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Capitol Police Arrest 575 People Protesting Trump Immigration Policies At Senate Building

The Capitol Police charged approximately 575 people with unlawfully demonstrating in the atrium of the Hart Senate Building. They are being processed on the scene and then released.

More than a thousand female protesters, joined by Democratic senators, marched two miles down Pennsylvania Avenue to protest the Trump Administration’s family detention and separation policies, and demanded the abolishment of Immigration and Customs Enforcement, ABC reports. The walk ended in the Hart Senate building, where Capitol Police arrested many of them in response to an act of civil disobedience.

Chanting “WE CARE” and “ABOLISH ICE,” the protesters are demanding Congress act to end Trump’s policies that criminalize and detain undocumented immigrants and separate detained families. ICE is a common acronym for the U.S. Immigration and Customs Enforcement agency.

Women’s March organizers were involved in today’s action, along with local D.C. advocacy groups. The rally started in Freedom Plaza at around 11 a.m and proceeded down Pennsylvania Avenue until participants reached the Capitol. Once they reached the building, women sat on the ground and waited to be carted off. Police began arresting them in groups.

Protesters walked around wearing mylar blankets similar to those being handed out to immigrant children detained and separated from their families.

“Women are outraged at the separation of families,” said Linda Sarsour, one of last year’s Women’s March Organizer. “We are outraged of all the things that are unfolding in our country.”

Democratic Sens. Ed Markey of Massachusetts, Mazie Hirono of Hawaii, Kirsten Gillibrand of New York and Richard Blumenthal of Connecticut visited the protesters to support their efforts. Sen. Tammy Duckworth was spotted in her wheelchair with her daughter in her lap.

“We are here to say we’re ready to sacrifice and we’re ready to leave our jobs, leave our families to come and take this act of civil disobedience here,” she said.

The actress Susan Sarandon made an appearance at the march, and she was arrested in the second group of protesters in the Hart Building, where 50 senators have their offices, according to Washington Post reporter Marissa Lang.

The march began near the Department of Justice, where speakers rallied supporters by sharing their experiences with immigration and calling for action. Before the march, protesters were split into four groups to review the procedures if arrested.

Congresswoman Sheila Jackson Lee of Texas called for ongoing mobilization beyond Thursday’s protest. “This is not a day event,” Lee told a crowd of protesters. “This is an everyday event.”

People showed their support through handmade signs, including one that read “Don’t have a heart of I.C.E.” Others marked “We Care” on their palms. Still other protesters wore jackets with “I really care. Do you?” painted in white on their backs, a reaction to the controversy that followed First Lady Melania Trump’s trip to the southwest to visit detained children. As she boarded a plane in Washington D.C, photographers could clearly read the message “I really don’t care. Do u?” on the back of her jacket, which reportedly retails from Zara for $39. While the First Lady took the jacket off before exiting the plane, it was widely seen as an inappropriate choice of clothing.

As women protested downstairs, senators began coming down to shake their hands and say thank you.

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Travel Shows Were Boring as Fuck, Then Came Anthony Bourdain: New at Reason

Once upon a time, travel shows were stodgy as fuck. Television tourism was populated with pleasant, proper people who strolled the Champs-Élysées or the beaches of Rio to show you how to do pleasant, proper, prepackaged things.

Until the 1990s, travel shows were mostly about watching a trusted host sniffing his way through fine wineries, meandering through Baroque Period museums, lounging around four-star hotels, and indulging in the sensual pleasures of eating familiar fare with the right fork at the right restaurant, and always with the right kind of people.

Then came Anthony Bourdain. He began every show with a parental advisory warning and was 10 times snarkier than all the other hosts put together. His punk nonchalance stuck out like a middle finger to every travel show that went before him. He savaged rival chefs by name and held in righteous contempt every culinary fad and pompous ideology that stood in the way of pure food enjoyment.

I liked him immediately.

