Author: admin

Authored by James Howard Kunstler via Kunstler.com,

It’s conceivable, in a nation that absolutely can’t make sense of itself, that Mr. Trump’s annual report to congress will be as incomprehensible as this year’s Superbowl halftime show. Even the weather in Atlanta was a complete mystery with Maroon 5’s front man, Adam Levine, capering half-naked in tattoo drag amid artificial fires-of-hell, and then local hero rapper Big Boi’s triumphal entry in a limo, nearly lost inside what looked like the pelt of a giant ground sloth – an eight-year-old’s idea of what it means to be important. Or maybe it was just all code for two sides of the climate change debate.

You can be sure the atmosphere will be frosty to the max when the Golden Golem of Greatness lumbers down the aisle of congress’s house on Tuesday night. I wouldn’t be surprised if the Democratic majority turns its backs on him during the always excruciating preliminaries and then just walks out of the chamber. Don’t expect the usual excessive rounds of applause from the president’s own party this time, either, in the big, half-empty room. They don’t know what to do about him at this point… or what to do with themselves, for that matter.

The running theme for State of the Union (SOTU) messages going back to Ronald Reagan is American Wonderfulness, so expect at least forty minutes of national self-esteem therapy, which nobody will believe. Throw in another ten minutes of elevating sob stories about “special guests” up in the galleries. But leave a little time for Mr. Trump to roll a few cherry bombs down the aisles. He must be good and goddam sick of all the guff shoveled at him for two years.

The hinge of the whole story will be how fabulous the US economy is. Mr. Trump performed miracles like unto Moses in Egyptland. The manufacturing economy that made America great in the 1950s is back (not). Unemployment has been vanquished (not). We are “energy independent” (not). The once-again rising stock market is proof-of-life for US business prospects (not). We have the best medical care and higher ed in the world (cough cough). It would all come as a surprise to the people dining on dog food with ketchup out in the flyover precincts – but they are not exactly the types to sit around and listen to Don Lemon and Jeffrey Toobin dissect the speech post-game.

Following the new-ish tradition of a designated opposition respondent to the SOTU, Democratic sore loser Stacy Abrams (Georgia Governor’s race, 2018), will virtue-signal her party’s dedication to identity politics, concealing its dark connection to the Wall Street / K Street grift machine, and to the Neocon war hawks so eager to manufacture failed states in parts of the world that are too bothersome to try to get along with. I suppose she will try to revive the Russian collusion angle, with a spin on how the Georgia election of 2018 was also rigged by malign forces to prevent her victory.

Mostly though, Ms. Abrams will extol the wonders and marvels of free health care and free college for all under the coming 2020 Democratic Party landslide, a comfy-cozy future of women-led caring-and-sharing, plus the promise of punishing taxes-to-come on super-rich toffs like Mr. Trump. The media will eat it up. Ms. Abrams will then be promoted as the next vice-president. The party’s strategy is to get every female voter in America on-board along with its supplemental People-of-Color-and-LBGTQ army for a surefire electoral victory. I can see that possibly working, but is it a good fate for the country to be literally divvied up between a women’s party and a men’s party?

It sounds like a recipe for Greek tragedy to me.

Anyway, both sides are marinated in delusion these days. Whatever Mr. Trump trumpets about the economy on Tuesday night will unwind stupendously in the months ahead. In private, he probably knows this, and I’m sure that he’s preparing to preside over some form of a national bankruptcy work-out. But even that won’t stop the roaring choo-choo train of the “democratic socialist” nirvana to come. The new religion of Modern Monetary Theory (MMT) they subscribe to says that the government can spend as much money as it feels like spending because, one way or another, they create the money. Of course, this is Karl Marx with all the humor removed. And when it comes rolling down the tracks, it won’t be much of a joke.

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

Ultra-rich partygoers at a Palm Beach soirée thumbed their noses at robin-hood tax proposals pitched by various Democratic candidates going into 2020, according to Bloomberg. 

The party at the Norton Museum of Art Saturday night had all the trappings of the Palm Beach high season – those Stubbs & Wootton slippers, some fabulous gowns, and, with President Trump ensconced at Mar-a-Lago, a healthy disregard for the tax plans being floated by a wide field of potential Democrat candidates in 2020.

