Category: zerohedge

Authored by Conrad Black via The New York Sun,

We are living through a phantasmagoric psychodrama generated by the dishonest national political press. This is the press whose Joe Scarborough of MSNBC did not show some of President Trump’s responses to his enemies because of “concern” for the president’s family, as he “seems to have lost his mind.”

This is a new frontier in American journalism, where a television news commentator who hates the president wishes to spare the president’s family a rerun of his entirely rational denunciations of his enemies.

The House of Representatives began considering impeachment because an anonymous Democrat and former political associate of Vice President Biden received a hearsay account of a conversation between President Trump and President Volodymyr Zelensky of Ukraine, in which Mr. Trump encouraged the newly elected leader to find out if Mr. Biden and his son had done anything inappropriate in Ukraine. The president quickly made the transcript of the conversation public.

Partisan Democrats and formerly sensible commentators have portrayed Mr. Trump’s request as a demand for incriminating evidence on Mr. Biden, failing which he would not resume U.S. aid to Ukraine. In other words, this was a solicitation for a benefit of value to Mr. Trump’s 2020 reelection campaign. The reference to a resumption of aid was 500 words earlier in the transcript, and not connected at all to the Biden question.

When Mr.Biden was mentioned, it was to request to know what happened — a neutral request for the facts. Yes, Mr. Trump said the appearance of the former vice president’s son $50,000-a-month sinecure as a director of a Ukrainian gas company, along with the elder Biden’s boast of having a Ukrainian prosecutor fired, was “horrible.” And so it was. But there may be uncontroversial explanations. If the Biden allegations are unfounded, Americans will want to know. If the facts are corrupt in themselves, Americans — and Democrats especially — will want to know that, too.

In reality, the whole episode is nonsense, a farce. House Speaker Nancy Pelosi won’t hold a vote on a formal impeachment inquiry because she couldn’t win the vote. If there were such an inquiry, where the Republicans called and examined witnesses and subpoenaed documents, it would collapse as quickly as the Russian collusion fraud did when former special counsel Robert Mueller stumbled through his congressional inquiry.

House Intelligence Committee Chairman Adam Schiff — who is usually lying when his lips aren’t moving and always is when they are — says we will not be hearing from a non-whistleblowing leaker, to give his hearsay evidence of a conversation that any person in the world can read and see has no legal implications whatever. But the investigation indomitably continues. It is like the last government of the German Third Reich, meeting in the week following the death of Hitler on the few thousand acres they still governed on the Danish border, discussing agriculture and immigration.

With no evidence of wrongdoing by the president, the Trump-hating press is now scrambling after Rudolph Giuliani, formerly one of the nation’s toughest prosecutors, as if they can pin something on him while he acted as the president’s private attorney. With Hunter Biden in hiding, this ludicrous mockery must end. Pompous commentators who don’t like Mr. Trump but have learned to live with their underestimation of him cannot go on indefinitely with wagging heads and furrowed foreheads, discussing the president’s “crisis.”

Fox News, which is generally well-disposed to the president, published a poll last week that 51% of Americans believe the president should be impeached and removed from office.

Fox’s polls aren’t very accurate, though their news coverage and comment are quite professional. But this one is bunk. Between 40% and 50% of Americans may wish there were a reason to remove Mr. Trump, or hope that he won’t be reelected. That figure is insufficient to change congressional votes on an impeachment resolution, given that about 45% of the country is militantly pro-Trump and probably 10 million others will hold their noses and vote for his substantive performance despite his stylistic foibles.

But a substantial part of the anti-Trump vote is a levitation, sustained by the unprecedented hostility and dishonesty of almost all the national political press, which has been confirmed in independent studies by Harvard University and the Pew Research Center and others.

Not all the hostile press is shrill. My rational and moderate friend of many years, Fareed Zakaria of CNN, wrote in the Santa Cruz Sentinel on October 11 that he now favors “an impeachment inquiry” because Mr.Trump’s “efforts to pressure the new Ukrainian government, including his phone call with President Volodymyr Zelensky, were profoundly wrong;” and because of Trump’s “far more troubling . . . refusal to cooperate with the impeachment inquiry.”

Implicit in this explanation is the retreat away from the Trump-Zelensky telephone call, which is effectively conceded not to be probative evidence of any impropriety. Instead, Democrats are returning to the justification that impeachment is warranted based upon unspecified, unimaginable, and surely nonexistent evidence of presidential misconduct. The pitiful squeak that is meant to be a clinching argument is Mr. Trump’s refusal to cooperate with an impeachment inquiry based on an illusion.

The Democrats are stuck with this clunker. Maybe Speaker Pelosi wanted to humiliate the young Marxist congresswomen and Mr. Schiff and the porcine Jerry Nadler, who chairs the House judiciary committee. Maybe she wanted to get this out of the way now before it caused the Democrats more embarrassment, and before the long-awaited indictments of a number of prominent members of the previous administration for its unconstitutional confection and promotion of the Trump-Russian collusion fraud.

It is not for me to read Mrs. Pelosi’s mind, but she must have had some reason to let this anemic, spavined cat out of the bag. But this cat can’t purr and has no whiskers, let alone claws. In Monty Pythonese, “It’s a dead Cat!” (and it won’t even bounce).

The Democrats’ presidential nomination candidates are a rag-tag of extremists, kooks, dolts, and bumbling geriatrics, (Hillary Clinton was back last week with her autocue squib that Mr. Trump’s “an illegitimate president”). But it is a national party because it has tens of millions of traditional supporters who are reasonable people. Their aversion to Trump enabled most of them to endure the bone-crushing defeat over the Russian fiction.

The allegation a few weeks ago of a 30-year-old act of sexual misconduct by Supreme Court Justice Brett Kavanaugh, which had most of the candidates screaming for his impeachment in the 24 hours before it was exposed as a completely unfounded charge, must have caused unease to many thoughtful Democrats.

But when this stinker implodes, after they have got the faithful to the edges of their chairs and exhumed John Dean and Carl Bernstein, the bloodless assassins of Richard Nixon, and the full gallery of their unctuous homelists and pietists who demean the occupation of commentator, sensible Democrats will disembark. The best way Democrats can serve their party now is to try to get a plausible semi-moderate like Senator Klobuchar of Minnesota, no world-beater but Walter Mondale in drag-she can lose with honor and dignity, and turn off the CNN-MSNBC-main network hate machine.

