Chinese Trade War Retaliation Sparks Buying Panic In Stocks

Almost 800 points off the lows on the heels of Larry Kudlow’s comments after China escalates the global trade war? The stench of The PPT was rife today…

 

Chinese stocks went out weak after the trade tariff headlines…

 

And US equity futures were monkeyhammered overnight and through the open. But some sickly-sweet words from Larry Kudlow was enough ignite some momentum and rap stocks all the way back to green… and back to the opening ledge on Monday… and then to last Thursday’s highs…

For some context, that is almost a 1000-point bounce in The Dow…

The cash markets all tracked each other perfectly…

All on one big mega short squeeze…

 

S&P bounced back above its 200DMA…

 

Nasdaq futures perfectly bounced off their 200DMA…

 

VIX crashed back below 20…

 

FANGMAN stocks were panic-bid – MSFT and AAPL green on week…

 

There was one stock that did not benefit from the panic dip buyers…

 

Bank stocks ripped into the green for the week…

 

But bank credit risk continues to break out…

 

More disappointing macro data today and stocks have finally caught down to that reality…

 

And the probability of a 4th rate hike in 2018 (so 3 more) has tumbled to less than 20%…

 

Treasury yields rose on the day and are higher on the week…

 

The Dollar Index continued its tight-range-bounce going nowhere fast action…

 

Late in the day, the Loonie and Peso ramped after a headline claiming Trump was softening on NAFTA demands…

 

Cryptos had an ugly day, dragging them all red on the week…

 

Gold ended unchanged (but off its $1350-plus highs), silver dropped when crude ramped and copper dumped on trade (then pumped)…

 

Bonus Chart: Traders are starting to bet on Fed rate-cuts in 2022 as Trade War anxiety ripples through sentiment. As Bloomberg notes, if you take the numbers literally, it seems investors now think there’s a chance that the tightening cycle could come to an end — in 2022.  The one-month U.S. overnight index swap rate five years forward has fallen below the three-year forward one-month rate, as the chart below, which gives us a rough proxy of the market’s projection of the Fed’s rate path going forward, shows.

That’s a significant change, at least qualitatively, from a month ago, when the forward curve was continuously upward-sloping out to 10 years.

Bonus Bonus Chart: Global Hedge Funds are unchanged in three years…

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Three Mini-Bubbles Burst. Is One Of The Big Ones Next?

Authored by John Rubino via DollarCollapse.com,

Financial crises tend to start at the periphery and work their way into a system’s core. Think subprime mortgages (a tiny little niche of a few hundred billion dollars) that blew up in 2007 and nearly brought the curtain down on the whole show.

There’s no guarantee that the same dynamic will play out this time, but stage one – the bursting of peripheral bubbles – has definitely arrived, with three in progress as this is written.

Subprime auto loans

One of the bright spots of the past few years’ industrial economy was the willingness of people who couldn’t afford new cars to buy them anyway, usually on terms that lock them in until those cars are barely roadworthy seven years hence. This trend always had an expiration date (as does everything “subprime”) and January appears to have been it.

Subprime New-Car Buyers Going Missing From U.S. Showrooms

(Bloomberg) – The American consumers who were stretching themselves to buy or lease a new car are starting to go missing from showrooms.

Rising interest rates and new-vehicle prices are squeezing shoppers with shaky credit and tight budgets out of the market. In the first two months of this year, sales were flat among the highest-rated borrowers, while deliveries to those with subprime scores slumped 9 percent, according to J.D. Power.

The researcher’s data highlights what’s happening beneath the surface of a U.S. auto market in its second year of decline after a historic run of gains. Automakers probably will report sales in March slowed to the most sluggish pace since Hurricane Harvey ravaged dealerships across the Texas Gulf Coast in August, according to Bloomberg’s survey of analyst estimates.

Credit Profiles
Westlake Financial Services has specialized in subprime lending since its founding in Los Angeles thirty years ago. Subprime loans now make up just 55 percent of its portfolio, down from 75 percent five years ago, said David Goff, vice president of marketing.

“Subprime losses increased maybe to pre-recession levels a year or so ago,” Goff said in an interview last month. “That caused you to require a little bit more from the subprime customer. And those people, instead of buying a new car, are switching over to a used car.”

Mortgage refis

As interest rates fell inexorably over the past 30 years, a mortgage holder could refinance at a lower rate every two or three years and either pocket some extra cash or lower his or her monthly payment. This worked like a rolling tax cut for homeowners and a steady source of zero-risk income for banks.

But with interest rates now rising, that gravy train has ended:

Homeowners ditch refinancings as mortgage rates rise

(MSN) – Refinancings make up a smaller portion of the mortgage business than at any time in the past two decades, posing a challenge for lenders who already fear higher interest rates and climbing house prices could eventually depress purchase activity.

Last year, 37% of mortgage-origination volume was because of refinancings, according to industry research group Inside Mortgage Finance. That is the smallest proportion since 1995, and the number of refinancings is widely expected to shrink again this year. In 2012, refinancings were 72% of originations.

While purchase activity has climbed steadily from a post-financial-crisis nadir in 2011, growth in 2017 wasn’t enough to offset a $366 billion decline in refinancing activity. The result: The overall mortgage market fell around 12%, to $1.8 trillion, according to Inside Mortgage Finance.

What’s more, there are fewer homeowners eligible to refinance because of rising rates. The number of borrowers who could benefit from a refinancing is down about 37% from the end of last year, estimates Black Knight Inc., a mortgage-data and technology firm. At 2.67 million potential borrowers, this group is at its smallest since 2008.

Cryptocurrencies

Bitcoin’s journey from nerd novelty to global psychological dominance was truly epic. But it ended in 2017, and the slope has been negative ever since. As this is written bitcoin is down by more than half from its peak and the crypto universe market cap is now smaller than bitcoin’s alone was a year ago.

This of course might not be the end for cryptocurrencies. They’ve had several big corrections during their emergence and could take off on another parabolic run at any time. Still, the latest correction came just as millions of new users were jumping in worldwide, and they won’t recover from those psychic scars easily.

The Low-Key Indicator That The Bitcoin Bubble May Have Burst

(MSN) – Bitcoin, the poster child for cryptocurrency, is in the throes of a bear market that began shortly after the asset hit a price of just over $19,000 in December. Judging by Google search trends, that’s a state of being bitcoin isn’t likely to break out of any time soon.

