Category: zerohedge

Some 3,000 residents of Sydney’s Opal Tower, an apartment in the city’s Olympic Park, are facing the possibility of spending Christmas in an emergency evacuation shelter after the building – and all buildings within a 1 kilometer “exclusion zone” – was evacuated following signs of “cracking” in the 33-storey building that have stoked fears about a possible collapse.

Emergency responders were called to the building Monday morning after residents on the tenth floor reported hearing loud “cracking” noises. An initial investigation determined that the building had moved one or two millimeters, according to the Guardian. Laser monitors are being used to scan for any additional movement in the building.

Though details about the evacuation are still trickling out, the Associated Press reported that police had to use heavy equipment to force open doors to allow residents to escape. Neighboring buildings have also been evacuated.

The tower has almost 400 one, two, three and four bedroom apartments, with two bedrooms selling for nearly $1 million. The tower is situated over the central site of the 2000 Sydney Olympics.

Fire officials in the city said it was “too soon” to tell on Monday whether the building was in danger of collapse. Acting Superintendent Greg Wright said his department couldn’t offer a time estimate for how long the inspections would take. Water, gas and electricity service to the building has been shut off.

“We don’t know that until the engineers assess the building and have a look at what caused the issue and if there is a major issue with the building…It’s not going to be done in minutes. Hopefully it doesn’t take much longer than hours,” he said.

Residents had been taken to the Royal Agricultural Society Hall, but many have now been rehoused. Meanwhile, trains will skip the Olympic Park stop that runs near the building. Buses will serve the area instead, according to Channel 9 News.

The engineering firm that helped build the tower released a statement after the evacuation describing a potential complication that may have contributed to the “cracking” sounds.

Wood & Grieve Engineers, who worked on the building, said online: “The large structural offsets at the base of the towers created a particular challenge. The difficulty was in the coordination of transferring sewer and storm water services through the deep transfer beams and large transfer slabs.”

“Due to the height of the building which imposes excessive pressures on the pipework and fittings installed on the lower half of the building, the WGE team came up with a unique dual stage pressure control concept and conducted a series of experimental tests to simulate the real working condition of the system before specifying it for installation in the building.”

Roads have been blocked around the building, including both sides of Australia Avenue. But one event that hasn’t been canceled is a BBL cricket match between Sydney Thunder and the Sydney Sixers, which will be held at Spotless Stadium. Fans have been asked to travel to the stadium by bus and enter through a side entrance.

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Authored by Joe Schaeffer via Liberty Nation,

The biggest weakness of liberal editors is that they need to reflect their world view.

When news broke out of Germany that an award-winning reporter for Der Spiegel had been exposed as a serial fabricator, my first inclination, before delving into the details, was to assume a certain way the story would unfold. It would involve a writer reporting from a leftist viewpoint in a highly literary, as opposed to fact-driven, manner.

Check and check. Claas Relotius, honored in 2014 as CNN’s “Journalist of the Year,” was especially adept at a stylized form of “reporting” that read like good fiction. His articles often featured lazy anti-American stereotypes that serve as easy comfort food for European leftists: vigilantes on the Mexican border, death penalty eyewitnesses. Relotius provided himself a lively palette from which to paint his biased fiction.

Relotius will go down in shame with other famous journalist hoaxers, yet the people who most enabled his betrayal of the reader will likely avoid similar ignominy.

Which is head-scratching because if a criminal profiler were to come up with a pattern for these kinds of frauds, they would find one constant: editors who were hoodwinked because their fake reporters were writing exactly what they wanted to read.

Janet Cooke

The original black eye to the mainstream leftist journalism machine came in 1980 with the infamous Janet Cooke caper at The Washington Post. Cooke, a 26-year-old reporter, won the Pulitzer Prize for an article on an 8-year-old heroin addict named Jimmy. The article featured that same literary style of reporting that reads like a good book instead of an informative news article. And it fit perfectly into a liberal editor’s wheelhouse with its stirring, highly-personalized account of a minority social crisis in need of a solution, as written by a black woman.

The Post’s ombudsman at the time, Bill Green, wrote a lengthy report on the Jimmy fiasco in 1981 for the newspaper. It revealed that Cooke was hired by the newspaper not for who she was, but for what The Post wanted her to be. Cooke claimed to be a Phi Beta Kappa graduate of Vassar. It turned out she only attended classes there for a year. There was almost no vetting of her resumé or background at all.

“When Cooke visited The Post… every interviewer was impressed,” Green wrote.

“She was a striking, smartly dressed, articulate black woman, precisely the kind of applicant editors welcome, given the pressures to hire minorities and women.”

Red flags should have abounded in the Jimmy piece. The idea that a reporter for a major city newspaper would be allowed to sit and watch while an adult injected an 8-year-old child with heroin seems rather far-fetched to say the least, yet Milton Coleman, city editor who worked on the article, saw no reason to doubt the account or any of the hokey dialogue that came along with it. “I wanted it to read like John Coltrane’s music, strong. It was a great story, and it never occurred to me that she could make it up,” Green quotes Coleman as saying. Of course not.