Mr. Trump can’t be removed from his office; he deserves and will gain reelection on his record; the Democrats will be back — both parties always are. But the sooner the country tunes out this dishonest, evil press putschism, the better for the whole country, especially the national political news outlets themselves.

Back on September 8, just hours before September’s notorious “quant crash” that sent “momentum” and “growth” stocks tumbling and “value” and “most-shorted” names surging…

… alongside a sharp spike in interest rates which crashed the “market-neutral” momentum index…

… and which also crippled Long/Short hedge funds who had ridden the growth vs momentum divergence to unprecedented extremes only to suffer in the fallout of the trade’s reversal, sending Goldman’s Hedge Fund VIP basket tumbling as stock with a high hedge fund ownership concentration hit a 1+ year low…

… Morgan Stanley made an prescient warning, one which we discussed in “Morgan Stanley Spots A Major Challenge Facing Today’s Market: What If Things Get Better?”  As the bank’s cross-asset strategist Andrew Sheets wrote that “this week’s rally shined a light on the market’s bull case, and the importance of a better economy to that story. Given our cautious views on growth, trade progress and central bank action relative to consensus, we maintain our cautious stance. But this week was a shot across the bow: if we’re wrong and growth is set to reaccelerate, the market isn’t positioned for it. The moves could be large.“

Ever since then, traders have been obsessed by the threat that the world is shifting away from a decelerating growth trajectory and re-entering growth, albeit week; more specifically, traders have been extremely cautious in identifying key inflection points which transform the “bad news is good news” regime to a “bad news is bad news” again.

Well, as Goldman writes on Friday, after being mostly negative YTD, macro surprises have turned positive for the first time since April 2019, if only marginally, as Goldman’s “global CAI Innovations index” has turned sharply higher in recent weeks, even if it remains negative.

A less subjective interpretation of incoming data, if one coming sentiment surveys, confirms that an inflection point was recently reached, as the global manufacturing depression appears to be finally bottoming out; to wit, after the longest slowdown in global manufacturing PMIs on record, PMI prints have finally posted an increase in the last 2 months.

Of course, with some $15 trillion in debt still trading at negative yields and traders still predominantly positioned for continued downside in yields, what the above observations of a potential inflection point to global growth – and inflation – imply, is that yields could go sharply higher from here as a waterfall liquidation, coupled with the occasional VaR shock, results in a furious selloff in duration as inflation expectations reprice higher.

This, as Morgan Stanley first hinted over a month ago, and as the quant crash from mid-September showed vividly, is a major problem, because as Goldman’s Christian Mueller-Glissman explains, “a sustained increase in real yields due to better growth could also drive a violent procyclical rotation across and within assets, similar to 2H 2016. This could hit a lot of the popular rotation trades YTD as the combination of structural and cyclical growth concerns and lower real yields has led to concentrated positioning.”

To dramatically underscore this point, the Goldman strategist also brings attention to the “sharp (albeit temporary) rotation in September”, which served as a “preview” of what is to come should growth return to the global economy. More importantly, as the chart below – which plots the 3-month correlation of popular rotation trades with real yields – shows,  the extreme negative correlation, or “asymmetry” between real yields and “consensus trades”  has never been greater!

In other words, whereas the S&P500 is up roughly 20% YTD, not only are most traders lagging – as we showed recently in our latest hedge fund performance report – the broadest benchmark, but they all appear to be pursuing the same consensus trades.

Intuitively this makes sense: after all, the worse the news, the most likely central banks are to engage in further easing and unroll even more accommodative policies. And sure enough, as Goldman notes, support from monetary policy is already fading:

Initially this came alongside a sharp steepening of US yield curves and an increase in US 10-year TIPS yields – a reversal of the ‘risk off’ move in August – as PC1 ‘ Global growth’ recovered at the same time. But since October PC2 has declined further, even as PC1 fell sharply at the beginning of the month.

In short, as Goldman concludes, in the near-term it seems increasingly difficult for G3 central banks to surprise in a dovish direction without weaker growth first.

What the above means, said simply, is that the biggest risk traders face, is not some geopolitical shock, Impeachment inquiry, trade war, or economic slowdown, but – paradoxically – the threat that things are getting better again. Or as Morgan Stanley warned more than a month ago, “if growth is set to reaccelerate, the market isn’t positioned for it. The moves could be large.”

Ok… so if growth is the biggest risk then the playbook is simple: hope for even more bad news, and more easy policies. Simple, right?

Well, not quite, because as Goldman admits, whereas “good news” is the biggest near-term risk to consensus trades, more bad news could end up being just as bad. Or, as Glissman writes, “until a meaningful growth pick-up comes, markets remain vulnerable to negative shocks, and as a result the range could get ‘fatter.’ With the fading search for yield, the correlation of the VIX with US 10-year TIPS yields has turned sharply negative.

This is notable, because a similar extreme correlation between the VIX and TIPS yields was observed during the Tech Bubble Burst (2001/02), the GFC (2008), the Euro area crisis (2011) and the EM/Oil crisis (2015/16).

Intuitively, this too makes sense, as lower real yields from here “could signal increased recession risks, e.g., a spillover from weak global manufacturing to services and the labor markets, and thus higher risk premia across assets would outweigh lower discount rates.”

Of course, since there is now at least one generation of traders who has never appreciated that bad economic news actually means bad news for stocks, Goldman points out that – at least in theory, and in a world where central banks don’t manipulate all signals – “S&P 500 volatility tends to increase with weaker US growth” yet since this is anything but a normal world, as Goldman’s US Current Activity Indicator has declined YTD, the VIX has barely budged.

This will change, because as Glissman writes next, “shocks from policy, politics and geopolitics could quickly drive more volatility: there is a growing gap between the VIX and global/US economic policy uncertainty indices given increased concerns around geopolitical developments in the Middle East and Hong Kong, as well as domestic politics in the US.”

In other words, after years in which both good and bad news was interpreted as good news for stocks by traders, we are now entering a rather unpleasant phase for market, one where any “good news” could spark an unprecedented collapse in consensus trades, wiping out years of gains, on one hand and where continued economic slowdown could in turn spark a VIX shockwave, similar to the one seen just as the tech bubble burst and global financial crisis erupted.

