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Authored by Mike Shedlock via MishTalk,

There are now 8 wall prototypes of varying cost and beauty. None meet operational standards or Trump’s purported cost.

Trump’s Slat Steel Barrier

A design of our Steel Slat Barrier which is totally effective while at the same time beautiful! pic.twitter.com/sGltXh0cu9

— Donald J. Trump (@realDonaldTrump) December 21, 2018

Standoff

A standoff over funding for President Donald Trump’s long-promised border wall has resulted in the longest-ever shutdown of the US government.

Trump wants $5.7 billion to build a beautiful wall to stop the “humanitarian and security crisis”.

House speaker Nancy Pelosi says no. So here we are. Let’s ponder designs and costs as described in Trump Wall – All You Need to Know.

No New Additions

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Before Mr Trump took office, there were 654 miles of barrier along the southern border – made up of 354 miles of barriers to stop pedestrians and 300 miles of anti-vehicle fencing.

Trump wants a 2,000 mile wall.

Estimated Cost for Trump’s Wall

The Department of Homeland Security (DHS) previously estimated a wall spanning half the border would cost up to $25 billion, but it has now said it is still looking at options to determine the price tag.

US Customs and Border Protection (CPB) says that, on average, it costs approximately $6.5 million per mile to construct a new border wall or replace existing legacy fence.

Assuming the current 654 miles are all usable, the math is simple enough. (2000 – 654) * $6.5 Million= $8,749,000,000. That is well under their estimate. If one assumes that the entire wall will be replaced, we arrive at $13 billion.

I do not believe these estimate include land cost, and they are also likely low-ball estimates. One can likely toss Senator McCaskill’s estimate out the window as well.

Eight Prototypes

​

Officials at the US Customs and Border Protection agency have said none of the Trump administration prototypes tested in 2017 met its operational requirements.

However, they did provide “valuable data” to help select design elements in the future, they added.

Illegal Immigration From Canada

​

Most illegal immigration is from visa ‘overstayers’, not people crossing the border. Although the number of overstayers overall dropped to around 420,000 in May 2018 – it was still more than the number of people arrested trying to enter illegally via the Mexico-US border.

Land Seizures Continue

The Texas Tribune reports feds moving ahead with land seizures for South Texas border wall.

As a national debate raged about family separations at the border, U.S. Customs and Border Protection told a group of South Texas officials earlier this week that the federal government plans to move forward with private land seizures in the Rio Grande Valley to build sections of President Donald Trump’s border wall.

An investigation last year by ProPublica and The Texas Tribune found that the federal government invoked a little-known Great Depression-era law that allowed it to swiftly seize land to build the barrier and compensate landowners later. Dozens of landowners whose property was taken for the barrier still haven’t received compensation as lawsuits over the fair value of the seized land linger in court.

The investigation also found that during the process the U.S. Department of Homeland Security cut unfair real estate deals, secretly waived legal safeguards for property owners and ultimately abused the government’s extraordinary power to take land from private citizens.

You may also wish to consider Trump’s border wall threatens to end Texas family’s 250 years of ranching on Rio Grande.

It’s easy to support the wall as long as it isn’t your property being seized, and your cattle’s access to water shut off.

And for what? It is unlikely to stop the flow of humans or drugs. If by some chance it stops drugs, prices will go up, and so will the number of crimes committed to pay for drugs.

Death Wall Might Work

If you want to build a wall that works, make it a double wall each 6 feet tall, with 40 yards separating the walls.

Shoot anything with two legs that enters the zone. After a few deaths and huge public outcry, the illegal entries from Mexico would stop.

That is not a serious suggestion, I am merely stating a wall plan that would be cheaper and arguably work better.

How badly do we want to protect our borders?

A Better Wall

Alternatively, and better yet, enforce e-Verify, place stiff penalties on companies that violate it, and shut off all benefits for illegals.

In the grand scheme of things, $6 billion for a wall or even $20 billion is not a lot of money.

Were it not for the odious land grab, and threats of property ending up on the wrong side of the fence (it has happened already), one might conclude “it’s a small price to pay”.

However, people who make such rationalizations are seldom the ones paying the “small price”.

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

Authorities in the northern Chinese province of Hebei have rolled out an app over WeChat which can tell people if they’re walking near someone in debt, according to China Daily. 

The program, aptly named “map of deadbeat debtors,” flashes a warning if someone in debt is within a 500-meter radius – showing their exact location according to a screenshot of the app. 

Whether the app reveals the debtors’ names or photos is unknown, nor does China Daily mention how much money is owed or to whom – but according to paper the app allows people to “whistle-blow on debtors capable of paying their debts.”

“It’s a part of our measures to enforce our rulings and create a socially credible environment,” said a spokesman for the Higher People’s Court of Hebei – which is behind the app. 

The “map of deadbeat debtors” is yet the latest in China’s push towards a shame-based “social credit score” system which has already been deployed in several parts of the country. According to a November report, Beijing has an ambitious plan to control China’s citizens through a system of social scoring that punishes behavior it does not approve. 

Some critics warn the new system is fraught with risks and could reduce humans to little more than a report card, said Bloomberg. 

Hangzhou, the capital city of China’s Zhejiang province, rolled out its social credit system earlier this year, rewarding “pro-social behaviors” such as blood donations, healthy lifestyles, and volunteer work while punishing those who violate traffic laws, smoke and drink, and speak poorly about government. 

By mid-Q2, China had blocked more than 11 million flights and 4 million high-speed train trips for people who had poor social credit scores, according to the National Development and Reform Commission.

According to the Beijing plan, different agencies will link databases to get a more detailed picture of every resident’s interactions across a multitude of financial and social platforms. 

