Category: zerohedge

Weeks after Goldman Sachs worst quarterly FICC revenue line print since the financial crisis left the bank’s reputation as the savviest trading house on Wall Street in tatters, Bloomberg and WSJ have reported that the bank is considering serious cutbacks in its trading business, including curtailing its fixed income trading and possibly cutting its commodity trading unit entirely.

Not long after the last of the Goldman’s former ruling triumvirate of Lloyd Blankfein, Gary Cohn and Harvey Schwartz left the bank, the unit from which all three men began their ascent to the top of the storied investment bank – namely, the commodities trading unit – is now on the chopping block, per WSJ. After suffering its worst year on record in 2017, commodities trading revenue improved slightly last year. But analysts say the unit is unlikely to match the profitability from the 2000s, when commodities trading contributed some 15% to the bank’s pre-tax profits.

In more than one sense, news that the bank could shutter its commodities unit is a surprise: Goldman stuck with commodities trading even as other banks cut back. Goldman even recently announced an expansion into a green energy business for corporate clients while dipping its toe into nascent LNG markets.

The decision to close the unit, which will be presented to the bank’s board later this month, followed a review of each of the bank’s business units ordered in October by CEO David Solomon, who is facing increased pressure thanks to the 1MDB scandal. During the monthslong review, the bank determined that the unit ties up too much of the bank’s nearly $1 trillion balance sheet for too little profit, suggesting that it is getting in the way of Goldman’s push into other, more lucrative, businesses like main street banking.

Goldman is also looking into reducing the capital dedicated to its core trading business in its fixed-income group, according to BBG.

Senior officials reportedly told the bank’s leadership that the market-making business in the fixed income group was too big, and that operations within the division needed to be diversified.

However, a spokeswoman for the bank stressed that no final decision had been made.

“We’ve not yet reached any conclusions from our business-review process,” said Michael DuVally, a spokesman for the New York-based bank.

 

 

 

 

 

 

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

Authored by John Rubino via DollarCollapse.com,

The key insight of the Austrian School of Economics (maybe the key insight of ALL economics) is that the amount you borrow matters, but so does the use to which you put the money.

A case in point is US corporate debt, which has changed structurally lately in very scary ways. The short version of the story is that after the US cut interest rates to historically low levels to keep the Great Recession from swapping it’s capital R for a capital D, public companies figured out that they could borrow money for less than their stocks’ dividend yield, use the proceeds to buy back their outstanding shares, and generate free cash flow in the process. And – a nice added perk – the increased demand pushed their share price up and landed their CEOs even bigger year-end bonuses.

So that’s what they did, on an epic scale.

But – recall the Austrian School insight – the result was soaring debt without any new productive assets to offset the cost.

Generally speaking, debt rising faster than operating income equals diminished creditworthiness. So all that borrowing has produced several trillion dollars of debt that’s just one step above junk. Here’s an excerpt from money manager Louis Gave’s take on the subject.

The Size of Corporate Debt One Rung Above Junk Has Never Been Greater, Warns Louis Gave

Louis Gave at Gavekal Research says the greatest source of potential instability in the years ahead lies with the massive growth of the U.S. corporate debt market, particularly at the BBB-rated (near junk) level.

Gave recently told FS Insider that it has far outpaced the economy and could be due for a reset during the next downturn, which is increasingly becoming a concern by other strategists.

When it comes to potential trouble spots brewing in the financial markets or global economy, Gave said “if you ask a French client, they tend to point a finger at Italy. If you ask Italian clients, they point a finger at Deutsche Bank; and if you ask German clients, they point a finger at France. When I talk to my U.S. clients, most of them point a finger at China, which they see as having unsustainable high levels of debt and is an accident waiting to happen.”

However, Gave sees an even source of potential problems since, as he points out, the “size of corporate debt one rung above junk has never been greater” (see below).

The challenge today, Gave said, “is that part of the massive growth we’ve seen in the U.S. corporate bond market has really taken place in the BBB space. And so, if you start seeing an economic downturn (and the usual type of downgrades that occur in a downturn), then all of a sudden you have investment grade that becomes non-investment grade.”

Gave worries this could send shock waves through the financial markets since U.S. corporate debt is widely held by pension funds, investment banks, and large institutions all around the globe.

