Category: zerohedge

A hand grenade was tossed at a police station in Malmo, Sweden, around 9pm on Wednesday, resulting in a “huge explosion” according to local media reports. 

Police spokeswoman Anna Goransson told Swedish publication Aftronbladet: The place is locked off and the bombing group is on its way,” adding “Fortunately, no people have been injured, but cars, I cannot say how many, have been damaged.”

Authorities have yet to confirm what caused the explosion, but local media are reporting that a hand grenade was used.

Police have not confirmed any arrests so far, but Aftonbladet’s photographer said two people have been taken into custody. The detonation took place just as the two suspects approached the station, according to reports.

Police have been placed on high alert and are patrolling various locations across the city.

Local media and authorities have sketched possible connections with a recent spate of attacks on police stations in Sweden. On December 29, a police car was destroyed outside a police station in Malmo. In October, a powerful explosion outside the police station in Helsingborg also caused significant material damage. Following Wednesday night’s attack, the Police Association tweeted that “attacks against police must end.”

Regional police chief Carina Persson called the attack “completely unacceptable,” after visiting the scene of the explosion. “We must continue to work intensively in the fight against the serious crime,” she said, vowing to punish the perpetrators.

Grenade attacks in Sweden have been on the rise since 2012, though the rate in 2017 was considerably lower than in previous years, at 10 attacks vs. 34 the previous year.

 

In 2016, an 8 year old boy sleeping in the living room of relatives in Gothenburg, Sweden was killed by a grenade thrown into the room. “At least five children and several adults were in the flat when the grenade was hurled inside,” according to the BBC, who added that the boy died in his mother’s arms.

 

In February, 2017 a man was injured outside of a residence after a grenade was thrown: 

Explosion, suspected grenade attack in Malmo. One injured: https://t.co/kmoumRdDhJ

Tim Pool (@Timcast) February 27, 2017

Aside from grenade attacks, Sweden has an overall crime problem…

In a February, 2017 article that the Huffington Post deleted entitled “Trump is absolutely right about Sweden” Norwegian journalist, author, and world traveler Reni Zografos outlines the country’s sweeping problems with immigrants and crime – along with the failure by foreign media to cover the problems. 

Its well known to Scandinavians and other Europeans that liberal immigration comes with drugs, rapes, gang wars, robbery and violence. In addition to that we see the respective nations’ cultures fading away, for good and for bad. But the immigration problem is not only a Swedish predicament.

The fact is that the press here in Europe hasnt been doing their job properly. There is this fear on the part of journalists to not report the basic truth – which is that Europe has enormous problems that comes from liberal immigration politics, and as we now see not just in Sweden, but also here in Norway. –Reni Zografos

Meanwhile, following a gang related murder of a 21-year-old man in Malmo last weekend, Sweden’s PM, Stefan Lofven, says deploying the military to clamp down on gang violence is an option, reports Omni news (translated): 

“It’s not my first action to put in a military, but I’m prepared to do what it takes to ensure that the seriously organized crime is eliminated,” he told TT.

The statement comes after SD leader Jimmie Ekesson, during the party leadership debate, declared “declared war” against organized crime and said he wants the military to be put in order to bend it.

On a direct question from TT to Lvfven after the debate if he excludes military intervention, he answers:
– We look at what opportunities exist, I do not see it as the first solution, but we will look at how we get rid of gang crime.

According to data released by Swedish police in December, there were 306 shootings in Sweden last year, resulting in 41 deaths.  Swedish officials, meanwhile, are blaming Islamic Terrorism on “white power.” in December of 2016, Sweden’s freshly minted “Anti-Terror” coordinator, Anna Carlstedt, blamed Islamic Terrorism on “White Power” her first day in office.

 

#Swedens anti-terror coordinator claims Islamic extremism is caused by ‘White Power’ movements, once again proving this cartoon to be true. http://pic.twitter.com/ZsmbvXiTz2

Johnny 50 (@Johnny5024) December 21, 2016

While we’re don’t know if Sweden’s most recent grenade attack was done by migrants, the rise in grenade attacks appear to be directly correlated with the rise in refugees flooding Europe, 72% of whom are “men of fighting age.”

