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LA Times Refuses To Participate In Boston Globe’s “Groupthink” War On Trump

The Los Angeles times has refused to participate in the Boston Globe’s coordinated ‘call to action’ in which they have colluded with over 400 newspapers to publish anti-Trump editorials. 

Calling the Globe‘s campaign “groupthink,” the Times writes that while they may agree with the anti-Trump sentiment, they “would not want to leave the impression that we take our lead from others.” 

Each of the papers will publish editorials — their own separate editorials, in their own words — defending freedom of the press.

The Los Angeles Times, however, has decided not to participate. There will be no free press editorial on our page today.

This is not because we don’t believe that President Trump has been engaged in a cynical, demagogic and unfair assault on our industry. 

…

Even when we do agree with another editorial page — on the death penalty or climate change or war in Afghanistan, say — we reach our own decisions and positions after careful consultation and deliberation among ourselves, and then we write our own editorials. We would not want to leave the impression that we take our lead from others, or that we engage in groupthink.

Earlier Thursday, President Trump began the day attacking the “Fake News Media,” calling it the opposition party: 

Then shifted to a more direct shot at The Boston Globe…“Now the Globe is in COLLUSION with other papers on free press.”

And attempted to end on a positive note… “Honesty wins…”

As Twitter user @KidBrightwillow notes, when the pro-Trump Sinclair Broadcast group coordinated a right-leaning message that anchors across the country read, the same papers now colluding with the Globe cried foul. 

When else has the Boston Globe colluded with against Trump? Oh right, Hillary Clinton’s campaign!

***

As we noted last night ahead of today’s blitz, Al Tompkins at The Poynter Institute – a five decade award-winning journalist and producer – acknowledges the reality that:

We will protest again that we are really good for democracy, that we are vital to the nation… and the people who agree with the president won’t give a damn what 200-plus newspaper editorials or a thousand editorials have to say.

Tompkins brings a common-sense perspective, likely echoing what most average Americans might be thinking right now, ultimately concluding of the breathless headlines now promising 350 “pro-journalism editorials” that it’ll be little more than the usual self-congratulatory and meaningless noise that many Americans have come to expect from the mainstream press.

He rains on their parade and predicts:

So the editorials Thursday will create a lot of chatter. Trump backers will call journalists whiners and journalists will counter-attack. Twitter and cable news will have a ball with it all.

And Friday morning we will be right where we were this morning. 

And crucially Tompkins, himself a prominent longtime educator of journalists across the nation, says that journalists as a collective profession have gotten so much disastrously wrong yet remain intransigent, and the American people understand this well.

He says:

Lots of journalists were surprised after the 2016 election. We vowed to listen to the public more, to find out why we were so surprised to hear that the public didn’t love journalists and a growing number didn’t believe us.

Meanwhile, the US Senate passed a resolution on Thursday that “affirms that the press is not the enemy of the people.” 

Maybe just an enemy of Trump?  

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California Considers Canceling Mandatory Cancer Warning For Coffee

|||Anthony Devlin/ZUMA Press/NewscomCalifornia officials are wondering if the decision to force coffee shops to post cancer warnings went a bit too far.

California’s Proposition 65 requires that all businesses use explicit warning labels on their products if there is a cancer-causing agent present. A March ruling by a Los Angeles Counter Superior Court judge extended that requirement to coffee shops, even major chains like Starbucks, because of the existence of acrylamide.

Acrylamide, a byproduct of roasting coffee beans, was included following a study showing that lab rats who consumed the chemical in high doses were much more likely to develop cancer. A human coffee drinker would need to consume 35,000 cups of regular coffee every single day to face the same risk.

The L.A. Times reports that the Office of Environmental Health Hazard Assessment (OEHHA) determined that coffee did not pose a significant risk to consumers and is seeking to reverse the labeling requirement. OEHHA announced a Thursday hearing to propose an update to the regulations that would clarify “exposures to Proposition 65 listed chemicals in coffee that are produced as part of and inherent in the processes of roasting coffee beans and brewing coffee pose no significant risk of cancer.”

Other groups have similarly found no connection between coffee and cancer in human beings. The American Institute for Cancer Research (AICR), for example, wrote in February that while “acrylamide increases risk for lab animals, no links have been established between acrylamide in food and cancer risk for humans as research is inconclusive.” AICR added that the topic of whether or not coffee is linked to cancer “is a well-studied one.”

Bonus links: Simple coffee is not the only part of one’s morning routine that has faced scrutiny from regulators. Coffee additives and accessories like sweetener, plant-based milk, and straws (for the cold brew fans) have been the subject of a legal battle or two at some point.

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Revoking Ex-CIA Chief John Brennan’s Security Clearance Is Both Good and Bad News

John BrennanPresident Donald Trump has revoked the security clearance of former CIA Director John Brennan.

In a statement, Trump accused Brennan of leveraging his “status as a former high-ranking official with access to highly sensitive information to make a series of unfounded and outrageous allegations—wild outbursts on the internet and television—about this administration.” Trump added that “Mr. Brennan’s lying and recent conduct, characterized by increasingly frenzied commentary, is wholly inconsistent with access to the nation’s most closely held secrets and facilitates the very aim of our adversaries, which is to sow division and chaos.”

Which is to say, Trump doesn’t like Brennan’s very vocal criticism of him. The president told The Wall Street Journal he holds Brennan largely responsible for the special investigation to determine the extent of Russian meddling in the 2016 presidential election and whether anybody in Trump’s orbit was involved.

Let us not weep much over Brennan’s fate. As director of the CIA, Brennan defended terrible practices such as torture and extrajudicial drone assassinations. Under him, the CIA secretly snooped on Senate Intelligence Committee staff who were researching and producing a report critical of the CIA’s use of torture in interrogations of terrorism suspects during the wars in Iraq and Afghanistan. Then Brennan played dumb about it. And then nothing happened. Brennan is neither the hero of this story nor a victim, and he is probably still going to do just fine as a talking head on the news.

Sadly, not very many people cared about Brennan’s behavior in connection with the Senate torture report at the time, which makes Trump’s inclusion of it as a justification in his statement a bit unexpected. Sen. Rand Paul (R-Ky.), who is encouraging Trump to revoke the security clearances of former officials and who filibustered Brennan’s appointment as CIA director to highlight the secret use of drones by Barack Obama’s administration, certainly knows all about Brennan’s background. Other Republicans, however, were hardly big supporters of the torture report, and the Trump administration apparently wants nothing to do with the issue.

There is little about Brennan’s actual behavior as CIA director that Trump would disagree with, so let’s not play dumb about Trump’s motivation in revoking his security clearance or those of other potential targets. It’s obviously a way of punishing critics within the national security and intelligence community whom Trump loathes (and who loathe him in return).

Does the motive matter? Trump, for his own reasons, is punishing former officials whose behavior may be detestable on other grounds. Or even possibly illegal: One of Trump’s targets is form National Intelligence Director James Clapper, who lied to a Senate panel about the existence of the National Security Agency’s massive domestic surveillance program.

Let’s not fall for a false choice. We can welcome the outcome here and still be concerned about the downstream consequences of tying security clearances to personal loyalty. This is an administration under investigation, and Trump is clearly using his powers against those who support the investigation. There’s a pretty clear message here for anyone working within the administration who may be connected to the Trump investigation or anybody currently employed by the Justice Department who may be involved: If you support this investigation, it could hurt your career.

