent reported the severing of ties between EU and UK security agencies as a result of a ‘no deal’ Brexit.

Rob Price, head of the Acro criminal records office, said access to EU conviction records was “critical” to deciding whether to release or detain a foreign suspect. Without them, the UK could be forced to allow dangerous criminals to roam the streets.

“Now is the time for people to really understand this is not just something you can pass off and say ‘it will be alright’,” Mr Price said. “Politicians use the term ‘sub-optimal’ and what does that mean? It means high risk and less secure.”

And while UK law enforcement agencies are “trying their best” to build a backup system, without access, “stuff will get missed.” The UK makes 600 requests to foreign law enforcement agencies every day, and of these, roughly two-thirds are for Europeans. Because of the cooperation agreement, responses from Europe can take one to two days. But the lag time for agencies outside of Europe can be longer than three months.

As it stands, the agreement allows the UK access to ECRIS, the European Arrest Warrant, Schengen Information System II and other systems. This access will be maintained until the end of the transition period (the end of 2020), so that would give the UK some lead time to negotiate replacement agreements.

“We’re going to have to explain that to the public at some point, we may even have to explain that to victims and witnesses.”

“Somebody may be arrested for shoplifting here but back home they could have a serious conviction. There could be a reason why they are here.”

And while Acro said he’s working to set up bilateral agreements, completing security cooperation agreements with individual members of the EU27 could take a long time.

“In a short timescale we’re not going to be able to get 27 agreements,” Mr Price said. “Bilaterals are a lot slower, a lot clunkier. ECRIS is a really important part of our business – turning that off is going to have a significant impact on our ability to make this country safer and to make European countries safer as well.”

And as if rampant crime wasn’t enough of a concern, a more immediate concern could be a “garbage crisis” in the heavily populated streets of the Southeastern UK, the area in and around London. Because if the UK leaves the EU without a deal on March 29, export licenses for livestock and the millions of tonnes of waste that the UK exports to the EU could become invalid “overnight,” according to the Guardian.

The result could be nothing short of a public health emergency. Not only would the UK lose the ability to export its trash, increasing the likelihood of polllution seeping into its water supplies, but a backlog of livestock could cause manure overflows.

If the UK leaves the EU without a deal on 29 March, export licences for millions of tonnes of waste will become invalid overnight. Environment Agency (EA) officials said leaking stockpiles could cause pollution.

The EA is also concerned that if farmers cannot export beef and lamb, a backlog of livestock on farms could cause liquid manure stores to overflow. A senior MP said the problems could cause a public health and environmental pollution emergency. An EA source said: “It could all get very ugly, very quickly.”

The emails leaked to the Guardian were sent to EA staff, asking for 42 volunteers to staff crisis management centres that would deal with incidents. On Tuesday the chief executive of the civil service revealed plans to move up to 5,000 staff into an emergency command and control centre in the event of no deal.

It would also open the door to criminal fraudsters seeking to exploit the situation.

“No deal would be a green light to criminal fraudsters and create a public health and environmental pollution emergency. EA officials should not carry the can for the failings of government to get a deal through and this shows how hollow the prime minister’s promises were about protecting the environment if we leave the EU.”

But in what was perhaps the most outlandish entry in the “Project Fear” project, two UK newspapers, the Daily Mail and the Times of London, led their Sunday editions with stories about plans to move the Queen and the royal family out of London to a “secure location” if a no-deal Brexit results in public unrest –  a plan we’re calling “Operation Gan-Gan Drop”.

If rioters take to the streets of London following a hard Brexit, a Cold War plan to evacuate the royals to an undisclosed location in the countryside would be immediately implemented.

The Queen and other senior royals will be evacuated from London in the event of riots triggered by a no-deal Brexit, under secret plans being drawn up by Whitehall.

Emergency proposals to rescue the royal family during the Cold War have been “repurposed” in recent weeks, as the risk continues to rise of the UK crashing out of the EU without a deal before next month’s deadline.

Still, during times of abject hysteria, some MPs – notably arch-Brexiteer Jacob Rees-Mogg – have spoken up to remind Britos that while there would be a degree of economic fallout from a hard Brexit, it would be “survivable,” according to Sky News.

“It seems to me we have got to guard against two things. One is an irrational pessimism that says that everything will be a catastrophe and irrational optimism which says everything will be okay.

But the way things are going, if May wants to successfully whip up the votes for the version of her Brexit deal that has already been voted down by a historic margin, she is going to need to try a little harder.

via ZeroHedge News http://bit.ly/2SnmU7K Tyler Durden

Authored by Lance Roberts via RealInvestmentAdvice.com,

…as I noted two weeks ago in this missive, these were all of the ingredients necessary to bring the bear market that began in 2018 to its end.

For now.

The Fed Is Limited

While the Fed certainly gave the markets what it wanted in the near-term,  in the longer-term there is actually very little the Fed will be able to do to stem the next recessionary bear market. 

The chart below shows why. 

In 2008, when the Fed launched into their “accommodative policy” emergency strategy to bail out the financial markets, the Fed’s balance sheet was only about $915 Billion. The Fed Funds rate was at 4.2%.

