Category: zerohedge

“Run For Cover”: Greenspan Warns The Bull Market Is Over; Leads To Widespread Mockery

Former Federal Reserve chairman Alan Greenspan told CNN that it may be time for investors to “run for cover” – after massively hedging his language to include the possibility of further market gains before a painful correction. 

“It would be very surprising to see it sort of stabilize here, and then take off,” Greenspan told CNN‘s Julia Chatterly, adding that while markets could still go up further, “At the end of that run, run for cover.” 

Markets have struggled to maintain altitude in Q4 – with the S&P 500’s late September gains of more than 9.5% evaporating to -4% YTD as of Tuesday, after closing at its lowest level since October 2017 on Monday. 

“The volatility is a function of how we speak, think and feel — and it’s variable,” said Greenspan. “Unless you can somehow radically change human nature and how we respond, this is what you’ll always get and have been getting. You have to count on it, if you’re going to understand how the market functions.”

President Trump in recent weeks has warned the Fed against further tightening – sentiment which billionaire hedge fund manager Stanley Druckenmiller and former Fed member Kevin Warsh wholeheartedly agree with. 

“The central bank should pause its double-barreled blitz of higher interest rates and tighter liquidity,” wrote Druckenmiller and Warsh in a recent Wall Street Journal Op-Ed.

On Tuesday, Trump tweeted: “I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!”

On Monday Trump tweeted that it was “incredible” that the Fed was considering a rate hike in light of a very strong dollar and “virtually no inflation.”

Greenspan, meanwhile, told CNN that a key factor in recent volatility has been a “pronounced rise in real long-term interest rates,” and that the United States may be in store for a period of stagflation, which he called “a toxic mix” of high inflation and high unemployment last seen in the 1970s and early 1980s. 

“How long it lasts or how big it gets, it’s too soon to tell,” said Greenspan. “We’ll know it when we get on top of it.”

Greenspan’s comments mocked far and wide. David Rosenberg tweeted: “When the architect of the ‘Greenspan put’ tells investors to “run for cover” as he did today on CNBC, you know that finally we have a bona fide contrary buy signal!”

Longer interview below:

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Running Out Of Lifeboats – Has “BTFD” Become “STFR”?

Authored by Lance Roberts via RealInvestmentAdvice.com,

Kevin Wilson recently penned a piece for Seeking Alpha that made a great point about where the markets are currently. To wit:

“Famous market observer Art Cashin mentioned a metaphor in October 2017 that resonated with me. He said (words to the effect that) at that moment, market players had only the protection provided by pictures of lifeboats, not the lifeboats themselves. This is just like the Titanic, whose measly 16 lifeboats looked nice, but left many hundreds on board with no means of escape when the ship sank. That is the current market situation in a nutshell. Players seem to believe that their positions are diversified enough to protect them in a downturn, and in any case, many appear to expect no major drawdown in spite of many months of extreme volatility. I would argue that the risk is far greater than perceived by many, and the protections most have in place are quite inadequate.”

Indeed, that is the case. As I noted in this past weekend’s newsletter, while the S&P 500 has declined only marginally for 2018, the devastation across markets has been dramatically worse.

In other words, traditional diversification, which is considered the “defacto” portfolio protection strategy by the mainstream media, has not worked.

Over the last several weeks, I have been discussing the transition of the market from “bullish” to “bearish.”

“The difference between a ‘bull market’ and a ‘bear market’ is when the deviations begin to occur BELOW the long-term moving average on a consistent basis.”

“For only the third time in the last decade, the market has now slipped below that longer-term trend.

The difference, this time, is there are no Central Banks talking about coming to the markets rescue – at least not yet.

