Biden Asked Point Blank About Apparent Cognitive Decline… It Didn’t Go Well

Biden Asked Point Blank About Apparent Cognitive Decline… It Didn’t Go Well

Tyler Durden

Thu, 08/06/2020 – 12:55

Over much of the past year there’s been increased scrutiny focused on presumptive Democratic presidential nominee Joe Biden’s possible cognitive decline, given a series of bizarre statements, mishaps, and sometimes testy exchanges with constituents.

To our knowledge, the below televised CBS interview this week is the first time the 77-year old former VP was asked directly on a major TV network whether he’s willing to submit to a “cognitive test” in order to put widespread concerns of his perceived mental decline to rest. 

“Why the hell would I take a test?” Biden exploded. This was followed by a strange and somewhat nonsensical cocaine analogy, and ended with Biden once again sputtering and trying to get out simple words — a familiar pattern. In short, it didn’t go well:

“C’mon man,” Biden responded to CBS Errol Barnett while other panelists looked on. “That’s like saying, ‘You — before you got on this program you took a test where you’re taking cocaine or not, what do you think? Huh? Are you a junkie?’”

And Yahoo News describes it went further downhill from there:

Barnett followed up by asking Biden what he would say to Trump, “who brags about his test and makes your mental state an issue for voters?”

“Well, if he can’t figure out the difference between an elephant and a lion, I don’t know what the hell he’s talking about,” said Biden with a laugh. “Look, c’mon man, I know you’re trying to goad me, but I’m so …  looking [forward] to have an opportunity to sit or stand with the president on the debates.”

But the question remains whether there will even be live, in-person debates.

There’s been wide suspicions of recent push by Democrats to keep Biden in his basement and avoid debating Trump altogether.

‘Strong whispers in Washington DC’ of Joe Biden’s cognitive decline:

According to a report in Axios this week, President Trump’s personal attorney Rudy Giuliani has officially requested the additional, earlier debate for the first week in September in a Wednesday letter to the Commission on Presidential Debates.

Clearly, judging by this latest interview as well as past campaign appearances especially prior to the pandemic lockdowns, DNC insiders are likely terrified at the prospect of Biden melting down into incoherent commentary during a live debate performance. 

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Microsoft Reportedly Expands Scope Of TikTok Deal Talks To Cover Entire Ex-China Business

Microsoft Reportedly Expands Scope Of TikTok Deal Talks To Cover Entire Ex-China Business

Tyler Durden

Thu, 08/06/2020 – 12:39

Updates about the ongoing deal talks between Microsoft and ByteDance are arriving almost as rapidly as updates about the ongoing negotiations between the White House and Congressional Democrats over an extension of financial relief for American citizens and businesses.

And the latest report comes from the FT, which says that Microsoft and ByteDance are now looking at the possibility of buying all of TikTok’s global operations, including in India and Europe, not just the US-facing business, along with the business in Canada, Australia and New Zealand. Microsoft said Sunday night that it was looking into buying TikTok’s US operations, along with those based in “Canada, Australia, and New Zealand.”

Microsoft is chasing a deal to buy all of TikTok’s global business, including the viral video app’s operations in India and Europe, according to five people with knowledge of the talks. The US software company said on Sunday it was in negotiations with ByteDance, the Chinese owner of TikTok, to explore “a purchase of the TikTok service in the United States, Canada, Australia, and New Zealand”. But Microsoft has since also pursued a plan that would include all countries where TikTok operates. TikTok does not operate in China, and such a deal would not extend to its China-facing sister app Douyin.

However, according to the FT, Microsoft’s expanding ambitions are bumping up against a new obstacle – and we’re not talking about President Trump’s oblique demands for “key money” paid to the US Treasury: We’re talking about Beijing.