“They’re going to eat themselves alive,” Commerce Secretary Wilbur Ross said. –Bloomberg

Except – a majority of Americans are now saying they’re cool with plans to extract up to 70% from the income of the super-rich over certain levels, according to Politico. 

Out of several polls showing support for the money grab, a new POLITICO/Morning Consult poll released Monday reveals that 76% of registered voters think the rich should pay more in taxes, while a survey conducted by Fox News concluded that 70% oif Americans thought raising taxes on those earning more than $10 million was warranted – including 54% of Republicans. 

The surveys suggest that perhaps the Palm Beach crowd might want to take such proposals more seriously, as average voters are keenly aware of the rise in income inequality in the United States. Imagine how voters will feel during the next recession, should one materialize? 

“There is a deep wellspring in terms of perception of unfairness in the economy that’s been tapped into here that either didn’t exist five years ago or existed and had not had a chance to be expressed,” said JPMorgan chairman of market and investment strategy, Michael Cembalest. “This is quite a moment in American economic history where all of a sudden in a matter of months this thing has kind of exploded like this.”

A plan from first-term Rep. Alexandria Ocasio-Cortez (D-N.Y.) to slap a 70 percent marginal rate on income earned over $10 million clocked in at 59 percent support in a recent Hill/HarrisX poll.

The new POLITICO/Morning Consult poll, conducted Feb. 1-2, found that 61 percent favor a proposal like the “wealth tax” recently laid out by Sen. Elizabeth Warren (D-Mass.) that would levy a 2 percent tax on those with a net worth over $50 million and 3 percent on those worth over $1 billion. Just 20 percent opposed the idea. The poll surveyed 1,993 registered voters and carries a margin of error of plus or minus 2 percent.

It showed 45 percent favored a plan like that laid out by Ocasio-Cortez while 32 percent opposed it. –Politico

In short, Republicans who think they’ll be able to easily spin the Democrat tax plans as irrational cash-grabs in 2020 may find it difficult to make their case. 

“There is certainly an appetite for more taxes on the rich, though the threshold matters,” said polling expert Karlyn Bowman with the American Enterprise Institute. “There is also some support for redistributing income.“

Last year, 48% of taxpayers described their own taxes as “about right,” while around 45% said they were “too high.” Democrats, keenly aware that raising taxes on the middle class is probably a really bad idea at this point, have concluded that raising taxes on the ultra-wealthy is a safe bet that could help pay for government programs such as a “Green New Deal” or “Medicare for All.” 

That said, proposals have varied as to who exactly would end up paying more taxes under a Democrat president in 2020. 

Some Democrats piling into the 2020 race are now competing to get further to the left on boosting taxes on the rich. After Warren’s wealth tax announcement, likely candidate Sen. Bernie Sanders (I-Vt.), who bucked recent political tradition with calls for tax hikes in his 2016 campaign, unveiled a proposal to increase the number of wealthy Americans subject to the estate tax.

Those who aren’t calling for big new taxes — including Sen. Kamala Harris (D-Calif.), who prefers refundable tax credits — are facing some heat on the left as insufficiently progressive. –Politico

“It’s not surprising to me at all. Washington has been working so long for the billionaire class that people around here cannot imagine crossing them,” said Elizabeth Warren, adding “It never even becomes a topic of conversation. The ultra-millionaires have gotten so much from this country that it’s not unreasonable to ask them to give back a little bit.”

Warren claimed that she wouldn’t raise taxes on the middle class, should she win the Democratic nomination. “That’s just wrong. Why on earth would I do that? It makes no sense. I think I’ve already lost the billionaire vote,” she said. 

Trump once pushed for an ultra-wealth tax

President Trump pushed for a measure in 1999 while pondering a presidential bid on the Reform Party ticket – suggesting a 14.25% one-time tax on those with a net worth of more than $10 million. Trump suggest this would wipe out the national debt entirely – which was just $5.5 trillion at the time, as opposed to today’s nearly $22 trillion. 

“By my calculations, 1 percent of Americans, who control 90 percent of the wealth in this country, would be affected by my plan,” said 1999 Trump. 

Trump has long since abandoned that idea, focusing instead on wedge issues like immigration to target voters concerned about their jobs and wages as well as those worried about demographic changes in the country.