In short, after years in which every idiot trader made money regardless of how they were positioned, mean reversion is finally coming… and it will be a bitch.

Authored by Joeri Cant via CoinTelegraph.com,

The G20 finance chiefs of the world agree that global stablecoins give rise to a set of public policy and regulatory risks.

image courtesy of CoinTelegraph

On Oct. 18, Reuters reported that the G20, an international forum for the governments and central bank governors from 19 countries and the European Union, have called upon the International Monetary Fund to examine various macroeconomic implications of global stablecoins, including monetary sovereignty issues in its member countries.

Members say stablecoins pose a serious risk to global finance

Per the report, the nations agreed that global acceptance of stablecoins will give rise to a set of serious public policy and regulatory risks. G20 finance ministers stated:

“Such risks, including in particular those related to money laundering, illicit finance, and consumer and investor protection, need to be evaluated and appropriately addressed before these projects can commence operation.”

Bank of Japan’s Governor Haruhiko Kuroda said that the G20 summit will begin with a debate regarding stablecoin regulations — following proposals from global regulatory bodies like the Financial Stability Board and the Financial Action Task Force. Kuroda stated:

“Some emerging countries have concerns on what could happen if stablecoins backed by a huge customer base become widely used globally

[…]

But this is not just a problem for emerging economies. It could have a broader impact on monetary policy and financial system stability.”

Stablecoin concerns multiply among major economies

The news follows a recent report by the G7 task force stating that stablecoins such as Facebook’s Libra present a significant risk to the global financial system.

In the report requested by the G7 finance ministers and central bank governors, the task force confirmed that the group of the seven wealthiest nations would not allow any global stablecoin to launch without addressing related challenges and risks.

CIA analysts involved in the intelligence assessment of Russia’s activities during the 2016 US election have begun to hire attorneys, as Attorney General William Barr expands his investigation into the origins of the Russia probe, led by US Attorney John Durham.

The prosecutor conducting the review, Connecticut U.S. Attorney John Durham, has expressed his intent to interview a number of current and former intelligence officials involved in examining Russia’s effort to interfere in the 2016 presidential election, including former CIA Director John Brennan and former director of national intelligence James Clapper, Brennan told NBC News. –NBC

NBC learned of the ‘lawyering up’ from three former CIA officials “familiar with the matter,” while two more anonymous leakers claim there’s tension between the Justice Department and the CIA over what classified documents Durham has access to. 

With Barr’s approval, Durham has expanded his staff and the timeframe under scrutiny, according to a law enforcement official directly familiar with the matter. And he is now looking into conduct past Donald Trump’s inauguration in January 2017, a Trump administration official said.

One Western intelligence official familiar with Durham’s investigation leaked that Durham has been asking foreign officials questions related to former Trump campaign aide George Papadopoulos, who was fed the rumor that Russia had ‘dirt’ on Hillary Clinton by a Maltese professor, Joseph Mifsud. While US media has sought to portray Mifsud as a Russian asset, the self-described member of the Clinton foundation has far stronger ties to the West.  

A Western intelligence official familiar with what Durham has been asking of foreign officials says his inquiries track closely with the questions raised about the Russia investigation in right-wing media—a line of inquiry based on accusations made by George Papadopoulos. https://t.co/pku50keorJ

— Ken Dilanian (@KenDilanianNBC) October 19, 2019

According to congressional testimony given by Papadopoulos last October as well as statements he’s made over Twitter, the whole thing was an FBI setup – as a ‘woman in London, who was the FBI’s legal attache in the UK’ and “had a personal relationship to Bob Mueller after 9/11” was the one who recommended that he meet with Mifsud in Rome. 

To be clear: a woman in London, who was the FBI’s legal attaché in the U.K., and had a personal relationship to Bob Mueller after 9/11, encouraged me to meet Joseph Mifsud in Rome in March 2016 and introduced Bruce Ohr to the top U.K. prosecutor 4 days before the Trump tower mtg.

— George Papadopoulos (@GeorgePapa19) March 30, 2019

As the theory goes; Mifsud, a US intelligence asset, feeds Papadopoulos the rumor that Russia has Hillary Clinton’s emails shortly after he announces he’s going to join the Trump campaign. Papadopoulos repeats the email rumor to Australian diplomat Alexander Downer, who alerts Australia’s intelligence community, which notifies the FBI, which then launches operation “Crossfire Hurricane” during which the FBI sent multiple spies (including a ‘honeypot’) to infiltrate the Trump campaign. Notably, former FBI employee Peter Strzok flew to London to meet with Downer the day after Crossfire Hurricane was launched – while Strzok’s boss, Bill Priestap was in London the day before the Downer-Papadopoulos encounter. 

We have now pinned Peter Strzok’s boss, Bill Priestap, in London the week of May 6th, 2016 and on the 9th. The day before Alexander Downer was sent to spy on me and record our meeting. Congress must release the transcripts and embarrass the deep state.

— George Papadopoulos (@GeorgePapa19) April 20, 2019

And if this is all true, Durham has a lot to untangle – including the Clinton / DNC-funded Steele Dossier. 

From Egon von Greyerz at goldswitzerland.com:

The earth is about to get much cooler and so too is the earth’s economy.

“Sic Transit Gloria Mundi” (Thus passes the glory of the world). This phrase was used at the papal coronations between the early 1400s and 1963. It was meant to indicate the transitory or ephemeral nature of life and cycles.

As we are now facing the end of a major economic, political and cultural cycle, the world is likely to experience a dramatic change which very few are prepared for. Interestingly, the peak of economic cycles often coincide with the peaks in climate cycles. At the height of the Roman Empire, which was when Christ was born, the climate in Rome was tropical. Then the earth got cooler until the Viking era which coincided with the dark ages.

THE PROBLEM IS “THE ECONOMY STUPID” AND NOT THE CLIMATE

Yes, of course global warming has taken place recently as the effect of climate cycles. But the cycle has just peaked again which means that all the global warming activists will gradually cool down with the falling temperatures in the next few decades. The sun and the planets determine climate cycles and temperatures, like they have for many millions of years, and not human beings.