Last week, the People’s Daily published an editorial proclaiming that the CCP would never allow the US to “steal” TikTok in a “Smash and Grab”

Meanwhile, Microsoft executives have sought to assuage the Chinese government as it seeks to avoid being caught in cross fire between Beijing and Washington, two of the people said. One person close to Microsoft pushed back on the suggestion that the US tech group was discussing asset swaps in China as part of a deal. 

On one hand, the notion that Microsoft is looking at buying the entire business makes sense considering reporting from CNBC’s David Faber on the difficulty of untangling TikTok from the rest of ByteDance. President Trump said yesterday that, when it comes to TikTok, it would probably be easier to “buy the whole thing” than just buying 30% of it.

One person close to ByteDance’s Asia-Pacific operations suggested that Microsoft had been attracted to the idea of buying all of TikTok’s global business by the difficulty of separating back-office functions such as HR and to ensure that TikTok users in one country could still use the app if they travelled to another.

Any eventual deal may take a variety of forms, the people who spoke to the Financial Times said. They highlighted a long list of obstacles that stand in the way of a transaction, including price.  One person involved said the discussions were like “multi-dimensional chess” given the number of stakeholders in the process, including governments and minority shareholders in ByteDance. Even adding the entire business to any deal does not resolve the enormous challenge of untangling TikTok’s technology from ByteDance. ByteDance had previously been working on separating the data and algorithms between China and the rest of the world before the talks began, employees said. Microsoft has discussed adding an agreement whereby it would have one year to separate TikTok from its Chinese parent and address US government concerns over the security of the data generated by the app.  Two people following the talks closely said that the timeframe would be difficult to meet, with one of them going so far as to say it could take between five and eight years to fully separate the software.

Perhaps the biggest incentive for Microsoft to buy the entire business is the potential for a turnaround in India, formerly TikTok’s biggest market, until the app was banned there in June (a fact that the US media has rarely brought up in its coverage of President Trump’s threats).

India is TikTok’s biggest market, with more than 650m downloads according to Sensor Tower data. But it has been banned in India since the end of June, when the government put it on a blacklist of 59 Chinese mobile apps that it accused of threatening national security.  A purchase by Microsoft may help restore its fortunes by removing the stigma of Chinese ownership at a time when anti-China sentiment has been inflamed by a deadly clash between Indian and Chinese soldiers in the Himalayas earlier this year. One person close to ByteDance in India said there was a “deal in the works” with Microsoft for TikTok India but that if it fell through, ByteDance could sell TikTok India either to foreign investors or Indian buyers. ByteDance would then license its technology to the company and share revenue.

However, for investors trying to assess the likelihood that this deal will go through, this might be the key line from the FT’s story.

The shift from Sunday underscores how preliminary the talks between the two sides remain as they race to meet a mid-September deadline to reach a deal and prevent TikTok from being banned in the US. 

Hours after the FT post was published, Microsoft issued an official denial, saying it isn’t looking into “expanding the scope” of the TikTok deal.

If talks truly are still “very preliminary”…which means either the media is overplaying the odds of a deal, or Microsoft (or possibly BytdeDance) is over playing it via these ‘strategic’ leaks to the press. Given the potential for serious market blowback should this deal fall apart, none of these scenarios would surprise us.

And if the obstacles to a deal are as big as they look (satisfying the interests of one major world power is difficult enough…but two?) it looks like the teens’ favorite new digital “safe space” might be seriously “stuck in the middle” of a geopolitical battle, making it all the more likely that American tech companies will be forced to “deplatform” TikTok, effectively “killing” the app (at least in the US)

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University Investigating Music Theory Journal for Issue It Published

The Foundation for Individual Rights in Education reports:

UNT’s Journal of Schenkerian Studies is under investigation following calls from around the country for it to be shuttered and for one of its advisers, UNT music theory professor Timothy Jackson, to be fired. The journal’s sin? Following criticism by scholar Philip Ewell that 19th century music theorist Heinrich Schenker, whose influence on music theory is “hard to overstate,” was an “ardent racist and German nationalist,” the journal presented an edition including debate among scholars on racial issues and music theory.

