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If you’re a law abiding US citizen, a team of armed undercover US Air Marshals could be following you on your next flight, taking minute-by-minute notes whether or not you engage in such threatening behavior as sleeping on the plane, using a phone, going to the bathroom or talking to other passengers. 

The Boston Globe has revealed a new federal program that profiles and surveils ordinary US citizen travelers who otherwise have no legitimate reason for being profiled. The secret program, called “Quiet Skies”, was set up to monitor US citizens with no prior record and who don’t result in red flags being raised at the airport. The people surveiled and followed in this program are, according to a TSA memo cited by the Globe article, “not under investigation by any agency and are not in the Terrorist Screening Data Base”.

In essence, the program gives the TSA the option to monitor and track whoever it likes for any reason whatsoever, effectively granting TSA agents a green light to violate anyone’s personal privacy even as the legal and constitutional implications of such profiling remain unknown. And, understandably, internal pushback against the relatively new program  has emerged as some Federal Air Marshals have noted that it is a drain on resources and is way too time consuming and costly.

Further, concerns have been raised by legal experts, like Jonathan Turley, a George Washington University law professor, who said that “if this was about foreign citizens, the government would have considerable power. But if it’s US citizens — US citizens don’t lose their rights simply because they are in an airplane at 30,000 feet.”

Predictably, the TSA defended the program to the Boston Globe when asked and declined to note for the article whether or not the program has been successful in stopping any threats. In fact, it wouldn’t even confirm that the program existed. But documents provided to the Boston Globe by FSA sources confirm that this highly controversial program does, in fact, exist.

So if you’re not on any terrorist watch list and you are not under investigation by the Federal Government, what exactly do armed Air Marshals look for when a “small team of them” watches you as you fly or home to visit relatives for the holidays?

Amazingly, the red flag “triggers” for in depth surveillance involve behaviors that essentially all passengers are susceptible to, such as:

• whether or not passengers fidget
• whether or not they are using a computer on the flight
• whether or not they stare off into space
• face touching
• exaggerated emotions
• whether or not a subject has lost or gained weight from the information provided to authorities
• whether or not the subject has facial hair, tattoos, piercings,
• whether not they slept during the flight
• whether not they use the bathroom on the flight
• how they were picked up when they arrive.

The full “behavior checklist”, uploaded on the Boston Globe website,  is both astonishing and frightening.

A casual skim of the above “threats” narrows down the list of potential suspects to – well, everybody who flies or has ever flown in an airplane.

And yes, Air Marshall have been instructed to focus especially on people who have “gained weight”, have a beard, checked their baggage, and either talk on the phone or have a computer: almost as if the government has granted explicit permission for the FSA to profile just about anyone, for any reason whatsoever.

The article did not reveal how people are initially chosen for the screening, and the TSA naturally refused to share the information. However, what we do know is that once one has made the list and is selected for surveillance…

…a team of air marshals is placed on the person’s next flight. The team receives a file containing a photo and basic information — such as date and place of birth — about the target, according to agency documents.

The teams track citizens on domestic flights, to or from dozens of cities big and small — such as Boston and Harrisburg, Pa., Washington, D.C., and Myrtle Beach, S.C. — taking notes on whether travelers use a phone, go to the bathroom, chat with others, or change clothes, according to documents and people within the department.

Despite its relative recency, the program is already operational across virtually all major airports.

And just like Edward Snowden and the NSA, the Globe points out that pushback against this kind of indescriminate profiling is rising as “dozens of air marshals have raised concerns about the Quiet Skies program with senior officials and colleagues, sought legal counsel, and expressed misgivings about the surveillance program, according to interviews and documents reviewed by the Globe.”

Sensing an avalanche of legal fees, experts that specialize in civil liberties and citizens’ rights believe that the program may not be lawful:

Experts on civil liberties called the Quiet Skies program worrisome and potentially illegal.

“These revelations raise profound concerns about whether TSA is conducting pervasive surveillance of travelers without any suspicion of actual wrongdoing,” said Hugh Handeyside, senior staff attorney with the American Civil Liberties Union’s National Security Project.

“If TSA is using proxies for race or religion to single out travelers for surveillance, that could violate the travelers’ constitutional rights. These concerns are all the more acute because of TSA’s track record of using unreliable and unscientific techniques to screen and monitor travelers who have done nothing wrong.”

George Washington University law professor Jonathan Turley said Quiet Skies touches on several sensitive legal issues and appears to fall into a gray area of privacy law.

The biggest irony, as several Air Marshals observed, is that that potentially illegal program which infringes on the privacy and constitutional rights of US citizens, is also being paid for by those very same US citizens. Just like with the NSA.

Even the president of the Air Marshal Association has spoken out against the program:

Several air marshals, who spoke on the condition of anonymity because they are not authorized to speak publicly, told the Globe the program wastes taxpayer dollars and makes the country less safe because attention and resources are diverted away from legitimate, potential threats. The US Federal Air Marshal Service, which is part of TSA and falls under the Department of Homeland Security, has a mandate to protect airline passengers and crew against the risk of criminal and terrorist violence.

John Casaretti, president of the Air Marshal Association, said in a statement: “The Air Marshal Association believes that missions based on recognized intelligence, or in support of ongoing federal investigations, is the proper criteria for flight scheduling. Currently the Quiet Skies program does not meet the criteria we find acceptable.

“The American public would be better served if these [air marshals] were instead assigned to airport screening and check in areas so that active shooter events can be swiftly ended, and violations of federal crimes can be properly and consistently addressed.”