Jayson Blair

Then there is Jayson Blair, the equally young (27 years old) reporter who fabricated dozens of stories for The New York Times in the early 2000s. A 2003 article in Salon states an NYT internal review found the paper had published 73 Blair articles from the fall of 2002 through spring 2003. A stunning 36 of them, just about half, had “problems.” Blair routinely plagiarized material from other reporters and even “filed” articles from cities he had not even visited.

Like Cooke, Blair was put on the fast track at a major liberal newspaper because he was young and black, without consideration to his personal or professional preparedness to deal with that path. This really should not be seen as a stain on the reputations of young, black reporters in general. Rather, it should be seen for what it is: an unconscionable failing by veteran, experienced editors who want to create a certain news environment based on their particular worldview.

Walt Harrington, a former Washington Post staffer during Cooke’s time at the paper, explained it best. “As it happened, the organization pushed a flawed person into [something she couldn’t handle],” he told ex-colleague Mike Sager.

“It’s like taking a person who’s weak and encouraging them to do something that they’re not equipped to resist. But at the same time, any system should be thoughtful about that kind of person.”

Not only are young reporters like Cooke and Blair left to bear the greatest weight of opprobrium from scandals they should never have been allowed to perpetuate in the first place. But in our last example, we will see how an editor can actually be showered with praise after repeatedly failing to detect a massive hoax on his watch.

Stephen Glass

Stephen Glass pulled off perhaps the most ridiculous serial fabrication in modern journalism history, writing fictitious articles for the liberal magazine The New Republic in the late ’90s, layered with one fantastic lie after another.

His lies were so brazen that they were constantly challenged by the people and institutions he wrote about via letters to the editor. Jonathan Last, reviewing the 2003 film Shattered Glass that was made about the affair, concedes that any good editor could be fooled once or twice by a fabricating writer. But Glass wrote 27 thoroughly fake stories. “Surely the need to respond to letters 6 times in 19 months should have woken someone up,” Last suggests.

Largely because of the way he was depicted in that film, editor Charles Lane, now of The Washington Post, is considered a hero in certain liberal circles for finally “exposing” Glass. He was manning the ship as Glass filed one ludicrously fake story after another, yet not only does he have to deal with none of the shame that comes with such a massive deceit of his magazine’s readership, he actually basks in praise in the aftermath of it all.

“While the world would be a better place if it had never happened, it would be hypocritical to say it was some kind of heavy burden for me,” Lane told former New Republic colleague Hanna Rosin in 2014. “It was a great feather in my cap.”

Far more truthful than the heroic portrayal of Lane in Shattered Glass is a quote the man himself gave in 2003, which should be commended for its self-awareness, even given in retrospect.

“His [Glass’] stories traded on stereotypes, on the world as some of us believe it is, or we’d like it to be,” Lane told the Pittsburgh Post-Gazette. “So there were stories on the pot-smoking young conservatives and on department-store Santas who were really child molesters.

All of this kind of stuff fit into people’s preconceptions. And it’s the biggest reason we should all be ashamed.”

And now we have the Der Spiegel scandal. Fifteen years later and liberal editors are still falling for the lies they want to hear.

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A few hours after the S&P tumbled over 2.7%, sliding into a bear market for the first time in a decade, Japan’s Nikkei 225 – which had been sliding gradually for the past week – dropped sharply by over 3.2% at the open…

… becoming the latest index to tumble into a bear market, sliding over 20% from its October 2 peak.

Meanwhile, the broader Topix index – which had already entered a bear market from its January 2018 highs – plunged even more, dumping over 4.3% and was trading at levels last seen in November 2016, as more than 2 years of gains have been largely wiped out in just the past 3 months as the Christmas Eve rout launched in the US goes global.

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New York City’s dwindling middle class has been leaving the city in droves, as the city loses over 130 residents every day according to the latest US Census data. 

Comprising 48% of city residents, those with annual incomes between $30,000 and $60,000 are feeling the squeeze from higher living costs, wage stagnation and high taxes that whittle away at disposable income. New York’s exodus is topped only by Chicago, according to the data analyzed by Bloomberg. 

For comparison, around 61% of New Yorkers were considered middle class in the 1970s. 

“The middle class is getting squeezed,” says economist Peter C. Earle of the American Institute for Economic Research. “The rich in New York City are getting richer; the poor are actually getting richer, but not rich enough to be middle class.” 

According to Earle, it isn’t unreasonable to assume middle-class incomes have fallen at a more rapid pace in NYC due to the city’s disproportionately high living costs. 

of the estimated 175,000 net new private-sector jobs that have been created in New York City since 2017, fewer than 20 percent are paying middle-class salaries, Earle notes.

The arrival of highly paid Amazon jobs in Long Island City will hardly make a dent in that situation, say analysts. And if anything, the estimated $3 billion in subsidies could saddle taxpayers with huge long-term debt, they add. –New York Post

As the Post notes, one need look no further for evidence of the shrinking middle class than “borded-up retail stores,” which reflect “rising rents and slackening consumer demand.” 