The issue led a group of graduate students to write to UNT College of Music Dean John Richmond on July 29, expressing concerns about the journal and, in particular, Jackson’s involvement in the issue. The students called for the journal to be dissolved, Jackson investigated and potentially fired from his teaching position, an anonymous contributor to be unmasked, and the issue to be publicly condemned by the university….

The graduate students claimed that Jackson had used the journal “to promote racism” by defending the music theorist after Ewell wrote that Schenker’s “racist views infected his music theoretical arguments.” Jackson’s article, one of several defending the composer in the 2019 edition of the journal, contextualized Schenker and his changing views on race, which were partially due to the rise of Nazi Germany. (Schenker was Jewish; his wife was arrested by the Nazi regime and died in Theresienstadt concentration camp.)

On July 31, after receiving similar calls for investigation and punishment from a group of faculty members, Richmond announced “a formal investigation” into the journal.

“Students and faculty can challenge the journal’s assertions and criticize Schenker as much as they want, and the journal is free to resolve internal disputes as it pleases — and we’ll defend its right to do so,” said Lindsie Rank, author of FIRE’s [letter to the university]. “But UNT is violating core principles of academic and editorial freedom — and the First Amendment — by initiating an investigation into the journal. Rigorous debate and discussion, not administrative censorship, is how we find truth.”

FIRE’s letter to UNT President Neal Smatresk reminds him of the public institution’s unassailable responsibilities to uphold the First Amendment rights of its faculty and students, and demands the immediate cessation of the investigation into the journal. FIRE also reminds Smatresk that the freedom to publish is protected not only by the First Amendment, but also by UNT’s own policies. If any editors acted in contrast to the journal’s editorial structure or internal policies, the resolution must be handled internally within the journal to preserve its right to editorial independence, but the university may not step in without violating its First Amendment obligations.

Even without formal punishment, an investigation can chill expression in violation of the First Amendment. Recent months have seen an alarming spate of such investigations. Last week, Auburn University announced it is “considering options” on how to respond to a lecturer’s anti-police tweets. On July 14, Fordham University investigated and punished a student for holding a legally-obtained gun in an off-campus Instagram memorialization of the Tiananmen Square massacre. On July 7, FIRE called on UCLA to end its investigation of a professor for quoting Martin Luther King, Jr.’s use of a racial slur in “Letter from a Birmingham Jail.”

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81 Percent of Black Americans Want the Same Level, or More, of Police Presence: Gallup

defundpolicebklyn

As calls to defund and abolish the police grow around the country, a new poll by Gallup finds that a large majority—81 percent—of black Americans want the same or increased levels of police presence in their neighborhoods. Just 19 percent of black Americans said they want the police to spend less time in their neighborhoods, a figure that accords with earlier surveys finding that only 22 percent of black Americans want to get rid of police forces as we know then.

Gallup collected the data online between June 23 and July 6 from a representative sample of over 30,000 respondents who were sorted into one of four categories (black, white, Hispanic, and Asian). The survey also found that

Black Americans’ reported exposure to local police is slightly above the national average, with 32% saying they see the police often or very often in their neighborhood. This compares with 22% of White Americans and 21% of Asian Americans. Hispanic Americans’ experience is similar to that of Black Americans, with 28% often seeing police where they live.

Most other Black Americans (41%) say they sometimes see police in their area, matching the national average, while another 27% say they rarely or never see them.

Asians were the largest group preferring police spend less time in their areas. Fully 28 percent of Asian Americans wanted to see less of the police, double the national average. At the same time, 78 percent of Asian Americans were either very confident or somewhat confident that they would be treated with “courtesy and respect” when interacting with police. The corresponding figure for black Americans was just 61 percent.

An earlier Gallup survey found overwhelming support among all Americans for “major changes” (58 percent) and “minor changes” (36 percent) in the way police departments operate. Only 6 percent of respondents said no changes were needed. Among the most-popular reforms were punishing officers who abuse citizens and firing cops with multiple infractions. Fifty-six percent of respondents also favored eliminating police unions, which are widely seen as protecting bad apples from discipline and prosecution.