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Impossible Burger Maker Denounces Friends of the Earth As ‘Anti-Science Fundamentalists’

ImpossibleBurgerBaileySomewhat to my surprise as a dedicated carnivore, I enjoyed a delicious Impossible Burger for the first time last November at Farmers and Distillers in Washington, D.C. The burgers have the texture and mouth feel of a beef patty. They even had some delightful, off-the-grill crunchy charred bits. I have since happily munched a couple of more times more on these vegetarian burgers that bleed.

Produced by Impossible Foods, a Silicon Valley start-up, the burgers are made of textured wheat protein, potato protein, coconut oil, and leghemoglobin, the key ingredient. Leghemoglobin is an iron-containing molecule that occurs naturally in every plant and animal. It is the abundance of this heme in animal muscles that gives meat much of its distinctive deliciousness. The heme in Impossible Burgers is derived from soybeans and produced by fermenting yeast genetically enhanced to make it.

It is apparently the fact that the leghemoglobin in Impossible Burgers is produced by, gasp, genetically enhanced yeast that has outraged Friends of the Earth (FOE) activists. Various hemoglobin molecules are ubiquitous in nature, occurring in most organisms, including bacteria, protozoa, fungi, plants, and animals. Impossible Foods checked with numerous food safety experts, who agreed that leghemoglobin is generally recognized as safe (GRAS). The company has voluntarily filed a GRAS notice with the Food and Drug Administration summarizing the safety science behind that conclusion.

Without any significant evidence, FOE suggests that “animal replacement ingredients produced through genetic engineering” in products like the Impossible Burger may “pose unforeseen health risks.” Impossible Foods Chief Communications Officer Rachel Konrad hits back hard: “The US wing of FOE is an anti-science fundamentalist organization that wants to eliminate genetic engineering at any cost, including the lives of people, the health of the planet, and even FOE’s own credibility. This is an organization on the wrong side of history, doomed to irrelevance for failing to acknowledge and embrace reality.”

That characterization of FOE sounds about right to me.

As I reported earlier:

Other than trying to placate vegetarians and vegans, why bother creating Impossible Burgers? Founder Patrick O. Brown says that the company is on a mission to make the global food system more sustainable. The company claims that compared to cows, the Impossible Burger uses 95 percent less land, 74 percent less water, and creates 87 percent less greenhouse gas emissions.

Assuming that Impossible Burgers and other future plant-based meat competitors catch on with consumers, they will be another happy example of how human ingenuity is continuing our withdrawal from nature. These may be good reasons for people to eat Impossible Burgers, but I will happily do it because I enjoy the taste.

Come to think of it, I may take my wife out to lunch over the weekend to see what she thinks of the Impossible Burger.

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Trump Reportedly Considering Utah Sen. Mike Lee For SCOTUS Seat

Less than 24 hours after 81-year-old Justice Anthony Kennedy announced his retirement, effective July 31, from the Supreme Court after a more than 30-year tenure (making him the 14th longest service justice out of 113), rumors about his successor already abound. To wit, Bloomberg reported that President Trump has asked his advisors for their opinions about nominating Utah Senator Mile Lee to replace Kennedy.

To be sure, the selection process is just beginning, and it’s likely Trump hasn’t yet settled on a favorite, according to Bloomberg. Brett Kavanaugh, a judge on the DC Circuit Court of Appeals, is also being considered (and led online betting markets as the most likely candidate as of yesterday).

Mike
Utah Sen. Mike Lee

The selection of a Supreme Court justice is vital to the president’s legacy: Assuming Trump’s nominee is around the age of his previous pick, Neil Gorsuch, he or she will likely serve on the court for decades.

And even with Republicans’ slim majority in the Senate, whoever Trump nominates only needs the support of the Republican caucus to make it through the Senate since the Democrats implemented the so-called “nuclear option” – eliminating most fillibusters for presidential nominations – back in 2013.

Importantly, Lee’s name was included on a list of potential nominees that Trump released during the campaign, even though Lee initially declined to endorse the president and said he voted for fellow Utahan Evan McMullin as a “protest vote.” But while Trump is notorious for holding grudges, he and Lee appear to have patched things up; Lee has been a reliable vote for Trump’s priorities.