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The One Oil Industry That Isn’t Under Threat

Authored by Nick Cunningham via Oilprice.com,

Peak oil demand might be near, but the consumption of oil for plastics will keep demand elevated for decades. Indeed, the IEA has said that plastics and other petrochemicals are the only sector in which oil consumption could continue to grow well into the 2030s.

Rising plastic consumption is driven by population growth, higher median incomes and urbanization. Plastic production and consumption has absolutely skyrocketed over the last two decades and the growth in emerging economies such as China and India will ensure that consumption continues on its steep upward trajectory.

While there are multiple feedstocks for plastics, solvents and other derivatives, the two main feedstocks are ethane and naptha, which come from natural gas and crude oil.

Oil demand in the transportation sector is expected to peak, and while there is a great deal of disagreement over when we might arrive at that date, many forecasts converge at around the 2030s as the most likely period. But long before then, oil demand for transportation will begin to slow as more and more electric vehicles cut into the market share of the internal combustion engine.

With oil demand in transit slowing, petrochemicals take on a larger role. Over the next two decades, petrochemicals could account for the largest portion of oil demand growth, and by 2035, petrochemicals will “account for almost all growth” by 2035, according to a new report from Wood Mackenzie. Surging petrochemical production and consumption largely comes down to plastics.

To be sure, the ghastly levels of plastic in the world’s oceans and waterways have sparked a nascent movement to ban plastic, at least in some form. Starbucks made headlines when it recently announced plans to phase out plastic straws by 2020. In their place, Starbucks will use a recyclable strawless lid and alternative materials for straws. The company also said it would spend $10 million to develop compostable cups.

Meanwhile, governments are also slowly beginning to target plastic. States and municipalities have placed taxes on plastic bags at the checkout counter, or banned them altogether. Europe is mulling a ban on plastic bags.

“However, in their current form, these decisions are likely to have only a marginal impact,” Bank of America Merrill Lynch wrote in an August 3 research note. “While a clear risk to our view, we do not see enough support for recycling and alternatives for now to significantly move the needle on petrochemical oil demand.”

Consumption is rising because plastic is extremely cheap, so finding alternatives is tricky. “Plastics are incredibly efficient and cost effective and finding alternative solutions for their myriad applications and benefits is not easy. It’s also going to be more expensive and few want to incur the burden of higher costs,” Wood Mackenzie wrote.

“The aspirations to curb plastics is long on intentions and short solutions.” There are a variety of bio-based alternatives that companies are exploring, but “plastics are just too efficient to be easily replaced,” WoodMac concluded.

WoodMac noted a few upsides to plastics, including reduced food spoilage, reduced transit costs and fuel consumption. “If plastic food packaging is banned, spoilage increases and this will lead to more land, water, pesticides, equipment and so on being consumed. In the end, is this better for the environment?” Paper is often cited as an alternative to plastic, but paper production has a larger carbon impact than plastic, WoodMac says.

Still, a shockingly low percentage of plastic is recycled. According to Bank of America Merrill Lynch, packaging accounts for about 36 percent of plastic production. But only 14 percent of plastic in packaging is recycled, with the rest either incinerated, littered or sent to a landfill. Sorting is a big issue because different materials need to be processed in different ways. Meanwhile, as the volume of plastic in individual packaging is reduced, it becomes less profitable to recycle. This practice, known as “lightweighting,” actually leads to reduced recycling rates. Plus, plastic replete with food and drink is too dirty to recycle and ends up discarded into a landfill.

Overall, oil and natural gas demand for the production and use of plastic is set to rise substantially in the years ahead, although prices will influence the rate of growth. “It is important to mention that recycling will also be impacted by oil prices. High oil prices lead to high chemical prices, incentivising recycling,” WoodMac wrote. “Low oil prices result in lower virgin [plastic] prices making it difficult for recycled products to remain economically viable.”

Ironically, EVs could keep plastic consumption aloft. EVs could lead to a peak in oil demand and potentially push the oil market into decline. But that could translate into a structural decline in prices as demand in transportation steadily falls. Cheap oil, in turn, may keep demand elevated in the petrochemical sector, boxing out alternatives to plastic.

It’s a tough nut to crack. But any campaign to definitively break the fossil fuel addiction is going to have to systematically include a colossal effort to wean the global economy off plastic. As of now, it’s hard to envision. The conundrum of plastic makes the campaign for electric vehicles look easy by comparison.

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“Virtually Everybody Knew This Was Coming”

Was it Turkey’s “executive presidency” and its unwillingness to hike rates in the face of soaring inflation? Or maybe the record global debt accumulated over the past decade? Maybe the artificially low interest rates? Or perhaps it was the pervasive current account deficits amid easy outside capital. How about the rapid slowdown in China, its escalating trade war with the US, and the Yuan devaluation? Or perhaps it’s just the rising US interest rates and global quantitative tightening soaking up billions in excess liquidity?

However one justifies the current emerging market crisis, one thing is clear “virtually everybody knew this was coming.” At least that’s the common theme according to SocGen’s Albert Edwards, who after an extended absence has returned, with a new note looking at the turmoil gripping the EM sector. It’s hardly new territory for the SocGen strategist, who prior to his current role, was most famous for his correct observations on the Asian Financial Crisis of 1997.

Fast forward some 21 years, and having previously everything the world is currently going through, Edwards believes the current turmoil boils down to two things: the Fed’s ongoing tightening – a point we discussed earlier this week in “Forget About Turkey: Asia Is The Elephant In The Room” – and China’s rapid devaluation. And, as Nedbank noted previously, it’s about much more than just Turkey, which is merely the symptomatic “tip of the iceberg.”  Here’s Edwards’ take on where we stand:

Many commentators have thought for some time that Turkey was a macro-accident waiting to happen. But the key issue is not Turkey’s idiosyncratic macro problems. The unfolding crisis in EM is the direct result of Fed tightening and the strong dollar. The Fed always raises rates until something breaks. But Turkey breaking will not be enough to derail this Fed’s tightening mission. But what is the significance of China’s ongoing devaluation in the face of rapidly weakening growth and trade tensions? Is that also playing a role in draining global liquidity from the financial markets?

And speaking of Turkey, nothing that is taking place now should be a surprise: after all, until the recent diplomatic spat, all the same trends were in place – sliding currency, rising inflation, surging USD-denominated debt, gaping current account deficit…. In fact, if one did not see the Turkey crisis, they should probably look for a job outside of finance (like this Barclays bond trader for example). This is how SocGen’s Alvin Tan summed up the current crisis in Turkey:

“A textbook currency crisis is unfolding in Turkey. Large and widening current account deficit, check. Growing foreign currency debt, check. High and rising inflation, check. Constrained monetary policymaking, check. Just as King Canute could not stem the waters by ordering the tide to stop, a country with a 6% current account deficit and 15% inflation will be powerless to stop its bonds and currency sliding without hiking interest rates and/or restricting capital outflows. The triggers may be unique, but the crisis in Turkey is all too familiar, and the required policy response is too.”

What’s more, Edwards says that in the same way that the Asian crisis and the subsequent 1994 Mexican Peso (Tequila) crisis were wholly predictable, so too was this crisis, even though Turkey’s has a unique vulnerability has stood head and shoulders above other EM countries for some time, the same one we discussed in “16 Billion Reasons Why Turkey’s Currency Crisis Will Become A Debt Crisis.”