Finally, for those unlucky enough to have “gained weight” since their last observations – or heaven forbid grew a goatee – and triggered the TSA’s red flag, once selected for the list they are surveilled for up to 90 days or for their next three encounters, whatever comes first.

While the long running practice of Air Marshals Performing surveillance on those who are the focus of government investigations makes sense – this clear abuse of power and disregard for the rights of US citizens is so egregious that even those tasked with enforcing it can’t get behind it.

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Over the past month we have observed China announcing a slew of easing measures, both monetary and fiscal, in quick succession: there has been a cut in the reserve ratio requirement (RRR) for commercial banks, easing of regulatory norms to support broader credit growth, a call for more “proactive” fiscal policy, and accelerated issuance of local government bonds to support infrastructure investment. As these steps contradict the tightening path that Beijing has pursued since April 2016, it has provoked confusion from investors.

So, in an attempt to answer some of these lingering question, Morgan Stanley’s chief Asian economist Chetan Ahya writes that he thinks China’s easing is defensive in nature, aimed at sustaining a moderate pace of growth, and not a shift to an offensive stance (i.e., to accelerate GDP growth). Nonetheless, he also note that “it signals a readiness to act” and adds that “if trade tensions create a meaningful risk to growth, we should expect a much more vigorous – though still defensive – policy response.”

Here are the key questions asked by investors, and Morgan Stanley’s responses:

(1) Do these measures indicate a change in China’s policy stance?

We think China’s recent easing measures aim at maintaining a neutral policy stance. Our framework for assessing policy is to look at the pace of broad credit growth, which policy-makers call ‘total social financing’. Our chief China economist, Robin Xing, believes that broad credit growth will stabilise at around 11%Y in 2H18. Before these measures were announced, investors probably believed that policy-makers would stay on a tightening path, with the expectation that broad credit growth would continue to decelerate (as it had since April 2016 when it was growing at 16%Y). The recent measures have changed these expectations, while increasing confidence that policy-makers will be able to stabilise credit growth.

(2) Why have policy-makers taken these measures?

This easing is defensive and pre-emptive in nature. We think policy-makers have adopted these measures to guard against potential negative repercussions of trade tensions and their knock-on impact on external demand, not in reaction to slowing domestic demand. Indeed, our recent work suggests a 16bp effect on China’s growth from the trade measures implemented recently, considering both direct and supply chain effects, though this could rise to 70bp if a 10% tariff were imposed on all US imports from China (a total of US$500 billion).

(3) Are they sacrificing their policy reform agenda to protect growth?

We think the reform agenda remains in place. Since 2016, policy-makers have been at work on supply-side reforms (cutting excess capacity) and cleaning up the financial system. They have made good progress, according to our materials analyst Rachel Zhang and financials analyst Richard Xu, with the rate of improvement currently pegged at 60-70%. We believe financial clean-up remains in focus, as the RRR cuts are designed to avoid over-tightening. And policy-makers are continuing to implement supply-side reforms via increased focus on environmental protection.

(4) Will RMB face significant depreciation pressure again?

The recent depreciation has been triggered by concerns about trade tensions and the potential divergence between the US and China on monetary policy. Despite comments from policy-makers aimed at stabilising the exchange rate, market pressures have led to continued depreciation. However, to put the recent currency moves in a broader context, much of the seemingly sharper depreciation in fact has reversed the appreciation that occurred from February to mid-June (with RMB strengthening by 3% against its currency basket even though the trade-weighted USD appreciated by 7%). We think RMB will likely return to a regime of relative stability in the trade-weighted exchange rate. In other words, if the broad trade-weighted USD depreciates, RMB should appreciate.

Morgan Stanley concludes that “all things considered, given that the policy stance in China should not be a game-changer, our strategy teams remain cautious on both DM and EM risk assets.” But perhaps an even greater threat to China’s stability than trade wars or slowing credit growth, are “the lingering concerns about the ongoing Fed tightening cycle, elevated trade tensions and their attendant impact on global growth.“

In other words, if the US wants to truly hurt China, it can simply by ratcheting up rates, which eventually could cause a series of financial crises in Beijing, a topic which will be further discusses in a subsequent post by One River Asset Management CIO Eric Peters.

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Authored by James Bovard via The Mises Institute,

This week is the 40th anniversary of the publication of my first attack on the Postal Service. “Time to Stamp Out the Postal Monopoly” was the lead article on the Boston Globe oped page . A dozen years later, the chief postmaster of Boston denounced me as “the nation’s number one postal basher.”

I forgot to thank the postal unions for clinching the 1978 sale of that piece – my first in a major paper. I had pitched the piece to the Globe a couple months earlier and revised it to their specifications. But then I heard nothing and I assumed the piece was dead. Then the postal unions threatened a nationwide strike, kindly providing a newspeg (and perhaps also enraging some Globe editors). The Carter administration placated the unions with hefty raises and guaranteed lifetime jobs.

Back in those days, the U.S. mail was practically the only way an aspiring writer could afflict editors in distant cities with his work. Stamp prices were skyrocketing and service was wildly erratic, delaying the arrival of vital reject slips. Mail delivery ceased entirely for a week after the postman became frightened of the Dobermans owned by the drug dealers on the ground floor of the rickety apartment building where I lived. To visit a Boston post office was to descend into a netherworld of zombies and psychopaths who hated anyone who approached them with an unstamped envelope. The worst outrage was that it was a federal crime for anyone else to provide better mail service.

The next year, I whacked the Postal Service in the Washington Star and followed up, after I moved to the Midwest, with a hit in the Chicago Tribune in 1980. That piece led to my first talk show – an appearance on Chicago’s WVON radio station. It did not occur to me that I should be conversational instead of responding warily, like I was being cross-examined late at night at a police road block. The talk show host utterly misunderstood the article and her questions seemed inane. When I asked her to clarify, she repeated her lines louder. I was unaware that interview questions are often written by an assistant or an intern. For a talk show host to read an entire 700-word article is like a normal person reading Moby Dick.