Currently, it is still too early to know for sure whether this is just a ‘correction’ or a ‘change in the trend’ of the market. As I noted previously, there are substantial differences which suggest a more cautious outlook. To wit:

  • Downside Risk Dwarfs Upside Reward. 
  • Global Growth Is Less Synchronized
  • Market Structure Is One-Sided and Worrisome. 
  • Higher Interest Rates Make It Hard for the Private and Public Sectors to Service Debt
  • Trade Tensions With China Are Intensifying
  • Any Semblance of Fiscal Responsibility Has Been Thrown Out the Window
  • Peak Buybacks. 
  • China, Europe, and the Emerging Market Economic Data All Signal a Slowdown
  • The Democrats won control of the House in the Mid-term elections which will effectively nullify fiscal policy agenda moving forward.
  • The leadership of the market (FAANG) has faltered.

Here is the important point.

Understanding that a change is occurring, and reacting to it, is what is important. The reason so many investors ‘get trapped’ in bear markets is that by the time they realize what is happening, it has been far too late to do anything about it.”

More importantly, as I have shown previously, the long-term technical backdrop has now substantially eroded. John Murphy at Stockcharts.com had an important note on this:

“There’s a reason why every short-term rally attempt over the past couple of months has failed. That’s because longer-range indicators have turned bearish and remain so. It’s more difficult for bounces on dailycharts to get very far when the trends on weekly and monthly charts have turned down.”

He is absolutely correct and today we are going to go through some of the longer-term charts to show the risk currently at hand.

On a weekly basis, the market is clearly oversold and, historically speaking, such conditions have led to reflexive bounces.

However, it is important to note the difference between “bull” and “bear” markets.

During bull markets, markets trade above their longer-term moving averages and can remain overbought for extended periods of time. During “bear” markets, the opposite is true as markets tend to trade below their long-term means and remain oversold.

So, while it is very likely the current oversold condition will lead to a short-term bounce, it is likely an opportunity to reduce risk into.

John also highlighted similar concerns in his missive as well:

“Chart 1 plots weekly price bars for the SPX since the start of 2016 when the last ‘up-leg’ of its nearly ten-year bull market started. And the chart strongly suggests that the nearly three-year rally has ended. First of all, the rising trendline starting in early 2016 was broken during October. That previous support line has acted as a resistance line above short-term rallies since then. That’s a negative sign.

The SPX is now headed down for a retest of its early 2018 lows. That will be a major test of the market’s uptrend. Because a decisive close below that previous low would confirm that stocks are in the early stages of a bear market. In addition, the blue 10-week moving average crossed below the red 40-week average this month (called a “death cross”) which is another bearish sign. [A TV anchor on FOX Business this week referred to the death cross as “gobbledygook”, which says a lot about the quality of its reporting]. Even stronger bearish signals are clearly seen on the weekly RSI and MACD lines.”

Most importantly, the long-term weekly sell signals have turned negative as well. This combined signals are rare in nature and historically have been worth paying attention to.

The Bear Growls

On a monthly basis, the data is also suggesting that a “bear” may indeed be stalking investors.

IMPORTANT NOTE:  While we are discussing these technical issues today, monthly signals are ONLY VALID on the first day of the following month. So, if the markets were able to rally to all-time highs before the end of December, these signals would all be potentially reversed. 

Of the monthly signals we follow, the shorter-term signals have all recently crossed back into “alert” territory suggesting the pressure on stocks remains lower for now. However, as shown, given this is a short-term signal, it issues alerts which do not always indicate the beginning of a bear market.

However, once we move to the longer-term indicator, the picture becomes substantially clearer.

There are two very important points to take away from the chart above.

  1. The long-term monthly signal has been triggered which suggests risk should be substantially reduced, and;
  2. The market has violated the long-term moving average which has only occurred 3-times previously: 2000, 2007, and 2015.

As John concluded in his article as well:

“That’s because a bull market usually has three ‘up-legs,’ and it’s just completed the third one.”

The Biggest Threat To The Bull Market

“Mike ‘Wags’ Wagner: ‘You studied the Flash Crash of 2010 and you know that Quant is another word for wild f***ing guess with math.’