Ironically, the new survey on feelings toward law enforcement presence, part of the Gallup Center on Black Voices, suggests that if Black Lives Matters and other police abolitionists get their way, they will be thwarting the very group in whose name they are acting.

Related video: “Why Bad Cops Aren’t Punished: The Case Against Qualified Immunity.”

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81 Percent of Black Americans Want the Same Level, or More, of Police Presence: Gallup

defundpolicebklyn

As calls to defund and abolish the police grow around the country, a new poll by Gallup finds that a large majority—81 percent—of black Americans want the same or increased levels of police presence in their neighborhoods. Just 19 percent of black Americans said they want the police to spend less time in their neighborhoods, a figure that accords with earlier surveys finding that only 22 percent of black Americans want to get rid of police forces as we know then.

Gallup collected the data online between June 23 and July 6 from a representative sample of over 30,000 respondents who were sorted into one of four categories (black, white, Hispanic, and Asian). The survey also found that

Black Americans’ reported exposure to local police is slightly above the national average, with 32% saying they see the police often or very often in their neighborhood. This compares with 22% of White Americans and 21% of Asian Americans. Hispanic Americans’ experience is similar to that of Black Americans, with 28% often seeing police where they live.

Most other Black Americans (41%) say they sometimes see police in their area, matching the national average, while another 27% say they rarely or never see them.

Asians were the largest group preferring police spend less time in their areas. Fully 28 percent of Asian Americans wanted to see less of the police, double the national average. At the same time, 78 percent of Asian Americans were either very confident or somewhat confident that they would be treated with “courtesy and respect” when interacting with police. The corresponding figure for black Americans was just 61 percent.

An earlier Gallup survey found overwhelming support among all Americans for “major changes” (58 percent) and “minor changes” (36 percent) in the way police departments operate. Only 6 percent of respondents said no changes were needed. Among the most-popular reforms were punishing officers who abuse citizens and firing cops with multiple infractions. Fifty-six percent of respondents also favored eliminating police unions, which are widely seen as protecting bad apples from discipline and prosecution.

Ironically, the new survey on feelings toward law enforcement presence, part of the Gallup Center on Black Voices, suggests that if Black Lives Matters and other police abolitionists get their way, they will be thwarting the very group in whose name they are acting.

Related video: “Why Bad Cops Aren’t Punished: The Case Against Qualified Immunity.”

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Should This Juror Have Been Excused for Cause in a Child Rape Prosecution?

Tristan James Morales was convicted of raping his 8-year-old niece; he argued that one of the jurors was improperly biased, and should have been excused for cause (as the defense lawyer had argued). Here’s the Montana Supreme Court’s summary of the facts; do you think the juror should have been excused? The court split 4-3 on this, but you’ll need to check the opinion to see which side prevailed.

“On the first day of trial, prior to voir dire, the court distributed a questionnaire to prospective jurors asking whether they or anyone they knew had been a victim of sexual assault or whether they held strong beliefs that would make it difficult to serve as a juror in Morales’s case. The court then conducted individual in-chambers voir dire of sixteen prospective jurors based on their responses to the questionnaire. The court released seven of nine jurors Morales challenged for cause based on their experiences with or strong beliefs about sexual assault, one over the prosecution’s objection.

“When the questioning turned to prospective juror R.C., she revealed in chambers that her sister, foster children with whom she grew up, and a close friend all had been sexually abused as children. The District Court questioned R.C.:

[Q.] Okay. We all come to the courtroom with personal experiences and our background that shapes how we see the world, our issue here is can you take that information that you have with your friends and whatnot and set that aside and listen to the evidence as it comes in fairly and impartially and follow the instructions on the law that I give you?

[A.] I don’t think that I could.

[Q.] And could you elaborate on that, please?