Along with the coin’s value, Google searches for bitcoin have plummeted in 2018. Has the bubble really burst this time?

FOMO Fades
Fear of missing out — FOMO, as it’s colloquially referred to — was often noted last fall as a major wind beneath bitcoin’s wings. With the crypto conversation migrating from trading desks to dinner tables, everyday folks armed with only a passing understanding of the currency or the technology that underpins it poured money into the asset.

Awash with demand, bitcoin did what any good commodity would and became more valuable. Since then, whether from profit-taking or panic selling, the price has descended more than 100 percent from the highs. And there seems to be little hope recreational buyers will step in and provide support.

A look at how the Google search trends chart correlates with a chart of bitcoin’s value over the last year implies that the fair-weather investors who helped propel it into the stratosphere may have moved on.

So it’s beginning. The periphery is crumbling.

As for which bubbles make up the core of the system, some obvious candidates are sovereign bonds, Big Tech stocks, and fiat currencies. These are entirely different animals from, say, subprime auto loans, and when they go they’ll take a lot of underlying assumptions down with them.

Of the three, Big Tech looks closest to the edge. The FANG+ stocks have been rising for so long that they’ve become an uncomfortably large part of the overall stock market. So their fate to an extent determines that of the Dow and S&P. And lately their situation is looking dicy for a variety of reasons.

First and foremost, they’re all ridiculously expensive, trading at historically outrageous multiples of earnings, cash flow, book value, you name it. Second and much stranger, they’re behaving in ways that are enraging both competitors and customers, so a backlash of some sort is inevitable. Third and stranger still, they find themselves in an environment where the president is completely willing to attack them on their own social media turf while starting trade wars that disproportionately affect tech company products. Add it all up and the unlimited future of just a few months ago now looks like an oncoming storm.

Tech stocks get battered, helping bash the Dow, S&P

(CBS) – U.S. stocks tumbled into correction mode to start off the second quarter on Monday, as technology shares got battered on worries sparked by trade concerns and tweets by President Donald Trump and Elon Musk.

“Today it’s the tech and tariff trade that has the market rattled,” said Nick Raich, CEO of The Earnings Scout.
The Dow Jones industrial average shed 458 points, or 1.9 percent, while the S&P 500 dropped 2.2 percent. But the day’s biggest loser was the tech-heavy Nasdaq, which plummeted 2.7 percent.

Retaliatory tariffs imposed by China on a slew of U.S. exports and Mr. Trump’s ongoing criticism of online retailer Amazon helped push equities into a downward spiral. “We’re starting a new quarter on an awfully soft footing,” said Art Hogan, chief market strategist at B. Riley RBR. He chalks up the market’s slide to “tariffs, protectionism and chaos in the White House.”

The president has for days been assailing Amazon, lately focusing on a “scam” contract with the U.S. Postal Service that has actually been judged profitable for the post office. “It’s a long way to go to say ‘I don’t like the Washington Post’,” said Hogan of the newspaper owned by Amazon owner Jeff Bezos.

“We import a lot of technology from China,” said Paul Nolte, a senior vice president and portfolio manager at Kingsview Asset Management. “What may happen here is we see retaliation from China specific to technology.”

A tech crash would be brutal but survivable.

But if the markets lose faith in sovereign debt and fiat currency, that’s the end of the system as we know it. A plausible last act to bring this about might be a tech dislocation that pulls down the rest of the stock market, prompting central banks to respond with massive money creation and universally-negative interest rates. Then let’s see what happens to those fiat currencies.

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“We’re In Limbo”: Migrant Caravan Stalls Out In Mexico, Organizers Admit Defeat

A giant caravan of Central American migrants illegally crossing through Mexico, in the hopes of illegally crossing into the U.S., has ground to a halt as over a thousand migrants begin their fourth day camped out at a Mexican sports arena.

“We’re in limbo,” said one asylum seeker camped outside of the center – surrounded by garbage bags full of trash and rolled up mattresses.

Organizers admit they were taken aback by both the size of this year’s caravan—which has been a periodic ritual since 2010—and the attention it has received. They also admit their original plan of making their way to the U.S. border has likely changed. –Wall St. Journal

“We cannot arrive to the border with 1,000 people. The group is too large, we never had seen this amount of people before,” said organizer Irineo Mujica, adding that previous caravans had about 300 people.

Meanwhile, Mexican foreign minister Luis Videgaray tweeted on Tuesday that the caravan had “disbanded,” despite appearing largely intact on Wednesday – albeit not moving.

Mexican authorities have already deported approximately 400 marchers, while the rest will be given either a 20-day transit visa through Mexico to return home, or a 30-day humanitarian visa for those who want to apply for asylum in Mexico.

Not so fast…

Reports are also coming in that several hundred caravan members boarded “The Beast” train in Central Mexico, while the rest of the caravan forged ahead.

Some in the United States think the notion of Central American refugees seeking asylum in the United States after passing through Mexico is laughable – considering Mexico’s “working” asylum system.

Mark Kirkorian, director of the Center for Immigration Studies, a Washington-based think tank that favors more immigration restrictions, said that any migrant from Honduran who tries to enter the U.S. from Mexico should forfeit their claim to be seeking asylum. –WSJ

“I’m sorry, but you are not seeking refuge from persecution if you are passing through 1,000 miles of Mexico, a country that has a working asylum system, and trying to reach the U.S.,” Mr. Kirkorian said.

Caravan organizer Irineo Mujica said that around 70% of the immigrants want to stay in Mexico if they receive their papers to stay and work there – and that many have family living in the country.

“What I need is a job to support my family, and if Mexico provides me with papers and work I will stay [in Mexico] with a cousin,” said Walter Romero, 40, who had to shutter his garage business in the Honduran city of San Pedro Sula amid the looting and protests of recent months.

Hondurans seeking refuge in the U.S. has grown dramatically over the last decade as political instability and gang violence have escalated. Petitions for asylum from El Salvador, Guatemala and Honduras grew by 800% between 2010 and 2016 according to the DOJ.

Mexico, meanwhile, has stepped up immigration enforcement along their southern border – apprehending over 5,000 illegal immigrants in February, up from 2,000 and 3,000 per month for most of last year.

Trump steps in

As the caravan made its way north over the past week, President Trump pointed to it as an example of why his border wall needs to be built. Trump also threatened to kill NAFTA and cut off foreign aid to “Honduras and the countries that allow this to happen.”