National chain-store locations have plunged in the city by 0.3 percent, to 7,849, this year, according to the Center for an Urban Future. And a record 18 chains, including Aerosoles and Nine West, vacated all their city sites in 2018.

One sector doing a booming “business” is food pantries. Despite a city unemployment rate of 4%, New York food pantries report elevated levels of demand, especially during the holiday season. –New York Post

Contrary to the stock-market linked troubles facing most Manhattanites, over one million New Yorkers have reported worrying that they don’t have enough food to feed their families.

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Authored by John Whitehead via The Rutherford Institute,

Once upon a midnight clear, there was a child’s cry, a blazing star hung over a stable, and wise men came with birthday gifts. We haven’t forgotten that night down the centuries. We celebrate it with stars on Christmas trees, with the sound of bells, and with gifts… We forget nobody, adult or child. All the stockings are filled, all that is, except one. And we have even forgotten to hang it up. The stocking for the child born in a manger. It’s his birthday we’re celebrating. Don’t let us ever forget that. Let us ask ourselves what He would wish for most. And then, let each put in his share, loving kindness, warm hearts, and a stretched out hand of tolerance. All the shining gifts that make peace on earth.”

– The Bishop’s Wife (1947)

What a year.

It feels as if government Grinches and corporate Scrooges have been working overtime to drain every last drop of joy, kindness and liberty from the world.

After endless months of gloom and doom, it’s hard not to feel like Charlie Brown in A Charlie Brown Christmas as he struggles to feel happy and find the true meaning of Christmas in the midst of rampant commercialism, political correctness and the casual cruelty of an apathetic, self-absorbed, dog-eat-dog world.

Then again, isn’t that struggle to overcome the darkness and find the light within exactly what Christmas—the celebration of a baby born in a manger—is all about? The reminder that we have not been forgotten or forsaken. Glad tidings in the midst of hard times. Goodwill to counter meanness. Innocence in the face of cynicism. Hope in the midst of despair. Comfort to soothe our fears. Peace as an answer to war. Love that conquers hate.

As “fellow-passengers to the grave,” we all have a moral duty to make this world (or at least our small corners of it) just a little bit kinder, a little less hostile and a lot more helpful to those in need.

No matter what one’s budget, religion, or political persuasion, there is no shortage of things we can each do right now to pay our blessings forward and recapture the true spirit of Christmas.

For starters, move beyond the “us” vs. “them” mentality. Tune into what’s happening in your family, in your community and your world, and get active. Show compassion to those in need, be kind to those around you, forgive those who have wronged you, and teach your children to do the same. Talk less, and listen more. Take less, and give more. Stop being a hater. Stop acting entitled and start being empowered. Learn tolerance in the true sense of the word. Value your family. Count your blessings. Share your blessings. Feed the hungry, shelter the homeless and comfort the lonely and broken-hearted. Bridge bridges, and tear down walls. Stand for freedom. Strive for peace.

One thing more: make time for joy and laughter. Shake off the blues with some Christmas tunes, whatever fits the bill for you, be it traditional carols, rollicking oldies, or some rocking new tunes. Watch a Christmas movie that reinforces your faith in humanity.

Here are ten of my favorite Christmas movies and music albums to get you started.

First the movies.

It’s A Wonderful Life (1946). An American classic about a despondent man, George Bailey who is saved from suicide by an angel working to get his wings. This film is a testament to director Frank Capra’s faith in people. Sublime performances by James Stewart and Donna Reed.

The Bishop’s Wife (1947). An angel comes to earth in answer to a bishop’s prayer for help. Cary Grant, David Niven and Loretta Young help energize this tale of lost visions and longings of the heart.

Miracle on 34th Street (1947). By happenchance, Kris Kringle is hired as Santa Claus by Macy’s Department Store in New York City for the Thanksgiving Day Parade. Before long, Kringle, who believes himself to be the one and only Santa Claus, has impacted virtually everyone around him. Funny, witty and heartwarming, this film is stocked with some fine performances from Maureen O’Hara, John Payne and young Natalie Wood. Edmund Gwenn won the Academy Award for best supporting actor for his role as Saint Nick.

A Christmas Carol (1951). This is the best film version of the penny-pinching Scrooge’s journey to spiritual enlightenment by way of visits from supernatural visitors. Alastair Sim as Scrooge gives one of the finest film performances never to win an Oscar. The Man Who Invented Christmas (2017) provides a wonderful glimpse into how Charles Dickens came to write A Christmas Carol.

A Christmas Story (1983). Ralphie is a young boy obsessed with one thing and only one thing: how to get a Red Ryder BB-gun for Christmas. Ralphie’s parents are wary, and his mother continually warns him that “you’ll shoot your eye out.” Based on Jean Shepherd’s autobiographical book In God We Trust, All Others Pay Cash, at the heart of this timeless comedy is the universal yearning of a child for the magic of Christmas morning. A great cast, which includes Darren McGavin, Peter Billingsley, Melinda Dillon and a voice-over narrative by Shepherd himself.