If the market fell into a recession tomorrow, the Fed would be starting with roughly a $4 Trillion dollar balance sheet with interest rates 2% lower than they were in 2009. In other words, the ability of the Fed to “bail out” the markets today, is much more limited than it was in 2008.

“So what? There are plenty of bonds to buy.”

True, but there are other factors at play which will also dramatically limit the effectiveness of further rounds of accommodation. 

When the Fed launched QE in 2009, market valuations had been reverted to below the long-term average and investor sentiment had been completely washed out. The massive selling that occurred as the markets collapsed left a huge amount of “pent up” demand for equities. 

Today, that is no longer the case. 

Valuations are no longer cheap by historical standards, but instead are expensive by virtually every measure. 

As Goldman Sachs pointed out recently, the market is pushing the 89% percentile or higher in 6 out of 7 valuation metrics.

There is no longer a “pent up” demand for equity ownership as households now have more equity exposure than at any other point in history.

Furthermore, the market is not grossly oversold and deviated well below long-term trends as it was in 2008. As Dana Lyons recently penned:

“We used exponential regression smoothing to find the ‘best fit’ trend line on the [Shiller data] series from 1871 (h/t to Doug Short for the concept.)

After finding the best fit trend line for the composite, we can measure how far above or below prices are at a given time. As it turns out, this past September saw the composite reach 122% above the trend line, i.e., it was 122% “overbought”. In nearly 150 years, the only months that saw prices more overbought than that were those encompassing the 1999-2000 market top — the most excessive, bubbly top in U.S. market history.”

While markets can certainly remain extended for much longer than logic would predict, they can not, and ultimately will not, stay overly extended indefinitely. 

The important point here is simply this. While the Fed may have curtailed the 2018 bear market temporarily, the environment today is vastly different than it was in 2008-2009.  Here are a few more differences:

• Unemployment is 4%, not 10+%

• Jobless claims are at historic lows, rather than historic highs.

• Consumer confidence is optimistic, not pessimistic.

• Corporate debt is a record levels and the quality of that debt has deteriorated.

• The government is already running a $1 trillion deficit in an expansion not half that rate as prior to the last recession.

• The economy is extremely long is a growth cycle, not emerging from a recession.

• Pent up demand for houses, cars, and other durables has been absorbed

• Production and Services measures recently peaked, not bottomed.

In other words, the world is exactly the opposite of what it was when the Fed launched “monetary accommodation”previously. Logic suggests that such an environment will make further interventions by the Fed less effective.

The only question is how long will it take the markets to figure it out?

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

The name “Thunderf00t” is the alias of Phil Mason, a British chemist and video blogger who has become well-known for posting YouTube videos that criticize, among other things, pseudoscience. His day job is as a scientist in the field of chemistry and biochemistry at the Academy of Sciences of the Czech Republic. His tongue in cheek, yet starkly accurate criticisms, have earned him nearly 850,000 subscribers on YouTube and an aggregate total of more than 220 million views.

He famously dismantled The Boring Company’s tunnel reveal in a scathing video at the end of 2018 and has now turned his efforts to Musk’s idea of putting cold gas thrusters on the upcoming Tesla Roadster. His latest video, called “Elon Musk’s Flying Car – BUSTED!” takes on Musk’s recent proclamation that the coming Tesla Roadster would “do something like” flying:

The new Roadster will actually do something like this https://t.co/fIsTAYa4x8

— Elon Musk (@elonmusk) January 9, 2019

“It’s a really, really stupid idea,” Mason first says of rocket technology being applied to conventional vehicles. Cold gas thrusters, he argues, are one of the most low performing and inefficient ways to try and make a car fly, he continues. 

“It’s one of the oldest ideas out there,” Mason says about cold gas thruster technology and how it was used in some of the first torpedoes. It’s inefficiency has been known about “for over a century,” he says, performing a crude demonstration with compressed gas on his own. 

The idea of cold gas thrusters on a car is “really stupid” he continues.

To make his point, Mason replays Musk’s own words from the Boring Company reveal where Musk himself says: “There are some drawbacks to flying cars, essentially its a helicopter with wheels. They make a lot of noise, there’s a lot of wind force and the probability of something falling on your head is much higher if there’s a bunch of flying cars around.”

“That’s why flying cars are completely impractical,” Mason continues. “Cold gas thrusters are bloody noisy!” he proclaims. 

Mason then goes on to debunk the idea of the Hyperloop, which is supposed to use low pressure vacuum technology for high speed travel. “It’s more of soap box derby, instead of the future of transport,” he says about Musk’s Hyperloop ideas.

“It drives Elon Musk fans crazy when you tell them that he is not the visionary that invented the Hyperloop,” Mason says, referring to the century old idea of a vactrain. “He just took somebody else’s idea that was over 100 years old and gave it a new name.” 

The reason that no one has built one of these 600 mph vacuum trains is because it’s “insanely difficult, insanely dangerous and insanely expensive to do,” he says. The Hyperloop makes the flying car seem like a “cakewalk”, Mason concludes, audibly trying to hold back laughter. 