 

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Authored by James Rickards via The Daily Reckoning blog,

The key to bubble analysis is to look at what’s causing the bubble. If you get the hidden dynamics right, your ability to collect huge profits or avoid losses is greatly improved.

Based on data going back to the 1929 crash, this current bubble looks like a particular kind that can produce large, sudden losses for investors.

The market right now is especially susceptible to a sharp correction, or worse.

Before diving into the best way to play the current bubble dynamics to your advantage, let’s look at the evidence for whether a bubble exists in the first place…

My preferred metric is the Shiller Cyclically Adjusted PE Ratio or CAPE. This particular PE ratio was invented by Nobel Prize-winning economist Robert Shiller of Yale University.

CAPE has several design features that set it apart from the PE ratios touted on Wall Street. The first is that it uses a rolling ten-year earnings period. This smooths out fluctuations based on temporary psychological, geopolitical, and commodity-linked factors that should not bear on fundamental valuation.

The second feature is that it is backward-looking only. This eliminates the rosy scenario forward-looking earnings projections favored by Wall Street.

The third feature is that that relevant data is available back to 1870, which allows for robust historical comparisons.

The chart below shows the CAPE from 1870 to 2017. Two conclusions emerge immediately. The CAPE today is at the same level as in 1929 just before the crash that started the Great Depression. The second is that the CAPE is higher today than it was just before the Panic of 2008.

Neither data point is definitive proof of a bubble. CAPE was much higher in 2000 when the dot.com bubble burst. Neither data point means that the market will crash tomorrow.

But today’s CAPE ratio is 182% of the median ratio of the past 137-years.

Given the mean-reverting nature of stock prices, the ratio is sending up storm warnings even if we cannot be sure exactly where and when the hurricane will come ashore.

This chart shows the Shiller Cyclically Adjusted PE Ratio (CAPE) from 1880-2017. Over this 137-year period, the mean ratio is 16.75, media ratio is 16.12, low is 4.78 (Dec 1920) and high is 44.19 (Dec 1999). Right now the 33.68 ratio is above the level of the Panic of 2008, and above the level of the market crash that started the Great Depression.

With the likelihood of a bubble clear, we can now turn to bubble dynamics. The analysis begins with the fact that there are two distinct types of bubbles.

Some bubbles are driven by narrative, and others by cheap credit.

Narrative bubbles and credit bubbles burst for different reasons at different times. The difference is critical in knowing what to look for when you time bubbles, and for understanding who gets hurt when they burst.

A narrative-driven bubble is based on a story, or new paradigm, that justifies abandoning traditional valuation metrics. The most famous case of a narrative bubble is the late 1960s, early 1970s “Nifty Fifty” list of fifty stocks that were considered high growth with nowhere to go but up.

The Nifty Fifty were often referred to as “one decision” stocks because you would just buy them and never sell. No further thought was required. Of course, the Nifty Fifty crashed with the overall market in 1974 and remained in an eight-year bear market until a new bull market began in 1982.

The dot.com bubble of the late 1990s is another famous example of a narrative bubble. Investors bid up stock prices without regard to earnings, PE ratios, profits, discounted cash flow or healthy balance sheets.

All that mattered were “eyeballs,” “clicks,” and other superficial internet metrics. The dot.com bubble crashed and burned in 2000. The NASDAQ fell from over 5,000 to around 2,000, then took sixteen years to regain that lost ground before recently making new highs.

Of course, many dot.com companies did not recover their bubble valuations because they went bankrupt, never to be heard from again.

The credit-driven bubble has a different dynamic than a narrative-bubble. If professional investors and brokers can borrow money at 3%, invest in stocks earning 5%, and leverage 3-to-1, they can earn 6% returns on equity plus healthy capital gains that can boost the total return to 10% or higher. Even greater returns are possible using off-balance sheet derivatives.

Credit bubbles don’t need a narrative or a good story. They just need easy money.

A narrative bubble bursts when the story changes. It’s exactly like The Emperor’s New Clothes where loyal subjects go along with the pretense that the emperor is finely dressed until a little boy shouts out that the emperor is actually naked.

Psychology and behavior change in an instant.