Taylor Mason: ‘Quant is another word for systemized ordered thinking represented in an algorithmic approach to trading.’

Mike ‘Wags’ Wagner: ‘Just remember Billy Beane never won a World Series .’ 

– Billions, A Generation Too Late

While Billions is a hugely entertaining show, especially if you are in the business, the writers pull storylines straight from real life. As JP Morgan previously noted:

“Quantitative investing based on computer formulas and trading by machines directly are leaving the traditional stock picker in the dust and now dominating the equity markets.

While fundamental narratives explaining the price action abound, the majority of equity investors today don’t buy or sell stocks based on stock specific fundamentals. Fundamental discretionary traders’ account for only about 10 percent of trading volume in stocks. Passive and quantitative investing accounts for about 60 percent, more than double the share a decade ago.”

Herein lies the single biggest threat to the bull market.

As long as the algorithms are all trading in a positive direction, there is little to worry about. Algo’s were not a predominant part of the market prior to 2008 and, so far, they have behaved themselves by continually “buying the dips.” That support has kept investors complacent and has built the inherent belief “this time is different.”

But what happens when these algo’s reverse course and rather than “buying the f***ing dip,” they begin to “sell the f***ing rallies” instead?

It may have already started.

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Trump Blinks; White House Will Avoid Shutdown, Find Other Ways To Fund Wall

The White House on Tuesday said that it wants to avoid a partial government shutdown and has found other ways to fund President Trump’s border wall, according to spokeswoman Sarah Sanders. 

Congress and President Trump have just four days to come to an agreement before large portions of the federal government begin to shut down. At issue is a fight over $5 billion in funding from Congress for the border wall, which Democrats led by Sen. Chuck Schumer (D-NY) have flat out rejected. 

Sanders told Fox News “We have other ways that we can get to that $5 billion,” adding “At the end of the day we don’t want to shut down the government, we want to shut down the border.” She then said that the White House was looking into other funding sources and believed that it could be accomplished legally. 

“There are certainly a number of different funding sources that we’ve identified that we can use, that we can couple with money that would be given through congressional appropriations that would help us get to that $5 billion that the president needs in order to protect our border,” said Sanders. 

None of that sounds like Mexico paying for it, but we digress…

Sanders’s comments come after a series of miscalculations by Republicans in recent days over how to try and get Democrats to sign onto $5 billion to pay for the construction of a wall along the Mexico border.

Last week, Trump said he would be “proud” to shut down the government over the issue, a statement that congressional Republicans openly said muddied their messaging. –WaPo

On Sunday, Schumer told Meet The Press that President Trump would not get funding for the wall “in any form.” 

On Monday evening, frustrated Senate Republicans told the press they were expecting a formal proposal from the White House to avert a shutdown – perhaps around 5 p.m., however that never happened and the Senate moved on to other issues such as an overhaul of the criminal justice system. 

“We’ll continue to have these conversations with both Senate and House Republicans and Democrats. Our team has been in constant communication,” said Sanders. “We’re going to continue to do that. I’m not going to negotiate here, but we’ve been talking to them just as recently as this morning.”

For now, while the Treasury Bill curve has improved, it remains anxiously kinked around the potential shutdown date (as demand for pre-shutdown liquidity inverts the curve)…

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“You Sold Your Country Out,” Judge Tells Flynn Ahead Of Imminent Sentence

One week after a federal judge handed down a three-year prison sentence to former Trump attorney Michael Cohen – and more than a year after National Security Advisor Michael Flynn pleaded guilty to charges of lying to the FBI about meetings he had with foreign officials – Flynn is appearing Tuesday before US District Judge Emmet Sullivan in a Virginia courthouse, where his sentence is imminent.

The hearing began with Flynn admitting he knew it was illegal to lie to the FBI, and rejecting an opportunity to postpone the hearing. Crucially, Flynn’s lawyer said he didn’t believe his client was “entrapped” by the FBI.