Trump also said on Tuesday that he would deploy U.S. troops to the southern border to guard against illegal crossings into the country “until we have a wall.”

“Until we can have a wall and proper security, we are going to be guarding our border with the military. That’s a big step,” Trump told reporters at the White House while sitting nearby Defense Secretary James Mattis.

Trump’s comments mark a significant escalation in U.S. border policy, as troops along the frontier with Mexico – not the U.S. border patrol, would be the most aggressive action taken to date by the President who promised voters a giant wall.

The President also closed the door on a DACA deal this week – an Obama-era program designed to protect young immigrants brought here illegally to the United States as children. In a Sunday tweet, Trump railed against “ridiculous liberal (Democratic) laws” like “catch and release”. And with more “dangerous caravans coming” to the US border, “Republicans must go to Nuclear Option to pass tough laws NOW. NO MORE DACA DEAL!

So we are left with a stalled out caravan that’s never going to reach the U.S. border, and U.S. troops on their way to guard it until the wall is built. Perhaps Trump should send the organizers gift baskets to thank them for making his case for stronger border security.

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Matt King: This Is The Real Reason Behind The Blow Out In Libor-OIS

Two weeks ago when discussing the ongoing blow out in Libor, which today again rose to 2.3246%, up 0.38% on the day, the highest since November 2008 and higher for the 39th consecutive day, the longest streak since November 2005, we said that contrary to the generally accepted theory that “all is well”, and that the move is purely technical as a result of a glut in T-Bill supply and cash repatriation, the real reason behind the Libor has to do with an overall dollar funding shortage and generally tighter financial conditions, which was also observed in the sharp move wider in bank CDS.

A key indication that this “less than benign” version of events is the right one, is that while the T-Bill glut is now over and there is little excess supply on the short end, Libor continues to rise.

Incidentally, those wondering where it is today, after blowing out to a post-crisis wide of 60bps, the L-OIS spread just hit new post-crisis highs, just shy of 60bps.

A second indication is that as we noted previously, Citi’s iconic credit manager, Matt King, agreed with the “Plan B” explanation, and as we discussed, said that the sharp move in both Libor and L-OIS is the function not of technicals, but a byproduct of Fed tightening, a much more structural – and precarious – explanation for what is really going on as it suggests that the Fed is stuck and any further tightening would result in financial contagion, and a potentially disastrous dollar short squeeze.

We bring this up because earlier today Matt King made a very rare TV appearance on CNBC, in which he once again explained to the numerous overnight Libor experts and macro tourists what is really the catalyst behind the Libor and LOIS move:

what we are seeing is relatively modest withdrawals from the central banks suddenly have broader consequences than the central banks have been anticipating, and that therefore does constitute a greater tightening as if we had two extra Fed hikes more than they were anticipating.

So far it is not systemic, yes we are not worried about banks falling over in the same way as 2008 or even 2012. At the same time, we would expect a broadening out of the stresses, or the tensions, beyond where they are at the moment. So far it’s just Libor-OIS it’s not cross-currency bases, and yet there are reasons to think that as the Fed drains excess reserves from the system, we will see that tension broaden out.”

This is a continuation of the point King made two weeks ago when the Citi credit strategist said that the level of reserves has been a direct determinant of stress in money markets – the cross-currency basis in particular, where a $200bn reduction in reserves has added about 10bp to the 5y €/$ basis, and where moves in the $/¥ basis have if anything been larger still. However, as Citi calculated over the next few months the level of excess reserves in the system is set to slide, dropping by around $300 BN over the next 3 months, which will pressure not only Libor-OIS but the various cross-ccy bases which have so far been untouched.

Matt King picks up on this topic this morning, and while skipping T-Bill issuance or tax repatriation as catalysts, says that the level of Fed excess reserves is to him “the most significant long-term driver: you are draining reserves which just increased to $30BN a month, and then you will increase to $40BN a month next quarter and that exerts a steady pressure here.

“So to date, the pressure yes was a shift in tax reform and how corporate treasurers are investing, but the trouble is that’s not going away, that’s a structural shift and we have this second structural shift from the Fed.”

King concludes with a discussion of a topic we first touched upon in February, namely the surging debt hedging costs as a result of the blow out in Libor-OIS, and how much more expensive it has become for foreigners to purchase US Treasurys and corporate debt on a hedged basis.

Commenting on the sharp rise in hedging costs, King says “that is a major concern to us” and explains why:

“80% of net buying in US credit over the last year came from foreigners and mutual funds. They’ve both just stopped for the last couple of months and everyone is hoping that they resume but that foreign bid – if you their Japanese investor – your hedged cost has gone from 2.50% to 2.75% and you know they will increase with each and every Fed hike and therefore suddenly US credit doesn’t look attractive and we’re not convinced you’re going to get a rebound there which is a big global negative.”

Indeed, because without foreign buyers at a time when the Fed is hiking rates and when the US is set to double its Treasury issuance and sell a net $1 trillion in debt this year, it is increasingly unclear how – absent QE – the Treasury will be able to do this without blowing out interest rates.

Matt King’s full clip is below.

Citi: Rise in Libor-OIS spread has further to go from CNBC.

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In Parting Speech, McMaster Warns “We Have Failed To Impose Sufficient Costs On Russia”

After a storied military career that earned him the respect of his colleagues at the Pentagon, former National Security Advisor HR McMaster ended his military career late Tuesday – and his barely 12-month tenure serving in the Trump White House – with a speech denouncing Russian President Vladimir Putin.

During his time at the White House, McMaster angered Trump and others in the West Wing by refusing to toe the administration line about Russia. Instead, he repeatedly declared that Russian meddling in the election was “beyond dispute”.

McMaster delivered his remarks at a Q&A with the Presidents of Estonia and Latvia that was intended to celebrate the US-Baltic partnership.

Per Axios, McMaster’s rhetoric was “some of the most blistering rhetoric toward Putin thus far from the Trump administration, and included an acknowledgement that the West has ‘failed to impose sufficient costs’ on the Kremlin.”

Because of this, “the Kremlin’s confidence is growing.”

“Russia has used old and new forms of aggression to undermine our open societies,” McMaster said.

He blasted Putin for his “pernicious form of aggression that combines political, economic, informational, and cyber assaults against sovereign nations.”

These include the Skripal poisoning, which McMaster called “an attempted murder that endangered the lives of over 130 people, including many children.”

He also defended Trump’s decision to expel 60 Russian diplomats as helping to remove dozens of Russian intelligence agents.