In March, we reported that China had rolled out an advanced facial recognition system over 16 provinces, cities and autonomous regions ominously called “SkyNet” for the “security and protection” of the country, reports Workers’ Daily. 

“The system is able to identify 40 facial features, regardless of angles and lighting, at an accuracy rate of 99.8 percent,” reported the People’s Daily. “It can also scan faces and compare them with its database of criminal suspects at large at a speed of 3 billion times a second, indicating that all Chinese people can be compared in the system within only one second.”

Between debt-shaming and skynet, China’s future is looking more and more dystopian as time goes on. 

via ZeroHedge News http://bit.ly/2Waan6y Tyler Durden

Video of employees from a Chinese company specializing in beauty products who were forced by their bosses to crawl a long distance on a busy street went viral this week, sparking global outrage at the appalling display, which further happened to involve a nearly all female staff.

The workers were literally forced to crawl on all fours after reportedly failing to reach their annual sales targets on Monday in the busy traffic of Tengzhou — a city in Shandong province in the country’s east. The group was filmed being driven on by a male supervisor bearing a flag with the name of the firm, which reportedly disrupted traffic.

Onlookers called the police, which soon arrived on the scene and warned the boss it must cease the punishment, as China has laws forbidding corporal punishment or acts of intentional public humiliation for workers; however, in recent years there’s been an observable trend that companies are increasing such bizarre tactics, which has involved everything from whipping to forced worm eating to caning. 

A company in China forced its employees to crawl on the street as a punishment… because they couldn’t meet year-end targets. pic.twitter.com/Pjo8SMEDrC

— DW News (@dwnews) January 17, 2019

Examples chronicled by the Daily Mail include the following:

Last month, workers at a Chinese hair salon were forced to slap themselves in the face 100 times, eat raw chillies and run 10km because their work performance hadn’t reached their boss’s expectation.

In November, employees at a home improvement firm in Zunyi, Guizhou province, were whipped with belts, forced to drink urine and eat insects after failing to reach their targets.

But few such shocking acts have been filmed (with some notable exceptions), which has led some skeptics online to suggest this week’s forced crawling spectacle could have been a PR stunt. But if so it appears to have backfired as the company has reportedly been temporarily shut down. 

One of the women forced to crawl the long distance confirmed to police it was a “self-discipline measure” for missing end-of-year targets, according to reports.

In a similar incident last May — though perhaps less public as it wasn’t in the middle of a busy intersection — video emerged from a monthly appraisal session in Yichand in central Hubei province.

The South China Morning Post reported at the time that a female boss slapped six male workers multiple times in what appeared a bizarre ritual to boost lagging morale. 

At the close of the ordeal, the employees were all forced to clap. During that event, as well as this week’s abuse incident, the companies claimed that staff members were willing participants in their punishment. 

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

Authored by Jeff Thomas via InternationalMan.com,

Eighty-four percent of millennials admit that they don’t know how to change a lightbulb. When asked what they do if one goes out, most either said that they call the landlord to fix it, or just accept having less light in future.

Readers of this publication will be savvy enough to know that a crisis of biblical proportions is on the way. It will begin as an economic crisis, but will quickly morph into a political and social crisis as well.

There can be no doubt that my generation (the baby boomers) have done more to create this crisis than any other. So, who will be the ones that will have to deal with the crisis, once it’s under way?

Well, that always falls to the young, strong, energetic segment of the population. The twenty-to-forty group would be the ones who would need to roll up their sleeves and bail out the sinking rowboat.

That means that, by the time we’re in crisis mode, the generation that will inherit the job of fixing the mammoth problem will be the millennials.

Uh-oh.

The “depression generation” were known for hard work and self-reliance. Their children – the boomers – were their spoiled children, who became the yuppies. They sought to live luxuriously, with a minimum of responsibility. The next generation – the millennials – have, so far, proven to be a generation that not only does not wish to take on responsibility, they are literally unable to do so.

With notable exceptions, it’s a generation of people who blindly expect that their parents, the government and perhaps the tooth fairy, have the full responsibility to take away all of their problems and inconveniences. This has reached the perverse degree that students at even the best universities have “safe spaces,” where no one may say anything that upsets them. Harvard now has rooms where students who are feeling stressed can play with Play-doh. Rules are established based not upon what is practical or workable, but on “How I feel at the moment.”

This is not just a generation that’s a bit spoiled and needs a shot of hard reality to aid their maturing process. This, tragically, is a generation that is simply unable to cope with responsibility of any kind – a generation that, literally does not know where to begin if a task as simple as changing a light bulb occurs.

Those from older generations tend to say, vaguely, “Well I suppose they’ll just have to grow up. If there’s a crisis, they’ll just have to get on with it.”

Well, no, unfortunately, neither the mindset nor the skillset exists for millennials to take on the job. At best they will fail to act. Just as they now accept darkness rather than figure out how to change a lightbulb, they’ll fail to roll up their sleeves to rebuild a working market during and after a crisis. But, at worst, they’ll have meltdowns, resorting to violence in the belief that, “This shouldn’t be happening to me!”

So, if this is the case, who, then, will be the saviours of the rather large portion of the world that will be self-destructing?

Well, historically, these developments tend to be generational, as described above. So, to understand how the crisis will play out, we might look at countries that are further along on the same curve. After all, boom and bust patterns are perennial; it’s just that, whilst one nation is in boom mode, there’s always another that’s is in bust mode.

France fell apart around 1800 and Russia did so around 1900. But we have a more recent example, right in the western hemisphere – Cuba.