After I moved to Washington, I often visited the lavish new headquarters of the Postal Service – thanks to their top floor library with panoramic views and a nook where stogies could be puffed all day. Old histories and dog-eared reports proved that the Post Office had been warring against its competitors ever since Congress gave it a monopoly over letter delivery prior to the Civil War. I burst out laughing when I to read the Post Office’s 1960 annual report’s proclamation of “the ultimate objective of next-day delivery of first-class mail anywhere in the United States.”

I smacked the Postal Service in publications ranging from Inquiry to the Los Angeles Herald Examiner to the Washington Times. Beginning in 1984, I regularly slammed the Postal Service in the Wall Street Journal, whose editorial features editor Tim Ferguson was the best and stoutest libertarian-leaning editor I encountered at a major outlet. I hammered the theme that “mail service is becoming slower, more expensive and less reliable.” I also pointed out how the Postal Service’s delivery tests – endlessly touted in their advertisements – were utterly fraudulent.

Every time the Postal Service raised postage rates or slashed service, I gave them another wallop. In a 1987 New York Times op-ed, I wrote that “First-class mail is becoming the ghetto of American communications… The U.S. cannot afford to enter the next century with a communications system little changed from the 18th century.” Assistant Postmaster General Frank Johnson responded that “Bovard continues to play his fanciful intellectual demolition derby… He often allows his bandwagon to run amok, rolling over much that is good. Pedestrian facts end up flattened.” Earlier in 1987, Johnson complained to the Wall Street Journal that I was “the Pied Piper of Privatization.”

Mauling the mail service led to my first gig as a scarecrow. The National Association of Postmasters invited me to speak to their annual Washington conference so that members would have “a clear picture of the very real threats that are bombarding us daily,” the association’s chief, a grizzled Irish postmaster-politician from Massachusetts, declared. I ambled up to the lectern at 9 a.m. Five minutes later, I had all 300 audience members on their feet howling with homicidal intent.

I spoke about how government monopolies lacked incentives to provide good service and asked: “If you had to invest your life savings in one company – would you choose United Parcel Service or the Postal Service?” “We already invested our lives in the Postal Service!” came the thunderous response. Oops.

The Boss Postmaster repeatedly jumped on stage to simmer the audience down so I could finish. Afterwards, he unleashed a podium-pounding tirade that flailed my views up-and-down and strutted before his members as if he’d just slain an anti-postal dragon. I only wish I could pocket $500 every time I get heartily cussed.

In 1989, nudged by Tim Ferguson, I spent five months seeking an interview with Postmaster General Anthony Frank. But a Postal Service spokesman told me that since the Postmaster General had recently appeared on “The Pat Sajak Show,” he did not need exposure in the Wall Street Journal. Besides, the spokesman said, my previous postal articles had been “tainted with bias.” Though the Postal Service was losing $2 billion a year, Frank scorned fundamental reforms, claiming that privatization would be “the Wino and Derelict Full Employment Act…. A lot of [the private carriers] would only work until they get the price of a bottle of Ripple and then they’d quit.” I scoffed in a WSJ piece that “the American people no longer need a monopoly that appears more interested in storing letters than in delivering them.” In a reply to the Journal, Frank complained that the piece was “just another case of Mr. Bovard mixing facts with fancy to suit his own” agenda.

In a 1991 Wall Street Journal piece, I jibed that “the Postal Service is the only delivery business that believes speed is irrelevant” and said that a pending four-cent hike in stamp prices “will help finance the greatest intentional mail slowdown in U.S. history.”

After I smacked the postal monopoly in USA Today in 1995, the Postal Service’s “media relations” manager claimed it was “utter nonsense” that the Postal Service was intentionally slowing the mail and lamented: “We find it very frustrating when individuals with an agenda and a pen are given a forum to spread malicious misinformation.” Since then, the Postal Service has become far more forthright about its slowdowns – which never produce the savings anticipated. But since they have captive customers, why not abuse them?

The Postal Service has a long history as a tool of government surveillance and suppression. Writing in USA Today in 1999, I hammered the Postal Service’s crackdown on private mail boxes and touted corrective legislation championed by Rep. Ron Paul. That piece concluded that “the only real solution is to demilitarize the Postal Service’s legal arsenal and end its power over other businesses and American citizens.”

In 2011, after the Postal Service announced plans to largely abolish overnight mail delivery, I slammed them in the Los Angeles Times: “When people bought ‘forever’ stamps, they didn’t realize that the name referred to the delivery time, not stamp prices.” The Times published a letter from an angry postal fan who demanded to know: “Was James Bovard bit by a mailman as a child?”

In 2013, the Justice Department and Postal Service filed suit against Lance Armstrong’s bike racing team (which received $40 million from the Postal Service), claiming that Armstrong had conspired to defraud the feds by using illegal stimulants. I commented in the Washington Times that “that conspiracy charge sounded like a good summary of the Postal Service’s own public relations strategy.” Besides, it made “no sense to to bankroll a bicycle-racing team at the same time that postal employees were widely perceived as a bunch of slackers.”

At this point, the Postal Service is rapidly becoming little more than an income maintenance program for the 630,000 employees. The big question is which will reach zero first – mail delivery targets or the Postal Service’s actual performance. Either way, the Postal Service continues to provide some of the starkest and most comical reminders of the folly of relying on the government.