“In the United States President Trump ordered the removal of dozens of Russian intelligence officers and the closure of the Russian consulate in Seattle. This action will also help protect our democratic institutions and processes as these Russian officers orchestrate Russia’s sustained campaign or propaganda, disinformation and political subversion,” he said.

But he ended his remarks by praising his former boss for holding rogue regimes to account, and that Putin’s recent successes have made him overconfident.

The outgoing national security adviser warned against those in the US who would “glamorize and apologize” for rogue regimes like Russia.

He also said Trump has “repeatedly told the truth about these murderous regimes.”

“Mr. Putin may believe he is winning in this new form of warfare…perhaps he believed that our free nations are weak and will not respond,” McMaster said.

“He is wrong. Russian aggression is strengthening our resolve and our confidence.”

McMaster is passing the reins to former UN Ambassador John Bolton, who officially begins his tenure as national security adviser next week.

* * *

Read McMaster’s speech in its entirety below:

Introduction:
General James L. Jones, Jr. (USMC-Ret.),
Interim Chairman,
Atlantic Council

Concluding Remarks:
Frederick Kempe,
President and CEO,
Atlantic Council

GENERAL JAMES L. JONES, JR.:  I really have a distinct honor and a personal pleasure of being able to introduce our keynote speaker tonight:  Lieutenant General H.R. McMaster of the United States Army.  As all of you know, General McMaster is the 26th national security adviser to the president of the United States.  And, as everyone knows, in the days ahead he will step down from his White House post and retire from a celebrated 30-plus-year career in the United States Army.  (Applause.)

We told General McMaster and Fred at the table that I was going to talk about the five or six best officers in the United States Army, and that would be General McMaster as a second lieutenant, General McMaster as a first lieutenant – (laughter) – General McMaster as a captain, and so on.  I won’t do that, but what a career he’s had, and aren’t we all the better for it?  H.R., thank you.  (Applause.)

I’m not finished.  (Laughter.)

For decades, he’s been identified as one of the Army’s most capable commanders and one of its sharpest intellects.  He is celebrated for his innovation and his courage both on and off the field of battle.  And he’s earned his stripes in the battle of Washington, I can tell you that.  (Laughter.)

He served with great distinction and valor in Desert Storm, where he was awarded a Silver Star for heroism, and in Operation Iraqi Freedom, and has contributed to Operation Enduring Freedom in Afghanistan.  And he’s celebrated for his leadership and valor in both the First and Second Gulf Wars.

In addition to his reputation on the field of battle and his innovative tactics as a soldier, H.R. McMaster is recognized as one of the United States military’s foremost intellectual thinkers.  His scholarship helped to prepare the United States Army for threats of the future and shed new light on counterinsurgency, counterterrorism, and military leadership theory.

In February of 2017, General McMaster was appointed as national security adviser by the president.  And during his tenure he has brought coherence and structure to the National Security Council in support of the administration’s reassessment of critical national security issues.  Under his leadership and in support of the president’s objectives, the National Security Council has produced a highly-regarded and globally-read National Security Strategy.

More importantly for the purposes of our dinner this evening, General McMaster has played an important role in supporting President Trump’s reinforcement of NATO’s eastern flank.  During his tenure as national security adviser, President Trump has attended the Three Seas Summit in Warsaw and pledged support for U.S. energy exports to Europe, committed greater funds to the European Defense Initiative – Deterrence Initiative, excuse me – brought new military capabilities to exercises and rotations in Europe, and secured greater defense spending commitments from our allies.  For these accomplishments and his many other achievements in uniform, our country and our allies around the world owe General McMaster a debt of gratitude for his lifetime of service to our country and to its security.

It’s my pleasure to introduce to you a great American leader, a great American diplomat, and a great American soldier, General H.R. McMaster.  (Extended applause.)

LIEUTENANT GENERAL H.R. MCMASTER:  Thank you so much.  Thank you, General Jones.

And it’s really – it’s really me who owes all of you a debt of gratitude, General Jones in particular.  He was so gracious to me when I took over this position.  And on that line about, you know, the best officers in the Army, there are a lot of people who know better than that, especially General Lute, for – (laughter) – for whom I served as his plans officer when I was a captain in the 2nd Cavalry Regiment.  And then Rich – and Rich Clarke, who’s here, our great J5 on the Joint Staff who’s my West Point classmate, and who knows as a kid I was often misunderstood and a victim of circumstance.  I was.  (Laughter.)

But – (laughs) – but thank you.  Thank you, General Jones.  Thank you for your work with Fred Kempe and Damon Wilson – I’m so glad he’s OK – to organize this wonderful event and host all of us for dinner.  The Atlantic Council is a special place, and the Atlantic Council does special work that is increasingly important to all of our – all of our security.

But President Kaljulaid and President Vejonis, what an honor to be here with two great leaders who have been so strong – so strong for their own nations, but really so strong for the West and all of us.  And, Minister Linkevicius, it is great – it is great to be here with you and all of our delegations.

And what a great – what a great idea to be – to pull together this group here – thank you, Atlantic Council – on this historic occasion of the U.S.-Baltic Centennial Summit.  So I want to just begin by congratulating Estonia, Latvia, and Lithuania once again on their 100th anniversary of independence.  (Applause.)  We are thrilled to have the opportunity to celebrate this important milestone with you in Washington, D.C.  And so what we’ll think, though, more – even more so than the history – about the history is that we’re beginning 100 years of renewed partnership among our nations.

As President Trump said earlier today, the United States has never ceased to recognize the independence of the Baltic republics.  In 1940, when the Soviet Union invaded your nations, U.S. Acting Secretary of State Sumner Welles issued the famous Welles Declaration.  In that declaration, Welles confidently wrote that the American people opposed any form of intervention on the part of one state, however powerful, in the domestic concerns of any other sovereign state, however weak.  In the absence of respect for sovereignty, Welles continued, the basis of modern civilization itself cannot be preserved.

After Welles’ bold and historic declaration, through the decades of Soviet occupation that followed, the United States continued to affirm the sovereignty of the Baltic republics.  Throughout that entire period, we confidently displayed the flags of independent Estonia, Latvia, and Lithuania alongside our own.