The climate activists are spending their efforts on the wrong issue. The big disaster looming for the world is not climate change but “the economy stupid” (phrase coined by Clinton).

So let’s instead look at the real coming disaster that the world needs to focus on and a number of facts that are self-evident even though very few are aware of them.

Instead of worrying about global warming, which we humans cannot effect, we should instead issue a GLOBAL WARNING about the coming economic cataclysm so that the world can be prepared for the extremely serious problems that will hit us all in the next few years.

Below I outline a potential scenario for the next 5-10 years:

• BIGGEST ECONOMIC DISASTER IN HISTORY
  The world is heading for an economic disaster of a magnitude that is much greater than the 1930s depression. There is really nothing to compare with in history since the world has never been in a similar situation before when every single major economy is at risk.

• GLOBAL DEBT WILL KILL THE WORLD ECONOMY
  Never before in history have all major countries lived above their means for such an extended period. And never before has global debt been almost 4X global GDP.

• $2 QUADRILLION DEBT AND LIABILITIES
  In addition, unfunded liabilities, like medical care and pensions, are at least $300 trillion globally. If we add gross derivatives of $1.5 quadrillion, which are likely to turn into real debt as counterparties fail, the total debt and liabilities are above $2 quadrillion.

• DEBT AT 30X GLOBAL GDP CAN NEVER BE REPAID
  $2 quadrillion is almost 30X global GDP. Who is going to repay this debt? Certainly not the current generation which has incurred most of it. And certainly not future generations which will neither have the means, nor the inclination to pay for the sins of the previous generation.

• DEBT IS GROWING AT AN EVER FASTER RATE
  Most major economies are continuing to spend money they haven’t got and thus to print money and expand credit at an ever faster rate. The US for example has increased debt by $800 billion since June. As the US economy falters, annual deficits of $1-2 trillion will increase manifold in the coming years. And when the banking system comes under pressure, which is happening right now, money printing will accelerate at an ever faster pace. As the global economy falters, most major countries will see deficits and debts rising quickly.

• NEGATIVE RATES – A RECIPE FOR DISASTER
  Negative rates are a disaster for the world. Over $17 trillion debt now carries negative interest. Firstly, it kills the incentive to save. A fundamental economic principle is that savings equal investments. The world cannot grow soundly with investments financed solely by debt or printed money. With no savings, most banks do not have funds to lend to businesses. Thus investments will slow down dramatically. Negative rates also lead to investors chasing ever riskier investments to get a higher return. Also, pension funds will not achieve adequate returns to cover outstanding liabilities.

• DEBT AND ALL BUBBLE ASSETS LIKE STOCKS AND PROPERTY WILL IMPLODE
  Like the climate virtually all asset classes are overheated. The bubbles that the credit expansion has created will implode in the next few years together with the debt that created the bubbles. Central banks around the world will make a desperate attempt to save the world economy by printing unlimited amounts of money.

• ALL CURRENCIES WILL GO TO ZERO – DEFLATION WILL FOLLOW HYPERINFLATION
  As money printing accelerates, paper money will become worthless and a depressionary hyperinflation will hit the world. Hyperinflationary periods on average last for around 1-3 years and are followed by a deflationary implosion of all asset values in real terms. At that point substantial parts of the financial system will cease to function properly or go bankrupt.

• GOVERNMENTS WILL LOSE CONTROL
  Before new financial and political systems emerge, there will be social upheaval and unrest. Criminality will be widespread as desperate and hungry people will do what they can to feed themselves and their children. In many countries, immigrants will be blamed for the misery of the people. Right and left wing radicals will fight immigrants. There are likely to be periods of anarchy as governments lose control. I do not believe that an elite will control the world at that point. The disorderly unwinding of asset bubbles and the world economy will be uncontrollable.

GLOBAL MARKETS ON THE CUSP OF CRASHING

The above scenario could start at any time. In many respects it has already started. The world will only be aware of the next phase when global markets start the first severe phase of the coming secular downtrend. We could see this already in October which is a notorious crash month. Or it could start as late as in early 2020. We will also start to see increased pressures in the financial system including problems in many European banks as well as US banks.

Once bubbles burst, the course of events could be very rapid. The above scenario could all happen over a few years and probably not more than five. This doesn’t mean that the economy will start recovering rapidly in five year’s time. It just means that markets and the worst problems reach a bottom. But after that the world will crawl along that bottom for many, many years.

There is no absolute protection against this scenario since it will hit all aspects of life and virtually all people. Obviously, people living off the land in remote areas will suffer less whilst people in industrial and urban areas will suffer considerably.

The best financial protection is without hesitation physical gold and some silver. These metals are critical life insurance. But there are clearly many other important areas of protection to plan for. A circle of friends and family is absolutely essential.

Writing in Vanity Fair earlier this week,  former Goldman Sachs employee William Cohan penned an explosively titled article – “The Fantastically Profitable Mystery of the Trump Chaos Trades” – that raises the possibility traders were tipped off to what President Trump was about to tweet ahead of time and bought massive S&P 500 futures positions right before big market swings.

The president’s talk can move markets – and it’s made some futures traders billions. Did they know what he was going to say before he said it?

“There is definite hanky-panky going on, to the world’s financial markets’ detriment,” One longtime CME trader says, who has been watching with disgust says he’s never seen anything quite like these trades, not at least since al-Qaida cashed in before initiating the September 11 attacks.

“This is abysmal.”

Notably we did not run a comment on the article upon its release because of our initial skepticism of Cohan’s version of events, and as Bloomberg reports, experts who examined the story said any implication that people traded on inside information fell short of being proven.

“Typically these stories focus on the times you’re right. No one writes about people buying a couple hundred million of e-minis and the market doesn’t do anything,” said Max Gokhman, the head of asset allocation for Pacific Life Fund Advisors.

“Volume spikes happen all the time.”

…attributing sinister intent to a handful of trades that quickly became money-makers ignores how common such large trades are in the futures market, said industry pros. Given how often people move tens of thousands of futures contracts at once — and how often people like President Donald Trump send stocks reeling — someone looking for suspicious timing is guaranteed to find it.

Even CNBC got in the act, with the traders raising significant doubts about Cohan’s version of events, and reminding the former Clinton-whispering author that massive kneejerk swings in futures have been happening for a decade and, the markets’ reaction to a tweet or comment is entirely unpredictable.