When investors realized in 2000 that Pets.com was not the next Amazon but just a sock-puppet mascot with negative cash flow, the stock crashed 98% in 9 months from IPO to bankruptcy. The sock-puppet had no clothes.

A credit bubble bursts when the credit dries up. The Fed won’t raise interest rates just to pop a bubble — they would rather clean up the mess afterwards that try to guess when a bubble exists in the first place.

But the Fed will raise rates for other reasons, including the illusory Phillips Curve that assumes a tradeoff between low unemployment and high inflation, currency wars, inflation or to move away from the zero bound before the next recession. It doesn’t matter.

Higher rates are a case of “taking away the punch bowl” and can cause a credit bubble to burst.

The other leading cause of bursting credit bubbles is rising credit losses. Higher credit losses can emerge in junk bonds (1989), emerging markets (1998), or commercial real estate (2008).

Credit crack-ups in one sector lead to tightening credit conditions in all sectors and lead in turn to recessions and stock market corrections.

What type of bubble are we in now? What signs should investors look for to gauge when this bubble will burst?

My starting hypothesis is that we are in a credit bubble, not a narrative bubble. There is no dominant story similar to the Nifty Fifty or dot.com days. Investors do look at traditional valuation metrics rather than invented substitutes contained in corporate press releases and Wall Street research. But even traditional valuation metrics can turn on a dime when the credit spigot is turned off.

Milton Friedman famously said the monetary policy acts with a lag. The Fed has force-fed the economy easy money with zero rates from 2008 to 2015 and abnormally low rates ever since. Now the effects have emerged.

On top of zero or low rates, the Fed printed almost $4 trillion of new money under its QE programs. Inflation has not appeared in consumer prices, but it has appeared in asset prices. Stocks, bonds, commodities and real estate are all levitating above an ocean of margin loans, student loans, auto loans, credit cards, mortgages, and their derivatives.

Now the Fed is throwing the gears in reverse. They are taking away the punchbowl.

The Fed is on course to raise interest rates again in March, under new chairman, Jerome Powell. In addition, the Fed is undertaking QE in reverse by reducing its balance sheet and contracting the base money supply. This is called quantitative tightening or QT.

Credit conditions are already starting to affect the real economy. Student loan losses are skyrocketing, which stands in the way of household formation and geographic mobility for recent graduates. Losses are also soaring on subprime auto loans, which has put a lid on new car sales. As these losses ripple through the economy, mortgages and credit cards will be the next to feel the pinch.

A recession will follow soon.

The stock market is going to correct in the face of rising credit losses and tightening credit conditions.

No one knows exactly when it’ll happen, but the time to prepare is now. Once the market corrects, it’ll be too late to act.

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• An internal House probe concluded that Pakistani IT aides Imran Awan along with four other individuals inappropriately accessed House servers and moved data
• They impersonated at least 15 U.S. House members they did not work for and the Democratic Caucus, using their credentials to gain access to the system – a federal offense.
• Data was migrated from several servers onto a single server, which disappeared while being monitored by police
• The Awans engaged in a “pattern of login activity” which suggest steps were taken to conceal their activity
• House Democrats in turn misrepresented the issue to their own members as solely a matter of theft
• No criminal charges have been filed related to the data breaches or a number of other violations

Imran Awan and Hina Alvi, Imran Awan’s wife

In what must surely warrant a Special Counsel by now, an internal House investigation concluded that Pakistani IT aides Imran Awan and wife Hina Alvi, along with Imran’s brothers Abid and Jamal and a friend, impersonated at least 15 U.S. House members for whom they did not work – using their credentials to log into Congressional servers, before migrating data to a single server, which was stolen during the investigation, all while covering their tracks – reports Luke Rosiak of the Daily Caller.

This, and much more is detailed in a presentation assembled the House’s internal watchdog – the Office of the Inspector General, after a four-month internal probe.

The presentation, written by the House’s Office of the Inspector General, reported under the bold heading “UNAUTHORIZED ACCESS” that “5 shared employee system administrators have collectively logged into 15 member offices and the Democratic Caucus although they were not employed by the offices they accessed.” –DC

One systems administrator “logged into a member’s office two months after he was terminated from that office,” reads the investigative summary.