  • FLYNN SAYS WON’T CHALLENGE CIRCUMSTANCES OF FBI INTERVIEW
  • FLYNN ADMITS HE KNEW LYING TO THE FBI WAS A CRIME
  • FLYNN REJECTS JUDGE’S OFFER FOR SECOND ATTORNEY TO REVIEW PLEA
  • FLYNN SAYS HE CONTINUES TO ACCEPT RESPONSIBILITY IN THE CASE
  • FLYNN DECLINES JUDGE’S OFFER TO POSTPONE THE HEARING
  • FLYNN’S LAWYER SAYS HE DOESN’T BELIEVE FLYNN WAS ENTRAPPED
  • JUDGE CONCLUDES NO REASON TO REJECT FLYNN’S GUILTY PLEA

After accepting Flynn’s plea, Judge Sullivan warned that Flynn’s was a “very serious offense.”

He also revealed that Flynn could have been indicted in a case involving a Turkish banker accused of helping Iran evade sanctions.

  • PROSECUTOR SAYS FLYNN COULD’VE BEEN INDICTED IN LOBBYING CASE
  • PROSECUTOR SAYS FLYNN HELPED IN TURKEY LOBBYING CASE

Prosecutors also noted that Flynn could continue to cooperate.

After confirming that Flynn would still cooperate, the judge’s statements took a harsh turn.

  • ARGUABLY, YOU SOLD YOUR COUNTRY OUT,’ JUDGE TELLS FLYNN
  • AGGRAVATING CIRCUMSTANCES ARE `SERIOUS,’ JUDGE TELLS FLYNN
  • JUDGE AGAIN OFFERS FLYNN MORE TIME TO COOPERATE BEFORE SENTENCE
  • JUDGE ASKS IF FLYNN MIGHT HAVE BEEN CHARGED WITH TREASON
  • PROSECUTOR SAYS `HESITANT TO ANSWER’ BUT NOT SAME AS FARA

According to the Hill, Flynn’s sentencing will be a “milestone” in the Mueller probe, which has spanned 19 months. As he approached the courthouse in Virginia, Flynn waded through what one journalist described as a “mosh pit” of demonstrators.

Flynn’s appearance in D.C. federal court before U.S. District Judge Emmet Sullivan will be viewed as a key milestone in an investigation that has prodded along for 19 months amidst high public intrigue and increasing vitriol from the president.

It was expected that Flynn wouldn’t receive significant jail time thanks to his “substantial assistance” to Mueller (the special counsel recommended a lenient sentence). Though Flynn was facing up to six months in prison. As a reminder, Flynn has sat for 19 separate sessions with the special counsel amounting to 60 hours of questioning.

Flynn

Just hours before the decision was handed down, the special counsel last night produced a heavily redacted ‘302’ document detailing then-national security adviser Michael Flynn’s interview with FBI agents Peter Strzok and Joe Pientka. The document showed Flynn was repeatedly asked about his contacts with former Russian Ambassador Sergey Kislyak and in each instance, Flynn denied (or did not recall) any such conversations. That release followed the FBI’s refusal to release the 302, which detailed Pientka and Strzok’s meeting with Flynn, to clear up suspicions that the document had been tampered with following reports that the two agents did not believe Flynn had been lying. Flynn and his attorneys alleged in a filing last week that Flynn believes he was mislead by the FBI, which Mueller dismissed as an attempt to “minimize the seriousness” of Flynn’s crimes.

Earlier in the day, President Trump tweeted “good luck” to Flynn.

After initially denying that he had discussed sanctions and a United Nations Security Council resolution during the presidential transition with Sergei Kislyak, the Russian ambassador to the US at the tie, Flynn eventually admitted that he had lied to Vice President Mike Pence about his contacts with Kislyak. He also confessed to lying to the FBI.