One Magic Christmas (1985). If you grew up in a family where times were tough, this film is for you. A guardian angel comes to earth to help a disillusioned woman who hates Christmas. This tale of redemption and second chances is a delight to watch. And Harry Dean Stanton makes a first-class offbeat angel.

Prancer (1989). This story of an eight-year-old girl who believes that an injured reindeer in her barn is actually one of Santa’s reindeer is one of the most down-to-earth Christmas films ever made. It’s a testament to the transforming power of love and childhood innocence. Sam Elliott and Cloris Leachman are fine in supporting roles, but Rebecca Harrell shines. Filmed on location in freezing, snowy weather, this film is a treat for those who love Christmas.

Home Alone (1990). Eight-year-old Kevin, accidentally left behind at home when his family flies to Paris for Christmas, thinks he’s got it made. Hijinks ensue when two burglars match their wits against his. A funny, tender tribute to childhood and the bonds of family.

Elf (2003). Another modern classic with a lot of heart. Buddy, played to the hilt by Will Ferrell, is a human who was raised by elves at the North Pole. Determined to find his birth father, Buddy travels to the Big Apple and spreads his Christmas cheer to everyone he meets. This film has it all: Santa, elves, family problems, humor, emotion and above all else, a large dose of the Christmas spirit. One of the best Christmas movies ever made.

The Christmas Chronicles (2018). The story of a sister and brother, Kate and Teddy Pierce, whose Christmas Eve plan to catch Santa Claus on camera turns into an unexpected journey that most kids could only dream about. Kurt Russell’s star turn as Santa makes for movie magic.

Now for the music.

Out of the hundreds of Christmas albums I’ve listened to over the years, the following, covering a broad range of musical styles, moods and tastes, each in its own way perfectly captures the essence of Christmas for me.

It’s Christmas (EMI, 1989): 18 great songs, ranging from John Lennon’s “Happy Xmas (War Is Over)” to Bing Crosby’s “White Christmas.” The real treats on this album are Greg Lake’s “I Believe in Father Christmas,” Kate Bush’s “December Will Be Magic Again” and Aled Jones’ “Walking in the Air.”

Christmas Guitar (Rounder, 1986): 28 beautifully done traditional Christmas songs by master guitarist John Fahey. Hearing Fahey’s guitar strings plucking out “Joy to the World,” “Good King Wenceslas,” “Jolly Old Saint Nicholas,” among others, is a sublime experience.

Christmas Is A Special Day (The Right Stuff, 1993): 12 fine songs by Fats Domino, the great Fifties rocker, ranging from “Amazing Grace” to “Jingle Bells.” The title song, written by Domino himself, is a real treat. No one has ever played the piano keys like Fats.

Christmas Island (August/Private Music, 1989): “Frosty the Snowman” will never sound the same after you hear Leon Redbone and Dr. John do their duet. Neither will “Christmas Island” or “Toyland” on this collection of 11 traditional and rather offbeat songs.

A Holiday Celebration (Gold Castle, 1988): The classic folk trio Peter, Paul & Mary, backed by the New York Choral Society, sing traditional and nontraditional holiday fare on 12 beautifully orchestrated songs. Included are “I Wonder as I Wander,” “Children Go Where I Send Thee,” and “The Cherry Tree Carol.” Also thrown in is Bob Dylan’s “Blowin’ in the Wind.”

The Christmas Album (Columbia, 1992): Neil Diamond sings 14 songs, ranging from “Silent Night” to “Jingle Bell Rock” to “The Christmas Song” to “Come, O Come Emmanuel.” Diamond also gives us a great rendition of Lennon’s “Happy Xmas (War Is Over).” A delightful album.

A Charlie Brown Christmas (Fantasy, 1988): 12 traditional Christmas songs by the Vince Guaraldi Trio. The pianist extraordinaire and his trio perform “O Tannenbaum,” “The Christmas Song” and “Greensleeves.” Also included is the Charlie Brown Christmas theme.

The Jethro Tull Christmas Album (Fuel Records, 2003): If you like deep-rooted traditional holiday songs, you’ll love this album. The 16 songs range from “God Rest Ye Merry Gentlemen” to Ian Anderson originals such as “Another Christmas Song” and “Jack Frost and the Hooded Crow.” With Anderson on flute and vocals, this album has an old world flavor that will have you wanting mince pie and plum pudding.

A Twisted Christmas (Razor Tie, 2006): Twisted Sister, the heavy metal group, knocks the socks off a bevy of traditional and pop Christmas songs. Dee Snider’s amazing vocals brings to life “Oh Come All Ye Faithful,” “Deck the Halls,” “I Saw Mommy Kissing Santa Claus,” among others—including “Heavy Metal Christmas (The Twelve Days of Christmas).” Great fun and a great band.

Songs for Christmas (Asthmatic Kitty, 2006): In 2001, independent singer/songwriter Sufjan Stevens set out to create a Christmas gift through songs for his friends and family. It eventually grew to a 5-CD box set, which includes Stevens’ original take on such standards as “Amazing Grace” and “We Three Kings” and some inventive yuletide creations of his own. A lot of fun.

Before you know it, Christmas will be a distant memory and we’ll be back to our regularly scheduled programming of politics, war, violence, materialism and mayhem.