As we first noted yesterday, Edwards echoes that “Turkey has discovered that high and rising foreign-denominated debt never sits well with a huge current account deficit and a reluctance to raise interest rates.”

And while there is no easy way out for Turkey, especially with some $16 billion in in USD-denominated debt maturing by the end of 2019 and an economy in which rate hikes are forbidden…

… in the bigger picture this is not about Turkey or even EM. It is – as Edwards points out – “as always, about the Fed. But what is China’s role in all this? Are we missing something important in focusing too much on the Fed and the US dollar?”

Edwards answers these questions, and start by focusing on Turkey, not because of some obsession but because the country truly combines all the worst possible aspects of a distressed emerging market nation: not only the soaring foreign-denominated debt… 

… but also that the current account deficit has remained stuck at 6% of GDP. And as an added kicker, there is a cartoonish self-appointed dictator to boot.

In this context, Edwards writes that “when you are relying on the “kindness of strangers”: to fund this deficit, it is best not to try and invent a new form of economics in which the higher interest rates needed to restrain a rampant credit bubble and defend the currency are deemed politically unacceptable.“

Alas, that is precisely what Erdogan has been doing, and not just for the past few years, but for over a decade. Meanwhile, the unfolding EM crisis has been building up for years, and just as investors ignored the naysayers in the run-up to the Global Financial Crisis (GFC), they have ignored the IMF and BIS, who have been cautioning for some years about the explosive build-up in EM debt and especially dollar-denominated debt (see charts below).

Edwards makes some further points on the ticking time bomb that is growing foreign debt ownership for any EM nation:

According to the BIS, total dollar-denominated debt outside the U.S. reached $10.7 trillion in the first quarter of 2017, and about a third of this debt is owed by the EM nonfinancial sector. EM specialists, the Institute of International Finance (IIF), have also warned about this build-up in EM foreign-denominated debt. They too note that the EM corporate sector has been leading the explosion of debt, with Turkey standing out for the increase in its exposure since the GFC (see charts below).

Turkey has never managed to escape membership of “The Fragile Five” EM country club. These, the most macro-vulnerable of EM countries, wobbled badly during the 2013 Taper Tantrum when the then Fed Chair Bernanke floated the idea of Quantitative Tightening. Yet the other members of “The Fragile Five”, Brazil, South Africa, Indonesia and India, have to a greater (Indonesia) or lesser (South Africa) extent shuffled away from their perilous situation, leaving Turkey as the standout accident waiting to happen.

But did these charts just now appear? Was the Turkish crisis as much a surprise as the collapse in the Turkish Lira would make it seem? Not at all, but there was always the Fed’s soothing promise to never allow rates to rise to fast that let a generation of EM “experts” go to bed at night, certain of the knowledge they would see their carry trades implode in the middle of the night. That has now changed. Here’s Albert: 

Let’s face it: virtually everybody knew this was coming. But in the frantic QE-inspired hunt for yield, no-one cared. And this is always the problem while liquidity is washing through the financial markets because of loose money polices (usually centred around the Fed).

It’s not just that the Fed which set the ticking time bomb below the entire emerging market: it’s also the certainty of the bulls that nothing bad could ever again happen, as “almost no-one is interested in heeding the pessimists and positioning of the inevitable financial market blow-up when eventually excessively loose monetary policy is belatedly tightened” Edwards laments.

Investors, drunk on the elixir of free money, think the good times will roll on forever. And even if they are cautious, a few quarters of underperformance usually invites either capitulation or being fired. With few exceptions, being too early with a bear call is usually a career ending decision. Better to stay in the crowd, remain fully invested and go over the cliff with the herd.

But besides complacent investor behavior, the Fed’s policies had a far greater impact on something even more important: dollar liquidity.

While US rates were low and the dollar was weak, the global carry-trade was a “no-brainer” (borrowing from US$ and investing in EM bonds). Then, as this year began, the dollar resumed its upward march after a 2017 pause, fuelled both by widening interest differentials in favour of the US and President Trump’s belligerent tariff talk. This has been a key ingredient in the stress on EM, because of their huge exposure to dollar-denominated debt.

The so-called “dollar shortage” has become a hot topic as EM companies scramble to unwind their dollar debt. Indeed, Raoul Pal, the keynote speaker in our January London 2017 Conference spent virtually his entire presentation talking about the coming EM crisis and the dollar shortage. But extreme long dollar positioning and a series of dovish Fed rate hikes took the steam out of the late-2016 dollar surge, and its further ascent was postponed until this year. But make no mistake, what we are seeing is exactly what Raoul predicted “a disorderly unwind of the global carry trade.”

Here Edwards repeats one of our favorite sayings, namely that the key for most commentators on whether the risk dominoes will continue to fall is the Fed tightening cycle. “To repeat: 10 of the last 13 Fed tightening cycles have ended in recession.”

Of course, no-one knows how much tightening will cause a recession this time around, or perhaps nobody really cares, because after a decade of doves in the Fed, few think that Fed will follow up its hawkish comments with the rate hikes it wants to deliver, especially if there is a market crash in the process. To Edwards, “part of this is baggage from the Bernanke and Yellen Feds who consistently over-promised and under-delivered.”

But many commentators, including myself, think that the Powell Fed will deliver rate hikes and that the strike price for the Powell equity put is far lower that it was for Greenspan/Bernanke/Yellen (ie, how much equity market weakness is the Fed prepared to tolerate before cutting rates). Powell is not one to freely allow the equity tail to wag the policy dog.

To be sure, it’s hardly rocket science to blame convulsing emerging markets on Fed policy, US interest rates, and a strong dollar. What else can there be, or as Edwards asks, “apart from Turkey-specific issues, has there been anything else that has triggered the immediate EM crisis that we should be watching closely?”

The answer to that is yes, China.

As we first discussed earlier this week, economic data reported by China has been progressively weaker culminating in this week’s abysmal data dump which missed across the board.

Even in the context of recent months the recently released July data were shockingly weak. Commenting on the Chinese slowdown, SocGen’s Wei Yao said that “in July, retail sales growth slid from 9.0% to 8.8%, or from 7.0% to 6.5% in real terms. In particular, retail sales of autos remained in contraction (-2.0%) and overall car sales dropped by 4.2%.” (see chart below, where I find it really is surprising how quickly REAL retail sales growth has decelerated).

Wei continues “Worse, there are signs that the labour market is starting to be affected by the economic slowdown. The surveyed unemployment rate edged up from 4.8% in July to 5.1%, a return to the March level. This was probably the most alarming data in July for policymakers.”

Edwards then shows the two charts we used in our latest observations on China’s ongoing credit impulse slowdown, which is taking place despite solid new loan creation, largely as a result of the ongoing collapse in China’s shadow banking sector.

But it’s what’s happen on the currency front that may be most interesting: according to Wei, “the central bank sent on 3 August the clearest signal so far of its dislike of large currency devaluation, as it re-introduced the 20% required reserve ratio on onshore currency derivative trading, thus making shorting the renminbi more expensive. This action taken at the time of still manageable capital outflows confirms our long-held view that devaluing the renminbi is not a tool that the Chinese government is willing to use lightly.”