In 1959, the Cuban government had become so corrupt and so oppressive that a small band of ne’er-do-wells was able to take over, with very little bloodshed.

Cubans from my generation were so pleased to have the fearsome Battista removed that they were prepared to accept whatever jury-rigged government the Castro brothers might dish up. Fidel Castro was no communist, but he quickly adopted communism when the Soviet Union agreed to pay him three times the going price for Cuban sugar, and they would take all he could produce.

Then, in 1991, the Soviet Union went bust and the flow of unrealistically high revenue came to a grinding halt. Cuba was thrust into dire poverty. (It was so extreme that, during that period, I recall never seeing a dog or cat on the streets of Havana, as they had all gone to the stewpot.)

Then, in the late nineties, Hugo Chavez began to pour money into Cuba and the country began to recover. At that same time, Raul Castro began to create a capitalist society within the communist framework. Private businesses were not only allowed, but encouraged. In time, the taxes that these businesses paid to the government refloated it and created the beginnings of prosperity. This year, Cuba will decide on changes to its constitution that will include a major shift toward a free market. Cuba, although most of the world does not yet understand it, is one of the emerging capitalist countries.

So, let’s have a look at how this has played out on the street level. How have the people of Cuba dealt with this over the last sixty years?

Well, for more than half the population, life is measurably better. For some, say 20%, there is genuine prosperity. Plenty of food, lots of private restaurants, nicer, newer clothes and new Hyundai SUV’s to replace the rusting Russian Ladas.

But, psychologically, what changes have taken place? Well, interestingly, almost no change has occurred, other than a generational one. Those old enough to remember the days of the revolution still talk on the park benches about the hope that that period created and wish that those days would return. They won’t. The generation that came after them, now in their forties, pine for the days of Russian largesse, vainly hoping that another Russia will come along and put bread on their tables. That won’t happen either.

However, those Cubans in their twenties have only known the post-Russian collapse period. They thoroughly understand that the government is never going to deliver on their promises of free stuff for all, sufficient to sustain life. They know, first hand, that there’s only one solution – go out and work.

Today, a twenty-something waiter in a Havana restaurant will say, “If I work ten hours a day, I’ll be able to buy a flat screen TV. If I work twelve, I’ll also be the first in my family to have an air conditioner.”

An entire generation in Cuba is figuring out the simple equation that work = prosperity. Cuba is only in the formative stages of this understanding, but their future is promising.

Concurrently, in the US, Canada and Europe, the generation that will be tasked with digging their countries out of depression will be the millennials. They will fail utterly at their task and they won’t reprogramme their brains to understand what’s necessary, any more than the last two generations of Cubans have. The task will fall to the next generation. It will be their children who take on the task and rebuild.

What this means is that the Greater Depression will not be brief. A recovery is likely to take twenty-five years, since another generation after the millennials will need to mature before a recovery can be effected.

And during that time, those jurisdictions will be quite a bit less than ideal as places of domicile.

*  *  *

Clearly, there are many strange things afoot in the world. Distortions of markets, distortions of culture. It’s wise to wonder what’s going to happen, and to take advantage of growth while also being prepared for crisis. How will you protect yourself in the next crisis? See our PDF guide that will show you exactly how. Click here to download it now.

via ZeroHedge News http://bit.ly/2W8nXaG Tyler Durden

Silicon Valley startups like Hustle, an ad-messaging company that spent lavishly on things like on-tap kombucha and arcade games for employees, are learning the hard way that party is coming to an end and the bill is finally due. Earlier this month, the company announced mass layoffs according to the WSJ . This depressing scene is now playing out across countless Silicon Valley startups, which sprung up like mushrooms when the money was easy and which are now starting to fold as the decade-long credit cycle tests the limits of the current bubble. 

Startup investors and company founders warn that the unchecked growth of the past several years—which by some metrics exceeded heights from the dot-com boom—is hitting a limit. A rout of publicly traded technology companies is fostering newfound restraint for investors in Silicon Valley, especially for younger, cash-strapped startups like Hustle.

Startup investor Sunny Dhillon told the WSJ: “The unbridled optimism that inhabits our world is getting a shot of realism.”

To be sure, the warning signs were easy to spot, starting with the shrinking number of seed deals, which fell to just 882 in Q4 versus more than 1500 that took place three years ago. 

Because VCs have a tendency to follow technology stocks, the NASDAQ’s recent 12% pullback from its Sept 2018 highs put pressure on many startups: scooter companies Bird Rides and Lime both had to lower their valuation targets in order to raise capital during their last funding round. Other startups are failing outright, like Munchery, a meal kit service that had raised more than $100 million from VCs.

Even far more developed companies such as Elon Musk’s SpaceX have suffered from the rising pressure on startups to deliver. After failing to meet recent fundraising targets, the company had to lay off 600 employees and stated publicly that it had “extraordinarily difficult challenges ahead.”

Perhaps the most prominent recent example of a major investor – one that has been spending liberally over the past 10 years – suddenly getting cold feet, is Softbank which had to slash 88% of its planned $16 billion investment in WeWork after the bank’s backers objected to the deal. 

Josh Wolfe of Lux Capital summarized the attitude in the VC world of changing from “’fear of missing out’ [to] ’shame of being suckered’.”

The sudden change in sentiment comes after a bumper year: U.S. VC backed companies raised a record $131 billion last year – eclipsed only by the previous record of $105 billion in the year 2000. And not all companies appear to be stuck – Uber and Airbnb are both still eyeing IPOs to help early investors cash out. 

Blockchain VC investor Christian Ferris said that he has served on the board of three companies that have shut down this year. He said: “Last year, they were flying you in business class. This year, they can barely afford coach.”