Tonight we celebrate this proud history at a critical moment for our nations and the world – critical because we are now engaged in a fundamental contest between our free and open societies and closed and repressive systems.  Revisionist and repressive powers are attempting to undermine our values, our institutions, and our way of life.  To preserve our sovereignty and prevail, we must renew the same confidence that inspired Welles and empowered the people of the Baltic nations through decades of Soviet occupation.  Armed with this confidence, we will triumph over new threats, including those posed by Russia’s increased aggression around the world.

Since the denial-of-service attacks on Estonia in 2007 and the invasion of Georgia in 2008, Russia has used old and new forms of aggression to undermine our open societies and the foundations of international peace and stability.  Estonia, Latvia, and Lithuania have all been targeted by Russia’s so-called hybrid warfare, a pernicious form of aggression that combines political, economic, informational, and cyber assaults against sovereign nations.  Russia employs sophisticated strategies deliberately designed to achieve objectives while falling below the target state’s threshold for a military response.  Tactics include infiltrating social media, spreading propaganda, weaponizing information, and using other forms of subversion and espionage.

So for too long some nations have looked the other way in the face of these threats.  Russia brazenly and implausibly denies its actions.  And we have failed to impose sufficient costs.

The Kremlin’s confidence is growing as its agents conduct their sustained campaigns to undermine our confidence in ourselves and in one another.  Last month, Russia used a military-grade nerve agent in an attempted murder that endangered the lives of over 130 people, including many children.  This attack was the first offensive use of nerve agent in Europe since the Second World War.  It was an assault on the United Kingdom’s sovereignty.  And any use of chemical weapons by a state party is a clear violation of the Chemical Weapons Convention.

Russia has also conducted numerous cyberattacks against free nations.  On March 15th, the Trump administration released a report condemning the Russian government for malicious cyber intrusions that targeted U.S. critical infrastructure, including our energy sector.  And we also know that Russia was behind the recent NotPetya cyberattack that caused billions of dollars in damage around the world.

Further, over the past year Russia has conducted numerous intercepts of U.S., allied, and partner aircraft and vessels, including in the Nordic-Baltic region, threatening freedom of navigation and endangering our personnel.

Mr. Putin may believe that he is winning in this new form of warfare.  He may believe that his aggressive actions in the parks of Salisbury and cyberspace, in the air and on the high seas can undermine our confidence, our institutions, and our values.  Perhaps he believes that our free nations are weak and will not respond – will not respond to his provocations.

He is wrong.  Russian aggression is strengthening our resolve and our confidence.  We might all help Mr. Putin understand his grave error.  We might show him the beaches of Normandy, where lingering craters and bullet holes demonstrate the West’s will to sacrifice to preserve our freedom.  We might bring him to our concert halls and theaters, where the music and art of our people reveal our freedom to create, imagine, and to dream.  We might take him to our universities, where the free exchange of ideas among young men and women displays our freedom to learn, to speak, and to achieve our highest aims.  We might lead him to the stately buildings here in Washington, where inscriptions carved deep into stone proclaim that we are free to worship, equal under the law, and opposed to every form of tyranny over the mind of man.  We might introduce him to the people – the people of Estonia, Latvia, and Lithuania, who endured the devastation of the Second World War, decades of Soviet occupation and communism, and emerged proud, strong, sovereign, free, and prosperous.  These are three of the most creative and innovative nations on Earth.  And Mr. Putin might also then consider how the Russian people’s aspirations connect his own population to us, despite the Kremlin’s efforts to sow dissention abroad and repress freedom at home.

In the room tonight are elected officials, public servants, intellectuals, and leaders from the private sector.  We converse without fearing that our opinions will lead to imprisonment, torture, or the death of a loved one.  We might ask others around the world a simple question:  Would you rather be part of a small club of autocrats that might rotate their meetings between Moscow, Tehran, Damascus, Havana, Caracas, and Pyongyang, or would you rather be a club of free peoples who respect sovereignty, individual rights, and the rule of law?  I think our club is better, and I think our club’s more fun for sure – (laughter) – than that club.

It is – it is time that we expose those who glamorize and apologize in the service of communist, authoritarian, and repressive governments, regimes who torture, enslave, oppress, and murder their people.  Even in the United States and in other free nations, some journalists, academics, public officials, and saddest of all young people have developed and promulgated idealized, warped views of tyrannical regimes.

A clear-eyed view of the brutal nature of repressive governments and ideologies is central to the president’s National Security Strategy.  And I appreciate the – I appreciate the comments about the National Security Strategy, but I should just say that it was really Dr. Nadia Schadlow who ran that effort and did a wonderful job for the president and led a great team to do that.  So – great job.  (Applause.)

Since taking office, the president has repeatedly told the truth about these murderous regimes and oppressive doctrines.  I’d like to ask you to refer to some of the previous speeches.  I mean, we heard this truth from the president at the United Nations.  We heard this truth in Riyadh.  We heard this truth in Warsaw.  We heard this truth in Seoul.  And we heard this truth in the seat of our democracy as Mr. Ji Seong-ho raised his crutches above the chamber in defiance.

The history of repression and authoritarianism is one of theft, torture, murder, and immense human suffering, and it is not – sadly, it is not a phenomenon of the past.  We are presently engaged in competitions with repressive and authoritarian systems to defend our way of life, to preserve our free and open societies.  We must be confident.  We must be active.  We cannot be passive and hope that others will defend our freedom.  The call to compete, to cooperate with others who share our principles, and to catalyze positive change is central to the president’s National Security Strategy.  And over the past year, the United States, our allies, and our partners have acted to defend our institutions and our liberty.

Last week, in response to Russia’s nerve-agent attack, nations around the world, including the United States and the Baltic republics, announced the coordinated expulsion of Russian officials from their countries.  The United States played a supporting role in catalyzing a response by NATO and like-minded nations.  The number of expelled officials is growing.  As of last Friday, nearly 30 countries had acted to expel more than 150 Russian officials.  These actions represent the largest collective expulsion of Russian intelligence officers in history.

In the United States, President Trump ordered the removal of dozens of Russian intelligence officers and the closure of the Russian consulate in Seattle.  This action will also help protect our democratic institutions and processes, as these Russian officers orchestrate Russia’s sustained campaign of propaganda, disinformation, and political subversion.

In April of last year, the United States joined eight other nations in establishing the new European Centre of Excellence for Countering Hybrid Threats.  To defend against new forms of aggression and subversion, Estonia, Latvia, and Lithuania – nations that experienced the first blows from Russia in cyberspace and on social media – all are lending their invaluable expertise to that center.