You can watch his full 35 minute video here:

via ZeroHedge News http://bit.ly/2UB82Qw Tyler Durden

Authored by Dennis Prager via DailyWire.com,

If I were to tell you that a growing group of killjoys wants to ban NFL cheerleading, would you guess that this group is on the political left or right?

Must be the right, right? They’re the religious ones with all the sexual hang-ups.

Wrong.

They’re on the left.

And what’s their problem with cheerleading?

I’ll let them speak for themselves.

In The Boston Globe, Margery Eagan, Globe columnist and co-host of NPR’s “Boston Public Radio,” wrote a column titled “It’s time to say goodbye to the NFL cheerleaders.”

She described NFL cheerleading as “creepy and demeaning.”

USA Today sports columnist Nancy Armour came to the same conclusion: “The underlying premise of NFL cheerleaders is degrading. … NFL cheerleaders need to go.”

Chicago Tribune sports reporter Shannon Ryan wrote, “The league has shown only that it regards cheerleaders as pieces of sideline eye candy.”

To make her point, she asked, “why aren’t there scantily dressed male cheerleaders and dance teams?”

Only the well-educated could ask such a stupid question – because only the highly educated deny that, with few exceptions, the only people who would like to see scantily dressed male cheerleaders are gay men.

In USA Today, Yale Divinity School Director of Communications Tom Krattenmaker added a theological voice to the anti-cheerleader chorus. “It’s time,” he intoned, “to call this out for what it is: demeaning to women and an anachronism that ought to be beneath the male fans to whom this titillating eye candy is served.” This sentence, and his whole piece, is what goes for deep thought on the left today. He doesn’t explain how being an NFL cheerleader is “demeaning.” He simply declares it so. Did he bother to interview any cheerleaders? I did, and the consensus among cheerleaders is that it is one of their greatest life experiences.

Jacie Scott, a black woman who retired from being a Dallas Cowboys cheerleader in 2016, wrote in response to Nancy Armour:

“I spent four years as a cheerleader in the NFL, and the experiences that each year brought helped shape me into the woman I am today. … I saw countries I never imagined seeing. I made a positive impact in lives, young and old, and I did it all with 30-something incredible women. I wouldn’t trade my time as a cheerleader for anything.”

What is demeaning to cheerleaders is not cheerleading but people like Tom Krattenmaker, Shannon Ryan, Margery Eagan and Nancy Armour who have the conceit — and meanness — to label these women demeaned.

I interviewed a former Atlanta Falcons cheerleader, Nina Ahlin (now Noa Hami), on my radio show. When she entered my studio, I was struck by how attractive she was 20 years after retiring from cheerleading, and by her modest dress. Regarding her dress, she explained that soon after retiring as a cheerleader, she met an Orthodox Jewish man, fell in love, converted to Orthodox Judaism and married.

Apparently, her religious husband, a successful businessman, didn’t find this woman’s cheerleading background “demeaning.” On the contrary, like the vast majority of men — religious or secular — he was delighted to be dating and ultimately marrying an NFL cheerleader. Good thing he didn’t go to Yale Divinity School.

It was clear that even now, as an Orthodox Jew who dresses in the long skirts and long sleeves, she doesn’t find cheerleading demeaning: She sent me a photo of herself from her cheerleader days.

As she wrote to me:

“I can’t imagine my life without having the experience I did as an NFL cheerleader. It was literally life changing for me. The friendships I made, the places we were able to go and the people we were able to meet can’t be duplicated. … The thought of that being taken away from young girls who dream of one day becoming a pro cheerleader scares me!”

Why do leftists have contempt for cheerleading and cheerleaders (who, after all, choose to be cheerleaders — and for virtually no pay)?

A Vanity Fair piece on cheerleaders gave the game away:

“The league profits from selling a retrograde notion of masculinity — big, strong men, unafraid to take a hit, surrounded by enthusiastic, scantily clad women.”

Or as a Canadian Broadcasting Corporation article titled “Pro cheerleading ‘should be abolished'” reported, former professional basketball player Mariah Burton Nelson said, “Cheerleading implies that women’s proper role is to support men, smile at men and fulfill the sexual fantasies of males.”

The left has contempt for masculinity and the male sexual nature that is part of it. The new emasculated man will not look at sexy women. And the new defeminized woman will not want to “support men,” let alone appear sexy for them.

The left claims to be pro-choice. But it demands the abolition of NFL (and NBA) cheerleading without giving women a choice to be cheerleaders — just as it never gave Miss America participants a choice when it abolished the Miss America swimsuit competition. Leftists believe they are morally superior people and, therefore, have the right to deprive anyone — man or woman — from choosing what the left disdains. The only woman’s choice the left cares about is the choice to extinguish nascent human life.

Even if you have no interest in football or cheerleading, this should be your issue. We have to tell the left here, as in virtually every other area of life, and in the most forceful terms possible: Just leave us alone. Let us live our lives with our small joys. And grow up — men like looking at women, and women like being looked at.