Hustle, which placed two video games costing $12,995 in its headquarters, still has a pulse, albeit with a much smaller spending footprint. Hustle even went as far as to rip its espresso machine out of the kitchen at the company’s headquarters.

Hustle was hiring new employees recently, despite having fallen short of revenue goals for the quarter and year, people familiar with the matter said. Investors were uninterested in putting in new money after Hustle failed to reach targets in areas such as signing up new corporate clients, meaning it’s only a matter of time before the plug is pulled.

Its CEO and founder, Roddy Lindsay, said in a company disclosure about its recent layoffs: “I made the rookie misstep of not watching our growth closely enough, and we ended up overbuilding our team beyond our means.”

Another way of saying that” money was very easy… and then it no longer was.

Looks like it’s back to Folgers for the remaining employees, who will have a job for at least a few more months.

via ZeroHedge News http://bit.ly/2WbVr87 Tyler Durden

Authored by Kevin Muir via The Macro Tourist blog,

Global risk markets have recently taken comfort in the Fed’s change of rhetoric along with Mario Draghi’s talk of pulling out the “monetary toolbox”. When combined with the Chinese government’s cutting of the reserve requirement ratio and other stimulative measures, it’s easy to see why sentiment shifted this month.

Yet the headlines out of China are getting scary. This morning Bloomberg is reporting on a special message from the Chinese leader.

China’s economy is not in good shape. Nor is dropping the reserve requirement ratio and cutting some tax rates going to turn it around. The truth of the matter is that we are now nine years from the Great Financial Crisis and China’s aggressive stimulus following that crisis has resulted in some rather uncomfortable mis-allocations of credit that need to be corrected. These fixes will not be easy and they will not be painless. China is not immune to laws of the business cycle even with their command economy.

I know that many risk-on bulls will point to this Chinese slowdown and reason, “their economy is quickly deteriorating so they are incented to make a deal with Trump.”

Yeah, there is no doubt that the Chinese hand is weaker than had their economy stayed firm, but to think that Xi will fold because of some short term pressure is naive. From Bloomberg:

Xi told a “seminar” of top provincial leaders and ministers in Beijing on Monday that the Communist Party needed greater efforts “to prevent and resolve major risks,” the official Xinhua News Agency said. He said areas of concern facing the leadership ranged from politics and ideology to the economy, environment and external situation.

“The party is facing long-term and complex tests in terms of maintaining long-term rule, reform and opening-up, a market-driven economy, and within the external environment,” Xi said, according to Xinhua. “The party is facing sharp and serious dangers of a slackness in spirit, lack of ability, distance from the people, and being passive and corrupt. This is an overall judgment based on the actual situation.”

Xi is preparing his country for more difficult times ahead – not getting ready to make some landmark deal that gives the US everything Trump wants.

Now don’t get me wrong – there will most likely be a deal. It’s in both countries’ interest to stop the bleeding. Yet the deal will not be enough to stop the slide in the Chinese economy.

I don’t need to reproduce all the scary graphs of the Chinese debt buildup. Or the astounding unprecedented size of growth in the Chinese economy over the past two decades. Everyone knows the bear case as they have been hitting us over the head with it for the past decade.

What’s different now is that the slowdown has clearly started. Instead of being some theoretical eventuality, the process has begun, and it’s too early to assume it will be an easy fix.

I would like to take a moment to remind readers that Felix Zulauf called this more than a year ago “This Cycle – It’s China!”

In a terrific interview with Barry Ritholz for his Bloomberg Masters In Business segment, Felix highlighted why the Chinese political cycle would mean the Chinese government would be in no hurry to stimulate their economy:

Felix: China I believe is in an interesting position right now. You heard President Xi’s speech last week, and in 2021 there is the 100th anniversary of the Chinese Communist party and it’s very clear that they want to have a strong economy at that time. If you want to have a strong economy in 2021, you stimulate in 2020. And they are central planners. So that’s means they have to take their foot off the pedal in 2018, 2019. I think in ‘18 and ‘19, they will address the imbalances in the financial sector and that will slow down the Chinese economy in ‘18 and ‘19, which will also slow down the rest of the world.

So we are entering a period where sometime in ‘18, I would say the peak of the market will be in the first half, the peak in the economy is probably from mid-2018 on, and then we slow down into 2020.

And 2022 is the next Chinese Congress, and President Xi is probably the first leader who tries to run for a third time. So he wants to have a very good economy in 2021 and 2022. That means he has to first slow things down, restructure some of the imbalances in the system because if he tries to carry through, it could backfire on him. It could be the worst of all worlds. Namely a completely overheated situation, with high inflation rates, etc…

That’s why I think the leader of this cycle, China, is going to slow down next year.

Barry: So the whole global economy is dependent on President Xi’s re-election desires in 2022?

Felix: As I said before, you always need to figure out what is the leading theme in the market cycle. In the last cycle, it was real estate, in this cycle it is China. And that’s why China is so important. China is the second largest economy, and in 10 or 15 years, it will be the largest economy of the world.

So let’s recap; China has finally started their long-awaited slowdown/economic-correction. Yet markets are optimistic that between a trade deal and stimulus, the Chinese government has got this under control. But there is little reason for the Chinese government to give in on a trade deal (Xi is appointed for life and doesn’t feel the pressure from each downtick in the Chinese stock market). Nor does Xi need to stimulate in a serious fashion at the first signs of economic slowing. Sure, he doesn’t want it to spin out of control to the downside, but to think he will waste bullets at this juncture does not take into account the longer term game he is playing.