As I make clear in my book Battlefield America: The War on the American People, there may not be much we can do to avoid the dismal reality of the American police state in the long term – not so long as the powers-that-be continue to call the shots and allow profit margins to take precedence over the needs of people – but in the short term, I hope you’ll do your part to “spread a smile of joy” and “throw your arms around the world at Christmastime.”

As Frank Cross, the Scrooge character in Scrooged (1988), remarks:

“I’m not crazy. It’s Christmas Eve! It’s the one night of the year when we all act a little nicer, we smile a little easier, we cheer a little more. For a couple of hours out of the whole year, we are the people that we always hoped we would be! It’s a sort of a miracle because it happens every Christmas Eve. And if you waste that miracle, you’re gonna burn for it. I know what I’m talking about. You have to do something. You have to take a chance. You do have to get involved. There are people that are having trouble making their miracle happen. There are people that don’t have enough to eat, and there are people that are cold. You can go out and say ‘hello’ to these people. You can take an old blanket out of the closet and say, ‘here.’ You can make ‘em a sandwich, and say ‘Oh, by the way, here!’ And if you give, then it can happen. Then the miracle can happen to you. It’s not just the poor and the hungry, it’s everybody that’s gotta have this miracle! And it can happen tonight for all of you! If you believe in this pure thing, the miracle will happen and then you’ll want it to happen again tomorrow! You won’t be one of these bastards who says, ‘Christmas is once a year and it’s a fraud.’ It’s not! It can happen every day! You’ve just got to want that feeling! And if you like it and you want it, you’ll get greedy for it. You’ll want it every day of your life, and it can happen to you! I believe in it now. I believe it’s gonna happen to me now. I’m ready for it! And it’s great. It’s a good feeling. It’s really better than I’ve felt in a long time. I’m ready. Have a Merry Christmas, everybody.”

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And it’s certainly not hedge funds.

As the following chart showing the performance of Goldman’s famous (or infamous) hedge fund VIP index makes it clear, the Top 20 most popular stocks among the “hedge” fund community have cratered into year end, down 22% from their all-time highs, dragging with them not only most hedge funds but also virtually all other active investors, who will be relieved to finally put 2018 in the rearview mirror.

No, the winner from the historic Q4 rout and record December plunge in the S&P are passive investors such and especially ETF giant BlackRock, whose exchange-traded fund business attracted more than $25 billion in November inflows, a record monthly haul for the company.

Recall that whereas last week EPFR reported that stock funds suffered record weekly outflows of $39 billion, this was the result of $53 billion in active fund outflows offset by $14 billion in ETF inflows, as the great rotation from active to passive continues.

The latest figures from BlackRock, the world’s largest money manager and biggest provider of ETFs, confirm that the shift away from expensive active investing, which has done little if anything to protect investors during the first bear market in a decade, to passive is accelerating.

And continuing: “we’re also seeing strong flows in December,” Blackrock spokeswoman Melissa Garville told Bloomberg

The gains for BlackRock came in a month when investors bailed out of actively managed funds and piled into passive vehicles amid spikes in market volatility. Active funds had outflows of $57.4 billion in November while passive funds, a mix of index mutual funds and ETFs, attracted $55.9 billion, according to data from Morningstar.

The shift into passive was broad-based as BlackRock drew cash into both stock and bond ETFs, while the company’s Emerging Markets ETF gained $3.3 billion and the IShares 1-3 Year Treasury Bond ETF added $2.4 billion as investors moved to short-term vehicles. Short-government funds, often seen as a safe-haven, received the most inflows last month in a decade, according to Morningstar.

The inherent paradox in this rotation is that if this is indeed “the big one”, there may come a day – again – when like during the ETFlash Crash of August 2015, ETFs plunge sharply amid a disconnect between the synthetic product and the underlying securities as investors liquidate en masse, forcing fund managers to dump all constituent shares, not just those which have the weakest fundamentals, in the process exacerbating the selloff as high quality, highly liquid names end up being sold off disproportionately relative to stock of companies that truly deserve to be dumped yet have made their way into countless ETFs; in fact there are now (way) more passive funds tracking stocks (over 3.2 million) than there are stocks in all global markets (43,000)…

… an imbalance which various Wall Street icons such as Howard Marks  believe will end in tears. Should the recent selloff fail to find a bottom, we may soon find out if they were right because as Howard Marks’ warned in 2017, “As a product of the last several years, ETFs’ promise of liquidity has yet to be tested in a major bear market, particularly in less-liquid fields like high yield bonds.”

Well, today the longest bull market in history officially ended and the bear market has begun, and with it, the test of just how resilient ETF liquidity truly is.

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A new poll from The Hill and HarrisX has former Vice President Joe Biden beating President Trump in a hypothetical 2020 matchup. The survey finds Biden ahead 42 percent to Trump’s 36 percent.

The same poll has President Trump beating Democrat Beto O’Rourke (D-TX) 37 percent to 30 percent, while former presidential candidate Sen. Bernie Sanders (I-VT) was nearly dead-even with Trump at 37 percent and Sanders at 38 percent. 