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“The Great Unwind Is Gathering Speed” – What Chris Whalen Is Worrying About For 2019

Authored by Chris Whalen via TheInstitutionalRiskAnalyst.com,

First a safe and happy holiday to all.

In this issue of The Institutional Risk Analyst, we ponder past prognostications and future risks in 2019.  And we are happy to announce the publication of The IRA Bank Book for Q4 2018. For those of you who were furiously buying copies of the Q3 edition last week, for which we are most grateful, hit the download link again to get the Q4 edition.  You’ll want to read about why US bank earnings growth is now 100% correlated to interest rates.

FYI, new editions of The IRA Bank Book are published about two weeks after the FDIC and other regulators release their institution level and aggregate data (roughly day 60 after the quarter end) for US banks.  The popular IRA Top Ten Banks usually appears after quarterly earnings are complete.  And yes, to your questions, we only sell the most recent edition of each report.

So what is our top concerns in 2019? 

First comes liquidity.  For the past several weeks, US equities have fallen as the great unwind gathers speed.  The same pressures that are causing the Federal Open Market Committee to consider pausing on rate hikes in 2019 are forcing stocks lower.

Never mind the parade of mindless reasons for the stock market reset – trade, China or even a weak US economy – the key factor pushing markets lower is the radical tightening of credit by the FOMC.  Even without a single rate hike in 2019, the tightening caused by the runoff of the Fed’s bond portfolio will continue to suck liquidity out of the financial system.  And lowering the target rate for Fed funds really won’t help if markets lock up.

Just as quantitative easing expanded the US liquidity base, quantitative tightening or “QT” represents a structural decrease in liquidity.  As the Fed’s balance sheet contracts, there is a dollar-for-dollar decrease in liquidity because the Treasury is running a deficit.  A bank deposit becomes a Treasury bill on the national balance sheet, illustrating why the Fed and Treasury are two faces of the same agency.  But the key point is that QT is beginning to impact markets and credit spreads.

The destruction of trillions in equity market valuation is creating a level of panic in the US markets not seen since 2016, when China fears caused the capital markets to seize up. We may be replaying that scenario again.  With high yield spreads headed to the danger zone of 500bp over Treasury yields, that tells you that the policy message coming from Washington is off key.  But it also means that the market for subprime debt, including leveraged loans and CLOs, is grinding to a halt.  That sound you hear is Wall Street choking on conduits full of loans that cannot be sold.

Feldkamp’s First Law states that when spreads widen too much, debt markets stop functioning and equity markets lose value.  We talked about this in “Financial Stability: Fraud, Confidence and the Wealth of Nations.”  When the mix of policy and personalities is toxic, spreads blow out, debt markets freeze and wealth as measured by the equity markets falls.  Sadly there are only a handful of people on the Street who get the joke.  The majority is captive of a narrative where trade tensions are responsible for market weakness.

Next on the string of worry beads is Europe. The European Central Bank just announced the end of its version of “quantitative easing” or QE, but unlike the US the ECB intends to reinvest its bond portfolio indefinitely.  There will be no “quantitative tightening” in Europe by actually allowing the portfolio to run off as in the case of the US Federal Reserve.  We reported this to readers after our trip to Paris last March. This past week, ECB Governor Mario Draghi confirmed our belief that EU banks cannot withstand a significant increase in rates.

The list of banks in Europe that are effectively insolvent is long and growing, in part because the EU banking system is not particularly profitable.  Again, as we noted in previous comments, strong banks are profitable banks.  Profits allow you to build capital and deposits, and fund credit losses.  For the banks of Europe and particularly nations like Italy, far too often there is little or no real profitability.  This leads banks to hide credit losses and asset quality problems.

We were amused to read that Qatar is considering increasing its stake in Deutsche Bank, as the newspaper Handelsblatt reported Sunday.  This brings back memories of a decade ago when Korea Development Bank was touted to be looking to acquire Lehman Brothers.  Then as now, the reports are not particularly helpful. What DB needs is to be recapitalized or acquired, but so far no credible investors has been willing to put new capital into this troubled bank.