 

Just as we saw a week ago when the US-China trade deal was finally agreed (or not as the case may be)…

Additionally, as Bloomberg reports, one trading expert, the chief executive officer of a major quantitative shop who asked not to be identified, said an analysis by his firm suggests no giant trades like the ones the article described appear to have happened.

The story says that in the last 10 minutes of trading on Aug. 23, someone bought 386,000 of the September S&P 500 contracts. That number is close to the total volume for September e-minis from 3:50 p.m. to 4 p.m. New York time, spread over thousands of trades — unlikely to be the work of a single person.

And Michael O’Rourke, JonesTrading’s chief market strategist said “I don’t see where the dots are connected.”

“Unless you have the trading records, which you don’t, you can’t tie one and one together to make two the way this story is laid out.”

And as a final nail in Cohan’s conspiracy coffin, CME rules prohibit anyone from owning more than 60,000 e-minis at a time. Besides, such a trade would’ve been gargantuan: worth nearly $60 billion. That’s big enough to send the stock market sharply higher and probably trigger trading halts, according to the CEO. That didn’t happen.

Despite the widespread rejection (and even mockery among many market participants), Cohan, said “of course I’m standing by my reports,” which reflected the accounts of sources in Chicago trading pits, claiming he was not making allegations – which for anyone with any cognitive ability is clearly a lie.

“I don’t make any allegations, I don’t know what really happened. I was just being reportorial about what traders in the pit were seeing,” he said.

“Do I trust my sources? Absolutely. Are they vastly experienced? Absolutely. Does everybody see things differently? Probably. What I’m saying is ‘Hey, there are regulators whose job it is to see these things and investigate them.’”

However,  shortly after the close on Friday night, the Chicago Mercantile Exchange issued a brief press release to clarify their findings on Cohan’s “fantastical” story:

“CME Group regularly monitors its markets for suspicious activity.

As it relates to the Vanity Fair article published on October 17, 2019, regarding activities in the E-mini S&P 500 futures contract, the allegations about the trading activity are patently false.

These transactions were entered into by a significant number of diverse market participants.“

But, if the purpose of Cohan’s article was simply more of the same sycophantic anti-Trump suspicion-raising, he has achieved his goal – no matter how ridiculous the street, or regulators, think his ‘story’ is, as the politicians have already pounced on the farce. Former prosecutors Congressman Ted W. Lieu (D-Los Angeles County) and Congresswoman Kathleen Rice (D-NY) sent letters to the FBI, the Securities and Exchange Commission and the Commodity Futures Trading Commission calling for an investigation.

In the letters, the Members write:

We write to urge you to investigate potentially unlawful behavior related to the trading of electronically traded futures contracts on the Chicago Mercantile Exchange in the last several months.

On October 16, Vanity Fair reported on numerous instances in which individuals or groups of individuals made millions, and in some cases billions, of dollars in profits by trading large numbers of Standard & Poor’s 500 (S&P) e-mini futures contracts immediately prior to major geopolitical events. In each of these instances, the e-mini contracts were traded within days, and often within hours, of the S&P rising or falling sharply. The trades preceded such events as the Saudi Aramco attack as well as announcements related to progress in talks between the United States and China over the trade war and the withdrawal of the extradition bill in Hong Kong. In one case occurring in August, the trader or traders made $1.5 billion when the S&P rose after President Trump lied about phone calls taking place between United States and Chinese officials.

While the aforementioned trades may be purely coincidental, their timing and scale raise serious suspicions about whether the traders received material nonpublic information that would affect the S&P and how they received such information. We urge you to swiftly investigate whether trading on insider information or any other fraudulent behavior occurred in relation to these trades.

Thank you for your attention to this matter. We look forward to your response.

*  *  *

Presumably, the CME’s vehement rejection of Cohan’s implications will be enough to dampen this narrative – but then again after two years of investigation and a collusion-less Mueller Report, some people just can’t help themselves from repeating the same worn old narratives.

How long before #FrontrunGate is trending on Twitter?

Finally, as a gentle reminder to the doubters, The Obama White House told the world in 2014:

“If I were you, I wouldn’t invest in Russian equities right now.”

And of course no one will ever forget President Obama’s advice to the investing world in 2009:

“What you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you’ve got a long-term perspective on it.”

Presumably he had his Series 7 and 63 all tucked away before he provided this sensitive risky information to the world.

We give the final word to JonesTrading’s O’Rourke:

“Millions of futures contracts trade a day, billions of dollars trade a day, so to make a connection, I feel like it’s very hard to do… To me the article just speaks more about the national sentiment about the office of the president.”

Cohan’s fantasy article is a blueprint for how the resistance works: publish bull$shit sourced anonymously, launch a probe, expand probe in the hopes of finding some real dirt, rinse, repeat.

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

Tulsi Gabbard has stones. She has the kind of stones born of a life dedicated to the cause of serving others.

She is the direct opposite of Hillary Clinton, for whom all causes serve herself and her enormous narcissism and pathology.

So seeing Gabbard go directly after Hillary Clinton after her debate performance the other evening where she explicitly called out both the New York Times and CNN (the hosts of the debate) for the hit jobs on her puts to rest any idea she’s someone else’s stalking horse.

Two weeks ago I asked if five tweets from President Trump changed U.S. foreign policy for good, Gabbard does him two better with these three tweets of absolute, Oscar Wilde-like beauty.

Great! Thank you @HillaryClinton. You, the queen of warmongers, embodiment of corruption, and personification of the rot that has sickened the Democratic Party for so long, have finally come out from behind the curtain. From the day I announced my candidacy, there has been a …

— Tulsi Gabbard (@TulsiGabbard) October 18, 2019

… concerted campaign to destroy my reputation. We wondered who was behind it and why. Now we know — it was always you, through your proxies and …

— Tulsi Gabbard (@TulsiGabbard) October 18, 2019

… powerful allies in the corporate media and war machine, afraid of the threat I pose.

It’s now clear that this primary is between you and me. Don’t cowardly hide behind your proxies. Join the race directly.

— Tulsi Gabbard (@TulsiGabbard) October 18, 2019

There is so much goodness to unpack in these tweets it is almost beyond my ability to do so.