Notwithstanding one’s opinions about whether the PBOC is or isn’t actively devaluting, the renminbi (RMB) is declining at an unusually fast pace compared to recent history, and according to Edwards, “this can’t just be market-related; if the Chinese authorities have moved into easing mode and begun lowering interest rates the currency will inevitably fall” and continues:

I certainly have been surprised by the pace of the renminbi decline since mid-year. At the time of writing the offshore rate is RMb6.95, only a tad above its early 2017 lows. In a few short weeks, the renminbi has lost all of its 18 months of gains, which in turn saw it recapture virtually all of its post Aug 2015 devaluation losses (see charts below).

Here Edwards highlights one notable difference from the 2015 devaluation: the speed with which the renminbi has tumbled, and has kept pace with other regional currencies, perhaps thanks to China’s relatively new FX basket.

What is significant to me is that the behaviour of the RMB seems very different now to that around the time of the Aug 2015 devaluation. We were writing then that the Abe-inspired slump in the yen had dragged down other regional Asian currencies (especially during H1 2015 see chart below), and that ultimately the Chinese authorities would be ‘forced’ to participate in a competitive devaluation – albeit grudgingly. The situation was not dissimilar in the run-up to the 1997 Asian crisis, which also had mega-yen weakness as a trigger.

One can see from the chart above the sharp downward move in the Korean won and the JPM EM FX Index before China devalued in August 2015, and that even after the devaluation the RMB declined in a much more subdued manner than its competing currencies.

Contrast that with the more recent plunge in the RMB, which is every bit as rapid as other regional currencies, if not more so. Kit Juckes has even just shouted to me from the other side the room that the RMB might be leading the way down in the region.

Which bring us to the conclusion, and the question which Edwards believes no-one is asking: is the entire house of Emerging Market cards about to topple, and is China – the dynamo behind the world’s EM (and DM) growth – losing control of its economy and using the RMB as a cushion?

“No-one is asking this question because we have got so used to the China naysayers (such as myself) being wrong that we dismiss their worries out of hand nowadays”, Edwards surmises. 

And in the very next sentence, he leave with some ominous words: “that is the same complacency that we saw during the run-up to the 2007 financial crisis and indeed in the run-up to the current Turkish crisis, which also defied the bears for so long until now.“

Maybe, or maybe like BMO’s Ian Lyngen wrote yesterday, the tightening is almost over, inflation be damned – after all, the Fed has repeatedly admitted that inflation is a “mystery” to its Econ PhD inhabitants – and not only is quantitative tightening set to end, but the next QE is on deck as soon as one year from today.

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Gary Johnson: ‘This Is Conceivably About Being the Swing Vote in the Senate’

Gary Johnson ||| Roberto E. Rosales/ZUMA Press/NewscomGary Johnson today finally made the official announcement that he is running for the U.S. Senate in New Mexico as a Libertarian. Now the two-time former governor of the state and two-time former Libertarian Party candidate for president has nine weeks to take on overwhelming front-runner Sen. Martin Heidrich (D) and novice Republican nominee Mick Rich.

In a phone interview yesterday, Johnson acknowledged that he is a “long shot” to win a three-way race in a heavily Democratic state. He said Rich seemed determined to stay in the race when the two men talked, but Johnson saw some cause for optimism in Heinrich’s soft numbers and the swiftness with which the incumbent lashed out at the Libertarian when the news broke. “I don’t know if Champagne shouldn’t be popped right now,” Johnson said.

While the idea of running for the Senate “came as a complete surprise” to Johnson just five weeks ago, after years of steadfastly ruling out another political run of any kind, the candidate says he’s relishing the opportunity to talk about the national debt (“I’d be the number-one deficit hawk”), free trade, anti-interventionism, and President Donald Trump’s immigration policies.

A first advertisement by the pro-Johnson Elect Liberty PAC, run by his former and presumed future campaign manager Ron Nielson, has been released:

And for the charges already cropping up that he could play “spoiler” to the Democrats’ dream of retaking control of the Senate, Johnson says bring it on, dreaming of what a Libertarian swing vote could mean. “Potentially,” he said, “I could be the U.S. senator from New Mexico who actually has a say in the direction this country ends up taking.”

The following is a lightly edited transcript of our conversation:

Reason: Let’s talk through how this happened. If I’m not mistaken, five months ago you told…Nick Gillespie that absolutely not would you ever get involved in politics again: “No, I’m done, I’m done with elected political office.” If we can’t trust your word about such important matters, how can we trust you to cut taxes once in office? What happened?

Gary Johnson: Well, so, I would just suggest that your timeline is a little off, that as recently as five weeks [ago], I would have said that…. So this came as a complete surprise—me, in Las Vegas, complete surprise. And everything I’m about to tell you is, was, [former L.P. Senate nominee] Aubrey Dunn‘s idea.

So there is no question in New Mexico that Martin Heinrich was going to win this race. No ifs, ands, or buts about it. But what was surprising was that [Dunn] had [done] some polling and discovered that Martin Heinrich’s numbers are really weak; there aren’t that many people that are committed to voting for him. And if Aubrey Dunn would have been elected to the U.S. Senate—which wasn’t going to happen, but if he would have been—arguably he would have been maybe the most powerful, or certainly among the most powerful, senators in the U.S. Senate, because he would have been the swing vote, and he would have been an independent Libertarian.

So that’s the lure here. This isn’t about bellying up to the trough; this is conceivably about being the swing vote in the Senate and deciding what’s good and what’s bad. And I have to tell you, this being laid on my plate in Las Vegas, anyone with this laid on their plate would seriously have to consider the offer, which in this case was, “Hey, I’m going to drop out, and the Libertarian Party of New Mexico can name you as my replacement.” So a couple of weeks ago, he announced that he was dropping out, and that he was imploring me to enter the race, and that’s what’s happened.

It’s not so much about [Heinrich]; it’s about what is at stake, and in this case, [that’s] balancing the federal budget. Nobody’s talking about the deficit! Yeah, lower taxes are a good thing, reducing the size and scope of government…gee, it doesn’t necessarily seem like he’s doing that, and by that I mean Trump, and the endless wars, and free trade. I’m not intending to be a wallflower if I actually get this opportunity to go to Washington. I could be, you know, a topic of [George] Stephanopoulos’s talk crew every Sunday morning: “Where’s Johnson on this stuff?”

Reason: So, you had said in your public comments up until now that you’re taking it seriously, but you only want to get in if you can win. Can you really win a three-way race in a very strongly Democratic state?

Gary Johnson: Deep question. I’m the underdog, no ifs, ands, or buts. I’m the underdog. We’ll see how much money we raise, and by “money we raise,” you know, you don’t have to outraise your opponent, you’ve got to have a certain parity, and we think that’s going to happen. And if that happens, it’ll be interesting.

And three-way race, yeah, it becomes more difficult in a three-way race. You hit that on the head also. And right now, Mick Rich, I think, is really upset. I mean, he’s pissed off. So at the moment, he’s going to…redouble his efforts; he’s going to win. That’s according to Mick Rich.