But he may have vulnerability on the tax issue heading into 2020 given his biggest legislative accomplishment as president so far was a $2 trillion tax cut that showered most of its benefits on corporate America while offering much smaller reductions to middle-class taxpayers. –Politico

Trump’s $2 trillion tax cuts, meanwhile, has been lauded by Republicans for the promse of faster growth and higher wages – however the new POLITICO/Morning Consult poll found that just 33% of those surveyed thought the tax bill was helping the economy, while 41% said it made no difference, and 25% had no idea or no opinion on how effective it was. 

While the progressive plans have been panned by most of the ultra-wealthy, JPMorgan Chase CEO Jamie Dimon said last week: “I believe that individuals earning the most can afford to pay more,” adding “And I have no problem paying higher taxes to address some of the fundamental challenges and inequities in our society.”

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

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Hard as it is to believe, airline travel recently became even more unpleasant. Transportation Security Administration (TSA) employees being required to work without pay for the duration of the government shutdown resulted in many TSA workers calling in sick. The outbreak of “shutdown flu” among TSA employees forced some large airports to restrict the number of places mandatory TSA screenings were performed, making going through screening even more time-consuming and providing one more reason to shut down the TSA.

Airline security should be provided by airlines and airports. Private businesses, such as airlines, have an incentive to ensure their customers’ safety without treating them like criminal suspects or worse. Security personnel hired by, and accountable to, airlines would not force a nursing mother to drink her own breast milk or steal a stuffed lamb from a wheelchair-using three-year-old and subject the child to such an intensive screening that she cries “I don’t want to go to Disneyworld.” Those who claim that the TSA is necessary to keep us safe should consider that the Department of Homeland Security’s own studies show that TSA’s screenings and even the intrusive pat-downs are ineffective at discovering hidden guns, explosives, and other weapons.

TSA employees have no incentives to please, or even care about the well-being of, airline passengers. Instead, their jobs depend on pleasing politicians and bureaucrats. If we have learned anything since 9/11, it is that most politicians are more concerned with appearing to be “doing something” about security than actually reducing the risk of terrorist attacks. That is why politicians’ response to 9/11 was a series of actions — such as creating the TSA, passing the PATRIOT Act, and invading Iraq — that trade our real liberties for phantom security. Sometimes, pro-TSA politicians will bemoan the TSA’s “excesses” and even call for “reforming” the agency in order to pretend they care about their constituents’ rights.

Restoring responsibility for providing security to private businesses will encourage the development of new and innovative ways to more effectively provide security. In a free market, airlines and airports could compete for business on the basis that their flights are safer or their screening is less unpleasant then that of their competitors. If airlines were able to set their own security policies, they would likely allow pilots to carry firearms.

Private companies also strive to be consistent in providing services. Therefore, a company providing private security would never inconvenience its customers because of a “temporary shutdown.”

Because government operations are funded by coercive taxation rather than voluntary choices of consumers, federal officials cannot rely on the price system to inform them of whether they need to increase or decrease spending on airline security. In the private sector, businesses that charge more for security — or any other good or service — than individuals are willing to pay lose customers. Also, if businesses do not spend enough on security, people concerned about safety will be unwilling to use their services. Privatizing airline security is the only way to ensure that the “correct” amount of resources is being spent on airline safety.

In the 18 years since Congress created the TSA, the agency has proven itself incapable of providing real security, but more than capable of harrying Americans and wasting taxpayer dollars on security theater.

Congress should permanently close the TSA and return responsibility for security to private businesses.

via ZeroHedge News http://bit.ly/2HSDtV8 Tyler Durden

What a difference a decade makes…

President Obama talks about immigration at an Orange County Town Hall event in April 2009…

What would happen if President Trump said those exact same words tomorrow night?

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

Authored by Simon Black via SovereignMan.com,

What I’m about to say may sound totally crazy at first. But keep reading, because I think you’ll agree that it’s dead-on accurate.

There’s a recession coming.

No, that’s not some Chicken Little “The Sky is Falling” statement. Far from it. It’s just a fact: economies and financial markets always go through boom and bust cycles.

There are good years and lean years, up years and down years.

(This is perhaps no different than life itself. Few people have the perfect day, every day. Sometimes it feels like we’re on top of the world. And sometimes it feels like the universe is conspiring against us.)