Clearly, Gabbard may have real problems with Donald Trump as president but she’s learned very quickly from him that the best way to deal with Hillary and her media quislings is to attack them without mercy.

Gabbard throws down the gauntlet here outing Hillary as the mastermind behind the DNC strategy of allowing the current crop of future losers to fall all over themselves to alienate as many centrist voters as possible.

This paves the way for Hillary to swoop in on her broom, pointed hat in hand, and declare herself the savior of the Democratic Party’s chances to defeat Donald Trump next November.

Remember that leading up to the debate Gabbard was going to boycott the event because it was such a corrupted event and stage-managed to showcase the chosen ‘front-runners’ — Joe Biden and Elizabeth Warren.

It makes sense to me that she decided at the last minute to join the debate after the Times piece just to ensure she got the national platform to openly call out the corruption in the same breath as attacking Trump for his, to this point, disastrous foreign policy mistakes.

She emerged from that debate as the only candidate with any moral compass capable of pointing in a single direction. Warren made a fool of herself responding with bromides about leaving in the ‘rightt way’ indistinguishable from any other presidential puppet of the last twenty years.

This is two debates in a row where Gabbard came out blazing at the front-runner, claiming a moral and ethical high ground on foreign policy that, at just over half the age of her rivals, that shows a maturity well beyond her years.

Her calling Hillary the “Queen of Warmongers” is so self-evidently true that it will reverberate far beyond Twitter into votes.

And it tells Hillary that Gabbard has zero fear of her and her political machine.

You can’t cow a person without fear who has nothing to lose.

[ZH: And Gabbard was not done – she ripped into Hillary’s terrible legacy in a Friday night “Tucker Carlson Tonight” interview.]

During her discussion with Fox News host Tucker Carlson, Gabbard framed Clinton’s opposition as being not only against her candidacy, but against “every veteran in this country, every service member, every American, anyone watching at home fighting for peace and who was calling for an end to these regime change wars.”

“Ultimately she knows she can’t control me,” Gabbard said, responding to Carlson’s question about why Clinton is taking aim at her. “I stand against everything that she represents and if I’m elected president, if I’m the Democratic nominee and elected president she will not be able to control me. She won’t be able to manipulate me. She won’t be able to continue to work from behind the curtains, to continue these regime change wars that have been so costly.”

The Democratic presidential candidate said the blood of her “brothers and sisters in uniform” killed in Iraq, a “war she championed,” is “on her hands.”

“I am calling for an end to these regime change wars. This is why she’s speaking out strongly and smearing my character and trying to undermine my campaign,” she said.

“Just as she is doing this to me, this is what will happen to anybody who is doing the same.”

Responding to a question from the Fox News host about the massive media and political opposition from both parties to her foreign policy positions, Gabbard noted that it happened as soon as she announced her candidacy.

” And now we know exactly why. It’s because I am standing up and speaking out strongly against the Hillary Clinton legacy, the warmongering legacy of waging these regime change wars, continuing to escalate these tensions between the United States, nuclear armed countries like Russia, China, this nuclear arms race bringing more profits to the military-industrial complex. “

Bullies like Hillary never learn that lesson until they are humiliated beyond recognition.

Moreover, when you look at this sequence of events it’s clear that the DNC, Hillary and everyone else close to the corridors of power fear Gabbard’s rise. If they weren’t they wouldn’t be putting out smears in the New York Times.

They wouldn’t be spending millions on social media trolls to discredit her in the public fora.

The first rule of politics is “You never attack down.”

Well, Hillary attacked down. The Times attacked down. The DNC, by gaming the debate rules, attacked down. And that spells disaster for anyone who does it.

Just ask Rudy Guiliani.

This was the exchange that ended Rudy’s political career. 150 seconds of truth-telling that ignited a movement which culminated in the election of Donald Trump.

Gabbard is following that same course. The difference between her and Dr. Paul is that she’s less polite. But as to their moral clarity there is little difference. And she shouldn’t be polite. The stakes are higher today than they were in 2008.

The people Gabbard is up against are even more ruthless since Hillary intends to win, whereas the Republicans in 2008 were fighting for the right to lose to her at the time.

Gabbard’s rise in popularity among Trump voters and centrists is born of the same exhaustion the American people have with endless wars for globalism. She is Trump’s Kryptonite.

The party she represents is irrelevant. By wrapping herself in the mantle of the front-runner for the nomination is not delusional, it’s the most strategic thing she’s done to date.

It’s also becoming more and more realistic as the days go on.

Because by responding to Hillary’s ham-fisted attempts to position herself as the voice of reason, Gabbard clarifies for everyone just how sick and bile-filled Hillary is by outing her as the delusional one.

And reminding everyone that Hillary is the architect of the very policies in the Middle East that Trump is now taking heat for trying to unwind.

Gabbard knows what the plan is. She was there in 2016 when Hillary stole the nomination from Bernie Sanders and quit her position in the DNC because of it.

Even Trump knows that foreign policy and foreign entanglements will be the big ticket issue for this election cycle.

Why?

Because Gabbard has single-handedly made it so.

Trump is already running against her by pulling back from Syria, looking for peace options in Afghanistan, firing John Bolton while using proxies and, yes, Vladimir Putin to assist him in fixing his myriad mistakes of the first thirty months of his presidency.

Hillary trying to position herself as the one who can save the Middle East from Trump’s bumbling is laughable and Gabbard just laughed in Hillary’s face.

Calling everyone who voices any dissent from foreign or domestic policy orthodoxy a Russian agent is a losing proposition. It belies reality and what people see with their own eyes.

Americans want better relations with Russia now World War III. Trump’s popularity has risen since he backed off on starting a war with Iran.

The media spent four years marginalizing Dr. Paul. The RNC stole the nomination from him just as surely as the DNC stole the nomination from Bernie. As the people in the U.K. are finding out, their votes don’t matter.

Democracy doesn’t matter, only the fever dreams of the soulless and the power mad who think they run the world. Look at what Hillary has become, not what you remember her to be.

She’s a tired, sick, fragile woman whose bitterness and evil is literally eating her up from the inside out. Have you noticed that she hasn’t been photographed standing up for months?