Reason: Have you reached out to him? I mean, I can’t help but notice, he’s sort of in the same career profile as yours, right? Like he’s—

Gary Johnson: Yeah, but it kind of ends there. I mean, he took it off his website, [but] on his website, he said his number-one priority was [keeping] illegal drugs from crossing the border. And I’ve got to tell you, that’s a disconnect. That’s just a non-issue. Are there drugs coming across the border? I’m sure there are. To the extent that it should be his number-one priority?…

I did have a conversation with him, and the one takeaway I wanted from the conversation was I didn’t want to make him mad; I just didn’t want to make him mad. And I accomplished that. During that conversation, he really, genuinely, expressed to me that he was going to win…

Reason: Last time you and I were in close contact, which is sort of the end of 2016, the last two months there were not a happy time for you on the campaign trail. You were eagerly looking forward to not reading about Gary Johnson, to not looking at Twitter, to getting up on a bike at 10,000 feet above sea level, doing God knows what kind of terrible athletic things. Are you enthusiastic about running? Are you in it to win it, not just as a concept, but are you a happy warrior in there, and motivated to get out on the trail, given how much it wasn’t always fun last time?

Gary Johnson: Well, you’ve hit on the other aspect of this, which is, “Oh my gosh, this is going to be a nine-week race.” I can do anything for nine weeks!

That was another criticism that I had about [a potential] Senate race: Number one, going up to the trough, number two…you’re looking at a year and a half of your life to campaign for that office. I think this will be terribly exciting; this came as a complete surprise, but it’s a nine-week campaign. Oh my gosh. Oh my gosh.

So, yeah, I think your assessment about what happened in the presidential race is accurate. But…for me, that was the end of like an eight-year, 10-year endeavor, going back a long way.

Reason: So if you were to win this, at a time when currently the split in the Senate is 51/49 Republicans, and the country is feeling pretty anti-Republican, though the Senate math is pretty dicey for Democrats, you could conceivably be the difference between a Republican-controlled or Democratic-controlled Senate. You would be…

Gary Johnson: Exactly!

Reason: …in other words, the most hated man in all of the United States, politically.

Gary Johnson: Or, maybe not, though, depending on what came out of that most hated man’s mouth.

Reason: Talk us through the prospects of being that person, both in terms of the opportunity to be hated, and the opportunity, as you see it, to do something different.

Gary Johnson: Well, talking about these issues, being a skeptic when it comes to our military interventions, genuine free trade being a solution, the size and scope [of government]. Nobody’s talking about the deficit; I’d be the number-one deficit hawk. I’d be in there fighting to reduce spending in meaningful ways, and that would mean reform of Medicaid and Medicare….

So I don’t know, am I going to be the most hated guy, or am I going to be the future of politics if I’m elected?

Reason: Talk about that future a little bit. This is obviously a chance for the Libertarian Party to have a shot at a Senate seat, which it has never really come close to. Talk about how this fits in with the growth of the success of the Libertarian Party, and how that motivates what you are doing right now.

Gary Johnson: Well, it’s an unparalleled opportunity for Libertarians. It’s an unparalleled opportunity for people that are independent, registered independent—which, of course, is the largest political affiliation in the country today. But really, if you can just drill into that a little bit, people I think discover that, “Oh my gosh, I’m independent, but I’m probably leaning Libertarian more than anything else.”

And I have used broad brush strokes to declare…what a Libertarian is. Which—I’ve gotten in big trouble with the Libertarians beccause “it’s not about that at all,” but I’m going to say it here too—is, “Look, I’m running as a Libertarian; this is the opportunity that has presented itself. But I’m really an independent. We’re all independent when it comes to philosophy. Hands down, I’m closer to being a Libertarian than any of the other two parties, but I don’t toe a line either. I’m an independent. We’re all independents. We really are.…

Reason: The bad September 2016 that you had, part of that, as we have discussed previously, was that was the month that Democrats freaked out about you. Tom Steyer threw a bunch of money into the campaign. Suddenly there was a barrage of very similar-sounding headlines about what a disaster you would be for the environment and suchlike. I’ll just throw a couple of headlines out that I just found five minutes ago or so. One is “Gary Johnson, Professional Spoiler, Jumps Into New Mexico Senate Race“; that’s New York magazine. And Esquire says, “Stoplight Skeptic Gary Johnson Just Decided That the Senate Is in Need of a Libertarian Loon.” You’re going to see a lot of that. You ready for that? You looking forward to that?

Gary Johnson: Yeah, well they’re dealing with New Mexico now. So New Mexico did elect me two times as governor, and I sowed a lot of seeds. So we’ll see how it turns out. I mean, hey, I don’t want to in any way diminish the long-shot aspect of this, but I don’t know if that’s wise. I don’t know if Champagne shouldn’t be popped right now, based on what’s happening.

Reason: Some Libertarian Party activists who are, for the most part, pretty excited about this news, have nevertheless back-channeled to me concern that, “Hey, this sounds like Ron Nielson’s idea. This doesn’t sound like Gary Johnson’s idea.” And there have been concerns over the years that too much of the strategy from your camp comes from him and not you. What do you say to those people about those specific concerns?

Gary Johnson: Well, in this case, this was Aubrey Dunn’s idea; this was really Aubrey Dunn’s idea.

Ron and I have had a great relationship; Ron and I now are on a 25-year relationship. I leave the campaign to Ron, but the messaging is me; he leaves that to me….I can’t say enough about Ron Nielson, and I think the guy’s a genius. I come back to the fact that Hillary and Trump each had [$1.8 billion], and we had $12 million. And, you know, I think Ron spent two solid weeks without a minute of sleep, and that was Ron. I mean, that’s what we all did. But Ron’s cooking this up and I’m the puppet? I don’t know. No, I don’t think so.

Reason: So going forward now, you’ve got a nine-week sprint ahead of you. What are some milestones? What are some big things that need to happen? What is the rabbit that you want to pull out of your hat?

Gary Johnson: Well, I think that money is the key….Don’t have to have more money; less is okay, but as long as it’s enough to actually launch into this, that’s really the key. And we’ll see how that goes….

Reason: And just straight up to the “spoiler” charge, which you’re going to hear nonstop from Democrats…How do you respond specifically to that spoiler charge now?

Gary Johnson: Well, I’m going to embrace whatever it is that they’ve got to call me; I’m just going to embrace it and go from there. You can call me anything you want, but here’s what’s at stake, and you want to call that a spoiler? I don’t know. I call that having a voice. I call that as a way to actually express my frustration over the whole system. That’s a vote for me….

Professional spoiler? Like I said, I’ll embrace it, whatever you want to call me. But potentially, I could be the U.S. Senator from New Mexico who actually has a say in the direction this country ends up taking.

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Notes From The Brink: Reasons Behind The Crypto Bear Market

Authored by Marie Huillet via CoinTelegraph.com,

Crypto is notoriously a “tough neighbourhood,” as even evergreen Bitcoin bull Tom Lee has put it. After a week in which double-digit losses wreaked havoc on many high-profile cryptos, and Bitcoin(BTC) momentarily fell through the $6,000 support, pitiless bearish sentiment has been circling, with some accusing the top coin of being “exhibit A” in a “permanently impaired or even game‐over” market.

image courtesy of CoinTelegraph

While Bitcoin may have posted 2018 lows, Ethereum (ETH) also plummeted to an eleven-month low to trade at around $254, falling by as much as 20 percent on August 14 alone. That same day, total market cap collapsed by $13.2 billion — back to late November 2017 levels.