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The publisher of the New York Times, A.G. Sulzberger, responded to a Trump tweet from this morning, saying he “implored” President Donald Trump at a private White House meeting this month to reconsider his broad attacks on journalists, calling the president’s anti-press rhetoric “not just divisive but increasingly dangerous” and that Trump’s assault on the media is “putting lives at risk”

The war of words started on Sunday morning, when Trump tweeted that he “had a very good and interesting meeting at the White House with A.G. Sulzberger, Publisher of the New York Times. Spent much time talking about the vast amounts of Fake News being put out by the media & how that Fake News has morphed into phrase, “Enemy of the People.” Sad!” Trump wrote.

A few hours later, Sulzberger issued a statement in which he said he decided to comment publicly after Trump revealed their off-the-record meeting held on July 20, noting that “Trump’s aides requested that the meeting be off the record” but with Trump tweeting this morning “he has put the meeting on the record, so A.G. has decided to respond to the president’s characterization of their conversation, based on detailed notes A.G. and James took.”

Sulzberger – who said said he accepted the meeting because Times publishers have a history of meeting with presidential administrations and other public figures who have concerns with the publication’s coverage of them – said his main purpose for accepting the meeting was to “raise concerns about the president’s deeply troubling anti-press rhetoric.”

“I told the president directly that I thought that his language was not just divisive but increasingly dangerous.”

Sulzberger also told Trump that that although the phrase “fake news” is untrue and harmful, “I am far more concerned about his labeling journalists “the enemy of the people.” I warned that this inflammatory language is contributing to a rise in threats against journalists and will lead to violence.”

Sulzberger, who went to the White House with James Bennet, who oversees that NYT’s editorial page, said he stressed “that this is particularly true abroad, where the president’s rhetoric is being used by some regimes to justify sweeping crackdowns on journalists.”

“I warned that it was putting lives at risk, that it was undermining the democratic ideals of our nation, and that it was eroding one of our country’s greatest exports: a commitment to free speech and a free press.”

In conclusion, the NYT owner said that “throughout the conversation I emphasized that if President Trump, like previous presidents, was upset with coverage of his administration he was of course free to tell the world. I made clear repeatedly that I was not asking for him to soften his attacks on The Times if he felt our coverage was unfair. Instead, I implored him to reconsider his broader attacks on journalism, which I believe are dangerous and harmful to our country.”

* * *

The president has repeatedly lashed out over media coverage of him that he deems unfair, and has labeled the news media the “enemy of the people” while regularly accuses reporters of spreading “fake news.” Just last week, Trump told hundreds of people attending the annual Veterans of Foreign Wars convention in Kansas City, Missouri: “Don’t believe the crap you see from these people, the fake news,” as he gestured toward journalists at the back of the room and the crowd erupted.

He also told them to remember “what you’re seeing and what you’re reading is not what’s happening.”

Trump has been especially vocal in his attacks on the “failing New York Times” and after the younger Sulzberger took over for his father as publisher on January 1, Trump tweeted that his ascension gave the paper a “last chance” to fulfill its founder’s vision of impartiality.

Trump urged the new Sulzberger to “Get impartial journalists of a much higher standard, lose all of your phony and non-existent ‘sources,’ and treat the President of the United States FAIRLY, so that the next time I (and the people) win, you won’t have to write an apology to your readers for a job poorly done!”

* * *

Shortly after the Sulzberger statement was published, Trump shot back with another extended attack at “anti-Trump haters in the dying newspaper industry”, who are “selling out our great country” and named the “failing New York Times” and the “amazon Washington Post”, split over 4 separate tweets:

When the media – driven insane by their Trump Derangement Syndrome – reveals internal deliberations of our government, it  truly puts the lives of many, not just journalists, at risk! Very unpatriotic! Freedom of the press also comes with a responsibility to report the news accurately. 90% of media coverage of my Administration is negative, despite the tremendously positive results we are achieving, it’s no surprise that confidence in the media is at an all time low! I will not allow our great country to be sold out by anti-Trump haters in the dying newspaper industry. No matter how much they try to distract and cover it up, our country is making great progress under my leadership and I will never stop fighting for the American people! As an example, the failing New York Times and the Amazon Washington Post do nothing but write bad stories even on very positive achievements – and they will never change!

It is clear that this latest escalation in the simmering war of words between Trump and the NYT is only just beginning, and comes at a precarious time for the president, with Mueller’s probe reportedly in its last stages, with his former lawyer Michael Cohen threatening to “flip”, with the trade war with China set to accelerate should another $200BN in tariffs be imposed in mid August, with Trump threatening to shutdown the government over border security, and as the political bickering over the upcoming midterm elections hit fever pitch.

Meanwhile, the biggest tailwind going for Trump is the strength of the economy and the stock market, although the immediate future of both is increasingly in question after last week’s Facebook fireworks which threatens the growth narrative, while many predict that GDP in Q3 is set to post a steep decline when it is reported just a few days before the elections.

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The city of Austin’s Equity Office has suggested renaming the Texas capital in a report about existing Confederate monuments that was published this week.

Known as both the “father of Texas” and the namesake of the state’s capital, Stephen Austin laid out the early outlines of Texas among his many accomplishments, however – and this is the reason for the proposal – as My Statesman reports, Austin also opposed an attempt by Mexico to ban slavery in the province of Tejas and said if slaves were freed, they would turn into “vagabonds, a nuisance and a menace.”