[A.] Because I’ve seen the emotional damage that it caused later on through these things that — and between that and my religious belief that sexual relations are between a man and woman who have been lawfully married, it is hard for me to set those beliefs aside.

[Q.] Even if I instructed you on the law regarding the State’s burden of proof, Mr. Morales'[s] presumption of innocence, and the fact that Mr. Morales does not have to present any evidence in this case whatsoever, do you feel like your background and experience would cause you a problem?

[A.] Probably not, then.

[Q.] So you would follow my instructions?

[A.] I would follow your instructions, yes, although it would be difficult to set this aside.

[Q.] Okay.

[A.] It’s a hard place for me to be to try to—I’ve never been in that situation where I’ve had to separate those two beliefs.

[Q.] It’s not necessarily separating, you can’t forget everything you know, that’s the reality. The issue, ma’am, is—like I say, we all come to this with backgrounds and experiences; the issue is Mr. Morales is guaranteed a fair trial; that during this trial process, it’s the State that has the burden of proof, and that burden of proof is beyond a reasonable doubt; and because the State has the burden of proof, Mr. Morales doesn’t have to present any evidence whatsoever. Furthermore, you cannot draw any type of negative inference if he chooses not to present any evidence.

Furthermore, he also has a guaranteed constitutional right not to testify. I would instruct you specifically on his constitutional right to testify, it’s a right we all enjoy as citizens, but you can’t consider it in any way, and furthermore, you cannot let it enter into your jury deliberations in any way.

So that’s a synopsis of some of the law I would instruct you on in this case with regard to some of those issues; would you follow the law I give you?

[A.] (No verbal response.)

[Q.] And there’s no right or wrong answer here, what I and the parties are looking for is for you just to tell us the truth.

[A.] (No verbal response.)

“At this point, the prosecutor asked the court if she could elaborate and engaged R.C. in the following line of questioning:

[Q.] [Morales is] charged with something; right?

[A.] Right.

[Q.] We are not asking you to say that an act is okay, you are not setting aside your religious beliefs, the law is that it’s not okay, so what you need to decide is if he did it, he’s guilty, right, and so the State has to prove that to you.

[A.] Right.

[Q.] So do you understand that difference?

[A.] I do understand that difference.

[Q.] That we are not asking you to decide that conduct is okay.

[A.] Right.

[Q.] Can you fairly listen to the evidence and be impartial when you are deciding another person’s guilt?

[A.] I think that I could.

[Q.] You think that you could?

[A.] I think, I’m not—

[Q.] But can you—if the State fails to prove its case, you’re listening to our witnesses, and it doesn’t come together and we don’t prove it, can you find him not guilty?

[A.] Yeah, I guess you’re unable to prove—if all the facts are laid out and you are unable to prove without a doubt, then that’s what it is.

“Defense counsel then followed up:

[Q.] Do you like judging people?

[A.] Not particularly.

[Q.] Does your religious belief system suggest you not judge people?

[A.] Yes.

[Q.] Your personal experience with the group of people you’ve identified— your sister, the foster children and friends—does that make you feel pretty angry?

[A.] Not angry.

[Q.] Resentful?

[A.] Pained, is that the same thing—I don’t think that’s resentful.

[Q.] Do you feel a need to exercise out that pain?

[A.] No.

[Q.] If Mr. Morales says nothing, does nothing, do you expect him to defend himself?

[A.] I would expect his—you, as his representative, to defend him.

[Q.] And if we choose to sit quietly and say to the Court we choose not to put on a defense, will you hold that against him?

[A.] No, because they would be expected to prove their case.

[Q.] Would you anticipate that he—would you infer anything by him not putting on a case?

[A.] Yeah, I think so.

[Q.] What would you infer?

[A.] Probably guilt, because if you have nothing to hide, you hide nothing.