As their economic miracle comes skidding to a stop, the Chinese will lightly apply a little gas, but they are by no means desperate to arrest the decline. Re-read Xi’s address. He is preparing everyone for more pain ahead. He is telling his party members to pucker up and get ready for some medicine.

And the medicine will not taste good.

Which brings me to the real purpose of today’s post. If you agree with my analysis about the difficult state China finds itself in, you might be tempted to run out and short CNH by the bucketful. No doubt that very well might work. But look at the move over the past couple of months – it’s not what you would expect given the terrible Chinese economic news releases:

The Chinese currency is managed. And that means it is a political process. Sure you could take the view that eventually the Chinese will be forced to revalue lower (higher CNH), but I would rather find an asset that gives me feedback on a realtime basis that more accurately reflects current economic conditions.

To my mind, Australia is the perfect vehicle to express my belief that the next year will continue to be difficult for China. No other major country has benefited more from the Chinese economic miracle than Australia. They are almost an economic miracle in their own right. Have a look at their nominal GDP growth over the past half century.

It’s been more than 25 years since Australia has suffered negative nominal GDP results.

Recessions are defined as a contraction in real GDP, so let’s look at real GDP to see if the story is different:

Sheesh! Same deal. These Australians sure know how to grow an economy.

But are they really so adept at repealing the business cycle? Or were they the lucky recipients of China’s insatiable desire for resources?

And most importantly, if China experiences another difficult year, what will this mean for Australia?

I am not sure if there are more perma-bears on China or Australia, but both camps are crowded. Australia has experienced a world-class real estate bubble over the past decade with stories that will eventually fill a Michael Lewis book. Yet the bears have been warning about the coming collapse in Australia for what seems like an eternity.

What’s changed now?

Well, that’s again easy.

The market is finally agreeing with their position.

Here is the ASX 200 Financials Sub-Index over the past year:

Not hard to figure out that the trend is down.

The Australian economic slowdown is also manifesting itself with slumping real estate prices.

The government is trying to manage the decline with lower interest rates, but record low levels are now providing little relief. Here is the 3 month Australian bank bill rate over the past couple of decades:

It’s even worse when you look at Australian rates versus the US.

The trend towards lower relative rates in Australia is pronounced and clear.

What is also pronounced and clear is that the bull move in the Australian dollar has long since past.

In fact, the Australian dollar has been going down for so long you almost feel like you might have missed the party.

Which brings me to my preferred way of expressing this trade.

I don’t know where the US dollar is headed. I worry that too often the USD trades more like a risk-on versus risk-off instrument than actually reflecting fundamental values of the currency. And I guess gun-to-head, I am worried about there being too many US dollar bulls for my liking.

So I find it hard to short AUD against USD down here. It might be the right trade – I am not disputing that! But I like shorting AUDCAD even better.

You see, Canada is also a resource economy. And although Canada is dependent on China to some extent, the reality is that Canada is far more exposed to the United States.

Therefore shorting AUDCAD is a way of expressing United States over China without being subject to the violent swings in the reserve currency due to global macro factors. The trade is just cleaner.

On technical long-term basis it’s nowhere near as bombed out.

But on a shorter timeframe, it’s making a series of lower highs:

A move back down to 0.9150 on AUDCAD looks like an easy chip shot.

What interesting is that the Australian / Canadian 3-month bank obligation yield spread went negative this summer for the first time in decades.

I know there are plenty of Canadian bears out there who believe the Canadian real estate market has also rolled over. That could be, but I think whatever pain Canada experiences, Australia will feel it worse. At the end of the day I would rather be long the currency of the country whose major trading partner is the United States and short that country who relies on China. We are a long way from this China slowdown being complete and shorting AUDCAD is my favourite way to play it. Remember what Felix said – no real stimulus until 2020!

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

Just days after joining the House Financial Services Committee (alongside such luminaries as Maxine Waters and Al Green), freshman congresswoman Alexandria Ocasio-Cortez (AOC) is among a group of the more progressive lawmakers joining the House Oversight Committee, Politico reported Tuesday.

The socialist justice warriorette – and latest poster-person (we are trying to be PC) for the ‘center’ of the Democratic party (which is just to the right of Marx) – will join fellow freshmen Reps. Rashida Tlaib (D-Mich.), Ayanna Pressley (D-Mass.), and Ro Khanna (D-Calif.), according to Politico.

The Oversight Committee is the main investigative committee in the House and is expected to open investigations into Trump and his administration during the new Congress.

And, as The Hill notes, each of the lawmakers has been particularly critical of President Trump. Perhaps most infamously, Tlaib embarrassed herself just hours after invocation earlier this month for saying House Democrats would “impeach the motherf**ker,” in reference to Trump.

Rep. Elijah Cummings (D-Md.), the chairman of the committee, told Politico that he is “excited” about the new members and dismissed any concerns about them. 

“If I based the choices going on the committee based on what people said or their reputations or whatever, I probably wouldn’t have a committee. I am excited – there were a lot of people that wanted to come on our committee,” he said.

Additionally, we suspect President Trump’s legal bills are about to increase exponentially (or maybe just fire Giuliani) as Politico reports that Rep. Dan Kildee, a member of the Democratic steering panel, said he was excited about the progressive picks.

“I want people to be aggressive, especially on that committee. It’s good to have people who aren’t afraid,” the Michigan Democrat said in an interview.

“They’re going to be dealing with some pretty important stuff.”

As Axios notes, the committee has already accrued a laundry list of potential subpoena targets over the past two years. 

via ZeroHedge News http://bit.ly/2Ra8yDf Tyler Durden

Authored by Jeffrey Snider via Alhambra Investment Partners,

Imagine yourself as a rural Chinese farmer. Even the term “farmer” makes it sound better than it really is. This is a life out of the 19th century, subsistence at best the daily struggle just to survive. Flourishing is a dream.