The report also identified several neighborhoods and 10 streets named in honor of the Confederacy or William Barton, a slave owner dubbed the “Daniel Boone of Texas,” that could be changed. The identified streets and parks are only suggested for reconsideration. And the city, Bouldin Creek, Pease Park and the Barton-related landmarks were included in a lower-tier list of “assets for secondary review” in the report. Still, the report did identify several streets staff consider related to the Confederacy and worthy of more immediate action. Those streets are:

• Littlefield Street
• Tom Green Street
• Sneed Cove
• Reagan Hill Drive
• Dixie Drive
• Confederate Avenue
• Plantation Road

That said, actually renaming the state’s capital would likely require a citywide election since “Austin” would have to be struck from the city charter and replaced.

While the cost of such changes is trivial – the report estimated it would only cost $6,000 to rename the seven streets – opposition to similar renamings has tended to revolve around the inconvenience and expense faced by longtime homeowners and business owners who must deal with a new address. Complaints along those lines surfaced earlier this year when the Austin City Council changed the names of two streets recognizing Confederate leaders.

Before the council renamed Robert E. Lee Road as Azie Morton Road and Jeff Davis Avenue was changed to William Holland Avenue, the city gathered input from residents along those streets. A majority opposed the changes, which occurred in April.

In response, some residents have accused the city of whitewashing history.

The latest report acknowledged the likelihood of opposing viewpoints and nodded to inconveniences to businesses and residents and the view that changing the names could be considered a threat to historical preservation. Notably, it also asked whether the proposed changes reside on a slippery slope.

“What’s next and where do we stop?” the report asks.

The report also identified numerous historical markers related to the Confederacy on city property that could be targeted for removal. Those include a marker for the Confederate States of America that’s located at Congress Avenue and Cesar Chavez Street.

However, the city would need approval from the Texas Historical Commission and the Travis County Historical Commission to move them.

The Austin report comes amid a national debate on Confederate monuments that was sparked following the 2015 massacre of black churchgoers in Charleston, S.C. It follows a 2017 recommendation from the Austin Commission for Women that any new street names should address gender and racial disparities in the naming of public symbols. The commission also suggested preference should be given to individuals connected to Austin and having a “positive relationship and history with the community.”

The Equity Office’s report concludes, “It is essential to acknowledge that societal values are fluid, and they can be and are different today compared to when our city made decisions to name and/or place these Confederate symbols in our community.

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Authored by Jeffrey Snider via Alhambra Investment Partners,

There is a huge difference between believing in gold and believing in the gold business. The former is about wanting a stable, dependable global monetary system, one very much like what survived thousands of years of history without a whole lot of changes to it. The latter is about convincing you who are likely to believe the same thing to actively buy as much gold as you possibly can.

To the gold business, deflation is a killer. To a true goldbug, either inflation or deflation suggests the monetary world is off its axis. The economics of gold in that situation has very little to do with its price, at least so far as the price in either direction denotes what’s wrong.

When you put gold and something like copper or even eurodollar futures together on a chart, they show very clearly one thing – that deflation.

Since 2011, there is a clear monetary impulse in that direction. Seven years is a very long time for there to have been anything else so substantial. It is textbook stuff, excepting that the actual monetary system which is bringing all this into our lives has never had written its required chapter in that book.

To those in the gold business, this cannot be possible. Central bankers are printing money, you see, furiously, therefore gold should be shooting to the moon. It’s not and hasn’t been for many years, therefore there has to be monkey business pegging the price of gold way, way less than its real price. And who better to perpetrate such insidious nonsense than the very central bankers who are killing the dollar with all their money printing!

If central bankers would stop their clandestine activities carrying out their visceral hatred of the metal, gold would reflect its “true” price, which is at the present time incalculably high. They say. Buy now, supplies are limited. 

There is a corollary to this conspiracy stuff. It posits that Asians, the Chinese in particular, are playing some long game. They are buying up gold so as to create a solid alternative to the dollar. Every gyration in its price is due to this undercover future trap, the Chinese doing things to de-dollarize (with the Russians, naturally) with gold at the base of their new pyramid.

Gold’s not down, it’s just reflecting the reality of this curiously convoluted trap and when it finally gets sprung at some unknowable future date the price of gold will, say it with me, shoot to the moon!

Conversely, the dollar becomes worthless. Therefore the “weak dollar” is the currency’s “true” price while the “rising dollar” is just something else entirely. They say.

These unbelievably patient supergeniuses are biding their time while the idiots in the West are squandering every advantage.

The second part can be true, is true, without it necessarily defaulting to the first part. In other words, absolutely, Economists in the West are idiots a fact you don’t need more than the price of gold to establish. They had no idea why it was going up (I still chuckle every time I hear “global savings glut”), and they have even less about why it’s down.

But that doesn’t mean central bank Economists in China are by inverse transitive properties somehow supersmart and technocratically competent. They may look that way in direct comparison to their counterparts, but that’s a meaningless low standard. There is the possibility, and a very good one, that both sets of Economists are equally bad at economy. This shouldn’t be surprising nor controversial, especially since many if not most of Asian central bankers were trained somewhere in the vast network of worthless Western Economic schools.

The dollar doesn’t need the Chinese and the Russians to help undermine its authority, as Putin says today; that already happened on August 9, 2007. What has occurred over the nearly eleven years since is an on-again/off-again dance with every individual country around the world trying to deal with the fallout.

There are two simple facts at play here. The “dollar” system is broken, and there is no alternative to that broken system. If there was, it would have been ready and implemented long before now. This deflationary direction has given the Chinese and Russians every reason and incentive for a decade to have accomplished something else before they, too, suffered the fate of this global deflationary “L”, or double “L” for some.