VC investor Tim Draper told Cointelegraph in an email that these vertiginous swings are exactly “why [he] made [his] prediction for 2022:”

“The long term trend is way up, but I expect many short-term swings in the market along the way. Fundamentally, the world needs Bitcoin, and that demand will only increase in the coming years as Bitcoin finds more and more uses and applications.”

Even more unflappable, “Bitcoin Jesus” Roger Ver, told us:

“I’m not sure what crash you are talking about. BTC is up 58% for the last year, and 1048% for the last two years. That feels like the opposite of a crash to me.”

As both of these remarks imply, the week’s cataclysm had in fact disproportionately impacted altcoins, leaving BTC relatively unscathed, as Coin360 data shows:  

Crypto market visualization. 15 June – 15 August historical data. Source: Coin360.

BTC dominance — or Bitcoin’s percentage of total crypto market cap — continues to break 2018 highs. As of press time it is at 53.3 percent, levels not seen since mid December 2017, just before the coin hit industry records to trade at $20,000.  

With alts undeniably ravaged, others have been puzzling why — even at a time of international currency crises, Bitcoin itself is yet to rally — this, surely, should be a bullish time for the top crypto? However, Bitcoin has notably failed to hold a recent breakthrough in late July when it was trading just shy of $8,400.

Bitcoin’s brief spike upwards in late July, since which it has tumbled. Source: Bitcoin Price Index

So — even if today’s flush of green has been a sight for your sore eyes, you’d be forgiven for continuing to feel skittish.

Is there method to this madness? Cointelegraph examines five of the most popular explanations for the week’s tumult to find out.

1. US Regulators Dithering Over Bitcoin ETF Approval

E-T-F — three letters anyone who’s been plugged in to the cryptosphere has probably had swirling around their head in recent weeks.

CryptoCompare CEO Charles Hayter yesterday proposed that the week’s market decline was a ricochet off the back of U.S. regulators’ recent decision to shelve a high-profile application for Bitcoin exchange-traded-fund (ETF) until September. He said:

“[This has been] momentum-based selling following the ETF kickback and the usual gyrations of a market in a depressed mode.”

Hussein Sayed, chief market strategist at FXTM, meanwhile suggested that:

“If an ETF doesn’t see the light in the coming weeks expect to see a further selloff, as it suggests regulators will continue to fight against bringing cryptocurrencies into the mainstream.”

If you’ve heard these three letters too many times by now, yet still can’t account for their mysterious powers to stir markets, let’s unpack this.

ETF stands for an exchange-traded-fund, which is a type of mutual investment fund that divides ownership of an underlying asset — a commodity, an index, bonds, or a basket of assets —  into shares.

The fund tracks the value of the asset(s) and is traded on exchanges, with shareholders entitled to any positive returns. A Bitcoin ETF can therefore offer an indirect way of purchasing BTC, where the investor only holds the corresponding security without having to hold the actual coin.

Crypto-based ETFs have long been discussed as a potential “holy grail” for the crypto industry that would herald major Wall Street adoption and allow for broader investor participation. They’re viewed by some as a less risky bet than investing directly in crypto on spot markets.

But as a marketable security that requires oversight by government authorities, their current regulatory status remains unclear. Several recent high-profile cases have demonstrated just how price-impactful ETF-related announcements from the U.S. Securities and Exchange Commission (SEC) can be.

First, in mid-July, a market rally kicked off, bolstered by news that the $6.3 trillion asset management heavyweight BlackRock –– the world’s largest provider of ETFs –– was beginning to assess potential involvement in Bitcoin.

But just two weeks later, the markets turned, taking a sharp tumble in response to news that the high-profile Winklevoss twins’ Bitcoin ETF appeal had been denied, with a dizzying $12 billion wiped from total market capitalization.

At the beginning of August, the SEC delayed its decision over another Bitcoin ETF application –– this time filed by VanEck & SolidX for trading on the Chicago Board Options Exchange (CBOE). Notably, instead of proposing a BTC-futures-based fund, T plans to go with a physically-backed model involving owning actual BTC. The firm also prices the fund’s shares at $200,000 a pop, eyeing major institutional players.

The SEC’s fickle position has dampened hopes –– even the likes of Charlie Shrem had expected that regulators would have been more likely to grant a stalwart mainstream institution such as CBOE the right to trade an ETF, if not the Winklevoss’ Gemini exchange. EToro analyst Matthew Newton told British newspaper The Independent:

“A green light for the Bitcoin ETF would fire the starting gun on a race among institutional investors to cash-in on this new product, so the market is rightly frustrated by the delay to the decision.”

And –– as The Independent notes –– it’s not just “digital gold” that sees its price fortunes tied to these fabled three letters: the first ever ETF to be backed by gold, which launched in 2003, is reportedly credited for skyrocketing the precious metal’s price up by over 300 per cent in the following decade.

2. ICO Sell-Off: Developers Are Liquidating Funds Raised Through Token Sales

This theory “soft-forks” three ways.

One

Bloomberg has suggested that developers of Initial Coin Offerings (ICO) are now cashing their holdings into fiat that they can then spend on developing their products. Bearing in mind that most token initiatives are ECR20 projects built on the Ethereum (ETH) blockchain with funds raised in ETH, this could account for the recent shattering price weakness in the Ethereum market. Biswa Das of crypto hedge fund BloomWater Capital told Bloomberg:

“These startups [raised] a lot of funds but they don’t have treasury management or enough cash management experience, so they’re selling too early and causing a lot of pressure in the market. It was fine last year but right now the the market is so fragile that it causes a lot of pressure.”

Das added that those projects that raised ETH during the market’s peak will “be most compelled to sell,” which CoinFi CEO Timothy Tam echoed when he remarked that “ICOs that raised a lot of money are really feeling a lot of pain” as the value of their crypto holdings plummets.

Bloomberg cites July figures from Autonomous Research that suggest that ICO liquidations worth around $5 billion have been driving down ETH’s price, an impact that has been “magnified due to deteriorating sentiment and low liquidity.” It also points to data from research website Santiment, which estimates that ECR20 projects “have spent over 110,000 ETH in the past 30 days.”

Back during the height of Ethereum’s allegedly ICO-driven rally in 2017, the altcoin soared to almost 32 percent dominance of the total cryptocurrency market, compared to Bitcoin’s roughly 39 percent at the time, as data from CoinMarketCap shows.

Ethereum’s burgeoning market cap share in June 2017. Source: CoinMarketCap

The turning tide in summer 2017 sparked talk of a so-called “flippening,” with some claiming that Vitalik Buterin’s brainchild would soon take the lion’s share of overall crypto market capitalization.

With Ethereum’s dominance now dipping as low as 13.5 percent August 14, Timothy Tam took the measure of fortunes as now doubly reversed, emphasizing that “the big story in the market [this week] is the huge weakness in Ethereum,” and noting that “Bitcoin has held up relatively well versus Ethereum,” even as it saw a dent in its chart against the dollar.

Ethereum co-founder Joseph Lubin in turn hit back, saying that he does not see the recent price collapse as a constraint to further growth. In a discussion with Bloomberg, Lubin attributed the market volatility to “trader types,” i.e. speculative investors, saying that it is not necessarily an indicator of underlying infrastructure enhancement:

“ … we build more fundamental infrastructure, we see a correction, and the potential gets even more impressive…we are probably two orders of magnitude bigger as a developer community than we were eight or 10 months ago.”  

Lubin added that the value surges of the past year were just another bubble like the previous “six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening.”