Progressive strategist Ruy Teixeira said in an interview that aired Monday on “What America’s Thinking,” that while it’s too early to start polling on 2020 contenders, it does not surprise that Biden matches up well against Trump. 

“It’s really early to be polling on this,” Teixeira, a senior fellow at the Center for American Progress, told Hill.TV’s Jamal Simmons. 

“It doesn’t surprise me that Biden runs relatively well against Trump. He’s got 100 percent name recognition, he’s a likable guy. I think he’d play well in different areas of the country that the Democrats haven’t done so well in,” he added. –The Hill

That said, polls in the 2016 Trump-Clinton race served as contrarian indicators – while The Hill is a liberal outlet, so take all of that with as many grains of salt as needed. 

The Hill-HarrisX poll is a joint project of The Hill’s new online TV division, Hill.TV, and the HarrisX polling company that surveys 1,001 Americans a day on the issues of the day in politics and policy. The Dec. 16-17 survey has a sampling margin of error of 3.1 percentage points. –The Hill

Last week the Democratic National Committee (DNC) announced a dozen primary debates in 2019 and 2020 – however no word on which candidate(s) they’ll leak debate questions to ahead of time. 

President Trump on Friday mocked O’Rourke, who lost his Senate bid in November – telling reporters “I thought you were supposed to win before you run for president!.” 

Sanders, meanwhile, was a strong contender in 2016 – only to have the DNC and Clinton campaign conspire against him; denying him access to key Democratic voter information, while giving Hillary Clinton debate questions ahead of time. Many have suggested that Sanders could have beaten Trump if he had prevailed in the primaries. 

Biden has left his options open in 2020. 

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Santa Claus – also known as Kris Kringle, Saint Nicholas, Father Christmas or just Santa, is apparently not cutting it as a member of the patriarchy depending on who you ask. 

A survey conducted by GraphicSprings on what could be done to “modernize” Santa was created based on suggestions by 400 people – after which 4,000 respondents across the UK and US voted on what Santa could do to get with the program. 

The good news? Most people say he shouldn’t change a thing; no iPhone, no dreadlocks, no flying car, no tattoos – and Santa certainly shouldn’t shave his beard. 

That said, 18.6 percent of Americans who answered the question “If you could ‘rebrand’ Santa for modern society, what gender would he be?‘ said that Santa should lose his sack and be gender neutral. 11 percent thought the Christmas icon should be a woman. 

Across the pond, 15.6 percent of Brits also thought Santa should be gender neutral, while just about the same number thought he should be a woman.

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Authored by Lance Roberts via RealInvestmentAdvice.com,

Last Monday, Jeff Gundlach, famed bond fund manager and CIO of Doubleline, made an interesting comment during an interview with CNBC when he stated that the 10-year Treasury yield would top 6% by 2020 or 2021.

6% would be the highest yield since 2000.

The chart below shows Gundlach’s estimated yield as compared to the long-run range of economic growth. (Note that real GDP growth was running at 5.27% in 2000 as compared to 3.0% today which is also getting weaker.)

As I discussed last week, interest rates are a function of the economy. So, while Jeff suggests that yields are rising to 6% in the next couple of years, such would suggest an extremely strong rebound in economic growth. Unfortunately, there is no evidence currently of a major upturn in economic growth due to surging deficits, debts, demographic, and employment trends. Further productivity trends mean such an upturn in economic growth could only come from a massive surge in debt. Is that likely to happen given our indebted state already?

The biggest problem with rising rates is the negative impact from higher borrowing costs. Given that consumption makes up 70% of economic growth, and that consumers are heavily indebted, a change in rates has an immediate impact to consumption. Take a look at the chart below of the Total Housing Activity Index versus 30-year mortgage rates.

But it isn’t just housing, but everything from automobiles to iPhones. When interest rates rise to a point to where the consumer can no longer afford the payment, the buy decision changes to either a lower priced product or a postponement of the purchase. More importantly, the change to the purchase mentality (either reduction or postponement) specifically slows the rate of economic growth.

Given the structural backdrops to the economy, there is an inability to substantially increase rates of productivity, output, wage growth, savings, or consumption which would lead to stronger rates of economic growth. In fact, we are currently running some of the weakest rates of economic growth, productivity, and wages on record.

The annual rate of economic growth back in the late 70s, early 80s, was between 6 and 8 percent. Today, the long-run outlook for the economy is closer to 2% which is the terminal result of a 40-year long debt-driven expansion. Given that long-run projections of economic growth are between 1.5-2.5%, such means that the 10-year Treasury should run at about the same level. It is simply not feasible for rates to levitate to 4, 5, or 6% when economic growth is unable to support higher rates. Inflation, interest rates, wages, and economic growth are all tied to the consumer.

And the consumer is pretty much tapped out as credit card debt hits all-time highs and most Americans say they didn’t get a pay raise at their current job, or start a better paying job, in the last 12 months, according to a Wednesday survey from Bankrate.com.