“I have a good relationship with the president. He and I don’t see eye to eye on every issue,” Lee said in a Fox News interview on Thursday. “He and I see eye to eye on most things when it comes to the Supreme Court of the United States.”

Lee, a religious conservative, has criticized the landmark Roe v. Wade legalizing abortion across the US, and would be expected to try and overturn that decision if he’s elevated to the court. However, this quality could complicate his nomination, given that two moderate abortion-rights supporting Republican Senators – Maine’s Susan Collins and Alaska’s Lisa Murkowski – could take issue with a Lee nomination. 

As of Thursday afternoon, online betting markets have shifted in favor of Amy Coney Barrett, a judge on the US Court of Appeals for the Seventh Circuit, who is currently the front runner.

Predictit

Barrett’s name was also included on Trump’s list of 25 potential candidates. Trump said after Kennedy announced his retirement that his nominee would come from that list.

Read the full list below:

* * *

Amy Coney Barrett of Indiana, U.S. Court of Appeals for the Seventh Circuit

Keith Blackwell of Georgia, Supreme Court of Georgia

Charles Canady of Florida, Supreme Court of Florida

Steven Colloton of Iowa, U.S. Court of Appeals for the Eighth Circuit

Allison Eid of Colorado, U.S. Court of Appeals for the Tenth Circuit

Britt Grant of Georgia, Supreme Court of Georgia

Raymond Gruender of Missouri, U.S. Court of Appeals for the Eighth Circuit

Thomas Hardiman of Pennsylvania, U.S. Court of Appeals for the Third Circuit

Brett Kavanaugh of Maryland, U.S. Court of Appeals for the District of Columbia Circuit

Raymond Kethledge of Michigan, U.S. Court of Appeals for the Sixth Circuit

Joan Larsen of Michigan, U.S. Court of Appeals for the Sixth Circuit

Mike Lee of Utah, United States Senator

Thomas Lee of Utah, Supreme Court of Utah

Edward Mansfield of Iowa, Supreme Court of Iowa

Federico Moreno of Florida, U.S. District Court for the Southern District of Florida

Kevin Newsom of Alabama, U.S. Court of Appeals for the Eleventh Circuit

William Pryor of Alabama, U.S. Court of Appeals for the Eleventh Circuit

Margaret Ryan of Virginia, U.S. Court of Appeals for the Armed Forces

David Stras of Minnesota, U.S. Court of Appeals for the Eighth Circuit

Diane Sykes of Wisconsin, U.S. Court of Appeals for the Seventh Circuit

Amul Thapar of Kentucky, U.S. Court of Appeals for the Sixth Circuit

Timothy Tymkovich of Colorado, U.S. Court of Appeals for the Tenth Circuit

Robert Young of Michigan, Supreme Court of Michigan (Ret.)

Don Willett of Texas, Supreme Court of Texas

Patrick Wyrick of Oklahoma, Supreme Court of Oklahoma

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2018 Is Shaping Up To Be The Tipping Point For Institutional Embrace Of Bitcoin

Authored by Omid Malekan, op-ed via The New York Times,

A few years ago, I asked a friend at a major Wall Street trading desk if her colleagues ever talked about cryptocurrencies. She responded that one person would occasionally bring up Bitcoin, then the room would clear out.

This was during Wall Street’s “Bitcoin is stupid” period, which fell between the initial, “I don’t understand it” era and the more recent “it’s a bubble” phase. Since the advent of the first cryptocurrency nine years ago, professional money managers have almost universally dismissed it as a potential investment. Although many have come around on the power of the underlying technology, cryptocurrencies have often been ignored or ridiculed.

Last year, as the price gains of cryptocurrencies like Bitcoin and Ether were generating daily headlines, some fund managers went on the attack, calling the sector a pyramid scheme. Although they probably really felt that way, they might have also been a little jealous. Wall Street money managers are not used to standing on the sidelines while amateurs get rich off something the pros don’t really understand, or worst yet, own.