Longtime PBOC Governor Zhou Xiaochuan wrote all the way back in March 2009:

The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies. [emphasis added]

You can understand why he might write about this in March 2009, for the BIS no less. Though the Western media publishing on behalf of incompetent Western central bankers characterized the panic and crash as subprime mortgages wreaking havoc on Wall Street, the truth which Governor Zhou realized is that it was really about eurodollar disruption wreaking havoc via Lombard Street to everywhere else on the planet.

Credit-based national currencies. Exchange the word “national” for “offshore” and he would’ve had it on the nose; eurodollar. 

But reform never went anywhere. Why?

First, because in the immediate years following the global dollar crisis it looked like everything was going to go right back to normal, or what everyone in Asia at least thought was normal. There was to be a “new normal” in the West, but EM economies were surely insulated from such a glitch – according to Economists.

Urgency to build toward an international currency in 2009 and 2010 died out with what looked like an actual recovery, especially in China. That country enjoyed more of the privileges of the eurodollar system than any other place on earth, including the supposedly nominal national sponsor of this “dollar.” If it was going to work even reasonably well again, as it appeared, why mess with it?

It made perfect sense to complain in March 2009 when Chinese exports were falling by 20%, but not so much in May 2010 when they were up nearly 50%.

But that only got them through to 2011 when the reality of chronic dollar dysfunction dropped on them like a hammer. The deflationary wave that followed the 2011 break swept up everyone in its way – eventually.

It wasn’t like 2011 happened and then China’s economy suffered tragedy right then and there.

It slowed in 2012, seemed to have stabilized in 2013, and then got into real trouble in 2014.

That was three years where Governor Zhou could have been pushing a dollar alternative – but he didn’t.

And then 2015 and 2016, still no alternative even though the Chinese economy finally joined everyone else in the global economic “L.” Why wait until now, suffering so much trouble over the last seven years since 2011? Does it take more than seven years to get the de-dollar thing ready?

Where Chinese and other Asian officials differ from Economists in the West is only that they are aware this is an “L” and not an actual business cycle at record length expansion. They don’t appear to be able to do much about it, which is why 2018 has seen too much of this (again):

I seriously doubt any central banker anywhere spends his or her time manipulating the price of gold down to the penny. Why would they? The whole point of QE was to play upon inflation expectations, which means a higher price of gold would actually help them achieve (as they saw them) their economic goals!

Never ascribe to malice, or supergenius Chinese long-range planners, dollars which can be explained, easily, by incompetence on both sides of the Pacific.

True goldbugs know the difference. Instability is the factor that matters, however it comes. Sometimes, ladies and gentlemen, deflation is just deflation.

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After last week’s collapse in Facebook shares, Goldman’s clients are hardly happy: after all, Goldman – which has a Buy rating on the stock – not only upped its price target from $205 to $225 back on April 26, which it then promptly trimmed back to $205 after the biggest value destroying event in history, but at the start of June explicitly said there was no danger of a bubble forming in tech stocks for years. And it’s hardly only Goldman clients: as Goldman’s David Kostin writes in his latest Weekly Kickstart, “FB ranks at the top of our Hedge Fund VIP List, with 97 funds owning it as a top 10 portfolio position”…

… although in a curious move, the bank also notes that investors that did own FB and sold following its results “apparently rotated into other stocks rather than holding cash; on Thursday the S&P 500 excluding FB rose by 10 bp, seven of 11 sectors posted positive returns, and share prices of FB’s FANG peer GOOGL rose by 75.”

Yet while Goldman clients appear to have taken Facebook’s collapse in stride, they are expressing another growing worry namely the “bad breadth”, or increasingly more narrow leadership, of the market. We first noted this one month ago when we discussed that just the Top 4 stocks have been responsible for 84% of the S&P’s upside in the first half of the year.

First forward 4 weeks, when Goldman’s Kostin writes that the biggest concern expressed in client conversations has been the increasingly narrow breadth of the equity market in that “the top 10 contributors have accounted for 62% of the S&P 500 7% YTD return”, and this even after Facebook’s record plunge which also dragged down some of the other most prominent tech names.

Kostin continues:

Of these 10 stocks, nine are technology or internet firms. The Technology sector alone accounts for 56% of the S&P 500 YTD return (76% including Consumer Discretionary members AMZN and NFLX).

As a result, Goldman’s proprietary “Breadth Index” currently reads 0 out of 100.

Other, more conventional measures of market breadth also show a recent narrowing. The next chart shows the distance of the S&P 500 from its 52-week high with the corresponding distance for the median constituent: “when only a small number of stocks act to lift the broad index, that gap turns negative and signals narrow breadth.”

Think of this chart as the risk momentum behind market leadership names turns negative.  Meanwhile, from a fundamental perspective, narrow market leadership typically reflects narrow earnings strength, which is often a symptom of a weakening operating environment. To be sure, there are several prominent examples of this occurring:

in addition to the well-known episode of narrow breadth during the Tech Bubble, previous narrow breadth markets occurred ahead of the recessions in 1990 and 2008 as well as the non-recessionary economic slowdowns of 2011 and 2016.

And yet, despite the increasingly narrow breadth, there is the silver lining is that from a historical perspective, “market breadth has not yet narrowed enough to signal investing danger.”

In the past, sharp declines in breadth have signaled below-average 1-, 3-, and 6-month returns for the S&P 500 as well as larger-than-average prospective drawdowns. Relative to history, however, the recent narrowing of market breadth has not been sharp enough to trigger alarm.

Which brings us to the second risk mentioned by Goldman’s clients: concentration.

Here the logic is similar to breadth, only instead focus is on market cap and earnings for the handful of market leaders, where the 10 largest firms now account for 23% of index market cap. As Kostin notes in the past, most instances of rising market cap concentration among a handful of stocks corresponded with an increase in earnings concentration as well, and cautions that “usually, these narrow bull markets eventually led to large drawdowns when investors lost confidence in the increasingly expensive handful of crowded market leaders.”