“There are real questions about all the energy debt that’s being issued by a lot of negative cash flow companies in the energy space,” he said, which also leads to questions about industrial, auto and real estate debt.

Gave asked listeners whether all this growth in debt has “funded the purchase of assets that allow the servicing of the debt and then the reimbursement of the debt or has this growth really funded a massive rise in share buybacks and financial engineering?” Gave said if the answer is the latter it would signify that our balance sheets are far more stretched out than they have been in previous cycles.

To sum up, hundreds of US companies are about to find their bond ratings cut to junk. They’ll then have to pay way up to refinance their debts (or in some cases to make payroll), setting off a death spiral that, if the history of past debt binges is any indication, will end with mass bankruptcies.

And as Gave notes, a ton of these bonds reside in the very same pension funds that are already due to implode in the next recession.

via ZeroHedge News http://bit.ly/2Twr6iU Tyler Durden

Rep. Alexandria Ocasio-Cortez (D-NY) is rolling out a legislative package which calls for a “national, social, industrial and economic mobilization at a scale not seen since World War II,” according to a letter the sent to colleagues. 

The specifics of the plan, dubbed the “Green New Deal,” will be released next week – however Ocasio-Cortez lays out several goals in the letter, including reaching net-zero greenhouse gas emissions “through a fair and just transition for all communities and workers,” while creating millions of “good, high-wage jobs,” according to Bloomberg. The plan also aims to ensure prosperity and security while investing in US infrastructure and industry. 

The “Green New Deal” will also fight racism apparently: 

The resolution will also call for clean air and water, climate resiliency, healthy food, access to nature and “a sustainable environment for all for generations to come,” according to the letter. Lastly, the Green New Deal will “promote justice and equity by preventing current and repairing historic oppression to frontline and vulnerable communities.”

She said the goals will be accomplished through a 10-year plan of industrial and infrastructure projects. –Bloomberg

The cost? $7 trillion. 

What is the ‘Green New Deal?’ pic.twitter.com/39hOXI9xMg

— Alexa Bellamy (@anna7bella) February 3, 2019

So far over 40 progressive lawmakers, including Democratic 2020 presidential candidates, have gotten behind the Green New Deal – however it has yet to win over Democratic moderates such as House Speaker Nancy Pelosi. 

Ocasio-Cortez on joining the Sunrise Movement’s protest in Nancy Pelosi’s office a week after the midterms: “I could have thrown up that morning, I was so nervous. But I kept kind of just kept coming back to the idea that what they’re fighting for wasn’t wrong.” pic.twitter.com/y81YDQiNe5

— Frank Dale (@fwdale) January 7, 2019

And while Bloomberg notes that “the Green New Deal would certainly never pass muster with coal-state Senate Majority Leader Mitch McConnell and President Donald Trump,” Democrats behind the plan think it’s “important to show it has the blessing of the House Democrats in advance of the 2020 presidential elections.”

In other words, some Democrats are looking to run on this in 2020. 

Conservatives pushed back on the idea. 

“Americans deserve better than to foot the bill for the Green New Deal’s reckless, expensive, and unattainable goals,” said Rep. Markwayne Mullin (R-OK). “The Green New Deal, just like proposals for free college or Medicaid for All, is nothing but an empty promise that leaves American taxpayers on the hook.”

The resolution has nine co-sponsors, while Sen. Ed Markey (D-MA) will roll out companion legislation in the Senate, according to the letter sent by Ocasio-Cortez. 

Markey will invite Varshini Prakash, co-founder of Green New Deal supporting group, Sunrise, as his guest to the State of the Union on Tuesday. 

On Monday, Ocasio-Cortez retweeted a claim from one of her advisers, law professor Robert Hockett, that “the problems the Green New Deal addresses require solutions where bigger is better, imperative, and paraodixcally, more affordable.” 

CASE FOR A GREEN NEW DEAL: @AOC adviser, Robert Hockett lays out the argument for why a full economic mobilisation agaist climate change now would save the US money in the long run (and, you know, hopefully the planet too).https://t.co/RoLLMV6mIo@rch371 #OOTT pic.twitter.com/VzoxBvxj1B

— David Sheppard (@OilSheppard) February 4, 2019

 Meanwhile, analysts have shot down the idea – suggesting that Ocasio-Cortez is in over her head. 