Two

Meanwhile, Yahoo Finance’s Jared Blikre has claimed that unconfirmed rumors from insider sources allege that the SEC is about to come out with new rules for ICOs in September. This, he said, could be fuelling “a scare that ICOs are disappearing,” but “who knows if it’s true.”

Three

The starkest version of the sell-off theory held that the “extinction-level event” for crypto assets –– which saw droves of double-digit losses among altcoins –– was a deserved comeuppance for projects that had failed to deliver on the goods. Blockstream Corp.’s Samson Mow suggested that “most cryptocurrencies have been overvalued for a very long time” –– or as financial broadcaster Max Keiser told Cointelegraph in an email:

“Crypto markets are shaking out the excess capacity of having more than 1,800 coins with no use case. Before 2017, the only reason new coins were created was to replace coins that had died. The expectation was that all non-Bitcoins would go to zero. Then 2017, and that equation was turned on its head. In 2018 we’re back to coin suicide watch for all but a few; Bitcoin, Litecoin, Monero, EOS, DASH, and a few others.”

Keiser added his Bitcoin-maximalist prediction that “by 2019, Bitcoin’s preeminence as a store of value will reassert itself and we’ll see new all-time-highs. 20 or so coins will make the cut and see new highs. The rest will go the way of virtually all software, gone and forgotten.”

The week’s carnage notably extended well beyond fledgling tokens and ECR20 projects to major contenders such as Ripple (XRP), Litecoin (LTC), EOS, and Cardano (ADA), as Coin360 historical data shows:

Crypto market visualization. 13 August – 14 August historical data. Source: Coin360.

Eyes bleeding, Digital Currency Group CEO Barry Silbert offered up a poll to gage the sentiment of the crypto twittersphere:

Out of 19,871 respondents, 73 percent thought the tumult isn’t over. But, as Fundstrat analyst Tom Lee quipped in response, the poll could likely be a “contrarian indicator”:

“Interested to see result but because crowds are influenced by price action (hence, not independent…no bottom majority probably means bottom in place.”

3. To Conquer Fear Is The Beginning Of Wisdom

This brings us to the golden thread that wove through all three versions of the sell-off theory and spins off into its own self-fulfilling spiral. EToro analyst Matthew Newton told the Express that it’s not just ICOs that are liquidating, but investors themselves that have “hit panic mode”:

“Investors seem to be increasing liquidations of their ICO holdings, with significant drops in price and increased volumes.This has had a knock-on effect on the rest of the altcoin market, with Bitcoin also momentarily dropping below $6,000 late last night. With prices hanging in the balance, emotions will be running high among traders.

Or, as Samson Mow noted, this “feels like the opposite of last year when money piled in as people felt FOMO. Now it’s piling out as they sense panic.” This theory has been echoed across the crypto space, with Blockchain Capital LLC’s Spencer Bogart alleging investor “disillusionment” with tokens and ICOs, and BKCM CEO Brian Kelly saying that “investors that were in it, and maybe caught the hype in November and December, are now panic selling out.”

ThinkCoin chief analyst Naeem Aslam shared his technical analysis with Cointelegraph in an email, suggesting that the market picture is showing signs of strained stamina in a protracted bear market:

“There are serious concerns that we may actually make another new low for the year because of the sturdy bearish sentiment […] traders have been waiting for the bull rally since early June […] but in actual reality, bears have shown their brutal strength over the bulls […] the only reason that we are seeing […] selling off so badly is that traders are losing hope of a bull run […] as long as the price keeps on having a stab at the lows of this year $5,791, we are not out of woods.”

Aslam’s email was penned during yesterday’s market respite, so he qualified his analysis to note that with Bitcoin “breaking [the August 14th] high of $6,298,” there is “a strong hope” for a bull run to continue if downward momentum stops short of forming a new 2018 low. In this scenario, the week will prove to have been a “false alarm,” he wrote. Aslam gave three key levels to keep in mind which show just how far the technicals intersect with sentiment:

“November 13th low: $5,605

October 18th low: $5,109

Psychological level: $5,000”

Although EToro’s Newton did stress that “keeping things in perspective, Bitcoin is still range-bound for now between $5,700 to $8,000 [and] in line with how it has traded over the past few months,” market panic –– as all these commentators suggest –– runs by its own logic.

Alleged despair and disillusionment also means we’re not just on coin suicide watch, but investor suicide watch, as the popular r/cryptocurrency forum on Reddit saw users on August 14 sharing helplines and site links for the US Suicide Hotline and the National Alliance on Mental Illness.

4. The Indomitable Futures Interaction Argument

We’ll keep this one short, and let you yourself judge whether or not this is a coincidence, remembering that Bitcoin was by no means the largest casualty of the week’s market havoc.

Earlier this summer, Fundstrat’s Tom Lee –– echoed by others –– had attributed the “gut wrenching” price weaknesses of Bitcoin to futures contract expirations, based on analysis of compiled data for the six expirations that have occured since CBOE launched its BTC futures contracts in December 2017.

CNBC’s Brian Kelly yesterday tweeted a graph accompanied by a statement implying that this week’s price tumble may have something to do with August 15 being the date of BTC futures expirations on CBOE:

“Today is CBOE Bitcoin Futures Expiration. This chart comes from one of the best crypto traders I know; who wishes to remain anonymous. I will call him “Pocket Full of Crypto” #bitcoin tends to recover after expiration.”

In a separate tweet, Kelly further noted that “$BTC shorts are still rising toward April highs…hmmm…,” accompanied by a second graph:

In his own comments on the week, Jared Blikre had also noted the transformational impact of futures trading on the Bitcoin space, saying that,

“I think Wall Street is gearing up for Bitcoin in a big way … but in the short term, we could have a washout, we could go down to $5,000, to $4,000, because the character of Bitcoin, the way it trades, has changed since last December’s introduction of futures.”

5. The Unexpected Fiat Interaction Argument

Blikre this week joined others in proposing what might be an apparently unusual argument for a crypto market analyst, given that many deem crypto assets’ price performance to be immunizedfrom wider economic factors and capital markets. As James Quinn, head of markets at blockchain investment advisory firm Kenetic, told Bloomberg this week:

“Correlations historically have been extremely low between cryptocurrencies and other asset classes, which is one of the reasons why there is interest in this space.”

Nonetheless, in the wider landscape, emerging market economies — the Turkish lira, the South African rand and the Indian rupee — have all tumbled against the greenback this week.

Blikre –– speaking August 14, when Bitcoin was trading 30 percent down over the three week-period –– suggested:

“30 percent is a crash right. The issue is, Bitcoin is a currency, and when we quote on our screen it’s BTC/USD, that’s a symbol. So like other currencies it trades against the US dollar. The US dollar’s on a tear, it’s up 4.5 percent this year, over the last three days it’s up 1.5 percent. That’s a big move for the dollar, and there’s not a lot of overhead resistance, so it could go even further.”

EToro analyst analyst Mati Greenspan mirrored Blikre in a tweet today, saying that “the buck is simply crushing everything in its path. He proposed that the apparent carnage “may well be a side effect” of dollar strength:

“This is the best explanation I can think of for the crypto decline given all the positive developments we’ve been seeing in the industry.”