The Trump administration also continues to impose sanctions and other penalties on Russian entities for targeting our cybersecurity, attacking our infrastructure, and otherwise infringing on the sovereign rights of the United States and our allies.  And the United States, as has already been mentioned, is substantially increasing funding for the European Deterrence Initiative, or EDI, which provides billions of dollars to U.S. military and allied forces in Europe to deter Russian aggression and prevent conflict.

So we are acting, but we must recognize the need for all of us to do more to respond to and deter Russian aggression, especially in four critical areas.

First, we must compete across all arenas to counter so-called hybrid warfare, this new form of Soviet-era active measures and maskirovka.  We must reform and integrate our military, political, economic, law enforcement, and informational instruments of power to deter and defeat threats to our sovereignty.

Second, we must catalyze change.  We must invest in our cyber infrastructure to ensure that we protect our data, our innovation base, and infrastructure against espionage and theft and attack.  To deter adversaries, we must be prepared to impose a high cost in response to cyber aggression.

Third, we must all cooperate to share responsibility in these and other security efforts.  Even as the United States has committed nearly $10 billion to EDI, many NATO countries, unlike the Baltic nations we are – who are here tonight, are still not honoring the Wales pledge to spend at least 2 percent of their GDP on defense.  Our mutual security requires everyone to contribute.

Finally, we must realize that all of our actions depend on preserving our strategic confidence, our will to advance our values and defend our way of life.  In that 1940 declaration that affirmed the Baltic nations’ independence, Sumner Welles was clear:  “The people of the United States are opposed to predatory activities no matter whether they are carried on by the use of force or by the threat of force.”  Welles’ noble text forever bound Americans to our Baltic brothers and sisters in a partnership based on respect for sovereignty, freedom, and the rule of law.  As President Kaljulaid said earlier today, as long as we remain confident in these foundational principles, proud of our history, and faithful to our values, our nations will remain strong, secure, and free.

It has been a privilege – great privilege to serve the United States for 34 years.  Tonight, at my last public engagement, it is an honor to address an audience that fundamentally understands what is at stake for our free and open societies.

Early in my career I had a change, with General Lute, to patrol the East-West German border and to see – to see that artificial boundary collapse – collapse suddenly one day, and to go from staring down East German border guards across the border to our soldiers being flocked with East Germans carrying bouquets of flowers and bottles of wine.  And so we ought to be confident.  We ought to be confident that freedom will triumph over repression.

But we must strengthen our resolve, cooperate to share responsibility, catalyze positive change, and compete effectively in new arenas.  The victory of free societies is not predestined, and I think that point was made earlier as well.  There’s nothing inevitable about the course of human events and history.  And there is no arc of history, there is no so-called end of history, that will ensure our success.

Brave men and women have fought for our liberty.  They’ve fought with their pens, as Sumner Welles did in 1940.  They’ve fought with their swords, as your brave independence fighters did in 1918 from these Baltic republics.  And today the survival of our free and open societies and our way of life continues to depend on our confidence in our values, on our pride in our heritage, and on our will to defend our freedom.

Thank you for the great privilege of being – of being with you this evening.  It’s truly been an honor.  Thank you so much.  (Applause.)

FREDERICK KEMPE:  General McMaster, what an amazing speech in your last public engagement as the national security adviser of the United States.  Thank you for that ringing voice of clarity.  This will go down in the Atlantic Council’s storied 60-year history as one of the great statements at one of the most crucial moments in our country’s decision-making process for the future.

Let me just quote one statement, but we’ll have all of this as soon as we can on our website:  “We are presently engaged in a competition with regimes of authoritarian systems to defend our way of life.”  And the rest of it, and the historic context in the rest of it, as you can see by this standing ovation, we applaud not only you and your service, but the statement you delivered tonight in honor of this 100th anniversary.

And let’s not forget it’s the 100th anniversary of an independence that at first failed and again has come to rise.  And so I think that has to inspire us doubly to recommit ourselves to this cause.  Thank you for inspiring us tonight.

LT. GEN. MCMASTER:  Thank you, sir.

MR. KEMPE:  Thank you.  Thank you.  (Applause.)  And thank you all for attending.  (Applause.)

 

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Facebook Admits Over 87 Million People’s Data Was Shared Improperly

Just a few short days before CEO Mark Zuckerberg does the ‘perp’ walk to Washington to testify to Congress, Facebook says the information of up to 87 million people, mostly in the U.S. may have been improperly shared with Cambridge Analytica, considerably more than the originally discussed 50 million.

As AP reports, this coming Monday, all Facebook users will receive a notice on their Facebook feeds with a link to see what apps they use and what information they have shared with those apps.

They’ll have a chance to delete apps they no longer want.

Users who had their data shared with Cambridge Analytica will be told of that within that notice.

Facebook says most of the affected users are in the U.S.

*  *  *

Full Statement below:

Two weeks ago we promised to take a hard look at the information apps can use when you connect them to Facebook as well as other data practices. Today, we want to update you on the changes we’re making to better protect your Facebook information. We expect to make more changes over the coming months — and will keep you updated on our progress. Here are the details of the nine most important changes we are making.

Events API: Until today, people could grant an app permission to get information about events they host or attend, including private events. This made it easy to add Facebook Events to calendar, ticketing or other apps. But Facebook Events have information about other people’s attendance as well as posts on the event wall, so it’s important that we ensure apps use their access appropriately. Starting today, apps using the API will no longer be able to access the guest list or posts on the event wall. And in the future, only apps we approve that agree to strict requirements will be allowed to use the Events API.

Groups API: Currently apps need the permission of a group admin or member to access group content for closed groups, and the permission of an admin for secret groups. These apps help admins do things like easily post and respond to content in their groups. However, there is information about people and conversations in groups that we want to make sure is better protected. Going forward, all third-party apps using the Groups API will need approval from Facebook and an admin to ensure they benefit the group. Apps will no longer be able to access the member list of a group. And we’re also removing personal information, such as names and profile photos, attached to posts or comments that approved apps can access.

Pages API: Until today, any app could use the Pages API to read posts or comments from any Page. This let developers create tools for Page owners to help them do things like schedule posts and reply to comments or messages. But it also let apps access more data than necessary. We want to make sure Page information is only available to apps providing useful services to our community. So starting today, all future access to the Pages API will need to be approved by Facebook.