“It’s a daunting task, and I’m not sure that the authors of the Green New Deal fully comprehend how much they’ll need,” physicist Christopher Clack told The Hill. 

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

“Stocks have reached a permanently high plateau”, “subprime is contained”, “there’s no icebergs this far south” and now “The Fed’s balance sheet is not the threat that people seem to think it is.”

Man’s ability to willfully ignore ‘downside possibilities’ and remain cognitively dissonant far longer than logic (or their pocketbook) should allow seems to know no bound and none other than The Federal Reserve’s Bill Dudley just unleashed what could be the piece de resistance of “nothing to see here, move along” agitprop.

Via Bloomberg,

Stop Worrying About the Fed’s Balance Sheet

It’s not the threat that people seem to think it is.

Financial types have long had a preoccupation: What will the Federal Reserve do with all the fixed income securities it purchased to help the U.S. economy recover from the last recession? The Fed’s efforts to shrink its holdings have been blamed for various ills, including December’s stock-market swoon. And any new nuance of policy — such as last week’s statement on “balance sheet normalization” — is seen as a really big deal.

I’m amazed and baffled by this. It gets much more attention than it deserves.

Let’s start with the stock market. Yes, it’s true that stock prices declined at a time when the Fed was allowing its holdings of Treasury and mortgage-backed securities to run off at a rate of up to $50 billion a month. But the balance sheet contraction had been underway for more than a year, without any modifications or mid-course corrections. Thus, this should have been fully discounted. 

Moreover, if anything, the run-off of the Fed’s balance sheet had a smaller-than-expected impact on the yields of those securities. Longer-term Treasury yields remained low, and the spread between them and the yields on agency mortgage-backed securities didn’t change much. It’s hard to see how the normalization of the Fed’s balance sheet tightened financial conditions in a way that would have weighed significantly on stock prices.

Better explanations for this fall’s weakness in the equity market abound. For one, economic growth and corporate profits looked set to falter in 2019, as the effects of corporate tax cuts waned and the labor market tightened. Demand for scarce labor should increase its share of income, crimping profits. And if the economy didn’t slow enough on its own, the Fed was likely to raise interest rates to make sure that happened. These developments weren’t good for an equity market that had been accustomed to strong earnings growth and an accommodative central bank.

Why then, one might ask, did the Fed announce changes to its plans to pare down its holdings of Treasury and mortgage-backed securities? Actually, there wasn’t much of a change at all. Here’s what Chairman Jay Powell said at his news conference last week:

1. The Fed will maintain a balance sheet big enough to satisfy banks’ demand for reserves, with a buffer above that so the Fed will not have to intervene in the money markets on a day-to-day basis;

2. The Fed now expects banks to demand more reserves than previously thought, so its balance sheet will likely be larger — this means more securities in its portfolio;

3. The Fed could use its balance sheet more actively as a monetary policy tool but only if interest-rate adjustments — its primary tool — were to prove inadequate.

None of this should be a surprise. It always was likely that the Fed would maintain the current “floor” system, in which its choice of the interest rate it pays on reserves drives monetary policy. It also has been clear that banks would have a greater demand for reserves than in prior expansions. That’s because the central bank now pays interest on those reserves, and post-crisis regulations require banks to keep a lot more cash and other liquid assets on hand. 

The new news here is simply that Fed sees greater demand for reserves than it expected a year ago. But even this should not be a big surprise. After all, the federal funds rate — the interest rate that banks pay to borrow reserves from one another — had crept up to equal the rate that the Fed itself pays on reserves. So the central bank’s conclusion is just consistent with what we have already seen happening in money markets.

The concept of using the balance sheet as a monetary-policy tool isn’t new, either. It has always been part of the Fed’s toolkit. The shift is merely in emphasis. When the Fed was clearly on a tightening path, the attention was on interest rates. The Fed has made it clear that this is the primary tool of monetary policy and that hasn’t changed a whit. However, now that the balance sheet is getting more attention and the direction of short-term interest rates is less certain, the Fed is simply reminding people that the balance sheet is still available in circumstances where its primary tool might be insufficient. 

We are nowhere close to that situation today. The balance sheet tool becomes relevant only if the economy falters badly and the Fed needs more ammunition. 