There are strong indications that many of the 44 members’ data — including personal information of constituents seeking help — was entirely out of those members’ possession, and instead was stored on the House Democratic Caucus server. The aggregation of multiple members’ data would mean all that data was absconded with, because authorities said that entire server physically disappeared while it was being monitored by police. –DC

The OIG also concluded that the Awans’ behavior appeared to be a “classic method for insiders to exfiltrate data from an organization,” as well as indications that a House server was “being used for nefarious purposes and elevated the risk that individuals could be reading and/or removing information,” and “could be used to store documents taken from other offices,” the Caller reports. 

A House committee staffer close to the probe told The Daily Caller that “the data was always out of [the members’] possession. It was a breach. They were using the House Democratic Caucus as their central service warehouse.”

“All 5 of the shared employee system administrators collectively logged onto the Caucus system 5,735 times, an average of 27 times per day… This is considered unusual since computers in other offices managed by these shared employees were accessed in total less than 60 times,” the presentation reads.

The internal document also shoots down any notion that the access was for some legitimate purpose – indicating “This pattern of login activity suggests steps are being taken to conceal their activity.” 

A second presentation shows that shortly before the election, their alleged behavior got even worse. “During September 2016, shared employee continued to use Democratic Caucus computers in anomalous ways:

• Logged onto laptop as system administrator
• Changed identity and logged onto Democratic Caucus server using 17 other user account credentials
• Some credentials belonged to Members
• The shared employee did not work for 9 of the 17 offices to which these user accounts belonged.”

The second presentation found “possible storage of sensitive House information outside of the House … Dropbox is installed on two Caucus computers used by the shared employees. Two user accounts had thousands of files in their Dropbox folder on each computer,” which is strictly against House rules due to fact that Dropbox is offsite. 

Without delving into espionage, let’s look at the statutes on computer crimes from the Department of Justice;

Under the Computer Fraud and Abuse Act (CFAA), simply accessing a computer and obtaining information carries a sentence of up to 10 years for more than one conviction of the same abuse. Trespassing on a government computer also carries a 10 year sentence. You can see the rest of the CFAA penalties below, many of which appear to fit the Awan case:

While each violation above carries its own penalties, let’s look at the first one; National Security violations Under the CFAA, a felony:

Whoever— (1) having knowingly accessed a computer without authorization or exceeding authorized access, and by means of such conduct having obtained information that has been determined by the United States Government pursuant to an Executive order or statute to require protection against unauthorized disclosure for reasons of national defense or foreign relations, or any restricted data, as defined in paragraph y. of section 11 of the Atomic Energy Act of 1954, with reason to believe that such information so obtained could be used to the injury of the United States, or to the advantage of any foreign nation willfully communicates, delivers, transmits, or causes to be communicated, delivered, or transmitted, or attempts to communicate, deliver, transmit or cause to be communicated, delivered, or transmitted the same to any person not entitled to receive it, or willfully retains the same and fails to deliver it to the officer or employee of the United States entitled to receive it . . . shall be punished as provided in subsection (c) of this section.

The punishment under 18 U.S. Code § 1030 is up to 20 years in prison for each violation. 

Meanwhile, House Democratic leadership has been downplaying the alleged breach by pointing to recent bank fraud charges the Awans were slapped with after Imran Awan was arrested at Dulles International Airport attempting to flee the country. 

Rep. Ted Lieu of California, who employed Abid Awan and is a member of the foreign affairs committee, said as far as he was concerned it was a simple issue of bank fraud.

“The staffer that I used, there was no allegation,” he told a TV station. “If you look at the charge of the brother, he was charged with bank fraud… that has nothing to do with national security.” –DC

The only Democrat who appears to have attempted to intervene with the Awans’ access is Rep. Xavier Becerra who ran the House Democratic Caucus server, knew about the unauthorized access, and tried to stop them according to the OIG report – however “the suspect defied him.” That said, Bacerra does not appear to have warned other offices that might have been affected. 