“Morales moved to strike R.C. for cause. The prosecutor asked R.C. whether she would be able to follow the court’s instructions and not infer guilt if Morales exercised his constitutional right to not testify. R.C. replied, ‘As a citizen, I would have to follow the law. Personal beliefs, I would have to set aside.’ The court addressed R.C.:

[Q.]… I want to come back to your job as a juror [] to listen to the evidence and make a decision on whether he’s guilty or not guilty, and that’s on the evidence presented in the courtroom only and the law as instructed by me. Now, I can tell you right now what I’m going to instruct you on if you serve as a juror, number one, they have the burden of proof.

[A.] Right.

[Q.] They have to prove the offense, every element of it beyond a reasonable doubt; two, if the State doesn’t meet their burden of proof, you must find him not guilty; three, the Defendant has absolutely no burden of proof, he may choose to rely on the State’s failure to prove their case; four, individually, he has a constitutional right guaranteed by the United States and Montana constitutions, something we all enjoy as citizens, not to testify; and furthermore, you cannot infer anything based on his decision not to testify, and you cannot let that enter into your jury deliberations in any way; can you follow the law that I give you?

[A.] Yes.

[Q.] And despite knowing former foster children and relatives and friends who have been sexually abused, can you put that aside and judge Mr. Morales based solely on the evidence in this courtroom and not let that personal bias or knowledge that you have impact Mr. Morales and the evidence you hear in this courtroom?

[A.] Yes.

[Q.] Are you certain?

[A.] Yes.

Read the opinion to see the court’s analysis.

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Filling In The Gaps

Filling In The Gaps

Tyler Durden

Thu, 08/06/2020 – 12:25

Authored by Sven Henrich via NorthmanTrader.com,

I had the pleasure of speaking with Raoul Pal of RealVision a few weeks ago. The interview was recorded in mid July and it was an opportunity have a heart to heart discussion about the key big issues all of us face on some level or another.

We all find ourselves in a rapidly changing world with unprecedented circumstances and we are all trying to make sense of it knowing what we know, recognizing what we don’t know and keeping taps on the possibilities of what could happen.

RealVision just made the interview publicly available on their YouTube channel today and it turns out to be good timing.

From a market direction perspective one of the many issues we discussed was the open gap on $SPX, the February gap in the 3300 zone.

3 weeks later and here we are, $SPX filled that gap today:

I should note that the gap on $ES futures is still slightly higher, but hitting this gap today brings the S&P 500 within an earshot of all time highs, negative earnings growth be damned.

One can’t shake the feeling:

The overpowering force of central bank liquidity continues to dominate the action today. And whether hitting this gap will prove to have any relevance remains to be seen. There are still open gaps higher on other indices, such as the $NYSE which still remains below the June highs:

But also note the multitude of glaring open gaps on $NYSE below. Not all gaps fill or will fill for a long time, but the abundance of open gaps is one of the many technical issues that give pause about the eventual sustainability of this historic liquidity driven rally.

These markets remain a journey, an expensive journey as valuations and forward’s multiples continue to expand.

Are these valuations and multiple expansions justified? I invite you to have a listen to our discussion as Raoul and I try to dissect the big picture issues:

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

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China Helped Saudis Build Secret Nuclear Site For Extracting Yellowcake: WSJ

China Helped Saudis Build Secret Nuclear Site For Extracting Yellowcake: WSJ

Tyler Durden

Thu, 08/06/2020 – 12:04

When it comes to America’s allies in the Middle East, Washington has long “looked the other way” while they recklessly pursue questionable weapons technology. Think Pakistan’s nuclear program at a time when the Reagan administration prioritized fighting the Soviets in Afghanistan, or Israel’s estimated 100 to possibly 200 undeclared nukes.

This has more recently been the case with Saudi Arabia, where the kingdom has long been rumored to pursue nukes to gain dominance over Shia rival Iran. And now this willful looking the other way on banned weapons is coming back to bite Washington hard.