For the crypto faithful on the other hand, it’s always been a question of when, not if, the rest of the world catches on. Their faith (despite the volatility) has put them on the right side of a powerful investment thesis, one best phrased as a question:

What happens when institutional money managers, who collectively control most of the world’s investment capital, enter a new asset class for the first time?

The answer lies in basic math. Institutions control so much money that they own half a trillion dollars’ worth of Apple alone, and that’s just one stock within a single asset class. If all the hedge funds and family offices out there decided to commit a fraction of that capital to a diversified portfolio of cryptocurrencies, they may double the size of the sector.

I’ve been making that argument to friends who work in institutional finance for years, but they’ve always brushed me off, and for good reason.

Contrary to what an outsider might think, people who manage other people’s money don’t base their decisions on how to maximize returns. Their first consideration is whether they could justify their actions should something go wrong.

This is a smart way for individual managers to make investment decisions, even if the combined effect is a lot of groupthink and the familiar cycle of booms and busts. Traders who lost money in mortgages in 2007 still have a job today because most of their colleagues also blew up in that trade.

That attitude is one reason no career-minded professional has wanted to be the first to dip toes into crypto. Or the second, or the 12th. Not if they wanted to have a long career. But with each passing month, as more people talk about Bitcoin and more conferences are held where more products aimed at institutions are introduced, the barrier to entry gets a little lower.

Every chain reaction starts small and needs the help of at least one catalyst. The adoption of the crypto-asset class by institutional investors has recently enjoyed several, the biggest of which is the introduction of infrastructure that solves the crypto-custodian problem.

Since blockchain technology gives cryptocurrencies certain physical properties, storage is a significant issue. An institution that invests in stocks doesn’t have to worry about a hacker infiltrating their servers to steal shares, but in crypto, that kind of thing happens all the time. Several solutions to this problem have been introduced by reputable crypto companies in recent months, including hardware products that help institutions secure their own cryptocurrencies and a storage service where a third party does it for them.

Then there are the recently introduced Bitcoin futures at the Chicago Mercantile Exchange and the Chicago Board Options Exchange. These products allow institutions to gain exposure to crypto markets while bypassing the storage issue altogether. As an added bonus, their creation signaled a much-needed nod of approval from financial regulators, as did Goldman Sachs’ decision to help clients trade them.

None of this means that the world’s pension funds and endowments are about to dive in. But for the bullish thesis to work, they don’t have to. Just the fact that they will start to consider the option is a major change. Throw in a sputtering stock market and a stalled bull market in bonds, and the argument becomes even more compelling.

On Wall Street, the only sin worse than being the first in a bad trade is being the last in a good one, or what crypto enthusiasts colloquially call FOMO — or fear of missing out. That fear drives a lot of investment booms, and nobody knows that better than the biggest stewards of institutional money: hedge funds.

Twenty years ago, most people had never even heard of “alternative assets.” Then the dot-com bubble burst, leading the Federal Reserve to slash interest rates, and it was no longer possible for pension funds and endowments to hit their annual return targets with only stocks and bonds. Within a few years, everyone was talking about the importance of allocating some capital to so-called absolute-return strategies, and the hedge fund boom was born.

We are still years away from when institutional investors will fully embrace crypto as an asset class, but 2018 is shaping up to be the year of the tipping point.

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San Diego Police Chief’s Bogus Number Ties Cannabis to Crime

The 2016 ballot initiative that legalized marijuana in California let local governments decide whether to allow growers, manufacturers, and retailers within their jurisdictions, and the claim that such businesses are magnets for crime has figured prominently in those decisions. Last September, for instance, San Diego Police Chief Shelley Zimmerman warned the city council that the “negative consequences and secondary effects” of tolerating recreational cannabusinesses would be “enormous.” To back up that claim, Zimmerman said medical marijuana dispensaries in San Diego had generated 272 police calls related to “burglaries, robberies, thefts, assaults and shootings, just to name a few,” in less than three years.