She’s the epitome of everything wrong with America and, in fact, the world and Tulsi Gabbard just stood up and laughed at her for still thinking she was the Emperor when in reality she’s The Joker.

*  *  *

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Chinese Vice Premier Liu He told an audience at a technology conference on Saturday that Chinese trade officials continue to make progress and are working with U.S. trade officials to solidify a partial trade deal. 

• RTRS: CHINA VICE PREMIER LIU HE SAYS CHINA WILL WORK WITH THE U.S. TO ADDRESS EACH OTHER’S CORE CONCERNS ON THE BASIS OF EQUALITY AND MUTUAL RESPECT

China’s top trade negotiator spoke at a virtual reality conference in Nanchang, the capital of southeastern Jiangxi province, and told the crowd: 

Vice Premier of China, Liu He, visited @htcvive stand in 2019 VR/AR product and application exhibition today. @CherWang presented the latest #VIVE #VR headset and the future 5G/VR strategy.@AGraylin @HTC_de @fabnapp pic.twitter.com/jIjaG4zk6r

— Alpert7 (@Alpertcr7) October 19, 2019

“The two sides have made substantial progress in many fields, laying an important foundation for the signing of a phased agreement,” Liu said. 

“Stopping the escalation of the trade war benefits China, the U.S., and the whole world. It’s what producers and consumers alike are hoping for,” he added.

China and the U.S. reached some form of understanding in meetings last week that could end a trade war that has roiled the global economy in the previous 15 months. 

President Trump has frequently touted how China will start buying $50 billion worth of U.S. agriculture products, though, we reported on Saturday morning that traders had seen no such purchases yet. 

The “phase one” deal isn’t a trade deal, it’s just China buying a lot of agriculture products from the U.S.

Phase one doesn’t address more significant issues such as forced technology transfers and industrial subsidies. It’s basically President Trump caving to China ahead of an election year so that he can please U.S. farmers who are suffering some of the worst financial conditions since the dark days of the 1980s farm crisis. 

Bloomberg noted that Liu didn’t address specifics about the trade talks in his speech. 

Liu also said China would expand investments in core technologies to ensure the economic restructuring of the economy was stable, adding that economic activity in the year ahead is “very bright.” 

“We’re not worried about short-term economic volatility. We have every confidence in our ability to meet macroeconomic targets for the year,” he said.

And while President Trump’s top economic advisors and industry experts recently warned him of an economic downturn if a further escalation in the trade war is seen by 2020, it seems a lite trade deal could be on the table next month.

But as our readers have recently learned, the trade war didn’t start the synchronized global downturn, so any lite deal next month won’t result in an immediate acceleration of global growth. That will be the point when central banks and governments really freak out, underlining how MMT and Helicopter Money is nearing. 

Authored by Chris Martenson via PeakProsperity.com,

“When it becomes serious, you have to lie”

The recent statements from the Federal Reserve and the other major world central banks (the ECB, BoJ, BoE and PBoC) are alarming because their actions are completely out of alignment with what they’re telling us.

Their words seek to soothe us that “everything’s fine” and the global economy is doing quite well. But their behavior reflects a desperate anxiety.

Put more frankly; we’re being lied to.

Case in point: On October 4, Federal Reserve Chairman Jerome Powell publicly claimed the US economy is “in a good place”. Yet somehow, despite the US banking system already having approximately $1.5 trillion in reserves, the Fed is suddenly pumping in an additional $60 billion per month to keep things propped up.

Do drastic, urgent measures like this reflect an economy that’s “in a good place”?

The Fed’s Rescue Was Never Real

Remember, after a full decade of providing “emergency stimulus measures” the US Federal Reserve stopped its quantitative easing program (aka, printing money) a few years back.

Mission Accomplished, it declared. We’ve saved the system.

But that cessation was meaningless. Because the European Central Bank (ECB) stepped right in to take over the Fed’s stimulus baton and started aggressively growing its own balance sheet — keeping the global pool of new money growing.

Let’s look at the data. First, we see here how the Fed indeed stopped growing its balance sheet in 2014:

And we can note other important insights in this chart.

For starters, you can clearly see how in 2008, the Fed printed up more money in just a few weeks than it had in the nearly 100 years of operations prior.

The flat parts of the curve in this chart are were the Fed paused its printing efforts. And at each of these plateaus, without the tailwind of fresh new hundreds of $billions created from thin air, the equity markets stopped rising and even (gasp!) threatened to decline.

So what did the Fed do in response? It resumed the money printing.

The above chart is really a monument to failure.  The initial $trillions of printed money didn’t solve things, and so more printed $trillions followed.

Every trick in the book has been used.  QE. Operation Twist. Jawboning by Bernanke, Yellen and now Powell. More jawboning and tweets from the President and his administration. And now, fresh interest rate cuts and a resumption of QE (but don’t call it that!) by the Fed.

Collectively, these efforts have horsewhipped stocks and bonds higher and higher over the past decade — which was the intent. But it seems the higher they go (and thus further distorted from their underlying valuation fundamentals), the Fed becomes ever more frightened of a correction.

So now let’s look at what happened after the Fed passed along the money printing baton to the ECB.

We can clearly see in the chart below that when the Fed stopped its printing in 2014, the ECB stepped right in and carried things on until this year:

During the years of ECB printing (and printing by other world central banks) stocks and bonds continued powering higher. That is, until the ECB slowed its efforts in late 2018, as the Federal Reserve was raising its federal funds rate.

You see, 2019 was supposed to be the year when the major central banks were supposed to start unwinding their massive balance sheets in earnest. And, in doing so, start to undo the massive market distortions caused by their prior actions.

And what happened in late 2018? The markets started rolling over fast and hard.

Panicked, the central banks have rushed back to “rescue” the system. And in the process, are showing that they’ll likely never “unwind” the $trillions they’ve been printing from thin air.

Looking again at the Fed’s balance sheet:

We see that, starting in 2017, the Fed began the slow process of trying to remove some of the liquidity it has injected into the system over the past decade.

It didn’t get very far.

Worried about recessionary signs and wobbly stocks (still within a few percentages of their all-time highs, mind you), the Fed’s most recent actions have undone 5 months of ‘tightening’ in just five blistering weeks of panic.