Facebook Login: Two weeks ago we announced important changes to Facebook Login. Starting today, Facebook will need to approve all apps that request access to information such as check-ins, likes, photos, posts, videos, events and groups. We started approving these permissions in 2014, but now we’re tightening our review process — requiring these apps to agree to strict requirements before they can access this data. We will also no longer allow apps to ask for access to personal information such as religious or political views, relationship status and details, custom friends lists, education and work history, fitness activity, book reading activity, music listening activity, news reading, video watch activity, and games activity. In the next week, we will remove a developer’s ability to request data people shared with them if it appears they have not used the app in the last 3 months.

Instagram Platform API: We’re making the recently announced deprecation of the Instagram Platform API effective today. You can find more information here.

Search and Account Recovery: Until today, people could enter another person’s phone number or email address into Facebook search to help find them. This has been especially useful for finding your friends in languages which take more effort to type out a full name, or where many people have the same name. In Bangladesh, for example, this feature makes up 7% of all searches. However, malicious actors have also abused these features to scrape public profile information by submitting phone numbers or email addresses they already have through search and account recovery. Given the scale and sophistication of the activity we’ve seen, we believe most people on Facebook could have had their public profile scraped in this way. So we have now disabled this feature. We’re also making changes to account recovery to reduce the risk of scraping as well.

Call and Text History: Call and text history is part of an opt-in feature for people using Messenger or Facebook Lite on Android. This means we can surface the people you most frequently connect with at the top of your contact list. We’ve reviewed this feature to confirm that Facebook does not collect the content of messages — and will delete all logs older than one year. In the future, the client will only upload to our servers the information needed to offer this feature — not broader data such as the time of calls.

Data Providers and Partner Categories: Last week we announced our plans to shut down Partner Categories, a product that lets third-party data providers offer their targeting directly on Facebook.

App Controls: Finally, starting on Monday, April 9, we’ll show people a link at the top of their News Feed so they can see what apps they use — and the information they have shared with those apps. People will also be able to remove apps that they no longer want. As part of this process we will also tell people if their information may have been improperly shared with Cambridge Analytica.

In total, we believe the Facebook information of up to 87 million people — mostly in the US — may have been improperly shared with Cambridge Analytica.

Overall, we believe these changes will better protect people’s information while still enabling developers to create useful experiences. We know we have more work to do — and we’ll keep you updated as we make more changes.

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Trade War Looms Over Oil Markets

Authored by Nick Cunningham via OilPrice.com,

Oil prices, along with equities across the board, were dragged down on Monday over fears of a brewing trade war.

China announced $3 billion of tariffs on U.S. goods, including pork and recycled aluminum. The move came as a retaliation to the Trump administration’s 25 percent tariff on steel and aluminum imports. China’s tariff announcement on Monday sent global financial equities careening downwards, and the losses were likely magnified by President Trump’s Twitter attacks on Amazon, which sparked a selloff in tech stocks.

Fears of a global trade war are again on the rise. The worrying thing is that China’s tariff measures on Monday were somewhat narrow, and only came as retaliation to the steel/aluminum tariffs, not the $60 billion in tariffs the Trump administration announced more recently, which specifically targeted China.

Chinese officials reiterated a desire to avoid a trade war, but China might not hold its fire forever, and the government could be preparing a larger set of trade tariffs in response.

In other words, there is a decent chance that the trade dispute continues to escalate.

That is bad news for oil prices. The case for oil going higher largely hinges on exceptionally strong demand scenarios for 2018. “Our latest forecast suggests that demand will grow by 1.7 million b/d in 2018, the fifth-highest this century,” WoodMac said in a recent note. A trade war would seriously upend that forecast.

“The retaliation from China is concerning for energy markets,” said Michael Loewen, a commodities strategist at Scotiabank in Toronto, according to Bloomberg.

“If a trade war occurs between these countries and it affects demand growth from emerging markets, that could be a big problem.”

Adding to the danger for oil prices is the fact that speculators have once again staked out an incredibly bullish position on oil futures. Hedge funds and other money managers have acquired a record in terms of net length in Brent futures, rising to 595,596 for the week ending on March 27, an increase of 34,388 from a week earlier. While that is a sign confidence in the trajectory of the oil market, it also exposes oil prices to a correction should sentiment turn bearish. As John Kemp of Reuters notes, the proportion of long to short bets has stretched to a record, exceeding 12:1.

Hedge funds and other money managers are all betting in the same direction. “That makes prices vulnerable to bad news,” Greg McKenna, chief market strategist at futures brokerage AxiTrader, told Reuters. He cited news that Russia increased production in March as an example of the type of market development that could upset the bullish sentiment and force a selloff.

Indeed, as has repeatedly occurred over the past several years, whenever investors build up positions in the futures market and take things a little too far, they tend to rush back in the other direction at the first sign of trouble. In fact, that occurred at the end of January when Brent surpassed $70 per barrel. The spike in financial volatility in early February led to an unraveling of positions and a sharp slide in oil prices.

The danger for oil is that a possible trade war represents one such obvious threat to market sentiment.

“The broader markets are struggling,” John Kilduff, a partner at Again Capital LLC, told Bloomberg. The oil market “is super long at the moment, so without a catalyst it will be hard for that length to stick around.”

This all stands in sharp contrast to a longer-term outlook for oil. Inventories are falling, OPEC is intent on keeping the production cuts through this year and into 2019, and plenty of geopolitical surprises could explode and take supply off the market. That means that there are very good reasons for why an oil price rally might occur later this year.

Yet, a trade war looms as a potential spoiler. And in the immediate future, anything that upsets bullish sentiment could lead to a price correction for oil, given all the lopsided speculative interest that could come undone.

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Facebook Slapped With Four New Lawsuits Over Cambridge Analytica Data Harvesting Scandal

The lawsuits against Facebook are pouring in following the bombshell data harvesting scandal revealed in the wake of the Cambridge Analytica (CA) exposé published by The Guardian last month.

Lawsuits began to pile up after it was revealed that CA had purchased user data from two psychologists (one of whom currently works for Facebook) who developed a data harvesting app which collected information on over 50 million users.

As we reported last month, a group of Facebook investors filed a lawsuit against the company in a San Francisco federal court, claiming that investors had suffered losses. The suit claims that, “defendants made false or misleading statements and failed to disclose that Facebook violated its own data privacy policies by allowing third parties access to personal data of millions of Facebook users without their consent.”

Four new lawsuits

Adding to Facebook’s woes, the company was hit with four new lawsuits, according to SFGate.