That number seemed suspect to Diane Goldstein, a retired Redondo Beach police lieutenant who chairs the board of the Law Enforcement Action Partnership (formerly Law Enforcement Against Prohibition, a.k.a. LEAP). After digging into the San Diego Police Department’s call records, Goldstein says in an email, she found that Zimmerman’s claim was “a gross distortion of crime related to the licensed medical marijuana dispensaries.” So did Voice of San Diego‘s Jesse Marx, who reports that Zimmerman’s figure includes “dozens of crank payphone calls to 911 operators made in the parking lot of complexes that house dispensaries and other businesses, dozens of false security alarms and even a couple requests to tow automobiles.”

Even when the calls involved more serious incidents, their connection to dispensaries was often tenuous. On May 1, 2017, for instance, police got a call about a woman who had fallen in a parking lot, possibly as a result of a stroke. Zimmerman blamed that incident on a dispensary called The Healing Center San Diego, Marx says, despite the fact that “the address on the report belonged to a nearby pain management center.” A February 27, 2017, call about a reckless truck driver made Zimmerman’s list because police happened to meet the caller on the same block as a dispensary. Zimmerman also counted an August 30, 2016, report about “a man digging through a dumpster behind a shopping center in San Ysidro” who had threatened to shoot someone, which she pinned on the Southwest Patient Group because it was one of the shopping center’s tenants.

Marx found that just one-fifth of the calls cited by Zimmerman “actually cite a dispensary as the location of a potential crime.” They include serious incidents such as an armed robbery of a dispensary employee, a fight that was broken up by a dispensary security guard, and a guard who “appears to have fired at a group of burglars in the middle of the night.” They also include “things like graffiti and vandalism complaints, water leaks and men being refused service because they couldn’t bring a dog inside the shop.”

Zimmerman has since retired, and her bogus number did not actually sway the San Diego City Council, which voted to allow marijuana businesses that serve the recreational market. But her fake figure lives on in debates playing out across California.

“Earlier this month,” Marx notes, “Zimmerman’s stats appeared in a memo written by Oceanside Police Chief Frank McCoy to the City Council, which decided—against the recommendations of a subcommittee—not to allow retail shops. Her remarks were also cited by anti-pot activists in Imperial Beach who helped slow down marijuana regulations there.”

Marx called Zimmerman to ask about those 272 calls that supposedly demonstrated the cannabis industry’s criminogenic culpability. She hung up on him.

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Report: John Kelly to Leave White House by Summer’s End

White House Chief of Staff John Kelly is expected to leave the Trump administration by the end of the summer, The Wall Street Journal reported today, citing people familiar with the matter.

The Journal‘s report said it’s not clear when Kelly, who previously served as secretary of homeland security, would actually leave if he does indeed decide to go. He could step down this week, or he might wait until next month, the newspaper said.

In the event that Kelly decides to leave, President Donald Trump reportedly has been consulting with his advisers regarding a suitable replacement. The two front-runners are Nick Ayers, Vice President Mike Pence’s chief of staff, and Mick Mulvaney, the head of the Office of Management and Budget and the acting director of the Consumer Financial Protection Bureau.

If Kelly opts to step down, Trump will be forced to hire his third chief of staff. Kelly’s predecessor, Reince Preibus, was ousted from his post last July.

According to Bloomberg, about half of the people who have held top jobs in the Trump administration no longer work in the White House.

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Fed Test Fails Deutsche Bank, Forces JPMorgan, Goldman, Four Others to Limit Payouts

After 13 days straight down, bank stocks staged a very modest comeback today ahead of tonight’s hope-strewn Comprehensive Capital Analysis and Review (CCAR). However, given the performance since the last CCAR, investors better hope it’s different this time…

As a reminder, all 35 banks passed the stress test last week as The Fed confirmed they would all be fine if stocks crashed 65% and VIX spiked to 60.

That test examined hypothetical losses with dividends continuing as before. The second phase (results announced today) looks at requests for future stock buybacks and higher dividends.