It’s worth pointing out that the composition of the balance sheet is also important. Not only does it matter how much the Fed holds in Treasury and mortgage-backed securities, but also — for Treasury securities — whether they are predominately short-term bills, medium-term notes or long-term bonds. 

On this score, the Fed faces several important decisions. First, once the balance sheet gets to the desired size, what will it do with its still-large holdings of mortgage-backed securities? Will it just let them run off passively, or more actively sell them off? Under a passive approach, it would take several decades for the holdings to disappear.

Second, on the Treasury side, what should the composition be? Before the crisis, the Fed held Treasury securities across the maturity spectrum. Now, with a much bigger balance sheet, there is more reason to shift to Treasury bills. Holding mostly bills would reduce exposure to interest rate risk and increase the firepower available to fight future economic downturns. Should quantitative easing be needed, the Fed would have greater scope to extend the maturities of its holdings, not just increase the size of its balance sheet. 

The bottom line: The Fed’s balance sheet isn’t the threat that market participants sometimes make it out to be, and last week’s announcements do not have significant implications for the interest rate outlook. Market participants would be better off focusing on the economic outlook. This is what will drive monetary policy and the Fed’s decisions about the appropriate trajectory for short-term interest rates over the next year. If the outlook changes, so will the Fed’s thinking.

*  *  *

So, feel any better? Still worried about the $4 trillion balance sheet’s affect on global markets? We have two quick questions for Mr.Dudley that should help clear things up:

1) When the balance sheet is expanding, your privy council proclaimed it all-powerful in its omnipotent role of wealth-creation through asset-value-levitation – So, why do you consider the unwind of this massive monetary experiment a ‘nothingburger’?

2) If the unwind of this experiment is ‘nothing’, why did the market shit-the-bed when Powell said ‘auto-pilot… lot smaller’ and why did The Fed just perform the greatest U-turn in policy in its history?

Probably nothing, right, Mr. Dudley?

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

In a report that elicited chuckles from some corners of Wall Street, the Washington Post reported late Monday that President Trump planned to nominate Treasury Undersecretary for International Affairs David Malpass – who, in addition to serving as the chief economist at Bear Stearns as the investment bank spiraled into bankruptcy, also worked in the Reagan and Bush the elder administrations – to be the next president of the World Bank.

Due to a decades-old agreement with European nations, Washington picks the head of the World Bank while Europe chooses the head of the IMF. Since 1944, the World Bank’s 12-member board has never refused to confirm Washington’s pick, meaning that Malpass’s confirmation is virtually assured – barring a unforeseen and unprecedented break with unprecedented.

One “person close to Malpass” told WaPo that he would seek to be a “constructive” World Bank president, though he declined to comment on Malpass’s agenda beyond saying he would seek to protect US interests and raise incomes in developing nations.

Of course, given his reputation as a skeptic of global institutions like the World Bank, speculation about Malpass’s plans for the bank will almost certainly be the subject of widespread speculation. Since joining the Trump Administration, Malpass has offered some scathing criticism of the institution, once describing the bank as part of a “giant sprawl” of international organizations that create “mountains of debt without solving problems.” He has also accused the World Bank of “mission creep” and of prioritizing its own growth over that of the recipients of its funds. Echoing Trump’s push to cut costs at the UN, the Economist described Malpass as a “cost cutting crusader”. Indeed, Malpass is a skeptic of the very organization that he is being tasked to lead. A noted China hawk, Malpass has been heavily involved with the US-China trade talks, and has also been critical of the World Bank’s loans to Beijing.

At least one former Wall Street economist pointed out the irony in appointing Malpass to run a global organization tasked with fostering economic growth and stability, particularly in the emerging world, after the Treasury official failed to foresee the impending demise of his former employer.

Can I nominate myself to run the World Bank? After all, I was the chief economist for a bank that didn’t fail during the global financial crisis.

— Stephen King (@KingEconomist) February 5, 2019

The current World Bank president, Jim Yong Kim, stepped down on Feb. 1 after more than six years in the post to take a job at a firm focused on infrastructure development in foreign countries. The official announcement of Malpass’s candidacy is expected on Wednesday.

via ZeroHedge News http://bit.ly/2D9fag7 Tyler Durden

After US Manufacturing’s PMI bucked the global slowdown trend, rebounding in January, US Services data was also expected to likewise stabilize against weakness worldwide, but it didn’t.