Here the saving grace is that whereas the Top 10 companies are now the most concentrated they have been since the financial crisis in terms of market cap, the continued earnings growth – which as we noted yesterday has so far seen a record number of stocks beat expectations – helps to stem fears:

Unlike past episodes of narrow market breadth, the earnings environment today appears healthy and broad-based. The top 10 S&P 500 stocks currently account for 20% of index earnings, roughly the same as in each of the last few years, and slightly below the 30-year average of 21%. In 2019, consensus expects the median S&P 500 stock to grow EPS by 10%, slightly faster than the 9% growth expected for the index.

Ok, but why in this time of strong profit growth is stock performance not distributed in a more even fashion? The answer, according to Goldman is due to investor concerns about global growth, including risks from trade conflict, which explains the “unusual current combination of strong fundamentals and narrow market breadth.” Meanwhile, elevated valuations discourage investors in many sectors.

Finally, the herding of most investors into a handful of stocks was the result of solid momentum and strong secular growth profiles of the largest market leaders have continued to attract investor assets. At least, that was the case before Facebook and Twitter both tumbled by 20% and have yet to see BTFDers emerge.

To Goldman, the irony of defending momentum-driven tech names while warning about potential “bad breadth” is not lost, and as Kostin observes, Facebook’s decline this week highlights the risk inherent in a narrow-breadth market, but instead of turning more cautious, the bank’s chief equity strategist writes that market performance in Facebook’s wake “supports our strategic preference for Technology and growth stocks.”

And so Goldman – whose prop desk may well be selling its tech exposure to marginal buyers – will continue to urge clients to be longs stocks until more such shock events take place,

For now, hedge funds believe the firm, and even after the Facebook fiasco, tech remains a hedge fund and mutual fund favorite, even though the latest 13-F filings showed that tilts in the sector are smaller now than they were in 2016 and 2017.

Goldman’s parting words to its “concerned clients” are of encouragement:

Other positioning data including our Sentiment Indicator suggest overall portfolio length has declined significantly in recent months, reducing concerns of crowding. While government policy remains a key risk, the pricing power of many Tech firms should help insulate them from the margin risks posed by escalating trade conflict.

In other words, “don’t worry not everyone is on the same side of the boat.” Perhaps, although after we beg to differ after just one look at this chart from Bank of America which shows that if one strips away tech and commerce, world stocks have barely moved this decade.

And if Facebook’s collapse showed one thing, it is just how flimsy the foundation supporting this sector has become, as investors panic sell first in some cases not even bothering to ask questions later…

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President Trump’s attorney Rudy Giuliani went on the defense Sunday morning, telling Face the Nation that former Trump attorney Michael Cohen made at least 183 recordings of separate conversations, among which the president is “discussed at any length” on 11 or 12, and only recorded on one. 

.@RudyGiuliani tells @FaceTheNation on additional tapes from Cohen:
-183 unique conversations on the tapes and President Trump is on one of them
-12 other tapes discuss President Trump. Giuliani said it is Cohen talking to reporters. pic.twitter.com/bF20QuGRpo

— Face The Nation (@FaceTheNation) July 29, 2018

CNN aired that conversation between Trump and Cohen, in which they discuss the purchase of rights to a Playboy model’s claim that she and Trump had an affair. Cohen’s attorney, longtime Clinton operative Lanny Davis, leaked it. 

Giuliani now says that the tape was altered, telling Fox that two experts and retired FBI agents who have analyzed the tape believe it was “played” with. 

Tampered tapes? President Trump’s lawyer, Rudy Giuliani says expert analysis shows ‘someone messed’ with Cohen tapes pic.twitter.com/Mf2h3YZWz8

— FOX & friends (@foxandfriends) July 29, 2018

Avowed Democrat Alan Dershowitz, a recent Trump defender, said that Giuliani is doing the right thing, and that any good lawyer would conduct a forensic examination of the tape. 

.@AlanDersh: Any good lawyer would have a forensic examination on taped evidence, so Rudy Giuliani is doing the right thing for President Trump pic.twitter.com/r9OwH19K1D

— FOX & friends (@foxandfriends) July 29, 2018

Responding to a New York Times report that special counsel Robert Mueller is digging through Trump’s tweets to make an obstruction case, Giuliani told Face the Nation on Sunday that President Trump may not have to testify at all because his tweets lay out his defense. 

“A lot of his tweets have been very helpful. The reason he may not have to testify is that he’s laid out his defense very clearly,” Giuliani said, adding “”Obstruction by tweet is not something I think works real well.”

“Generally obstruction is secret it’s clandestine it’s corrupt. I’ve looked at those tweets and they don’t amount to anything.”

Has Giuliani told @realDonaldTrump to stop tweeting after reports Mueller is investigating the president’s tweets?@RudyGiuliani : Good luck about tweeting…Obstruction by tweet is something that doesn’t work so well. pic.twitter.com/O4utVBBqbY

— Face The Nation (@FaceTheNation) July 29, 2018

While The Times said Mueller isn’t focused on any particular tweet or comment, he will attempt to tie Trump’s tweets to the Russia investigation; public attacks; misleading White House statements; and possible offers to pardon potential witnesses. 

In particular, Mueller is focusing on tweets concerning Attorney General Jeff Sessions and former FBI Director James Comey in order to stitch together a mosaic leading to the “obstruction” chapter of the saga, according to “three people briefed on the matter,” the gold standard in anonymous sources.