Saudi Arabia has constructed with Chinese help a facility for extracting uranium yellowcake from uranium ore, an advance in the oil-rich kingdom’s drive to master nuclear technology, according to Western officials with knowledge of the site,” The Wall Street Journal writes in a bombshell investigative report.

Al Ula in northwest Saudi Arabia, file image.

So this is where US foreign policy has arrived: no, there’s no yellowcake in Niger and never was, but we now have America’s global rival China helping our Sunni Wahhabi ‘ally’ construct a secret nuclear site while lying about it all along. Despite mounting evidence, the Saudi Energy Ministry issued a statement saying it “categorically denies” that it’s built an extraction facility.

However, there was this admission out of Saudi Crown Prince Mohammed bin Salman back in 2018: he said at the time “if Iran developed a nuclear bomb, we will follow suit as soon as possible.”

The Saudis maintain they are only in pursuit of a peaceful nuclear program, which happens to be Iran’s same position as well.

The WSJ identified the location based on intelligence sources and unnamed Western officials as in a desert area outside al-Ula in northwest Saudi Arabia. “The facility, which hasn’t been publicly disclosed, is in a sparsely populated area in Saudi Arabia’s northwest and has raised concern among U.S. and allied officials that the kingdom’s nascent nuclear program is moving ahead and that Riyadh is keeping open the option of developing nuclear weapons,” WSJ continues.

Barrel filled with yellowcake uranium, file image via ABC.net.au

Currently it’s public knowledge that The China National Nuclear Corp. and the China Nuclear Engineering Group Corp., which signed memorandums of understanding with the Saudi government in 2017 for uranium exploration, are working closely with Riyadh.

The new reports suggest these are instrumental in assisting with the secret nuclear facility.

Given the US has invaded at least one Mideast country on false charges it had Yellowcake Uranium in its possession, it’ll be interesting to see if there’s even so much as a statement of public censure directed at Riyadh out of the administration. We won’t hold our breath, given it seems such condemnations are reserved only for the likes of Assad or Gaddafi or the Iranians. 

But now that China has apparently entered the mix, things could get sticky, even with Washington’s closes Gulf ally the Saudis.

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The Open Trap Door Under Real Yields Rings Many Alarms

The Open Trap Door Under Real Yields Rings Many Alarms

Tyler Durden

Thu, 08/06/2020 – 11:45

By Laura Cooper, market strategist at Bloomberg

With no imminent end to collapsing real yields – which just hit a new record low -1.10%, the side effects of financial repression warn of stagflation, asset bubbles and policy impotence. Fresh lows for U.S. 10-year real yields this week show a trap door opened by growing economic angst, climbing inflation expectations and an indefinite pause in monetary policy.

The Fed’s explicit guidance that rates will stay near zero for the foreseeable future has markets pricing a hold until at least 2023, effectively killing price discovery.

When it comes to bond purchases, the central bank will likely have to skew buying to the longer-end to aid the recovery. That, combined with the search for yield, risks pushing yields on the entire U.S. curve below 1%, a threshold breached only briefly in March.

Not even the record-shattering supply announced on Wednesday is likely to lift yields, with insatiable appetite for safety and the seeds of debt monetization planted.

Meanwhile, inflation expectations have room to rise, with U.S. 10-year breakevens about 20bps shy of the 2020 peak. They could get a boost should questions ring louder over the Fed relaxing its inflation mandate, which has been in place since January 2012.

Fed Chairman Powell alluded to tweaking the price-stability mandate in the forthcoming policy review, while member Brainard coined the “opportunistic reflation” strategy to explicitly welcome an inflation overshoot. Such a stance would be a material departure for the Fed, given policy lags of at least one year.

Should markets believe the Fed will do what it takes for inflation to go beyond 2% in pursuit of full employment, then in theory 10-year U.S. real yields could tumble 40bps-50bps more from roughly -1.07% currently. That’s assuming nominal yields remain range-bound, and would be well below the estimated real neutral rate

That opens the door to risks such as stagflation — a more plausible scenario now given the unique combination of unprecedented monetary and fiscal stimulus; a deglobalization trend that’s creating supply constraints; and elevated unemployment that’s quashing hopefor a quick economic recovery.