According to the National Bureau of Economic Research, in fact, the average length of the ‘good period’ in which the economy expands during this up/down cycle is 56 months.

That’s followed by an average 11 months of economic contraction, upon which the whole cycle starts again.

Well, it’s been TEN good years now.

After the worst crisis since the Great Depression wiped out trillions of dollars of wealth around the world, most developed economies hit bottom in March 2009… and then started slowly inching their way forward again.

So that’s technically 119 months of economic expansion… which means the world is way overdue for a significant correction.

Even if you ignore economic history, there are signs everywhere.

Nearly every major asset class around the world– stocks, bonds, real estate, etc.– is selling near an all-time high, and being priced at levels that just don’t make sense.

The US stock market’s Price-to-Earnings ratio, for example, which is a measure of how much investors are willing to pay for every dollar of a company’s profit, has rarely been higher.

Other stock market ratios, like Price-to-Revenue, Price-to-Book, Cyclically-Adjusted Price/Earnings, have rarely been higher.

Even Warren Buffett’s preferred metric, which measures the value of the entire stock market relative to the size of the economy, has only been this high one other time in history– just before the dot-com bubble burst in 2000.

Just about any way you slice it, the stock market is overvalued.

It’s the same with bonds, whose values rise when interest rates are low.

Well, interest rates were literally at their lowest levels in 5,000 years of human history for most of the last decade.

And even though rates have risen a bit in the last 2-3 years, there are still trillions of dollars worth of bonds in the world that have NEGATIVE yields.

Companies whose finances are sinking faster than Virginia Governor Ralph Northam’s approval ratings are still able to borrow billions of dollars at practically nothing percent.

Even bankrupt governments are able to borrow money at unbelievable terms.

Argentina notably borrowed billions of dollars back in 2017 by issuing a ONE HUNDRED YEAR bond. Bear in mind that the country had defaulted several times just in the previous few decades.

But countless investors with their goldfish memories still lined up, and there was far more demand for the bond than Argentina’s government could accommodate.

(Amazingly enough, just one year later the government was already having trouble making interest payments and had to request an IMF bailout. Who could have possibly seen that coming?!?!)

Over in the Land of the Free, the average checking account now pays just 0.06% interest, while the rate of inflation is hovering around 2%.

This means that anyone who tries to be responsible and save money for the future is WORSE OFF after adjusting for inflation.

Not that anyone has any savings anyhow.

According to Federal Reserve data, the median bank balance in the US is barely $3,000, while a recent survey from BankRate showed that 23% of Americans have almost no savings at all.

Meanwhile, debt levels continue to rise. Government debt is at an all-time high around the world, led by the US government’s prodigious $22 trillion debt, far larger than the size of the entire US economy.

Corporate debt is at an all-time high. Student debt is at an all-time high. Consumer debt is at an all-time high.

Mortgage debt is also at an all-time high, now totaling $15.3 trillion. And that’s because property prices have hit another all-time high. Housing affordability, meanwhile, is at its lowest point in a decade.

You get the idea. Just about everything is overheated. And the economy is overdue for a big correction.

This economic correction is inevitable. It’s only a question of when: this year? Next year?

This is what concerns me.

You may remember that the last financial crisis in 2008 hit just two months before the national election in the United States. The economy instantly became the ONLY election issue that mattered.

It’s entirely possible that this will happen – a big recession and market correction hits just before the 2020 election, catapulting a legion of socialists into office.

Bear in mind that an economic crisis is like any other crisis: an opportunity for politicians to capitalize on people’s fear to pass dangerously ambitious legislation that wouldn’t stand a chance under normal circumstances.

Think back to 9/11. People were so panicked and terrified that they didn’t notice or care that the government passed Orwellian legislation like the USA PATRIOT Act.

Well, this time around there are already countless socialists clamoring for 70% tax rates, wealth taxes, etc.

And if they’re swept into office by a major economic crisis, they’ll have free reign to pass their entire agenda– higher taxes, nationalized healthcare, debilitating business regulations, etc.

This is a very real possibility: we’re overdue for a recession and the socialist are already waiting in the wings to seize power.

It’s strange to say, but I’m HOPING that a recession starts soon; if there’s a recession this year (instead of next), then it would likely be over before it becomes a major election issue.