Only, you can see just on the other side of the hill the bright reflective lights of one of China’s many glittering modern cities. Not only are you reminded of the stark difference between what must be the life of its denizens and yours, not too long ago your neighbor or distant relative was privileged enough to move out of the peasantry and into the light and city life of relative comfort and fortune.

You try not to be bitter because this transformation will some day be your transformation, biding your time until your number is called. You put up with a lot along the way, from clear restrictions to your personal freedom and human rights to ungodly pollution, but through it all you keep reminding yourself that even if you don’t live long enough, for your one permitted child their future is assured.

And then one day the government says, “sorry, we are all full up over here in paradise.”

China isn’t quite there yet, but that day is coming maybe even rapidly approaching. What’s more, Chinese officials know it. While Economists in the West were suckered into globally synchronized growth, the Communists knew it was nothing more than a marketing slogan. Long before trade wars, China’s economy in 2017 had reached its reflationary plateau and frighteningly it was a shallow one.

…of the 300 to 500 million peasants slated to become middle class workers, what happens if only 200 million end up having been given the order to move into the fancy new cities? (In truth, it doesn’t work like that; it works the same as anywhere else where the relatively affluent already in cities move into the new stuff and the newly arrived rural farmers take over the old left behind). This is the real danger and the real task for the Chinese government. A no-growth world means there isn’t anything for those still on the outside to do, and therefore no need for them in the cities.

If that was the best they could do when everything was supposedly going right, what was the downside when things didn’t go right? Furthermore, given recent history of the global reserve currency system, eurodollar not dollar, what were the chances “going right” was going to last more than maybe a few quarters longer?

On top of all that, the Chinese Communists remain keenly aware what happened in Russia when the Soviet Communists’ economy ran out on them. They aren’t around to tell the story.

More and more China’s officials are sounding the alarm. It is the political backlash against a world without growth. You can listen to Jay Powell and Mario Draghi if you like, and maybe Xi Jinping does as a matter of pure hope. But as the supreme official for what is always a fragile proposition (authoritarian states tend to be that way) Emperor Xi doesn’t have the luxury. He knows what could happen when he instructs local officials to give the “we are full” signal.

President Xi Jinping stressed the need to maintain political stability in an unusual meeting of China’s top leaders – a fresh sign the ruling party is growing concerned about the social implications of the slowing economy.

No kidding. China’s economic predicament is intractable. Even those who all throughout 2018 were speaking of the trade war can sense that this is so much bigger than tariffs on soybeans. Mainstream news stories once eager to blame American officials for a minor slowdown have come to realize this is internal Chinese demand on the brink.

Only, nobody can figure out why.

Eurodollar, not dollar. I wrote in October 2017 that the Chinese were warning the world about the state of the global economy because they are forced to be realistic about it by their dollar short. No one wanted to listen because Economists.

There is every reason to suspect that Chinese officials are increasingly accepting of a no-growth paradigm, and therefore it would be prudent (from the Communist perspective) to get ahead of any potential fault-lines that may develop in response to China without any “miracle(s).” With an end to the labor market transformation in sight, as indicated most spectacularly by FAI, it just might get a little dicey out in rural China.

That was five quarters ago, and I’ll repeat it again – this was long before trade wars.

The latest economic statistics from China display the unmistakable direction. The Chinese economy is not crashing, but there is no doubt it is slowing. In the bigger picture, there really is no difference anymore.

Industrial Production was a little better at 5.7% year-over-year in December than the atrocious 5.4% growth in November, that just means slightly less atrocious.

Retail Sales were up 8.2% last month, a tick above the 8.1% recorded the month before. November’s rate was the worst in a long time, again being a little better than the worst is still in the same category.

Accumulated Fixed Asset Investment (FAI) managed growth of 5.9% for all of 2018 over 2017. Private FAI was slightly higher last year than the year before, 8.7% compared to 6.0%, but that was a low level to come back to and nowhere near the 25% to 30% growth that used to be China’s urbanizing baseline. And much of that private FAI was directed into China’s longstanding property bubble.

GDP growth in Q4 (6.4%) was the worst in decades.

Xi’s predicament is very real, not that anyone should have any sympathy for a despot. By itself, slowing wouldn’t be too much to be concerned about; coming down from such a low start, however, changes the game entirely. There can be no growth and the probability the paradigm will change for the better is now exceedingly low. If you are a Communist, it isn’t just prudence to prepare for the scenario, it is full-on survival at this point.

When China signed on to the eurodollar system, they did so thinking it was a one-way ticket to paradise. Even after 2008, there were complaints about it (Zhou in March 2009) but no serious challenge once it looked like Emerging Markets were going to emerge maybe even the winner – it was widely believed there was a “new normal” in the West leaving growth the exclusive property of the East (and South).

It was a higher order mistake along the lines of these “decoupling” outbreaks. In the immediate aftermath of the Great “Recession” everyone acted as if the developing world was going to decouple from the lack of recovery in the developed world.

There is no decoupling, however, only variances in the time dimension. It was only a matter of time before the eurodollar’s “L” struck China, Asia, and all the rest of the global economy, too. Even when it did half a decade agopeople still couldn’t grasp the enormity of what was failing.

While Janet Yellen was busy with exit strategies and transitory factors, this is exactly what had happened. The eurodollar decay was not transitory, it just doesn’t happen all at once. That’s really all 2017 was, a pause in the global monetary deconstruction.