As we have discussed previously, the fact that insolvent Chinese aviation conglomerate HNA is selling its stake in DB means that the bank badly needs a new shareholder.  And keep in mind that HNA was not a cash buyer of DB shares, but instead used leverage to fund its position. Presumably the Qataris have cash.

We see the failure or restructuring of DB as a very real possibility in 2019, an event of default that will force the larger issue of bank solvency in Europe.  With the bank trading below one quarter of book value, the stock of DB is not suitable as an investment.  When will the EU authorities accept the fact that DB is crippled and requires state aid in order to stabilize?  In the event, the mirage of German economic power in Europe will evaporate.

Last comes China, both because of the growing potential for violent change and because western audiences are completely unprepared for this eventuality.  Credulous western observers talk about the “long term” perspective of the Chinese Communist Party (CCP), but in fact this gang of “running dogs” to borrow the Maoist terminology  is no different than western politicians. The make it up as they go.  The CCP is no more able to manage a economy than is President Donald Trump.  

The key difference in China is mountains of debt, no real equity leverage in the economy, and a payments system that is entirely focused through the Bank of China.  But the most troubling development in our view are the growing signs that the CCP and paramount leader Xi Jinping feel compelled to take more and more authoritarian measures to retain political control.

The brutal rise of Xi Jinping to sole power in China is nothing if not a display of massive insecurity, starting with the elimination of all rivals and ending with the dissolution of collective leadership.  Revelations that Beijing feels the need to imprison over a million Muslim Uighurs in  work camps, a mere 10% of the 11 million population of Xinjiang, also suggests a very direct fear of instability.

Mao Tse-Tung wrote in World Marxist Review in 1961:

“A potential revolutionary situation exists in any country where the government consistently fails in its obligation to ensure a least a minimally decent standard of life for the great majority of its citizens. If there also exists even the nucleus of a revolutionary party able to supply doctrine and organization, only one ingredient is needed: the instrument for revolutionary action.”

The revolutionary party is radical Islam, spilling across China’s western and southern borders. The CCP well recognizes the parallels with Chinese history.  And it has happened before.  Just as the Chinese nationalists and communist forces defeated the Japanese in WWII after decades of brutal occupation of China by Tokyo’s fascist rulers, the CCP is now in the position of the oppressor and the Islamist “terrorists” are the liberators.  No member of the CCP who understands China’s history could fail to be impressed by this parallel.

Watching the liquidation of the HNA Group, a process which we now learn from Reuters is being administered by China Development Bank, you begin to appreciate just how fragile is Beijing’s control of the economy.  CDB, of course, is HNA’s biggest creditor, and it in turn is an appendage of the Bank of China.

When Wang Jian, the co-chairman and a co-founder of HNA Group, “accidentally” fell off a wall in Provence, France, he was atoning for creating a scheme so gigantically absurd and so heavily leveraged that it threatened the CCP.  The CCP is happy to tolerate or even encourage wealth creation, but only so long as it does not become a problem.

HNA’s $50 billion debt fueled shopping spree was and is still a problem for China in 2019, but only illustrates a larger issue of national economic solidity and cohesion.  Westerners may need to consider the possibility of political change in China, a process that historically has come from the periphery and moved to the center in Beijing.  Offshore investors who have become enamored of the illusion of political stability in China may want to recalibrate the reality gauge in 2019.

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Trump’s “50 Bs” Is Really “36.2 Bs”

Earlier today, president Trump prompted confusion in the market, when in his latest tweet urging the Fed to stop hiking, the president also said “Stop with the 50 B’s.” In the absence of other hints, this was taken to suggest that Trump also wanted the Fed to not only stop hiking but also end the shrinking of its balance sheet, which as we have discussed repeatedly started shrinking by a $50 billion cap ($30 billion Trasurys and $20 billion MBS) starting in October 2018 and continuing – supposedly – at least until the end of 2019.