But as we used to say in the military, hope is not a course of action. And that’s why I’m preparing for what I think will be the greatest redistribution of wealth in modern history.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

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

With FANG stocks soaring all day without a specific catalyst, many investors were hoping that today’s panic bid in growth stocks was to frontrun Alphabet’s after hours results, which many expected would be another beat, sending the stock higher.

And to those who expected a beat, they were right, because moments ago Google Alphabet reported Q4 EPS of $12.77, beating exp. of $10.82 soundly, with revenue ex-TAC of $31.84BN also not only above the consensus forecast of $31.33BN, but also above the highest Wall Street forecast of $31.81BN.

The other Q4 core earnings highlights were all solid as well:

• paid clicks on Google properties +66%
• cost-per-click on Google properties -29%
• operating margin +21%
• operating income $8.20 billion

Additionally, ads on Google properties were up 21% and TAC as a share of ad sales was down from last year.

So far so good, and if this was it, the shares would have maintained their kneejerk spike higher and continued today’s levitation.

However, as in the case of Amazon, it was not meant to be, because after scanning the company’s top and bottom-line beats, traders shifted their attention to how much money Alphabet was spending to maintain its top line growth and margins, and it was here that a problem emerged, because Google CapEx exploded 80% higher from the $3.8BN a year ago to a whopping $6.85BN, while total CapEx surged to $7.1BN, far above the $5.66BN estimate, and – as in the case of Amazon – concerns emerged that Alphabet will have to spend far more on capital to maintain its profit and cash flow.

As a result of this surge in CapEx, shares tumbled as much as 3.8% in extended trading, which as Bloomberg notes, if repeated in the cash market tomorrow, it would be the biggest drop since Dec. 4.

Needless to say, the Nasdaq is not happy and absent some very optimistic disclosures during the earnings call, expect today’s sharp Nasdaq spike to be promptly unwound overnight and during tomorrow’s cash session.

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

With China taking the week off for Lunar New Year, it seems vol-selling is back en vogue as overnight tape-bomb-risk ‘may’ have been removed (as well as immediate Chinese financial system liquidity issues). Do not worry, risk is “contained”…

 

China closed so no equity market but the yuan tumbled overnight…

European stocks were generally lower on the day but UK’s FTSE managed to scramble back to close green…

 

But US equity markets all drifted higher all day, led by Nasdaq…with a vertical panic-bid into the close…

 

As we detailed earlier, today’s melt-up comes to you courtesy of CTAs – All the major indices have broken above key technical levels…

And so, almost exactly one month after trend-following CTAs  flipped to net short for the first time in three years…

… accelerating the market’s slide into the Dec 24 bear market which lasted all of 5 minutes before a combination of Mnuchin’s invocation of the PPT (and bank liquidity check), Trump’s urge to buy stocks as it was “a tremendous opportunity to buy”, a massive pension fund rebalancing buy order and Powell’s dovish U-turn sent stocks soaring, CTAs are back to where they were for the most part since 2016: long.

And the result is evident in futures – calm until the cash market opens and the algo-buying panic begins…

Another big squeeze of the shorts again today…and the meltup at the close…

 

Apple’s recent resurgence has pushed it back to the most valuable US listed company once again at $807bn, back above (barely) Microsoft and Amazon…

 

Equity and Credit protection costs plummeted further… VIX tumbled to a 15 handle (4mo lows)

 

Treasury yields were up across the curve today…

 

10Y Yields rallied back to erase the post-Powell plunge, but were unable to breakout…

 

The dollar surged back up to recent highs – erasing the post-Powell plunge…but was unable to breakout…

 

But, with SOTU tomorrow, some wonder if Trump’s falling approval will lead the dollar lower again…

Cryptos were a mixed bag…

 

Copper managed notable gains and while Crude rebounded it remained red like PMs as the dollar surged…

 

Gold erased its post-Powell jump…then rebounded…

 

WTI plummeted into and across the US equity market open, breaking back below $54, but like the rest of the market, it rebounded strongly (some noted that the selloff was attributed to a large producer)…

 

Since The FOMC statement, Bonds, Bullion, and the Dollar are now back to unchanged but stocks are panic-bid…

 

Finally, this is becoming a farce…

Stocks are soaring as Earning expectations plunge to six-month lows…

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