It’s back again and in a big way. The Chinese Communists have been battening down the hatches for five quarters already. The negative signals are as much political and social in nature as economic or financial. In fact, the econ stats more and more merely confirm the alarming political developments.

via ZeroHedge News http://bit.ly/2U4SzrC Tyler Durden

After last week’s embarrassing debacle in which special counsel Robert Mueller issued a rare statement calling bullshit on BuzzFeed over their Trump Tower Moscow report that Trump ordered his attorney Michael Cohen to lie about the timeline, the beleaguered news outlet has taken a second bite at the apple with a new report (oddly written by a completely different journalist) refuting comments by Trump lawyer Rudy Giuliani that “no plans were ever made” for the project. 

Not so fast Rudy… 

In their new report, BuzzFeed claims that the Trump Tower Moscow idea was “led by Trump’s then-lawyer, Michael Cohen, and his associate Felix Sater” despite writing in November that Sater both thought of and spearheaded the idea, turning to Cohen to “get it off the ground” while overpromising that he could seal the deal through his Russian connections that never panned out. 

Sater, a brash real estate promoter who pleaded guilty to racketeering in 1998 and became a longtime asset to US law enforcement and intelligence agencies, had worked with the Trump Organization on deals in the past and said he came up with the idea. Cohen, Sater recalled, said, “Great idea.” –BuzzFeed

Today’s “gotcha,” however is that the project had progressed much further than Giuliani claimed on Monday when he told the New Yorker “no plans were ever made. There were no drafts. Nothing in the file.” 

Not true, writes BuzzFeed’s Azeen Ghorayshi.

The president and his representatives have dismissed the project as little more than a notion — a rough plan led by Trump’s then-lawyer, Michael Cohen, and his associate Felix Sater, of which Trump and his family said they were only loosely aware as the election campaign gathered pace.

On Monday, his lawyer, Rudy Giuliani, said “the proposal was in the earliest stage,” and he went on to tell the New Yorker that “no plans were ever made. There were no drafts. Nothing in the file.”

However, hundreds of pages of business documents, emails, text messages, and architectural plans, obtained by BuzzFeed News over a year of reporting, tell a very different story. Trump Tower Moscow was a richly imagined vision of upscale splendor on the banks of the Moscow River. –BuzzFeed

 

Trump Tower Moscow hasn’t exactly been a secret, admits BuzzFeed, noting that Donald Trump tweeted about it following the 2013 Miss Universe pageant, and writing in his book The Art of the Deal that he had been trying to expand his business empire into Russia for over 30 years. 

@AgalarovAras I had a great weekend with you and your family. You have done a FANTASTIC job. TRUMP TOWER-MOSCOW is next. EMIN was WOW!

— Donald J. Trump (@realDonaldTrump) November 11, 2013

Over the last week, Giuliani admitted to the New York Times that the Trump Tower Moscow discussions were “going on from the day I announced to the day I won,” Giuliani quoted Trump as saying. He then walked back those comments, claiming in a statement: “My recent statements about discussions during the 2016 campaign between Michael Cohen and then-candidate Donald Trump about a potential Trump Moscow ‘project’ were hypothetical and not based on conversations I had with the President.” 

In other words, Giuliani is a walking gaffe machine – which we already knew. 

That said, the Trump Tower moscow project appears to have been much more developed than anyone in the Trump camp has acknowledged. 

According to a finalized letter of intent signed by Donald Trump on Oct. 28, 2015, the tower would have “approximately 250 first class, luxury residential condominiums.”

It would be located in Moscow City, a former industrial complex outside of the city center that has since been converted into an ambitious commercial district clustered with several of the tallest skyscrapers in Europe.

Its hotel portion would feature “approximately 15 floors” and contain “not fewer than 150 hotel rooms,” the letter of intent stated. The building would feature a luxury spa and fitness center, a commercial component “consistent with the overall luxury level of the Property,” and an office space “consistent with Class A luxury office properties,” as well as “luxury” parking. –BuzzFeed

Also in the plan was “The Spa By Ivanka Trump,” as well as a $50 million penthouse suite that they would give to Russian President Vladimir Putin. “My idea was to give a $50 million penthouse to Putin and charge $250 million more for the rest of the units,” Sater told BuzzFeed in November. “All the oligarchs would line up to live in the same building as Putin.”

Show Trump the money

The Trump Organization stood to make $4 million on an up-front payment for the deal; 25% of which would be paid upon execution of the licensing agreement, another quarter when they finalized a location, and the other half a week before the project’s groundbreaking – or two years after the execution of the licensing agreement, whichever came first. 

From there on out, Trump’s company would also get a cut of all the condominium sales at the tower, the agreement stated. From the total selling price of each unit, his company would get 5% for sales up to $100 million, 4% for the next bracket up to $250 million, 3% for anything between that and $500 million, 2% for anything up to $1 billion, and thereafter, a solid cut of 1%. For commercial and office spaces, it would get a 3% cut of all the rent. It’d get another 3% of sales on food and beverages, spa and fitness center use, and conference fees.

The deal also stipulated how much Trump’s management company would get paid for running operations at Trump Tower Moscow over 25 years. For the first five years, it would get 3% of all revenue generated by operating the hotel per month. Over the next two decades, it’d receive a flat 4%. In addition, the management company would also receive a monthly “incentive fee” — an additional 20% of the gross operating profit for the hotel — subject to annual negotiations. –BuzzFeed

At the end of the day, Trump Tower Moscow has never happened – and Trump himself has turned out to be the worst “Putin Puppet” ever after slapping heavy sanctions on Moscow and selling Ukraine weapons that the Obama administration wouldn’t.