Markit’s US Services PMI printed 54.2, down from 54.4 – the lowest since September – weighed down by the joint-weakest rise in new business since Oct 2017, the rate of new order growth matches December’s recent lows, and activity expansion is the softest in four months.

ISM’s Non-Manufacturing Index disappointed, dropping to 56.7 (57.1 exp) from an upwardly revised 58.0 as new orders dropped sharply in January. ISM Services has not been lower since Dec 2017

So manufacturing upticked in January and services slumped according to both surveys.

The downshift in services expansion is in sync with forecasts for economic growth to moderate this year as the tax-cut boost fades and the trade war weighs on business plans.

The index of non-manufacturing business activity declined to 59.7from 61.2 the prior month, and the gauge of new orders fell to 57.7from 62.7, the steepest drop since August 2016.

And New Export Orders crashed by the 3rd biggest amount since Lehman…

Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The robust economic growth signalled by the US PMI surveys at the start of the year sits in stark contrast to the near-stalling of growth seen in Europe, China and Japan. At current levels, the surveys are consistent with annualised GDP growth of around 2.5% at the start of the year.

“Jobs growth remained buoyant as business optimism perked up to its highest since October. Backlogs of work are meanwhile building up, in part because firms struggled to meet demand, which has in turn allowed sellers to continue to push prices higher.

“However, although still robust, the rates of economic growth, job creation and inflation signalled by the PMI surveys have cooled since peaks seen last year. This possibly reflects some impact from the government shutdown, though scant evidence of such was seen in the anecdotal evidence from the surveys, but also reflects an easing of demand growth, notably from abroad. Foreign sales of goods and services barely rose in January, contrasting with signs of faster growth of domestic orders. “

Just remember, it’s never a decoupling, it’s always just a lag.

via ZeroHedge News http://bit.ly/2TwnD3J Tyler Durden

C-o-m-i-t-y.

That, according to senior White House advisor Kellyanne Conway, will be the overarching theme of President Trump’s State of the Union, which is expected to begin at 9 pm ET  on Tuesday. Last year’s speech was distinguished by Trump’s calls for cooperation between the two parties during an 80-minute marathon that was the longest speech since the Clinton administration. Of course, Trump’s heartfelt speech did little to change the atmosphere of bitter partisan acrimony that has only intensified in Washington over the past year.

But after a divisive year that featured partisan battles over the confirmation of SCOTUS Justice Brett Kavanaugh, Trump’s zero-tolerance border policies and – most recently – the government shutdown, according to Conway, Trump is once again planning to strike a conciliatory tone to try and silence critics who joke that his speech would be more aptly referred to as “the State of Disunion”.

“This president is going to call for an end to the politics of resistance, retribution and call for more comity,” Conway said, spelling out the last word.

Many of President Trump’s recent decisions have been controversial among both Republicans (the trade war, his decision to pull troops from Syria and Afghanistan) and Democrats (immigration, the wall, the shutdown). And as the president seeks to rally support as the 2020 campaign season gets underway, previews of the speech published by the Hill, the New York Times and NBC News suggest that Trump will spend the bulk of his time touting his victories and selling his policies to the public, while calling for Democrats and Republicans to find common ground on issues like passing a sweeping infrastructure bill. The “optimistic” tone will go a long way toward setting out Trump’s goals for the coming year.

With that in mind, here’s a roundup of what to expect from Tuesday’s speech:

Making the case for an immigration ‘crisis’ (the New York Times):

Immigration policy dominated the president’s agenda during his second year in office, and most likely will again during the third. Mr. Trump has consistently tried to make the case that there is a “crisis” – of crime, drugs and human trafficking – at the border with Mexico, an emergency that can be dealt with only by building a border wall.

The president is also likely to call for a legislative solution to address the so-called Dreamers, younger immigrants who were brought to the United States illegally as children and have no criminal record. This is one area of possible cooperation with Democrats, but there are significant disagreements about details.