“According to the poll, 62% of Americans report not getting a pay raise or better paying job in the past year – up from 52% last surveyed last year. That said, just 25% of respondents in this year’s survey said they would look for a new job in the next year.”

It’s The Deficit

So, if economic growth is going to remain weak, then what other reason would cause rates to rise?

Jeff made a valid point about the issue of the deficit suggesting such will ultimately be the catalyst for rates to rise.

This is a topic I have discussed much previously:

“While the markets have been the beneficiary of the tax cut legislation, which gave a short-term boost to corporate profitability, the economy has enjoyed a boost from the massive increases to spending from what should have been more aptly termed the ‘Bipartisan Non-Budget Act of 2018.’ Notice in the chart below the pickup in economic activity has coincided with a surge in the deficit. Spending on natural disasters and defense spending increases ‘pull forward’ future economic growth which is an illusion of an economic turn.”

“Importantly, surges in budget deficits as a percentage of GDP, are normally associated with ‘recessionary’ activity in the economy. As noted, the increases in Federal spending create a temporary boost to economic growth which supports higher asset prices. Currently, the government is running one of the largest deficits, in both dollar terms, and as a percentage of GDP, in history. This is occurring at a time when the economy is ‘booming’ and deficits should be reduced for the next ‘rainy day.’” 

“Furthermore, with sequester-level budget caps returning next year, the budgetary issues in Washington will become even more complicated. The last time budget-caps came into play Ben Bernanke launched QE-3 to offset the economic drag from expected reductions in government spending. However, given the recent track record of the ‘conservative’ Congress, it is highly likely spending will be increased further in the months ahead. Look for an even larger ‘C.R.’ in December when the current resolution runs out.”

Jeff’s point is one that has been made many times previously by others. The basic premise is that as the deficit expands, it will require more debt to be issued. The problem comes when the demand to purchase that debt does not keep up with the supply. Up to this point, America has been fortunate to maintain its role as the world’s reserve currency which means foreign nations hold Treasuries in their reserve accounts. But, as Jeff states, there are many countries now looking for an alternative. The problem for America comes as the status of “reserve currency”diminishes.

I both agree and disagree with Jeff on this point.

I agree that other countries are looking for alternatives to the dollar as a reserve currency. However, there are two primary reasons why this will likely not be a real threat soon:

1. If you are any other country where are you going to store your reserve currency: China, Russia, India, Brazil, the Eurozone? Many of these economies are corrupt, weak, too small, or a combination of all three.

2. When global investors are seeking “safety” from “risk,” where are they going to go?

Both of these reasons have the same foundations:

1. Liquidity: the U.S. Treasury market is vastly deep and can support billions in transactions without a major dislocation.

2. Safety: despite all of the flaws in the U.S., it is still the safest country in the world to conduct business with. While there are certainly many issues, the “rule of law” in the U.S. still provides a relative level of safety for storing capital not found in other countries.

3. Return: the rate on U.S. Treasuries is high enough to attract capital from other areas as a “safe” store of value.

4. Dollar Value: the rising U.S. dollar is attracting capital flows from weaker currencies and economies.

I have repeatedly stated that when the market rout gets bad enough, money will flow into the “safest of havens” – the U.S. Treasury. Over the past month, this is exactly what happened.

“As a result of this pre-deflationary deluge, investors have flooded into bonds and out of stocks, while within equities there were large moves into defensives via energy and tech into staples and utilities. More importantly, this month’s survey found the biggest ever one-month rotation into bonds class as investors dumped equities around the globe while bond allocations rose 23ppt to net 35% underweight….”

Jeff’s premise is that with all of the new debt needing to be issued by the government to fund their ongoing fiscal largesse, there is a risk that “our neighbors” will not be “gracious lenders” in the future. As such, the “dollar funding”issue causes rates to soar higher until “buyers” can be found.

While I am certainly not denying such is indeed the risk. There isn’t a lot of historical precedents that such is the case with a mature, strong, industrialized country. Japan, as an example, is vastly indebted with a soaring budget deficit, weak economic growth, and does not maintain a “reserve” currency status. Yet, after 30-years, interest rates have failed to rise.

Notice that since 1998, Japan has not achieved a 2% rate of economic growth.

Even with interest rates still near zero, economic growth remains mired below one-percent, providing little evidence to support the idea that inflating asset prices by buying assets leads to stronger economic outcomes, or that rising budget deficits means higher rates.

The real risk to the domestic economy is that Jeff is right.

If interest rates do rise sharply it is effectively “game over” as borrowing costs surge, deficits balloon, housing falls, revenues weaken and consumer demand wanes. It is the worst thing that can happen to an economy that is currently remaining on life support.

Japan, like the U.S., is caught in an on-going “liquidity trap”  where maintaining ultra-low interest rates are the key to sustaining an economic pulse. The unintended consequence of such actions, as we are witnessing in the U.S. currently, is the ongoing battle with deflationary pressures. The lower interest rates go – the less economic return that can be generated. An ultra-low interest rate environment, contrary to mainstream thought, has a negative impact on making productive investments and risk begins to outweigh the potential return.

More importantly, while there are many calling for an end of the “Great Bond Bull Market,” this is unlikely the case for two reasons.