A world with NFL cheerleaders is far preferable to the world the left wants to create: a dystopia in which men and women are interchangeable.

via ZeroHedge News http://bit.ly/2t4xqSZ Tyler Durden

A police officer who shot the leader of a militant Antifa group was “legally justified” in a January 11 shooting at a Eugene, Oregon middle school. 

Charles Landeros, 30, was fatally shot in the head by officer Steve Timm at the Cascade Middle School, where Landeros’ daughter is a student. Landeros can be seen on bodycam footage pulling a gun during a struggle with Timm and another officer, Aaron Johns following a custody argument. 

Landeros went to the school that day over a conflict with his daughter’s mother. He had enrolled the girl in the school earlier that week without telling his former spouse, but school officials later learned that the girl’s mother had the sole authority to decide which school the girl attended.

At some point, Landeros was told to leave the school because he stopped answering the officers’ questions. He was warned that he would be arrested if he didn’t leave, the district attorney said.

Police body camera footage shows Landeros refused to leave the school because he believed only the principal had the authority to force him from the campus. He then sees his daughter walk into the hallway and repeatedly yells for her to “go.” –Oregon Live

According to district attorney Patty Perlow, Timm and Johns tried to arrest Landeros on suspicion of disorderly conduct and trespassing – pushing him outside the front doors. Landeros pushed back, and the pulled a handgun as he and Johns begin to struggle. Landeros can be seen pointing the gun at Timm and firing two rounds which miss the officer. Timm returned fire once and hit Landeros in the head right in front of his daughter. 

“It is unknown why Charles Landeros chose to use deadly force in this circumstance, but he clearly had no regard for the lives of the police officers or the students or staff present, including his child,” said Perlow in a statement. 

“Officer Timm saved the life of Officer Johns, himself and perhaps many others given the number of rounds Charles Landeros had loaded in his weapon. There is no clearer circumstance that the use of deadly force is justified than this.”

Landeros founded the “community Armed Self-Defense” Antifa group, according to Ammoland, and was wearing a “smash the patriarchy and chill” shirt during the incident.

Watch: 

The 9mm pistol Landeros pulled was bought legally in December by his sister-in-law, according to Perlow, and he was a concealed handgun license holder. He had a round in the chamber, 18 rounds in the magazine, and another loaded magazine on his gun belt. In his car, police found another magazine. Landeros was also wearing a backpack that had bullets for a different caliber firearm. 

Landeros’ family has called for an independent investigation into his killing, noting that he was an honorably discharged Army veteran and the father 10 and 12-year-old daughters. 

In mid-January, a heated protest broke out over the incident in which anti-police demonstrators faced off with counter-protesters supporting the police. 

Protesters & counter-protesters clash at Cascade Middle School this evening. Friends of Charles Landeros claim Friday’s officer involved shooting was a “homicide.” Parents of students showed their support for the Eugene Police Department. Details on @KEZI9 at 5 w/ @amberwilmarth. pic.twitter.com/R7H1J9DXbM

— Madison Glassman (@MadisonKEZI) January 14, 2019

One Cascade Middle School parent at the protest defended the officers. 

“They’re saying disarm cops, they’re saying that was murder. It wasn’t murder. [Landeros] brought a gun to my kid’s school,” said Karen Neurotch. “They didn’t get calls because their kids don’t go here. I got a call saying my kid was terrified because they heard shots fired.” 

Community Armed Self Defense’s Facebook page said that they could not count on the police to protect marginalized people, and that firearms help marginalized groups protect themselves, the Daily Emerald reported.

“The police are not here to protect us. They are more likely to harm us themselves than they are to ‘serve or protect’ us,” the group wrote on their Facebook page description.

The Civil Liberties Defense Center, another of the activist groups Landeros belonged to, posted about the shooting on their Facebook page. The post said Landeros left behind two daughters, ages 12 and 10, a partner, and numerous family members and friends. The group also said it will raise money to investigate the shooting on their own. –KGW

 Officers Timm and Johns have been with the Eugene Police Department for 14 and 17 years respectively. 

via ZeroHedge News http://bit.ly/2MORaD8 Tyler Durden

An undated yearbook photo appears to show Virginia Governor Ralph Northam sporting the same pair of pants as a man in blackface pictured in his 1984 medical school yearbook. 

The photo in question features a group of boys standing in front of a car below the title “Hi-Y” (a YMCA boys-only high-school program). The caption below indicates that Ralph Northam was the group’s president, while a boy standing on the right side is wearing what appears to be an identical pair of pants to the figure in blackface in Northam’s controversial 1984 yearbook page. 

“While balancing classes and work, Ralph also distinguished himself as captain of the both the basketball and baseball teams, and President of Student Government, the Beta Club and the Hi-Y Club, reads Northam’s bio at Our Campaigns. 

Northam came under fire after Big League Politics published a page from Northam’s 1984 yearbook of him in blackface. The photo had been floating around for months prior to publication, as indicated by Fox‘s Dan Bongino who said someone sent it to him in October. 

Northam initially apologized for appearing in the photo, only to walk that back in a quagmire of a Friday press conference in which he said he was “unaware of what was on my [yearbook] page,” and that he was neither the person in blackface or the KKK robes. 