Only there is a problem with this statement, because while the Fed is indeed limited by a previously mandated cap on how much it can shrink its balance sheet each month (i.e. $50BN) as TSYs and MBS mature, the reality is that the real number is far smaller as the Fed only has Treasury holdings that exceed the $30 billion cap when there are refunding auctions, while MBS holdings have traditionally been lower than the monthly cap since they are at the mercy of prepayment speeds.

So what does this mean in practical terms? When using the Fed’s own forecasts for actual Treasury and MBS redemptions, the monthly “50 B” number shrinks substantially, and over the period Oct 2018 – Dec 2019 averages to just $36.2 billion on average.

In other words, instead of raging at the 50 Bs, Trump should urge the Fed to “Stop The 36.2 Bs“… although considering the confusion the first statement prompted – after all the Fed’s monthly redemption schedule is hardly the first thing one would expect Trump to be tweet-raging about – it is perhaps best that Trump limited himself to broad strokes.

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Trump Foundation Agrees To Dissolve Amid A “Shocking Pattern Of Illegality”

President Trump’s charity, the Donald J. Trump Foundation, has agreed to dissolve amid allegations from the New York Attorney General’s office that it engaged in a “shocking pattern of illegality.” 

However, New York Attorney General Barbara Underwood announced on Tuesday that her office will continue to pursue its lawsuit against the foundation. 

As WaPo reports, the attorney general’s suit alleges that Trump used his charity’s money as his own piggy bank — including to help his presidential campaign by paying for giveaways at Iowa rallies.

“The Foundation was little more than a checkbook for payments to not-for-profits from Mr. Trump or the Trump Organization,” Underwood wrote in the initial suit.

The Trump Foundation was never the most impressive part of Trump’s portfolio: At its peak, in 2009, it had only about $3.2 million in the bank, a small sum for a billionaire’s charity.

*  *  *
Full Statement from AG Underwood

A.G. Underwood Announces Stipulation Dissolving Trump Foundation Under Judicial Supervision, With AG Review Of Recipient Charities

AG Underwood’s Lawsuit Remains Ongoing

Today, Attorney General Barbara D. Underwood announced that – following a court decision in favor of the Attorney General – the Trump Foundation has signed a stipulation agreeing to dissolve under judicial supervision, with review and approval by the Attorney General of proposed recipient charities of the Foundation’s remaining assets. 

This stipulation follows the court decision last month allowing Attorney General Underwood’s lawsuit against the Trump Foundation to move forward. 

Attorney General Underwood’s lawsuit sought the dissolution of the Foundation under judicial supervision and with the oversight of the Attorney General’s Charities Bureau. The lawsuit – which also seeks millions in restitution and penalties and a bar on President Trump and his three eldest children from serving on the boards of other New York charities – remains ongoing.

Attorney General Underwood released the following statement:

“Our petition detailed a shocking pattern of illegality involving the Trump Foundation – including unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more. This amounted to the Trump Foundation functioning as little more than a checkbook to serve Mr. Trump’s business and political interests.

“Today’s stipulation accomplishes a key piece of the relief sought in our lawsuit earlier this year. Under the terms, the Trump Foundation can only dissolve under judicial supervision – and it can only distribute its remaining charitable assets to reputable organizations approved by my office.

“This is an important victory for the rule of law, making clear that there is one set of rules for everyone. We’ll continue to move our suit forward to ensure that the Trump Foundation and its directors are held to account for their clear and repeated violations of state and federal law.”

The Attorney General filed the stipulation with the court today; it is awaiting the judge’s signature. 

*  *  *

We are sure the probe of The Clinton Foundation will be along shortly.