“The Caucus Chief of Staff requested one of the shared employees to not provide IT services or access their computers,” the OIG report reads, adding “This shared employee continued.” Unfortunately, while police were keeping tabs on the server as a primary piece of evidence in their ongoing investigation, they discovered in January that it was taken from under their noses and replaced with a different computer“

To read more about the Awans, take a look at the extensive reporting below by Luke Rosiak: 

Imran Awan: A Continuing DCNF Investigative Group Series

• Court docs
• House IT Aides Ran Car Dealership With Markings Of A Nefarious Money Laundering Operation
• Becerra Tried To Block Awan From House Democratic Caucus Server, But Logins Continued; He Didn’t Go To Cops
• Hard Drive Tied to Wasserman Schultz Is Central To Imran Awan Case
• 18 Months In, Dem IT Aides Not Charged With Hill Crimes Despite Evidence
• Used Political Influence To Have Fraud Charges Dropped In Pakistan
• Own Wife Turns, Accuses Him Of Fraud, Violent Threats
• Imran Awan ‘Very Strongly’ Wants To Block Review Of Hard Drive, Was Using Alias
• Lawyer Says Congressmen Wanted Invoices Falsified
• Sending Money To Police Officer In Pakistan
• Funneling ‘Massive’ Data Off Congressional Server, Dems Claim It’s Child’s Homework
• ‘Like a Slave’: Three Muslim Women, At Least One Of Them Bloodied, Called Police on Imran
• Had Secret Server, Caught Falsifying Evidence To Cover It Up
• Imran Still Has Copy Of House Laptop DWS Said Has Sensitive Leg-Branch Info
• DWS Laptop Found at 3AM In Phone Booth With Letter To Prosecutors
• Awan Asks Judge To Remove GPS, Citing Possible Emergency With Kids–Who Are In Pakistan
• Has Secret, Still-Active House Account–123@mail.house.gov–Linked To Intelligence Specialist
• DWS ‘Islamophobia’ Claim Prompts Angered Witnesses To Go Public
• Rep. Yvette Clarke Quietly Signed Away $120,000 In Missing Equipment
• Imran, Hina Indicted For Conspiracy Against U.S.
• DWS Now Says Laptop She Sought To Keep From Police Was Awan’s, Not Hers
• Liquidating $1.8M In Real Estate When Arrested, Some Still Pending
• DWS Seemingly Planned To Pay Suspect Even While He Lived In Pakistan
• Lawyer Is Longtime Clinton Associate
• Arrested At Airport After Wiring $300k To Pakistan
• FBI Seized Smashed Hard Drives From Home
• Ex-DNC Head ‘Negotiating’ With Police Over Letting Them See Evidence
• Dems Tying Themselves Into Knots To Ignore Criminal Probe
• ‘You’d Like Him:’ Associates Describe ‘Cunning,’ Charismatic Con Artist
• In Personal Lives, Evidence Of Massive Cons
• House Dems Hired A Fired McDonald’s Worker As Email Administrator
• DWS Admits To Violating Network Security, Blames House
• Wasserman Schultz Threatened Police Chief For Gathering Evidence
• Suspect Has Fled To Pakistan, Relative Says
• House IT Aides Fear Suspects In Hill Breach Are Blackmailing Members
• Read the Court Docs Detailing Their Greed, Ruthlessness
• Paul Ryan: Capitol Police Getting ‘Assistance’ On Criminal Investigation
• Brothers Could Read Every Email Of Dozens Of Congressmen
• …Also Had Access To DNC Emails
• …Allegedly Kept Stepmom In ‘Captivity’ To Access Offshore Cash
• …Received $4 Million From Dem Reps
• …Owed Money To Hezbollah-Connected Fugitive
• …Secretly Took $100K In Iraqi Money
• Brothers Had Massive Debts, Years Of Suspicious Activity
• House Intelligence, Foreign Affairs Committee Members IT Compromised

via RSS http://ift.tt/2DfmBRJ Tyler Durden

It’s not just the S&P that is soaring: so are 2018 full year EPS forecasts.

Over the past few weeks, analysts have been aggressively incorporating the impact of tax reform into their revised forecasts and the bottom-up EPS is now tracking over $150, up more than $2 (1%) over the past week and more than $4 (3%) since mid-December when tax reform was passed.