Several of the remarks came as Mr. Trump was also privately pressuring the men — both key witnesses in the inquiry — about the investigation, and Mr. Mueller is examining whether the actions add up to attempts to obstruct the investigation by both intimidating witnesses and pressuring senior law enforcement officials to tamp down the inquiry. –NYT

Trump’s lawyers argue that none of what Mueller is targeting constitutes obstruction, including the firing Comey in May 2017 – which falls under Trump’s authority as President.

Trump tower meeting

Finally, Giuliani told Fox News Sunday that Michael Cohen’s claim that Trump had advance knowledge of the Trump Tower meeting between Trump Jr. and a Russian attorney during the 2016 election false, saying Cohen’s “default position is to lie.” 

“If he taped everything else, why the heck didn’t he tape this?” Giuliani asked rhetorically, adding that he believes Cohen is “capable of doctoring tapes.”

CNN reported late Thursday that Cohen is prepared to tell special counsel Robert Mueller that then-candidate Donald Trump knew in advance about a June 9, 2016 meeting at Trump Tower between Donald Trump Jr. and Russian lawyer Natalia Veselnitskaya – a Fusion GPS associate who is not a fan of Trump Sr. 

“It’s just flat out untrue,” Giuliani told Fox. “I would’ve been surprised back then, but now that I know all this about (Cohen), it seems to me his default position is to lie.”

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Authored by Eric Peters via EricPetersAutos.com,

A good friend urges me to “sign up” for Obamacare.

He knows about the extortion letters I have been receiving from the federal thugs who are now the enforcers for the health insurance mafia – which succeeded in getting a law passed which forces us to buy their services.

Or else.

The “or else” being punishing fines – plus interest. These are called “shared responsibility” payments but – in the first place – nothing is being “shared” (I am being forcibly mulcted) and in the second place  for whom am I “responsible”?

Note the increase SRP for future years. NTTC Training 2014.

Myself, certainly.

But that is precisely the point and the fulcrum of my objection to Obamacare – to this business of being forced to be responsible for other people’s “care” at the expense of my own.

I could afford a high-deductible, catastrophic care insurance policy – something which would “cover” just that, a catastrophic and therefore not-likely event, such as a heart attack or cancer. And precisely because such an event is unlikely, the cost of such a “plan” would actually be insurance and so affordable.

I could therefore afford to be responsible for myself.

But Obamacare has turned the concept of insurance on its head. What is going on now is not insurance. It is wealth redistribution – mostly to the insurance mafia. The law forces me – and you – to pay for things we don’t need or use (for example, maternity care “coverage” for a divorced middle-aged man and “substance abuse counseling” for a man who doesn’t abuse any substances) which means no value received for the money extorted. The money lines the pockets of the mafia, which may perhaps dole out a portion to “cover” some portion of other people’s maternity care or substance abuse counseling.

I resent being mule-hitched to the insurance mafia’s profit wagon and also having the bit shoved into my mouth so that I may be forced to pull other people’s wagons rather than my own wagon – the only wagon for which I am morally “responsible.”

Which brings me back to my dilemma – and my friend’s solution.

Obamacare has made it financially impossible for me to afford “coverage” and so am not “covered,” which makes me all of a sudden a criminal for seeking to take care of myself and not filch other people’s pockets.

For this I am the object of punishment – like any criminal – except I fail to see how I am one given I’ve harmed no one. Not even myself – and even if I do harm myself, that is a matter between me and myself – the aggrieved party. Certainly I have aggrieved no one else, assuming I am not the property of someone else.

Which of course I am, apparently. And you, too. We will get to that momentarily.

At any rate, I am the object of punishment. “Shared responsibility”  fines – technically, taxes – which is how the federal thugs legitimated the illegitimate, arguing that the Congress (more thugs) having empowered themselves to tax us – that is, to steal our money as and how they wish, by voting to do so – therefore has the power to vote to tax us for failing to send money to the insurance mafia as ordered by their other edict.

So, $695 so far –  plus interest, accumulating. My punishment for failing to be “covered” last year. It will be another $695 plus interest for this year, too.

I cannot afford this, either – not without being unable to afford the care I actually do need, such as the old filling I just had replaced and the crown I had to have done last year, which together cost me about what my “shared responsibility” payment would be for last year and this year except I decided to be responsible for myself instead.

My friend urges me to “sign up” for Obamacare” on the “exchanges.” He says it will cost less – and by “signing up” I will avoid the “shared responsibility” fines (taxes) going forward.

This is all true – but entirely beside the point. Or rather, it is exactly the point.

If I “sign up,” I will be as Lee at Appomattox. I will have surrendered. I will have accepted the idea that I am not a sovereign individual who owns himself absolutely – and the corollary of that, which is the absolute right of others to ownership of themselves. That we are each free individuals, responsible for ourselves and our actions only.

Not for the actions of others, nor they for ours.

If we “sign up,we have accepted that we are all somehow each others’ collective property and as such are subject to being used and controlled by our owners, just like a mule or any other form of property.

That we are enslaved – to each other.

This is why I will not “sign up” – in the spirit of Giles Corey, the refusnik of Salem Witch Trials fame, who declined to go along to get along by witnessing falsely against his neighbors. More weight was all he said – with a contemptuous smile – as his tormentors attempted to get him to “share responsibility” by piling stones upon his chest.

If it comes to it, they can do that to me as well.

I won’t  go to the “exchanges.” Will not voluntarily send a single penny of my money to the cretinous insurance mafia. I will not pay the “shared responsibility” tax, either.

I will continue to be responsible for myself.

If that makes me a criminal in a system gone criminal, so be it.

More weight…

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