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Prof Who Co-Founded Black Lives Matter: ‘I.C.E. = Gestapo’

Authored by Peyton Dillberg and Jon Street via Campus Reform,

An Arizona professor tweeted recently that Immigration and Customs Enforcement (ICE) is equivalent to the Gestapo. 

Prescott College adjunct professor Patrisse Cullors, who is also a co-founder of the Black Lives Matter movement, made the statement on Twitter. The Gestapo, otherwise known as the Nazi secret police, was formed in 1933 and lasted until the end of World War II. The Gestapo played a key role in Nazi Germany’s plan to exterminate European Jews.

When asked to comment further on her tweet, Cullors told Campus Reform, “I’ve been reading about ICE’s role in rounding up human beings who are labeled ‘illegal’ by the U.S. government.” 

“Many of the people in the undocumented community have been working on their citizenship and are in legal proceedings while kidnapped by ICE,” she continued.

“The Gestapo also rounded up human beings labeled as ‘illegal’ by the German government. Both agencies use similar tactics and I think it’s important we name that.”

ICE generally relies on cooperation from local police in order to detain illegal aliens and then deport them. However, that cooperation has weakened amid a nationwide push by the left to discourage local police from notifying ICE of individuals who are found to be in the country illegally upon getting arrested. 

This negative attitude toward ICE has also reached college campuses. 

For example, in July, Yale Law School Professor Gregg Gonsalves took to Twitter, where he encouraged his followers to “hide immigrants from ICE.” One month earlier, in June, New York University Professor Sam Lavigne received praise from Antifa after releasing the personal information of at least 1,500 ICE employees online. 

St. John’s University disinvited ICE from its career fair after a student group threatened to protest the agency’s presence. This came just months after professors at Johns Hopkins University petitionedadministrators to “immediately dissolve the currently existing partnership between the Johns Hopkins University and ICE.”

Cullors’ tweet came the same month that Seattle University Law School suspended its externship with ICE because of the agency’s “unjust and inhumane treatment of asylum seekers and migrant families.”

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There Is A New “Most Crowded Trade” On Wall Street

Step aside FAANGs: there is a new “most crowded trade” on Wall Street.

As part of this month’s Fund Managers Survey, which as we summarized earlier, was about the gloomiest since the financial crisis with more than half, or 53% of survey respondents now expecting growth to weaken over the next 12 months, the worst outlook on the global economy since Oct. 2008…

… the same Wall Street pros no longer see “Long FAANG+BAT” as the most crowded trade on Wall Street, and for good reason: after a dramatic drop in the tech leaders in the past 2 months, most hedge funds, who were massively long a handful of “growth” tech names – recall MSFT, AMZN, FB GOOGL and BABA were the 5 most popular hedge fund holdings as of Sept 30 – had gotten crushed and fled these names in bulk.

So what is the new most crowded trade? According to the Fund Manager Survey, after a 19 month hiatus, being Long the US Dollar is once again seen by professional investors as the most popular trade…

… and for good reason: it very well might be because as the following Goldman chart shows, long USD positions are just shy off their highest level since January 2016 even as market expressed growing concerns about the slowing US economy.

Speculative USD positioning against currencies in the CFTC CoT report, in $ bn

Which is not to say that investors have fully given up on tech: as the last chart shows, while Long USD is once again the most crowded traded (according to 25% of respondents), Long FAANG+BAT is in second place with 20% of the vote, closely followed by short EM with 19%.

While it is obvious, the fact that the USD is considered a top trade at a time when the US economy is slowing and the Fed may be set to pause or end hiking just as the ECB is poised to tighten, suggests that investor fears about a global slowdown dominate regional concerns, as traders will only flood into the USD under conditions that demand a global “flight to safety” rather than a relative outperforming currency, which all else equal, would be the euro. And since it isn’t, it once again confirms that investors have truly never been more bearish on both the US and global economy, and are anticipating a period of far higher volatility and scramble out of risk assets as the 10 year central bank bubble is finally unwound.

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