1. As shown in the chart below, interest rates are relative globally. Rates can’t rise in one country while a majority of global economies are pushing low to negative rates. As has been the case over the last 30-years, so goes Japan, so goes the U.S.

2. Increases in rates also kill economic growth which drags rates lower. Like Japan, every time rates begin to rise, the economy rolls into a recession. The U.S. will face the same challenges. 

Unfortunately, for the current Administration, the reality is that cutting taxes, tariffs, and sharp increases in debt, is unlikely to change the outcome in the U.S. The reason is simply that monetary interventions, and government spending, don’t create organic, sustainable, economic growth. Simply pulling forward future consumption through monetary policy continues to leave an ever-growing void in the future that must be filled. Eventually, the void will be too great to fill.

Where Are Rates Headed In 2019

So where are rates headed. Dr. Lacy Hunt of Hoisington Investment Management had a good take:

“The U.S. economy appears to be on a steadily declining path to recession and disinflation/deflation. This may seem improbable in the face of record year-over-year growth in nominal GDP over the past decade.

Significantly, U.S. monetary restraint has caused a similar slowdown in local currency money growth around the world. Additionally, velocity in Japan, the Euro area and China has been declining secularly since the late 1990s, as debt has become increasingly less productive. Since money times velocity (i.e. its turnover) determines GDP in all countries, this cumulative global economic slowdown should impact U.S. economic activity.

 From the standpoint of an investment firm that started in 1980, when 30-year bond yields were close to
15%, the current 30-year treasury rate at 3% seems ridiculously low. In the near future, at 1.5%, the 3% yield will seem generous ”

I agree.

Currently, interest rates are at a level that has historically led to some sort of event. Whether it was economic, financial, or both, there is no real precedent which suggests rates could rise another 3% from here without severe ramifications. Of course, as the market declines, the demand for “safety” would ultimately push rates lower.

At some point, the Federal Reserve is going to step back in and reverse their policy back to “Quantitative Easing”and lowering Fed Funds back to the zero bound.

When that occurs, rates will not only go to 1.5%, but closer to Zero, and maybe even negative.

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Across Baltimore, news of explosions Friday morning reminded everyone that chaos from the 2015 Baltimore Riots has never left.

Police said a warrant had been issued for the arrest of a young woman in connection with the firebombing of multiple vehicles.

Lakia Letterlough, 25, is described as 5-feet-4-inches tall and 145 pounds with black hair and brown eyes, said the Baltimore Brew. Letterlough is wanted in connection with a series of vehicle fires.

“Somebody apparently took an accelerant and put it on a number of cars — we believe seven at this point,” Interim Police Commissioner Gary Tuggle said in an afternoon Friday press conference.

CARS SET ON FIRE IN MOUNT VERNON: Baltimore Police are trying to figure out who set 10 cars on fire in Mount Vernon early this morning, causing some of them to explode.

READ MORE: https://t.co/1oAzhoUg0R pic.twitter.com/1Lwve9z4sl

— WMAR-2 News (@WMAR2News) December 21, 2018

Responding to the firebombed vehicles in his district, Councilman Eric T. Costello posted information about the event on social media

.

“Early this morning [Friday] around 3 am in Mount Vernon, there were six vehicles lit on fire, centering around the North Charles St. corridor, near Eager Street,” he wrote. “This led to 3 other vehicles catching fire.”

“For neighborhood residents, the fires and explosions sent a shower of window glass onto sidewalks at about 3 a.m. turned their relatively quiet neighborhood into something resembling a war zone,” said the Brew. 

According to Costello, the first “event” involved a car on “North Charles Street @ Penn Station – 1 vehicle.” 

The remaining events, he said, were as followed:

• 1700 block of St Paul St – 1 vehicle
•  Unit block of E Lanvale St – 1 vehicle
• 1000 block of N Charles St – 1 vehicle, 2 incidental vehicles
• 1000 block of St Paul St – 1 vehicle
• Unit block of E Eager St – 1 vehicle, 2 incidental vehicles

Along with photos and videos on Twitter of the burned-out vehicles,  the Mount Vernon-Belvedere Association took to social media to encourage residents to contact police with any information or security camera footage.

“These criminal acts of vandalism are unacceptable and horrendous,” association leaders said on Facebook.

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) was called in to assist the Baltimore Police Department in the probe.

Investigators said it does not look like the vehicles were explicitly targeted. 

“We believe those were random acts of violence,” Tuggle said.

However, we disagree with Tuggle’s statement that it was a “random act of violence.”

Baltimore is the epicenter for economic inequality in the US. Black residents make up 63% of Baltimore’s population and do worse than the African American national average on nearly every metric.

Almost 1/3 of the households of color have a negative net worth in the city. So, when a young African American from an impoverished part of town firebombs a bunch of cars in Mount Vernon, a historical and wealthy neighborhood in the city, we should understand that wealth inequality, already at extremes, is leading to social destabilization.

Baltimore is imploding from within; it will get a lot worse in the next recession.

via RSS http://bit.ly/2BIbHUL Tyler Durden