“Let’s make this happen and build a Trump Moscow,” wrote Sater to Cohen in October of 2015. “And possibly fix relations between the countries by showing everyone that commerce & business are much better and more practical than politics. … Help world peace and make a lot of money, I would say that’s a great lifetime goal for us to go after.”

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

Authored by Sven Henrich via NorthmanTrader.com,

I got a freak chart for you that’s stunning, but bear with me here because it requires some background and patience. Most of us are focused on the daily or weekly action and it’s easy to lose sight of big cyclical trends. We don’t think of them as they take a long time to unfold and the daily noise is so much more dominant.

With the advent of permanent central bank intervention sparked by the financial crisis all of us have come accustomed to markets always going up with the occasional correction in between and the timing of corrections have seemingly become shorter and shorter. Big fat bottoms that happen after just a few days of temporary terror. We haven’t seen a true bear market since the financial crisis and even that one lasted barely more than a year as central banks stepped in. The last longer term bear market came after the technology bust in 2000 when markets bottomed in 2002 and 2003 and then proceeded onto the next bull market.

It didn’t always used to be this way. Going back to 1900 there were multiple extended periods of stock markets going nowhere and trading in wide chop ranges:

One could even argue that the period between 2000 and 2012 was such a period before markets finally broke above their 2007 highs.

But looking at this very long term chart we can note consolidation periods that were much longer, most notable the period between the 1960’s and the early 1980’s. No progress whatsoever, but then something happened and the answer should be obvious: The advent of personal computing, the internet and information technology. It changed everything and accelerated the world to never before seen wonders. But it also has come at a cost and we may be seeing the effects of this cost unfold in front of our eyes.

View it from a big macro perspective: Central banks have done their best to lead a global economy back to organic growth coming out of the financial crisis. The promise was full employment and inflation back to 2%. If you look at the official statistics they’ve met their unemployment goal, but they kept missing on the inflation front. Why? Because they are fighting the greatest deflationary force known to man: Technology. Companies like Facebook and Netflix have stamped out massive audience businesses requiring few people to serve them. The scalability of technology is incredible. Hence the economic model has changed and it’s all a bit inefficient for the many, but highly effective for the few. It is no accident that wealth inequality has expanded to the extreme degrees we witness today. It’s no accident that the tech titans are the richest people running around the planet. And given central banks’ desperate actions to ward off these deflationary forces they’ve enabled not only the renewed acceleration of asset bubbles again benefitting the very few, but they’ve also encouraged the taking on of unprecedented government and corporate debt and BBB rated junk debt in the process.

And now it gets interesting. In 2018 we witnessed a global blow-off top following 10 years of central bank intervention and following the US tax cut. Peak artificial liquidity. Global central bank balance sheets peaked in January 2018.

Where did the $DJIA stop? Not at some arbitrary point. No sir, it stopped at a very particular point, a point only a freak chart can suggest.

As many of you know I’m a big fan of trend lines and here it is, the freak chart:

1929 top, 2000 top, 2018 top (if 2018 is a top), but there is little denying the obvious: The $DJIA stopped twice in 2018 at a trend line that dates back to the starting points of 2 major crashes. 1929, and the 2000 technology crash.

The consequences? Immediate doom and gloom? I can’t say, what I can say is that this trend line has been massively relevant and is very much confirmed. Some may dismiss it as a fluke of course, but that would be a hell of a fluke.

Note there is a lower trend line there. This lower trend line has been left in the dustbin of history, untouched since the advent of the technology boom. The world has changed greatly since the 1980s, but the ghosts of historic debt expansion and slowing growth are all around us. If we can’t see massive organic growth with the largest artificial liquidity injection in human history what will it take? I have to ask.

What if it took all this artificial liquidity to barely squeak out 2% growth? That spike in GDP growth in the US last year? Looks very much temporary as the effects of the tax cut barely lasted 9 months.

Here’s the latest global growth forecast by the IMF:

2020 starts in less than 12 months and look at those far right columns.

Nobody wants to predict a recession of course, but these numbers are skirting awfully close to a recession.

1.3% GDP growth for Germany in 2019? 0.5% GDP growth for Japan in 2020? All these places still have negative rates and/or full intervention. US sub 2% in 2020 while the country is running trillion dollar deficits?

That’s the grand result of 10 years of artificial liquidity injections?

What if that’s the best this new economic reality could achieve under the structural circumstances? What if the technology growth boom is petering out? What’s $AAPL’s next big path to growth? Another iPhone version? Hardly.

No, it may just be that slowing growth globally will force the world to come to terms with the largest debt expansion in history and perhaps all of a sudden all that BBB rated junk debt will become very relevant very quickly:

Who is to say? I suggest nobody knows because the world has never before been in these circumstances.

But if things do indeed turn sour than our freak chart has some potential technical destinations to consider:

I’ve added some fibs to this long term chart and adding to the intrigue is the fact that these fibs line up with major previous market pivot points. Perhaps that’s just another fluke, but is it so unreasonable to presume that a 10 year record liquidity injection and record debt expansion has perhaps caused asset prices to overshoot? Just reversing back to the 2015/2016 area would constitute a .382 fib retrace. A 50% retrace would bring $DJIA back to the 2007 highs. A .618 fib retrace would bring $DJIA back to the 2011 lows and perhaps tag the lower trend line, timing dependent.

In context of a 90 year chart is such a technical retrace to the lows of just 8 years ago unreasonable? I have to ask.

Especially if you realize that 61.8% of the gains in that 90 year $DJIA chart have come in just the last 8 years. 

Ponder that.

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via ZeroHedge News http://bit.ly/2W6ch8t Tyler Durden