According to Bank of America, whose 2018 EPS forecast is even loftier at $153, “expect upward revisions to continue through earnings season, particularly as guidance trends have remained strong as well.”

Using a back of the envelope calculation, if one applies a 20x multiple, roughly where the market is trading, to the 4 point rise in forward EPS, it would imply an 80 point move in the S&P just to keep up with the revised earnings forecasts, although as Morgan Stanley explained yesterday, it is unlikely that earnings forecasts will actually receive the full benefit from these revisions, once the negative, second-round effects from tax effects start ro flow through, to wit:

Our strong belief is that the full flow through assumption will be violated however, meaning that  these numbers could be a best case scenario for tax flow through. Our doubt on full pass through of the benefits comes from an analysis of management incentives and early evidence  from companies that have already guided to less than full flow through of the benefits. As we go through earnings season how each company guides to the scope of tax benefits and how analysts choose to model this guidance should create a rise in earnings estimate dispersion.

In other words, after the benchmark EPS is revised sharply higher, it will be back to the old game of quietly – but surely – cutting estimates as we go through 2018.

Meanwhile, while so far most reporting companies have focused on the one-time tax charges associated with tax reform which negatively impact GAAP earnings, going forward more important than results will be commentary on tax reform’s impact to EPS, and specifically how much will be retained, labor (whether or not it leads to wage inflation, and whether tax reform will boost wages/hiring or just more M&A and worker “synergies”), and spending (whether corporations will increase capex, M&A, R&D, or just do more buybacks and dividends payouts with repatriated and retained earnings).

Here BofA notes, that while a few of the early reporters were still working through the impacts and did not provide updated guidance/details, “we expect more details as earnings season progresses; several companies also indicated they will provide more clarity at upcoming Investor Days. Some early details have emerged from the 20+ S&P 500 companies that announced one-time bonuses, where a third also announced increased capex and about half announced higher wages.”

 

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In a stunning report that could anger some of the foreign policy hawks who have been among Trump’s most staunch supporters since taking office, BI reported Wednesday that Trump denied that moving the US’s Israeli embassy to Jerusalem would happen within a year.

This represents a break with Israeli Prime Minister Benjamin Netanyahu, who has said he expected the controversial move, which has been condemned by members of the United Nations, would take place within that time frame.

According to Israeli reporters traveling with their president on a trip to India,

Netanyahu said Wednesday that “my solid assessment is that it will go much faster than you think – within a year from now.”

Asked about Netanyahu’s comment, Trump told Reuters in an interview that this time frame isn’t set in stone:

“By the end of the year? We’re talking about different scenarios – I mean obviously that would be on a temporary basis. We’re not really looking at that. That’s no.“

In an announcement that triggered protests in the Palestinian territories, in Beirut and across the Muslim world, Trump stunned the world in early December by recognizing Jerusalem as Israel’s capital and ordering the State Department to begin the process of moving the embassy from Tel Aviv. Critics of the move, which included the leaders of Saudi Arabia and Turkey, said it would disrupt the Middle East peace process.

Other Trump administration officials had previously expressed doubt that the move would happen so quickly. Secretary of State Rex Tillerson said last month the embassy move was “probably no earlier than three years out, and that’s pretty ambitious,” a timeframe that administration officials have attributed to the logistics of finding and securing a site as well as arranging housing for diplomats.

Jerusalem is famously home to holy sites for the Muslim, Jewish and Christian religions. The Palestinians want East Jerusalem, which Israel captured in the 1967 Arab-Israeli war and annexed in a move not recognized internationally, as the capital of their future state.

Many of Trump’s predecessors, including Bill Clinton, Barack Obama and George W Bush, had promised to recognize Jerusalem as the true capital of Israel and to move the US embassy there at some point during their terms.

 

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Update 1715ET: As January Bitcoin Futures approached expiration…

 

So cryptocurrencies were suddenly bid…

As it seems the 9500 Bitcoin net speculative short position sparked a squeeze that ramped from below $9500 to over $11,500..