Mr. Trump is not expected to veer from his demands for billions of dollars in funding for border security, including some kind of barrier. Congressional negotiators from both parties are trying to hammer out a deal on border security, but Democrats have been adamant that they will not agree to money for Mr. Trump’s wall, and the president has been pessimistic about the chances of Capitol Hill coming up with an agreement that meets his approval.

Still, he is not expected to use the address on Tuesday to declare a national emergency, which potentially would enable him to construct additional barriers along the border using presidential authority.

Will Trump declare a national emergency to build the wall? (courtesy of the Hill):

Trump is coming to Congress during crunch time for budget talks, with a Feb. 15 deadline to avert another shutdown.

In the lead-up to the address, Trump has slammed bipartisan negotiations as a “waste of time” and chastised Democrats for opposing his demand for $5.7 billion in border wall funding.

The president and his aides have instead hinted he may use Tuesday’s speech to lay the groundwork for declaring a national emergency that would allow him to sidestep Congress and build new portions of a wall along the U.S.-Mexico border.

Trump told reporters last week when asked about the declaration to “listen closely” to the upcoming speech. But a senior administration official who previewed Trump’s remarks on Friday would only say that immigration will be “the top priority” of the address.

A declaration would likely spark a political backlash by riling Democrats and even some Republicans. Senate Majority Leader Mitch McConnell (R-Ky.) has reportedly warned Trump privately that such a move could divide his own party. There’s also the near certainty of legal challenges to declaring an emergency.

The senior administration official said Trump, “in a spirit of trying to reach across the aisle to advance the interest of all Americans, is going to try to provide a bipartisan way forward” on the immigration stalemate.

Bringing homes the troops (courtesy of NBC News):

Trump has been fighting the Washington foreign policy establishment over his plans to withdraw troops from Afghanistan and Syria.

Most Republicans and many Democrats in the Senate have voted against a “precipitous withdrawal” from either country, but the Democratic presidential candidates found themselves siding with Trump – even if they disapproved of his methods and perceived motives – on the basic premise of winding down the U.S. presence on both fronts.

Tuesday’s speech is an opportunity for him to make his case to Congress directly and to the viewing public at home.

“We’ve been there for 19 years, almost, we are fighting very well,” he said of the Afghanistan war in an interview with CBS that aired over the weekend. “We’re fighting harder than ever before. And I think that they will – I think they’re tired and, I think everybody’s tired. We got to get out of these endless wars and bring our folks back home.”

An end to AIDS? (courtesy of Politico):

President Donald Trump plans to use Tuesday night’s State of the Union address to promise an end to the HIV epidemic in America, four individuals with knowledge of the planned remarks told POLITICO. Under Trump’s 10-year strategy, health officials would target the U.S. communities with the most HIV infections and work to reduce transmissions by 2030. The strategy has been championed by top health officials, including HHS Secretary Alex Azar and CDC Director Robert Redfield.

Drug pricing (courtesy of Fortune):

Trump is likely to tout his administration’s long-awaited proposal to end a complex system of drug rebates that’s been blamed for helping keep prices high. The measure, announced on Thursday, could hand the president a potential win on drug pricing if passed.

Besides directly targeting middlemen like pharmacy benefit managers, the policy is a “clear negative” for makers of expensive drugs that use rebates to fend off competition from cheaper alternatives, said Veda Partners analyst Spencer Perlman. Sell-side analysts at Wall Street firms had mixed reactions as health-care supply chain stocks fell on Friday.

Abortion appeal (courtesy of New York Times):

White House officials said the president is also likely to talk about abortion and the “fundamental importance and respect for human life.” Mr. Trump’s evangelical supporters, who fervently oppose abortion, have been the bulwark of his political base.

He might also talk about China’s program of forced abortion and sterilization, and perhaps even efforts in the United States to ease some abortion restrictions, such as a contentious amendment regarding late-term abortions being considered by the legislature in Virginia.

Infrastructure (courtesy of NYT):

The president, as he did last year, will almost certainly make an appeal for an infrastructure program, and is likely to emphasize its effect in rural America, the home of his political base.

Programs to repair roads and bridges have strong bipartisan appeal, but so far, Republicans and Democrats have not found a middle ground.

North Korea (courtesy of the Hill):

Another major announcement Trump has teased is a second nuclear summit with North Korean leader Kim Jong Un.