There’s technically two ways to “fail” the stress test — quantitatively and qualitatively. But no one has failed on a quantitative basis since 2013 because the Fed allows banks to take a “mulligan.”

The stress tests showed Goldman Sachs and Morgan Stanley potentially at risk, and as a reminder, Wells Fargo is under Federal Reserve restrictions and all eyes are on whether Deutsche Bank is allowed to do anything.

Specifcally analysts have grown more skeptical that GS/MS can increase their payouts — or in Goldman’s case, that it can even maintain last year’s level.

“We don’t get to see all the details of how the Fed gets to its numbers, but it’s still hard to fathom how they can meet pre-test expectations,” said Brian Kleinhanzl at Keefe, Bruyette & Woods. “The math just doesn’t work.”

And analysts aren’t confident that Deutsche Bank AG’s U.S. holding company can pass a key part of the test: the qualitative review of risk controls, internal oversight and other aspects of management. The bank’s U.S. unit already was placed on a Fed list of troubled lenders because its systems were deemed insufficient.

“It’s pretty hard to expect a positive surprise for the state of Deutsche Bank’s controls,” said Markus Riesselmann, an analyst at Independent Research in Frankfurt. “Sadly, we’re all pretty much used to bad news around Deutsche Bank, so a negative result won’t necessarily hurt their share price.”

For now, most banks’ dividends are well above their previous peak, but some still lag…

So what were the results?

*  *  *

Minutes before the official release time, BB&T filed an 8-K saying they passed the Fed’s annual stress test. They boosted their quarterly dividend by 3 cents to 40.5 cents. They’re also doing $1.7 billion in share repurchases.

RESULTS:

Tougher Federal Reserve stress tests forced six U.S. banks to scale back proposals for doling out more cash to shareholders.

Goldman Sachs Group Inc. and Morgan Stanley — agreed to freeze payouts at previous years’ levels.

American Express Co., M&T Bank Corp. and Keycorp also had to temper initial requests to distribute cash, according to results posted Thursday.

Twenty-eight other firms can proceed with their original proposals to boost stock buybacks and dividends after the Fed found they’d still hold enough capital to weather a hypothetical economic shock.

The regulator failed a U.S. subsidiary of Deutsche Bank AG, citing “widespread and critical deficiencies” in its planning, limiting the unit’s ability to send capital home to Germany.

Full Fed Statement:

As part of its annual examination of the capital planning practices of the nation’s largest banks, the Federal Reserve Board on Thursday did not object to the capital plans of 34 firms and objected to the capital plan of one firm.

Due in part to recent changes to the tax law that negatively affected capital levels, two firms will maintain their capital distributions at the levels they paid in recent years. Separately, one firm will be required to take certain steps regarding the management and analysis of its counterparty exposures under stress.

The Comprehensive Capital Analysis and Review, or CCAR, in its eighth year, evaluates the capital planning processes and capital adequacy of the largest U.S.-based bank holding companies, including the firms’ planned capital actions, such as dividend payments and share buybacks. Strong capital levels act as a cushion to absorb losses and help ensure that banking organizations have the ability to lend to households and businesses even in times of stress.

“Even with one-time challenges posed by changes to the tax law, the CCAR results demonstrate that the largest banks have strong capital levels, and after making their approved capital distributions, would retain their ability to lend even in a severe recession,” said Vice Chairman Randal K. Quarles.

When evaluating a firm’s capital plan, the Board considers both quantitative and qualitative factors. Quantitative factors include a firm’s projected capital ratios under a hypothetical scenario of severe economic and financial market stress. Qualitative factors include the strength of the firm’s capital planning process, which incorporates risk management, internal controls, and governance practices that support the process.

This year, 18 of the largest and most complex banks were subject to both the quantitative and qualitative assessments. The 17 other firms in CCAR were subject only to the quantitative assessment. The Board may object to a capital plan based on quantitative or qualitative concerns.