One lawsuit was filed by a Facebook user who claims the Menlo Park company acted with “absolute disregard” for her personal information after allegedly representing that it wouldn’t disclose the data without permission or notice.

That lawsuit, filed by Lauren Price of Maryland in San Jose on Tuesday, seeks to be a class action on behalf of up to 50 million people whose data was allegedly collected from Facebook by London-based Cambridge Analytica

Two other lawsuits were filed in San Francisco Tuesday and San Jose on Thursday by individual shareholders Fan Yuan and Robert Casey against Facebook, Chief Executive Mark Zuckerberg and Chief Financial Officer David Wehner.

The fourth lawsuit, filed in federal court in San Jose Thursday by San Francisco attorney Jeremiah Hallisey, is a shareholder derivative suit filed on behalf of the company against Zuckerberg, Chief Operating Office Sheryl Sandberg and board members. –SFGate

Meanwhile, Facebook stock is languishing at around $150 / share – down approximately 17% since the data harvesting scandal broke.

Keep in mind that Facebook shares had already been facing downward pressure from enhanced regulations in Europe over policing “hate speech,” with fines for a lack of enforcement – as well as a less active user base.

Facebook’s daily active user base in the U.S. and Canada fell for the first time ever in the fourth quarter, dropping to 184 million from 185 million in the previous quarter.

It’s a very small decline in a market that Facebook already dominates. But it’s also Facebook’s most valuable market, and any decline in usership — even a small one — isn’t a great sign. –Recode

 You can read two of this week’s court filings here:

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The Era Of The Fed “Put” Is Over

Authored by Adam Taggart via PeakProsperity.com,

To all those investors expecting the Fed to step in to backstop the recent weakness seen in the stock market, Wolf Richter warns: The cavalry isn’t coming.

After years of force-feeding too much liquidity into world markets, the central banking cartel is now aware of the Franken-markets it has created. And now with a new head at the US Federal Reserve, and soon at the ECB, central bankers have shifted their priority from supporting asset prices to now actively engineering lower prices.

They just don’t want prices to drop too far too fast.

Of course, the big question is: how much control do they really have? The situation may very quickly get out of their hands.

But the big takeaway is to expect lower prices across the board for nearly every “risk on” asset: stocks (including and especially the FANGS), corporate bonds and real estate. The Fed is working to reduce investor exuberance — and as many bloodied contrarian investors will warn you — Don’t fight the Fed:

Now we’re in an environment where we have an Everything Bubble, and even though there’s still a few central bankers out there that say that they can’t see the bubble, others have now acknowledged it. Of course they don’t call it a “bubble”; they say that prices are “elevated”. So they’re seeing this. In my opinion, a lot of the responses from the Fed are not really about inflation; they’re really about trying to avoid the asset bubble from getting any bigger. They’re trying to avoid a deflation of that asset bubble that could be very messy for the financial system.

Which is why they’re now tightening. Even though inflation by their measure is still relatively low and below target. And so they’re really not targeting inflation; I think they’re targeting asset prices. They’re trying to put a stop to the Everything Bubble out of fear that it might bring the financial system down again if this goes any further.

There’s debt behind this asset bubble, and this leverage is what’s risky. So I think the Fed is clearly, this time, on the side of targeting assets bubbles. Investors are asking if the stock market drops, if the Dow drops a thousand or two thousand or five thousand points, is the Fed going to step in and put a stop to it? And my gut feeling is, no, they won’t. They will let this run unless credit freezes up. They’re trying to bring these asset prices down somewhat. I think that’s the environment we’re in. We have bubbles everywhere, and now we have Central Banks trying to somehow save the system with minimum damage.

Of course we only have the central banks to blame for this situation. They wanted every investor to go way out on the risk branch, and pension funds have done that. And now, the price to be paid for that will be tremendous.  Most of these insolvent pension funds are state and municipal funds, so taxpayers may be at least partially responsible for picking that up.

This same will probably be true with corporate pension funds. We are seing companies that are going bankrupt, such as Remington, you know, they’re guaranteed to some extent by the Federal government and that, too, in the end, is probably going to require that the taxpayer will have to step in.

And as for the pain that rising interest rates will create, this is just the beginning. This has just started. After almost a decade of 0% interest rate policy we don’t know anymore what it’s like to look at many years of rising interest rates. Money will get a lot more expensive for a lot of companies. And those that have to roll over their debt, even if they’re not on LIBOR, if they have fixed rate debt they’ll have to roll that over eventually. And when they roll that over, they go from, you know, from a 4% percent coupon to maybe a 6% percent, 7% percent or 8% percent coupon.

As for housing, I think what we’ll see is not a dramatic selloff of double digit percentages that we had last time. I think we’ll see a long, drawn-out, much more difficult process. At first, it won’t even look like a sellout. I think on housing on a national basis, housing will continue to look strong even though the selloff will start in particular cities. You will have some cities that are turning around, but overall, nationwide the numbers are still stable. And so the Fed won’t even be worried about it because they’re looking at the nationwide numbers, and they’re saying, “Oh, it’s still okay, it’s just declining a little bit” or it’s “plateauing” whereas house pricing may be coming down pretty sharply in some of the most bubbly cities.

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The Other Chart Elon Musk Doesn’t Want You To See

“You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time…” – Abraham Lincoln

“There’s a sucker born every minute” – P.T. Barnum

Elon Musk’s car-making company burns through cash faster than Floyd Mayweather.

But everyone knows that… it’s just a matter of time and an Amazon-ian ‘decision’ before everything is awesome.

Elon Musk’s car-making company is seeing record bond and stock shorts removing him from any efficient means of raising capital.

But everyone knows that… any quarter now, production will get back on track, there’ll be no competition, and fiery crashes, auto-pilot errors, and emissions standards will be tightened in EV’s favor.

So just how close is Elon Musk’s car-making company to hitting its own targets… let alone those of the cult-following investors?

This is the chart that Elon Musk really does not want you to see…

As Bloomberg notes, Musk’s cunning plan – to make ‘low-cost’ electric vehicles available to the mainstream – only works if the company can figure out how to make exponentially more cars. And, as often happens with Musk’s aggressive goals, Tesla has repeatedly fallen short of its own manufacturing targets.

If Tesla can’t figure out how to make more cars soon, it could open a lane for rivals from Detroit and overseas to establish the high-volume market for a $35,000 electric car – one that Tesla has had in its sights from its very beginning.

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