Trump told CBS News on Sunday that the meeting “is set” and that he would reveal the details “probably” during the speech “or shortly before.”

“There’s also a very good chance that we will make a deal,” Trump said of the planned summit with Kim, which is expected to take place this month.

The president could use part of his address to try to win over skeptical lawmakers, who heard from Trump’s own intelligence chiefs last week that North Korea is unlikely to give up its pursuit of nuclear weapons.

One highlight of every SOTU is the guest list, as president’s typically incorporate the stories of every day Americans into their elucidation of their policy goals. This year, Trump’s guests will include an 11-year-old boy named Joshua Trump, who has reportedly been bullied because of his last name, Grace Eline, a child who was diagnosed with a brain tumor when she was 9; Judah Samet, a survivor of the Holocaust who lived through the shooting at Tree of Life synagogue in Pittsburgh; Ashley Evans, a recovering opioid addict; Elvin Hernandez, a special agent at the Department of Homeland Security who focuses on human trafficking; and Debra Bissell, Heather Armstrong and Madison Armstrong, family members of a Nevada couple who authorities say were killed by an undocumented immigrant, the Washington Post reported.

Given that this will be Trump’s first SOTU with Nancy Pelosi standing behind him while Trump speaks from the House rostrum – and with a handful of lawmakers hoping to unseat Trump in 2020 sitting in the crowd – particular attention will be paid to the Democratic response. The official rebuttal will be delivered by Stacey Abrams while Bernie Sanders will once again deliver a rebuttal of his own.

Readers can stream the speech live below:

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

As President Trump’s demands that funding for his border wall be included in a bipartisan border security bill continue to fall on deaf ears, the president once again blasted intransigent Democrats for refusing to cooperate on the wall, claiming he wouldn’t have needed to send another 3,600 troops to the border if we had a “real Wall” in place.

As “tremendous numbers” of people travel through Mexico toward the US border, Trump has sent a “Human Wall” of soldiers to defend against the next round of migrant caravans. But if the wall had already been built, the advancing caravans would be a “non-event.”

Tremendous numbers of people are coming up through Mexico in the hopes of flooding our Southern Border. We have sent additional military. We will build a Human Wall if necessary. If we had a real Wall, this would be a non-event!

— Donald J. Trump (@realDonaldTrump) February 5, 2019

The tweet followed a Politico report claiming that Trump isn’t planning to declare a national emergency to circumvent Congress and build the wall during the State of the Union on Tuesday.

But the calls for a wall of military personnel beg the question: Is this the human wall that Trump has in mind?

via ZeroHedge News http://bit.ly/2DVz8MR Tyler Durden

Authored by Patrick Buchanan via The Unz Review,

“Once that picture with the blackface and the Klansman came out, there is no way you can continue to be the governor of the commonwealth of Virginia.”

So decreed Terry McAuliffe, insisting on the death penalty with no reprieve for his friend and successor Gov. Ralph Northam.

Et tu, Brute?

Yet Northam had all but sworn Saturday he had no knowledge of the 1984 yearbook photo and that he was not either man in the photo.

McAuliffe, who is considering a run for president, joined Kamala Harris, Elizabeth Warren, Bernie Sanders, Cory Booker, Julian Castro and Joe Biden in the pile-on. All had washed their hands of Northam.

That a moderate Democratic governor is near friendless in a fight for his life reveals much about the Democratic Party.

Earlier last week, Northam was at the center of another blazing controversy. He had backed legislation to permit abortions up to birth.

And then he volunteered that, if a child were born after a botched abortion, the “infant would be resuscitated if that’s what the mother and the family desired, and then a discussion would ensue between the physicians and the mother.”

Northam seemed to be not only endorsing third-trimester abortion, but infanticide, “mercy killing,” the murder of a living but wounded baby after birth. A public outcry forced the legislature to back off the bill.

Then the photo from the yearbook of Eastern Virginia Medical School surfaced. Yet, in term of moral gravity, which is worse?

Public advocacy of late-term abortions with an option to execute babies who survive, or a stupid and insensitive 35-year-old photo of two beer-drinking guys, one dressed up in Klan costume, the other in blackface.

Other Democrats are saying that even if Northam is not in the “racist” photo, he admitted to putting shoe polish on his face, to imitate Michael Jackson and his moonwalk, for a 1984 dance contest.