He also admitted to going in blackface as Michael Jackson during a dance contest during the same press conference, and then took a reporter’s request to “moonwalk” seriously before his wife told him it was “inappropriate circumstances.” 

Gov. Northam: “That same year, I did participate in a dance contest … in which I darkened my face as part of a Michael Jackson costume.” pic.twitter.com/3RRhaWLJRY

— NBC News (@NBCNews) February 2, 2019

Northam has faced calls to resign from prominent Democrats seeking to distance themselves from the Virginia Governor, while President Trump waited until Saturday to weigh in. 

Democrat Governor Ralph Northam of Virginia just stated, “I believe that I am not either of the people in that photo.” This was 24 hours after apologizing for appearing in the picture and after making the most horrible statement on “super” late term abortion. Unforgivable!

— Donald J. Trump (@realDonaldTrump) February 3, 2019

via ZeroHedge News http://bit.ly/2t4B3sk Tyler Durden

Authored by Sven Henrich via NorthmanTrader.com,

Before I go into charts some things just have to be said:

All pretense has been laid to rest. Bears have been proven right. Markets are managed by a central planning committee.

Jerome Powell’s spectacular policy reversal produced the strongest January market rally since 1987 demonstrating once again the ugly truth that the Fed remains the largest price discovery mechanism driving markets. Powell spoke once, twice and thrice in January and each time markets went:

All Hail Chairman POW.

Not earnings, nor revenues, not growth, nor fundamentals mattered. All play second fiddle to the workings and mutterings of central bankers. Why even pretend we have a free market system? A system that is never allowed to price in bad news for more than a few days is doomed to bubble toward infinity. Too urgent is the reflexive impulse to intervene, too desperate is the realization the economy is only one risk-off event away from a recession.

Jim Cramer squarely blamed the December sell-off on the Fed and attributed the Fed’s to leading role for the strong January rally:

The implicit message: The Fed screwed up and had to rescue markets from its mistake.

But what was really the mistake? The Fed had embarked on the slowest rate hike cycle in history. They weren’t too aggressive. No, the mistake originated in accelerating the balance sheet reduction which in real world speak is removal of artificial liquidity. Some claim reducing the balance sheet is the equivalent of stealth rate hikes. If that’s true what was the $3.5 trillion dollar run up in the balance sheet in the years prior?

The answer is academic. What is real is that markets couldn’t handle the withdrawal in liquidity:

Oh sure the Fed gave it a shot in 2018 while things were good. After all the US tax cut brought about the largest buyback liquidity injection in history and while the Fed’s balance sheet had flatlined after the end of QE3 the ECB and BOJ took over the global central bank liquidity expansion program:

It’s only when the ECB reduced its QE program and the Fed began to accelerate their “autopilot” reduction in October, the infamous ’50Bs’ POTUS complained about, that everything fell apart. And that was the supposed policy mistake. The fact is that 10 years after the financial crisis central bankers don’t have a working exit plan. The fact is that temporary emergency measures have become permanent and the system can’t do without them. The Fed’s dot plot has once again been exposed to be a mirage only on the table when market rise, never when markets fall.

Well, no more worries about the balance sheet reduction, it’s been fixed:

Fed could soon stop trimming $4.1 trillion portfolio, Powell says

“The Federal Reserve may wind down its gradual asset-shedding operation sooner than thought, leaving the U.S. central bank with a bigger balance sheet than earlier anticipated, Fed Chairman Jerome Powell said Wednesday”.

Translated: We tried and it blew up in our face, so we’ll stop and we’re stuck with a huge balance sheet. Forever. Watch what we do next time.

Market appeasement at its finest, but with a steep price: Not only did the Fed kill off its credibility, it also looks to have overtly caved to President Trump’s public twitter demands to stop rate hikes and the “50Bs”. Trump demanded and Powell delivered. So much for backbone. None. Whether the Fed admits it or not the perception is awful. They caved to political and market pressure.

Asked several times about the “Powell put” during the press conference Powell kept avoiding answering the question. Instead he mumbled platitudes about “serving the American people”. Which American people? The greatest price market discovery mechanism was again applied to the few people that benefit.

“We’re data dependent and will wait and see” Powell uttered on Wednesday still claiming slowing economic data was behind the change in policy. Just 2 days later NFP came in at +304K and ISM manufacturing clocked in at a brisk +56.6. No, economic data was not the driving motivation to flip policy on its head. It was plunging markets in December. Full stop. Please don’t pretend otherwise, it’s intellectually insulting.

But Chairman POW may have made a tactical mistake in following Janet Yellen’s 2016 script of halting rate hikes after markets corrected hard following her initial December 2015 rate hike. Janet Yellen paused rate hikes at the market lows, at a moment of a market retest. By doing so she set the floor as other central banks stepped in.

Chairman POW on the other hand laid all the cards on the table 6 weeks into the largest uninterrupted rally since the 2009 lows. What’s he going to do if there is a retest? Immediately end the balance sheet reduction? Markets already expect that. Pause rate hikes? Markets already priced that in. So cut rates then? That seems to be the only policy option on a retest. Better hope there is no retest.