The tumble in real yields is also amplifying the bifurcation between the real economy and financial assets. While market-based inflation measures ramp up, firms that lack pricing power and absent wage negotiations are keeping alive the risks of a deflationary spiral.

The Bank of Japan offers a cautionary tale on the pitfalls of revising inflation mandates, which it did in January 2013 to combat chronic deflation. A more than trebling of its balance sheet, negative rates, forward guidance and ETF purchases failed to spur price growth.

The Fed itself examined the Japan experience in a study earlier this year. Lessons include that the central bank faces the risk of getting caught in “never-ending monetary accommodation even when real economic activity is strong or when financial stability risks accumulate.”

To be sure, the widespread decline in real yields has been in place for decades and has been driven by structural factors such as a demographic-driven propensity to save and the integration of Chinese investors into global financial markets. Yet this time around, financial repression has taken over real yields and further declines would only amplify the many risks ahead.

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NY AG Accuses NRA Of “Massive Fraud”, Seeks To “Dismantle” Guns-Rights Organization

NY AG Accuses NRA Of “Massive Fraud”, Seeks To “Dismantle” Guns-Rights Organization

Tyler Durden

Thu, 08/06/2020 – 11:44

Update (1140ET): James is starting off the hearing by detailing a state lawsuit against the NRA and seeking the dissolution of the pro-second amendment organization, one of several subjects she was expected to address today.

James alleges the the organization violated non-profit laws by diverting “millions of dollars away from the charitable mission of the organization for personal use by senior leadership,” who awarded contracts that benefited friends and family. That would be a slam-dunk if she were going after politicians. But at a non-profit, things are more blurry.

BBG published an update on the lawsuit almost immediately, suggesting that the financial news organization – owned by a former mayor of NYC – had the story under embargo ahead of time. Here’s a snippet from their reporting, which accuses NRA of “massive fraud”.

New York is seeking to dissolve the National Rifle Associationas the state attorney general accused the gun rights group and four senior officials of engaging in a massive fraud against donors.

A sprawling lawsuit filed Thursday in state court in Manhattan alleges the NRA diverted charitable donations for years to enrich the organization’s top executives in violation of laws governing nonprofits, New York Attorney General Letitia James said in a statement. The state is also demanding millions of dollars in restitution and penalties.

The case may pose one of the biggest legal threats the NRA has faced since its founding in New York in 1871. The turmoil began with a power struggle last year between former NRA president Oliver North and longtime leader Wayne LaPierre, which led to allegations of self dealing. A subsequent state probe found wrongdoing blamed for more than $64 million in losses in the last three years alone, James said.

“The NRA’s influence has been so powerful that the organization went unchecked for decades while top executives funneled millions into their own pockets,” James, a Democrat, said in the statement. “The NRA is fraught with fraud and abuse.”

For those who aren’t familiar, this is the culmination of what Trump once called “an illegal investigation” by Cuomo and the AG, which stems from a power struggle that rocked the NRA last year.

The news sent shares of gun makers lower.

The NRA must “get its act together quickly, stop the internal fighting, & get back to GREATNESS – FAST!” Trump tweeted at the time.

We imagine he’ll be chiming in on Twitter about this new lawsuit any minute now.

* * *

New York Attorney General Letitia James is delivering a press briefing on Thursday where it’s widely suspected that she will share “bombshell” allegations about President Trump and his finances, after subpoenaing documents from Deutsche Bank.

In recent days, stories about DB scrutinizing Trump’s former banker, and the Manhattan AG subpoenaing the bank over records pertaining to Trump, have stoked suspicions that something “big” might be coming.

Will this briefing live up to the hype? We’re about to find out.

via ZeroHedge News https://ift.tt/2Pr24kS Tyler Durden