Max Keiser for his part offered the following chart as evidence of what he termed the “damage [the] rising dollar is having around the world”:

Bloomberg notes that Bitcoin’s slide against the dollar this month is “almost as big as the Turkish lira’s 25 percent slump” –– “putting paid to the notion” –– as chief analyst at Markets.com Neil Wilson told Business Insider –– “of cryptos as a safe haven play.” Wilson added that “ultimately USD and US Treasury notes are the only real safe harbour.”

Before you arch your brows, this week has interestingly seen the exact opposite argument from renowned US economist Peter Schiff, who is credited for predicting the 2008 housing market meltdown. While it’s worth noting that Schiff is not exactly a Bitcoin bull, in his recent interview with Salon he scathingly anatomized what he considers to be an inevitable impending economic collapse in the fiat-denominated world:

“I think the U.S is in worse shape than Europe […] not that Europe and Japan are not in trouble, they are. But I just think we’re in more trouble  […] There are a lot of bubbles. The bond market is a bubble. The stock market, housing, the whole U.S. economy, really, is one gigantic bubble […] We’re going to have to deal with a lot of defaults, [and] a lot of debtors are going to go broke.”

Schiff further predicted that the Fed’s go-to solution of quantitative easing would wreak yet further havoc for the dollar. With the post-2008 bailout measures, he said, we’ve “actually compounded problems” and postponed “consequences to a later date –– we’re headed to that later date.”

Divinatory Practices

Whether you don a chartist’s hat or sift through proliferating white papers to make your investment judgements, commentators of all stripes continue to devise new strategies to interpret crypto-specific market signals.

A research group from Yale recently proposed a system intended to gage the “risk-return trade-off” of major cryptos, identifying a “strong time-series momentum effect” among major assets such as Bitcoin, Ethereum, and Ripple. Yale’s research also found a correlation between price and investor attention, which they deduced via social media and search engine trend analyses.

Fundstrat’s Tom Lee, for his part, has developed a “contrarian index” that lets investors know how “miserable” Bitcoin holders are based on current prices — dubbed the Bitcoin Misery Index (BMI) — which he launched at a time of comparable crypto market woes.

If eye-popping volatility appears –– until now –– to remain something of a paradoxical constant in the crypto space, this summer has seen significant developments, the impact of which is arguably yet to be understood.

Earlier this month, Intercontinental Exchange (ICE) –– the operator of 23 leading global exchanges including the New York Stock Exchange (NYSE) –– unveiled its plans to create a global ecosystem for digital assets that would cover the spectrum from federally regulated markets and warehousing to merchant and consumer needs.

While some have proposed this is the “biggest Bitcoin news of the year,” implying forthcoming bullish price moves as qualified custodian solutions are offered to institutional clients at scale, others propose that leverage-based financialization could hit at Bitcoin’s “algorithmically-enforced scarcity,” with adverse implications.

But –– as this latter argument notes –– this will depend on how HODLers choose to negotiate the new bridge with the traditional financial world. Until then –– we’re in for interesting times.

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Brennan Goes Nuclear After Losing Security Clearance, Pens Furious Screed In NYT

Former CIA Director John Brennan has written an op-ed in the New York Times following the Wednesday loss of his security clearance, claiming that President Trump is trying to silence him. 

Trump revoked Brennan’s clearance for what he called “unfounded and outrageous allegations” against his administration, while also announcing that the White House is evaluating whether to strip clearances from other former top officials. 

Trump later told the Wall Street Journal his decision was connected to the ongoing federal probe into alleged Russian interference in the 2016 election and allegedly collusion by his presidential campaign.

“I call it the rigged witch hunt, (it) is a sham,” Trump said in an interview with the newspaper on Wednesday. “And these people led it.”

“It’s something that had to be done,” Trump added. –Reuters

Writing in the New York Times, Brennan – who led the CIA under President Obama, called Trump’s denials of collusion with Russia “Hogwash,” and vowed not to be silenced.

“The only questions that remain are whether the collusion that took place constituted criminally liable conspiracy, whether obstruction of justice occurred to cover up any collusion or conspiracy, and how many members of ‘Trump Incorporated’ attempted to defraud the government by laundering and concealing the movement of money into their pockets,” Brennan wrote in the Times.

Mr. Trump clearly has become more desperate to protect himself and those close to him, which is why he made the politically motivated decision to revoke my security clearance in an attempt to scare into silence others who might dare to challenge him. -John Brennan

On Wednesday, Brennan tweeted that Trump’s move “should gravely worry all Americans” as it is “part of a broader effort by Mr. Trump to suppress freedom of speech & punish critics.”

“I will not relent,” he concludes…

Brennan then ran to his ‘safe space’ at MSNBC and raged hard…“I do believe that Mr. Trump decided to take this action—as he’s done with others—to try to intimidate and suppress any criticism of him or his administration,”

Following the stripping of Brennan’s clearance, Republican Senator Rand Paul of Kentucky praised the move, saying he urged Trump to do it. 

“I applaud President Trump for his revoking of John Brennan’s security clearance,” Paul said in a press release. “I urged the President to do this.”

“I filibustered Brennan’s nomination to head the CIA in 2013, and his behavior in government and out of it demonstrate why he should not be allowed near classified information,” Paul said. 

And in an op-ed for The Hill, former Trump adviser Sebastian Gorka wrote that “No one has a right to a top secret clearance,” adding: 

The argument that some are making that the president’s decision in some way infringes John Brennan’s free speech rights is, in fact, absurd. 

…

In the last few months, from his position as a paid commentator on MSNBC, John Brennan has repeatedly stated that the duly elected president of the United States is beholden to Vladimir Putin, potentially being blackmailed by him, and has gone as far as to call the president’s actions treasonous. This is a devastating charge to make, one that no other former cabinet-level political appointee has made about a sitting president. Ever. Yet, he does this without providing any evidence at all of his charge. –Sebastian Gorka

Meanwhile Trump supporters, such as Rep. Lee Zeldin, said that Brennan – who voted for a Communist for US President, “Should’ve never received the clearance in 1st place,” and that he’s “Now monetizing his position of former CIA Director w unhinged recklessness & insanity.” 

We can only imagine the op-eds, MSM rantings and #resist crowd responding en masse if and when the rest of the former Obama officials have their clearances stripped. 

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Turkey Stocks, Lira Slide After Mnuchin Threatens More Sanctions

The Lira and Turkish stocks are sliding notably after Treasury Secretary Steven Mnuchin warned that Washington is preparing more sanctions for Turkey due to the lack of progress on the release of Pastor Brunson.

Following a Turkish court’s refusal yesterday to release American pastor Andrew Brunson, Mnuchin warned at a White House cabinet meeting today that U.S. has more sanctions prepared for Turkey if Brunson isn’t quickly released.

Additionally, as Bloomberg reports, President Donald Trump said during a Cabinet meeting at the White House on Thursday that Turkey hasn’t turned out to be a great friend to the U.S., and he complained that his administration secured the release of a Turkish citizen from an unnamed country on Turkish President Recep Tayyip Erdogan’s behalf.

“We got somebody out for him,” Trump said, from “some place,” but Turkey continues to hold pastor Andrew Brunson. It’s “not right” and a “terrible thing,” he said.

The Lira is seeing the biggest dip in 3 days, erasing all overnight gains in just a few minutes…

And TUR – the MSCI Turkey ETF – is down over 3%…

Time for another conference call!!

 

 

 

 

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