Current sentiment is now very optimistic again, and I’ve outlined the bull case in The Empire Strikes Back should a renewed dovish Fed prevail in supporting asset prices into the rest of 2019. And so again the basic question remains: Will dovish central bankers trump fundamentals? Do fundamentals actually matter?

Let’s not forget that the global slowdown is not over, it has been intensifying in recent weeks. Europe’s largest economy is crawling to a halt: Germany’s economic downturn will last longer than previously thought with GDP growth “well below” 1.5% in 2019, Bundesbank President Jens Weidmann predicted. Less than 1.5% GDP growth in Germany while Italy falls into a recession. 

So excuse me for asking a pertinent question: What happens when countries fall into recession with interest rates still negative? Answer: Nobody knows, because it has never happened before. And frankly that prospect should concern everyone:

The ECB’s deposit rate has been at -.40% since March of 2016. They have never raised rates once and won’t this year and can’t do so next year. If negative rates were to promote sustainable growth they have failed to do so. What has QE produced? Trapped central bankers it looks. The emergency measures became permanent and now nobody knows how to unwind them. The Fed gave it a cautious careful effort and has now failed and capitulated to market forces.

What does this all say about the giant global central bank intervention game since the financial crisis 10 years ago? It smells of utter failure, of failed promises, of never reached growth, indebted nations and corporate sectors and sprawling wealth inequality with no practical plan to ever revert to “normal”. Normal is no longer possible and once again central bankers have found themselves trying to save markets from the consequences of another bubble they themselves again fueled with cheap money.

Hence, given this concerning backdrop I’m keeping a very open mind about the bear case, the one that says central banks may lose control over markets that they have carefully managed for 10 years. And in this context Chairman POW’s jawboning operation was a sign of desperation and not strength. Central bankers who have lost credibility may also lose respect of markets.

And if so, it lends credence to the supporting technical and macro evidence that suggests that a bear market can still unfold here in the months to come:

While the headline number in NFP indicated a strong gain in hires the unemployment rate also jumped a little higher. This is of note and bears close watching in the months ahead as a change in the direction of unemployment can signal a turn in the business cycle and history suggests that these can happen quickly:

Don’t forget we’re coming off of a very low baseline here:

And don’t let the headline NFP numbers fool you, layoff announcements are increasing.

Now let’s go through the charts:

Firstly, markets remain in the neutral zone, still above the daily 50MA, but below the 200MA, and hence so far this rally remains an aggressive rally below the 200MA:

Speaking of fundamentals deteriorating, note that this recent rally went entirely against the most recent trend in the Baltic Dry Index which made a new low in January:

Over the past year declines in the Baltic Dry Index have led to reversals in $SPX. Also note $SPX reached its .618 fib on Friday and found resistance there. Resistance is now the name of the game on a lot of charts. $SPX has the daily 200MA above and following a 6 week uninterrupted rally $SPX is now also near its weekly 50MA:

These MA’s are important pivots. Given the size and uncorrected nature of this rally it is at increased risk of an at least short term reversal.

After all $BPSPX RSI is now the most overbought since January 2018 before the 10% February correction:

And also note another time when the RSI spiked above 80 following a big sell-off: Following the 2015 correction. Back then markets squeezed slightly above the 200MA, consolidated and then corrected to new lows which then prompted the big global central bank rescue operation.

But it’s not only $SPX that’s running into resistance here.

$DJIA:

$TRAN:

$NDX:

You get the message: Trend line resistance, fib resistance, and MA resistances, all here and/or just above.

Speaking of $NDX here’s a historical chart that gives an interesting perspective to the brutal December sell-off and current rally:

Note the MACD histogram in December reached oversold readings only similar to the readings seen last during the crash of 2000. The counter rally that ensued then brought the MACD histogram back to positive…the worst was over right? No. The real fun only began after.

Hence I maintain the bull case remains unconfirmed as of yet. For now we continue to have witnessed a very aggressive counter rally below the 200MA partially fueled in speed and vigor by Chairman POW, but the fundamental picture has not improved. It continues to weaken globally. Bulls need to get prices above the 200MA and then maintain them above there to confirm a bullish path supported by a renewed dovish US central bank. Failure to do so risks the retest or bear case to unfold.

Markets have largely reached balance now after being highly imbalanced in December. $ES has also now reached the upper target zone I outlined in early January:

…and has approached a key resistance zone while becoming overbought following a historic script of aggressive counter rallies.

For the bear case to unfold sellers need to see index charts again fall below their 50MAs to begin with, a perhaps difficult task as the next round of artificial liquidity is just around the corner: Now that earnings are soon over buybacks are coming back. Ultimately these couldn’t save markets in Q4 2018, but then the Fed was raising rates and doing the ’50Bs’ dance.

Once a retrace unfolds the 2600 +/- zone around the 50MA will then likely prove a key battle for control:

Note the 50MA has now turned north for the first time since early October.

For now investors are hailing Chairman POW. And as long as fundamentals don’t matter the cheering will continue as long as future dips are bought. We’ll see how long the cheering lasts, especially as some other charts also suggest it’s too early to cheer.