The Board objected to the capital plan from DB USA Corporation due to qualitative concerns. Those concerns include material weaknesses in the firm’s data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress.

The Board issued a conditional non-objection to the capital plans of both Goldman Sachs and Morgan Stanley and both firms will maintain their capital distributions at the levels they paid in recent years, which will allow them to build capital over the next year. Each firm’s capital ratios, under the capital plans they originally submitted and with the one-time capital reduction from the tax law changes, fell below required levels when subjected to the hypothetical scenario. This one-time reduction does not reflect a firm’s performance under stress and firms can expect higher post-tax earnings going forward.

The Board also issued a conditional non-objection for the capital plan from State Street Corporation. The stress test revealed counterparty exposures that produced large losses under the hypothetical scenario, which assumes the default of a firm’s largest counterparty under stress. The firm will be required to take certain steps regarding the management and analysis of its counterparty exposures under stress.

The Federal Reserve did not object to the capital plans of Ally Financial, Inc.; American Express Company; BB&T Corporation; BBVA Compass Bancshares, Inc.; BMO Financial Corp.; BNP Paribas USA; Bank of America Corporation; The Bank of New York Mellon Corporation; Barclays US LLC.; Capital One Financial Corporation; Citigroup, Inc.; Citizens Financial Group; Credit Suisse Holdings (USA); Discover Financial Services; Fifth Third Bancorp; HSBC North America Holdings, Inc.; Huntington Bancshares, Inc.; JP Morgan Chase & Co.; Keycorp; M&T Bank Corporation; MUFG Americas Holdings Corporation; Northern Trust Corp.; The PNC Financial Services Group, Inc.; RBC USA Holdco Corporation; Regions Financial Corporation; Santander Holdings USA, Inc.; SunTrust Banks, Inc.; TD Group US Holdings LLC; U.S. Bancorp; UBS Americas Holdings LLC; and Wells Fargo & Company.

U.S. firms have substantially increased their capital since the first round of stress tests led by the Federal Reserve in 2009. The common equity capital ratio–which compares high-quality capital to risk-weighted assets–of the 35 bank holding companies in the 2018 CCAR has more than doubled from 5.2 percent in the first quarter of 2009 to 12.3 percent in the fourth quarter of 2017. This reflects an increase of more than $800 billion in common equity capital to more than $1.2 trillion during the same period.

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Felder: “Same Old Greed In A Shiny New Wrapper”

Authored by Jesse Felder via TheFelderReport.com,

The flows into tech funds of late have been absolutely astounding if not totally surprising.

The FAANNG stocks have been the market darlings for quite some time now so it’s understandable investors would chase this performance just as they do during every bull market.

It’s not just tech-focused funds overweighting the FAANNG stocks. There is a huge number of non-tech-focused funds that own these stocks, as well, and in a significant way further supporting their popularity in the marketplace. You can find them represented in size today in everything from consumer discretionary, retail, media and entertainment to momentum, cloud computing, internet and social media. In fact, without Amazon and Netflix, the consumer discretionary sector would be down on the year rather than up.

What’s more, in many cases, the ownership of these companies in many funds appear to be clear violations of their implicit if not explicit mandates. To demonstrate, let’s just run through the FAANNG stocks by market cap beginning with the biggest: Apple. There are fully 92 ETFs, according to ETFdb.com, that not only own the stock but also have an overweight (relative to the S&P 500) allocation to the shares. So not only are Apple fans and traditional passive investors buying tons of Apple stock, these other ETF investors are even more aggressively acquiring shares.

What I found notable in this case was that Apple was found in both value and growth-focused ETFs. I guess this isn’t really much of a stretch theoretically. A high-growth stock can become cheap just like any other. What is strange in Apple’s case, though, is that the stock now trades at its highest price-to-free cash flow in years. At the same time, the company’s 5-year average revenue growth is now the lowest in its history. Still, these systematic funds somehow find reason to not just own it but to overweight it as both a value stock and as a growth stock.

Next we have Google. Here we have over 100 different ETFs that see fit to overweight the stock in their portfolios.