To some Democrats, third-trimester abortions are a step forward for women’s rights. Gov. Andrew Cuomo was cheered in Albany for enacting a law to guarantee late-term abortions should Roe v. Wade be overturned.

By week’s end, Virginia Democrats were bewailing the “horrible” history of their state, where, in 1619, the first slave ship arrived at Point Comfort with men and women from Africa who would work the plantations until the Civil War ended, 250 years later.

One cannot rewrite history.

Four of America’s first six presidents – Washington, Jefferson, Madison, Monroe – were Virginians. All were slave owners. Richmond, the capital of Virginia, was the capital of the Confederacy. The commander in chief of the Confederate armies was a Virginian, Robert E. Lee.

Northam attended Virginia Military Institute, where Thomas Jonathan (“Stonewall”) Jackson had been Instructor of Artillery. The VMI cadet corps fought proudly in the Battle of New Market.

The most memorialized of Virginia’s heroes, in its monuments and statues, are colonists, Revolutionary War and Confederate soldiers and statesmen, and 19th- and 20th-century senators and governors. Almost all supported slavery or segregation.

When the Warren Court outlawed segregation in 1954, Virginia and the South replied with the Dixie Manifesto, declaring open defiance and “massive resistance” to the court order to integrate.

Not until Nixon’s presidency was the order carried out.

In recent years, there has been a running debate about what kind of country America is.

Is she a blood and soil nation, a separate people, with their own unique history, heroes, holidays, language, literature, myths and music? Or is America a propositional nation, united solely by its values, whose mission it is to transmit these values to mankind?

The question raised this weekend, however, is even more divisive.

Is America a good country, or has she, like Virginia, such a past of sins and crimes as to make her eternally ashamed and for which she should make eternal amends? Does America owe the world?

Should Western civilization be held responsible for what it has done through the centuries to persons of color the world over? Should we conduct a purging of monuments to all of America’s “white racists,” as antifa and its allies are determined to do in Virginia?

The Democratic Party may believe that by throwing Northam to the wolves it will satisfy these forces. It won’t.

We are at the beginning of a Kulturkampf to purge America of all monuments and tributes to the white males who created, built and ruled the country, and once believed that they, their nation, their faith, and their civilization were superior to all others. And, without apology, they so acted in the world.

Those two guys drinking beer in blackface and Klan robes and a hood thought they were being funny, but to the unamused members of a radicalized Democratic Party, there is nothing funny about them.

And, after Northam, these intolerant people will demand that the Democratic Party nominate a candidate who will echo their convictions about America’s past.

via ZeroHedge News http://bit.ly/2Gvly4H Tyler Durden

Scrambling after reports about his steamy relationship with former “So You Think You Can Dance?” host Lauren Sanchez was exposed by a series of reports published by the National Inquirer, Amazon founder and CEO Jeff Bezos pulled a $20 million Super Bowl advertisement for his space exploration company Blue Origin after it was revealed that Sanchez – who runs a photography company – shot some of the footage for the ad, according to the New York Post.

And instead of running the Blue Origin ad, Bezos had the Washington Post scramble to put together an ad featuring a voice-over provided by Tom Hanks (who famously played legendary Post editor Bob Bradley in the movie The Post) in just one week.

Since that ad aired, some on twitter have complained that the $5.25 million spent by WaPo on the ad spot would have been put to better use by hiring more journalists for the paper’s newsroom.

$5.25 million could pay for 10 journalists making $50,000 a year for 10 years.

— Jason Riley💎 (@OMGROFLOLJK) February 3, 2019

The melodramatic ad also accrued criticism for the awkward timing: Buzzfeed, Vice, HuffPo and a handful of other media outlets had just announced layoffs that would impact hundreds of journalists. WaPo had previously disclosed that it purchased the spot when it became available last week. Though it’s not clear whether the WaPo ad took the slot formerly reserved for the Blue Origin commercial, or whether one of the other Amazon commercials did.

Amazon aired ads for its Alexa digital assistant as well as its Amazon Prime service. Meanwhile, Bezos partied with Patriots owner Bob Kraft (without Sanchez in tow) and was also spotted hanging out with NFL Commissioner Roger Goodell.

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