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via ZeroHedge News http://bit.ly/2WFu5aw Tyler Durden

In keeping with a tradition that stretches back to the administration of George W Bush, President Trump sat down with CBS News for a sweeping hour-plus interview that is expected to air before the Super Bowl. And with so much happening on both the domestic and foreign front  – the tumult in Venezuela being only the latest addition to Trump’s foreign policy plate – Trump and his interviewer, Face the Nation correspondent Margaret Brennan had quite a bit to discuss.

Some of the highlights from the interview included Trump’s criticisms of Democratic House Speaker Nancy Pelosi, whom he derided as “very bad for our country”, his revelation that he intends to move US troops from Syria to a US base in Iraq, where they can help “keep an eye on” Iran (while he would like to withdraw from the Middle East, Trump suggested that it might be better for at least some troops to remain at a US-built base in Iraq for an indefinite period). As Venezuelan Dictator Nicolas Maduro scrambles to tamp down military defections and the rising tide of international opposition to his brutal regime, Trump reiterated that a military intervention in Venezuela “remains an option”. Meanwhile, trade talks with China were “doing very well” and another government shutdown remains a possibility because “I don’t take anything off the table.”

Here’s a summary of some of the biggest issues discussed during the interview:

Nancy Pelosi

With allegations that he “caved” to the octogenarian Democratic leader still fresh, Trump blasted his chief political antagonist as “very rigid” during negotiations, and accused her of hypocrisy because of her unwillingness to make building the wall a priority (allowing drugs, guns and human traffickers to continue flowing unabated into the US).

MARGARET BRENNAN: You had quite the showdown with Speaker Pelosi. What did you learn about negotiating with her?

PRESIDENT DONALD TRUMP: Well, I think that she was very rigid – which I would expect – but I think she is very bad for our country. She knows that you need a barrier. She knows that we need border security. She wanted to win a political point. I happen to think it’s very bad politics because basically she wants open borders. She doesn’t mind human trafficking or she wouldn’t do this because you know–

MARGARET BRENNAN: She offered you over a billion dollars for border security.

PRESIDENT DONALD TRUMP: Excuse me?

MARGARET BRENNAN: She offered over a billion dollars for border security. She doesn’t want the wall.

PRESIDENT DONALD TRUMP: She’s- she’s costing the country hundreds of billions of dollars because what’s happening is when you have a porous border, and when you have drugs pouring in, and when you have people dying all over the country because of people like Nancy Pelosi who don’t want to give proper border security for political reasons, she’s doing a terrible disservice to our country. And on the 15th we have now set the table beautifully because everybody knows what’s going on because of the shutdown. People that didn’t have any idea- they didn’t have a clue as to what was happening, they now know exactly what’s happening. They see human trafficking. They see drugs and gangs and criminals pouring in. Now, we catch them because we’re doing a great job. But if we had proper border security we wouldn’t have to work so hard and we could do an even better job, and I think Nancy Pelosi is doing a terrible disservice to the people of our country. But she can–

MARGARET BRENNAN: You’re still going to have to deal with her now.

PRESIDENT DONALD TRUMP: No, she can keep playing her games, but we will win. Because we have a much better issue. On a political basis, what she’s doing is- I actually think it’s bad politics, but much more importantly it’s very bad for our country.

The NFL

Of course, it wouldn’t be a proper pre-Super Bowl interview without a few questions about President Trump’s battle with NFL Commissioner Roger Goodell (a battle that was won decisively by the president when the league decided to crack down on players who opted to kneel during the national anthem). How does Trump feel about players like Colin Kaepernick and their complaints about his administration? Well, Trump said, many players have actually been calling and thanking him because he passed a sweeping criminal justice reform bill, something that President Obama tried and failed to accomplish.

According to Trump, the president did Goodell a “big favor” by scrapping Nafta and negotiating USMCA, which Trump said treats the NFL more favorably (though he neglected to elaborate about how).

MARGARET BRENNAN: I want to ask you about your relationship with NFL Commissioner Roger Goodell. Have- have you put your differences aside?

PRESIDENT DONALD TRUMP: I think so. I mean I- I was just one that felt very important, you can’t be kneeling for the national anthem. You have to respect our flag and our country. I want that as president and I’d want that as a citizen. And I have a very good relationship. I did them a big favor in negotiating the USMCA, which is basically the replacement to NAFTA, which is one of the worst trade deals ever made. And I said to Canada, look we have a great American company known as the NFL, and they were being hurt and treated unfairly, the NFL, by Canada for a long time. And I said to Prime Minister Trudeau, who was very nice about it and really understood it, I hope you can settle the difference immediately and fast. And they did. So I did the NFL a big favor, as a great American company and they appreciated it. And Roger Goodell, this is a dispute that has gone on for years. Roger Goodell called me and he thanked me. And I appreciated that. But they haven’t been kneeling and they have been respecting the flag and their ratings have been terrific ever since. And a lot of good things happened.