Included in this group is at least one “low volatility” ETF. According to Yahoo!Finance Google shares have a beta of 1.31 currently meaning they are 31% more volatile than the broad stock market. Yet this fund somehow sees fit to classify it as a “low volatility” stock. Alrighty then.

Turning to Amazon, again we have over 100 different ETFs that have overweighted the stock.

Included in these are several funds that purport to only invest in “best employers” or companies that demonstrate “employment equality.” This is certainly ironic considering this company has become the poster child for income disparity. Jeff Bezos is the now the richest man in the world with some of the lowest paid employees in the country and yet these ETFs somehow justify owning it and in greater size than the index.

Facebook also benefits by roughly 100 ETFs that have somehow tweaked their algorithms such that they can overweight the shares. One such fund claims to invest only in companies with a positive ESG (environmental, social and governance) impact. As for the “E” there’s not much I can say but when you are charged with fomenting violence and even death in places like Myanmar and others around the world and you have also become the poster child for some of the worst governance practices in corporate America it’s hard to see how these can fit within a “positive ESG impact” framework.

Netflix has a very curious holder of its own among the more than 100 ETFs that choose to overweight the shares. The stock currently pays no dividend and, to the best of my knowledge, never has. It might be difficult for the company to do so while it sustains losses in terms of free cash flow into the billions of dollars per year. Still, one “dividend advantage” fund not only owns Netflix shares but also in a size that is triple the index weighting.

Finally, Nvidia can be found as an overweight position in fully 140 different ETFs. By this measure it wins the popularity prize even if it isn’t an original FANG stock. One of these funds carries “ecological strategy” in its title. I assume it seeks to invest only in companies that meet some ecological test yet Nvidia chips have powered the Bitcoin mining boom, perhaps the single greatest waste of energy in human history. It’s very hard to call cryptocurrency or anything associated with it ecologically friendly. Still, this fund sees the core of the cryptocurrency mining mania as supporting a sound ecological strategy.

The point of all of this is simply to demonstrate the absurd extremes of the current mania in the stock market. The only way to explain any of it is to chalk it up to shameless performance chasing. Own these stocks in your ETF or suffer outflows that put its existence in jeopardy. Offer a dividend or a socially conscious or low volatility fund that beats the market via oversized FAANNG weightings and watch the inflows make you rich.

It’s the very same sort of insatiable greed on the part of Wall Street serving the insatiable greed on the part of investors that has driven every speculative mania throughout history. Only this time it comes in a brand new, shiny wrapper that people can use to call themselves ‘passive investors’…

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Bank Bounce Breaks Longest Losing Streak Ever But Yuan Collapse Continues

How many more lives does this dead cat have?

 

China had another ugly session overnight…

 

And while UK’s FTSE managed to scramble back to unchanged… most of Europe ended deep red…

 

Futures show the scale of today’s rebound that started as we headed into the cash open…

 

But on the week, all major indices remain red, with Trannies worst…

 

The Dow closed below its 200DMA for the 4th day in a row… (briefly tested it intraday but was rejected)

 

Banks finally broke their 13-day losing record losing streak – bouncing modestly ahead of CCAR tonight…

 

Just a reminder, here’s what happened after February’s CCAR…

 

AMZN’s purchase of PillPack sent many of the healthcare distributors and phramacy stocks reeling…

 

Treasury yields rose very modestly on the day…

 

The Dollar jerked noisily lower on the day

 

Pick your Peso on the day – Argentina’s Peso collapsed to a new record low close as Mexico’s Peso surged ahead of elections…

 

EM FX rebounded modestly today, retracing about half of yesterday’s losses…

 

Yuan continued its collapse – now down 11 straight days…

 

Bitcoin flatlined today but is holding unchanged on the week as the rest of the cryptospace drifts lower..

 

Despite the dollar weakness, copper and PMs continued to drift lower but WTI extended gains…

 

WTI surged higher on the day and tagged $74.03 at the highs…

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