It’s enormously concerning that the stock market is now the sole focus of central banking.  The stock market is a terrifically poor instrument by which to try and guide anything (except the growth in apparent wealth of the ultra-rich – it’s very good at that).

Remember, the Fed stopped printing in and began raising rates in order to build up some wiggle room to deal with the next recession when it inevitably arrives.

But that never came to pass.

The last rate hike was in January and the Fed is now back to lowering rates. With the federal funds rate at a measly 2.0% today and likely headed lower from here, the Fed has practically no wiggle room to speak of at this point:

“When it becomes serious, you have to lie”

The above is a quote from Claude Junker, of the EU technocracy, explaining (in 2014) why he believed lying is necessary during financial emergencies.

Fast forward to last week. When Jerome Powell tried to explain why the Fed is suddenly back in the business of printing $60 billion per month (out of thin air) to buy more US Treasury bills, he came off sounding like he’d ripped a page out of Junker’s playbook.

Is he now lying because “It’s serious”?

“I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis,” he said. “Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy.”

“In no sense, is this QE,” Powell said in a moderated discussion after delivering his speech.

(Source – Bloomberg)

Not QE?

Well, what about the fact that the Fed is conjuring $60 billion of new money into existence each month and shoving that into the banking system?

And what about the fact that these new Quantities of money are Easing financial conditions and expanding the Fed’s balance sheet again?

You mean other than those similarities, it’s definitely not QE, Jerome?

Even Wall Street agrees with me:

“I think what the Fed Chairman decides to call it is inconsequential,” Yousef Abbasi, global market strategist for U.S. institutional equities at INTL FCStone told MarketWatch. “From what’s been discussed, it’s exactly what was once called QE. They would be buying securities and increasing liquidity and that is easing. However you want to refer to it, ultimately it’s supportive of equities,” he said.

Mike O’Rourke, chief market strategist at Jones Trading said in an interview that balance-sheet expansion may be different because it will involve the purchasing of short-term government debt rather than long-term debt, but that the effect is to enable private banks to maintain larger balance sheets and take on more risk. “This is very QE-like,” he said.

(Source – MarketWatch)

Yes, this is “very QE-like.”  Indistinguishably QE-like.

Further, it has to be noted that the decision to suddenly restart the QE program was made mid-cycle, that is between FOMC meetings.  This is a good indicator that things are “serious”, as the Fed typically doesn’t like to appear as if it’s been caught off-guard.

So, from my perch: something BIG and concerning is afoot in the economy, the Fed is secretly panicking, and they’re lying to us about it.

Things Are Now “Serious”

Here in late 2019, both the Federal Reserve and the ECB are now both easing again – or back to ‘fraudulent money printing’ as I prefer to label it.

Perhaps a definition is in order. A fraud is meant to deceive while removing something of value from one or more parties.

When printing money, the central banks say they are doing it to protect the economy, jobs and the financial system.

But what’s actually happening is that wealth is flowing like a raging river towards a select few individuals and corporations.

It’s critical to understand that the central banks cannot print up prosperity. All they can do, being redistributive organizations, is take purchasing power away from one side and hand it to another.

So the key question to be asking now is:  Who’s winning and who’s losing?

Well, here in the US, we already know that it’s the tippy-top 0.1% that is doing almost all of the ‘winning.’  The next 0.9% are doing pretty well, too.  But by the time we get just slightly below the top 10%, we run out of “winners”.

Ergo, the bottom ~90% of us are the losers:

This enrages me enormously.  It’s such an obvious scam to reveal, but somehow the US press is entirely NOT up to the task.

For some insane reason, it has become normalized for the ultra-wealthy to grab everything for themselves, leaving little left over for today’s lower classes or for future generations.

When did such magnificent greed become normal?  How is any of this okay with anybody?

Increasingly, we’re seeing that more and more people are NOT OK with that. The Yellow Vest protests in France, the uprisings in Ecuador and Hong Kong, the climate protests, the Extinction Rebellion movement — all of these are forms of rejection of destructive blind greed.

They are also predictive signs that our social and political systems are becoming badly stressed.  When people finally start losing hope, they turn on their “leadership” and revolt.

In other words, It’s now becoming serious.

By now the central banks should have realized that their efforts to perpetually boost asset prices are unraveling the main social contracts upon which our very social stability and relative political peace rest.

But if they have, they aren’t demonstrating any signs of it. Instead, they’re still pretending everything is “in a good place”

The core predicament facing the Fed and its central banking brethren is that reality can be delayed but not dismissed.

The pressures of instability continue to mount exponentially the more the central planners try to contain and (literally) paper over them.

It’s no longer an issue of keeping stock prices attractively high. It’s about accelerating social inequality, the rejection of capitalism and globalization, rising geopolitical divisions, resource scarcity, and the loss of liberty, health and happiness. The central planners’ extractive policies are now manifesting in all of these ills.

How much longer can they keep the system from exploding outside their control?

In Part 2: Why The Fed Will Fail, we look closely at the key economic indicators that are convincing us that there’s not much time left before things violently correct.

At tipping points like now, it’s critical to remember that cycle ends are processes (i.e. slow), but reversals are events. They happen fast.

And once they start, only those who have already prepared in advance are ready for what comes next.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

With Boris Johnson’s plan to pass the Brexit vote this weekend unexpectedly rejected, after the Prime Minister was once again let down by a Parliamentary majority demanding the vote be delayed, cable has predictably tumbled, and after spiking as high as 1.2967 on Friday amid rampant speculation that a passage of the Brexit deal was virtually assured, which prompted a violent short squeeze, moments ago UK spread betting company IG noted that cable has tumbled over 120 pips…

… sliding as low as 1.2809/1.2839 in weekend trading.

Boris now has until midnight to request an extension as per S. 1(4) of the Benn act: https://t.co/PnafvvSd5M#GBPUSD 12836 -1.02%#IGWeekendMarkets

— IGSquawk (@IGSquawk) October 19, 2019

Ironically, with pound positioning having been massively short until very recently, when a historic squeeze flipped the net speculator balance bullish in recent days, absent a viable resolution and some clear path forward that does not involve a legal challenge, the odds of a no deal Brexit hitting on Oct 31 are once again all too real, and the result will be a violent reversal as shorts once again flood the pair…

… sending cable sharply lower when trading resumes late on Sunday.