MARGARET BRENNAN: Talking about the- the kneeling position you’ve taken and the controversy around it. Do you think that the players who did kneel had a point? I mean did you- are you sensitive at all to players like Colin Kaepernick, who- who point out that the majority of victims of police violence are black?

PRESIDENT DONALD TRUMP: Well, you know, I’m the one that had passed judicial reform. And if you look at what I did, criminal judicial reform, and what I’ve done- President Obama tried. They all tried. Everybody wanted to do it. And I got it done and I’ve been, you know, really- a lot of people in the NFL have been calling and thanking me for it.

MARGARET BRENNAN: Really?

PRESIDENT DONALD TRUMP: They have been calling and thanking, you know, that people have been trying to get that taken care of and it’s now signed into law and affects tremendous numbers of people, and very good people. I think that when you want to protest I think that’s great. But I don’t think you do it at the sake of our flag, at the sake of our national anthem. Absolutely.

China

With his trade deal in limbo ahead of talks in Beijing later this month, Trump reiterated that the US has the upper hand in trade talks because China’s economy is doing “very badly”. He added that he won’t accept anything that’s not a “fair trade” deal, but hinted that he was optimistic because China has already been “very helpful” on the issue of pressuring North Korea.

MARGARET BRENNAN: I want to quickly get to China. The last time you spoke with FACE THE NATION you were one hundred days into office and you said you would accept a less than perfect trade deal with China, if it meant they’d be helpful with North Korea. Do you stand by that?

PRESIDENT DONALD TRUMP: Well, yes but I think we’re in a different position now.

MARGARET BRENNAN: What do you mean?

PRESIDENT DONALD TRUMP: We’ve put very massive tariffs on China. China is paying a big price and it’s hurt China’s economy very badly. I want them to make a fair deal.They have been very helpful, especially at the beginning when I first came in with North Korea. They have stopped goods from going in. They have stopped a lot of things from going in through the border. Because as you know they have a border just like we have a border with Mexico, where crime is way up by the way, way up, and you have to remember that. But we have a border with- they have a border with North Korea.

MARGARET BRENNAN: Right.

PRESIDENT DONALD TRUMP: They have been very vigilant. Are they the same now? Probably a little bit less so. But North Korea is absolutely talking. And I think North Korea wants to make a deal. We are making a deal. It looks like we’re doing very well with making a deal with China. I can tell you this, no two leaders of this country and China have ever been closer than I am with President Xi. We have a good chance to make a deal. I don’t know that we’re going to make one, but we have a good chance. And if it is a deal it’s going to be a real deal. It’s not going to be a stopgap.

Iran

For the first time, Trump suggested that, after spending “a fortune” on a military base in Iraq, the US should keep troops there to maintain pressure on nearby Iran.

MARGARET BRENNAN: But you want to keep troops there now?

PRESIDENT DONALD TRUMP: –but when it was chosen– well, we spent a fortune on building this incredible base. We might as well keep it. And one of the reasons I want to keep it is because I want to be looking a little bit at Iran because Iran is a real problem.

MARGARET BRENNAN: Whoa, that’s news. You’re keeping troops in Iraq because you want to be able to strike in Iran?

PRESIDENT DONALD TRUMP: No, because I want to be able to watch Iran. All I want to do is be able to watch. We have an unbelievable and expensive military base built in Iraq. It’s perfectly situated for looking at all over different parts of the troubled Middle East rather than pulling up. And this is what a lot of people don’t understand. We’re going to keep watching and we’re going to keep seeing and if there’s trouble, if somebody is looking to do nuclear weapons or other things, we’re going to know it before they do.

Venezuela

Trump revealed that Venezuelan dictator Nicolas Maduro had requested to negotiate, but that the president had turned him down.

MARGARET BRENNAN: What would make you use the U.S. military in Venezuela? What’s the national security interest?

PRESIDENT DONALD TRUMP: Well I don’t want to say that. But certainly it’s something that’s on the- it’s an option.

MARGARET BRENNAN: Would you personally negotiate with Nicolás Maduro to convince him to exit?

PRESIDENT DONALD TRUMP: Well he is requested a meeting and I’ve turned it down because we’re very far along in the process. You have a young and energetic gentleman but you have other people within that same group that have been very very – if you talk about democracy – it’s really democracy in action.

MARGARET BRENNAN: When did he request a meeting?

PRESIDENT DONALD TRUMP: We’re going to see what happened. A number of months ago he wanted to meet.

MARGARET BRENNAN: But now because you’re at that crisis point–

PRESIDENT DONALD TRUMP: Well now we’d have to see.

MARGARET BRENNAN: Would you negotiate that?

PRESIDENT DONALD TRUMP: I would say this. I decided at the time, “no” because so many really horrible things have been happening in Venezuela when you look at that country. That was the wealthiest country of all in that part of the world which is a very important part of the world. And now you look at the poverty and you look at the anguish and you look at the crime and you look at all of the things happening. So, I think the process is playing out – very very big tremendous protests.

CBS News has already released a full transcript of the interview (read it here), which is expected to air at 3:30 pm ET.

via ZeroHedge News http://bit.ly/2D6zdf7 Tyler Durden