 

 

*  *  *

Update 1200ET: Bitcoin has rebounded over $1000 off its lows, breaking back above $10,000…

 

*  *  *

Having rebounded after the BitConnect headlines sent prices plunging, cryptocurrencies are more sedately limping lower this morning with Bitcoin dropping back below $10,000. The question on everyone’s mind, did the bubble just burst or do you BTFD?

It’s been an ugly week for cryptos…

With the heatmap a sea of red…

… And Bitcoin back below $10,000:

… down 50% from its all time highs.

Bitcoin broke its 100DMA – which has acted a broad support in the last year…

 

And Bitcoin Futures at the lowest since inception on heavy volume (note that Bitcoin spot topped as CBOE unleashed its futures contract)…

Notably – today is the expiration of the first CBOE Bitcoin futures contract. CFTC reports a 1907 contract net short position (around 9500 Bitcoin short) and one wonders what impact that is having on the market today)

Bitcoin is now flirting with the key 9,978 support level, which Goldman yesterday noted is critical for the future level of bitcoin.  As Goldman’s chief technician wrote, “Watch for signs of a base ahead of 9,978. Setup weakens through 9,836. Turn neutral/cautious through 7,882.“

Which means buyers materialize or it’s all downhill from here.

* * *

Piling on, during his earnings call this morning, Bank of America customers are welcome to buy Bitcoin and other cryptocurrencies, just not through the lender’s Merrill Lynch unit, Chief Executive Officer Brian Moynihan said.

“We have limited our relationships and I think the thing speaks for itself,” Moynihan said Wednesday on a call with reporters after reporting fourth-quarter results.

“We’ve basically told people that they could buy it in other accounts, but not at Merrill Lynch. And so it’s just our view that customers should be careful here.”

Merrill Lynch told employees last month not to offer clients Grayscale’s Bitcoin Investment Trust, one of the few financial instruments directly holding the digital coin. Moynihan said Wednesday the bank is concerned with not being able to identify who’s buying and selling.

Which led Bloomberg  to ask the question: Will the cryptocurrency go down as one of history’s most infamous bubbles, alongside tulipmania and the dot-com craze?

In a follow-up to our post from a month ago, Bloomberg looks at where we are now relative to ‘the big bubbles’…

As the chart shows, the cryptocurrency’s nearly 60-fold increase during the past three years was truly extraordinary.

The magnitude of Bitcoin’s boom (before it lost as much as 48 percent from its Dec. 18 high) suggests investors have reason to be worried.

However, Bulls say that Bitcoin’s boom is far from over, and that there’s more to analyzing a market than just measuring price gains. While the recent tumble has alarmed some investors, the cryptocurrency has bounced back from several previous swoons exceeding 50 percent. If Bitcoin did become a widely-accepted form of digital gold, as predicted by Cameron Winklevoss of Facebook fame, it could have a lot further to surge.

There’s also more than one way to slice a rally. On an annualized basis, Bitcoin’s three-year rise has been slower than the gains seen during several of history’s biggest manias — most notably the Mississippi and South Sea bubbles.

Still, skeptics abound.

Howard Wang of New York-based Convoy Investments LLC and Jeremy Grantham of GMO LLC have analyzed Bitcoin’s advance relative to past frenzies and concluded that it’s unsustainable. Grantham, who helps oversee about $74 billion as GMO’s chief investment strategist, summed up his concerns in a Jan. 3 letter to investors:

“Having no clear fundamental value and largely unregulated markets, coupled with a storyline conducive to delusions of grandeur, makes this more than anything we can find in the history books the very essence of a bubble,” he wrote.

However, as CoinTelegraph notes, although it’s not hard to find plentiful online resources asserting there’s no doubt Bitcoin is a huge bubble soon to burst, some people provide alternative views. One of them is Ben Davies, co-founder of another cryptocurrency called Glint. He thinks people are not looking at the bigger picture of Bitcoin, and that’s causing them to incorrectly see it as a bubble.

Davies also thinks the way people often compare Bitcoin to the bubble associated with tulip bulbs doesn’t hold water. He notes that although the prices of tulips soared then experienced a sharp downturn, that historic event is a “poor comparison.” He asserts the price increases associated with tulips were not similar to the cryptocurrency phenomenon.

However, even Davies admits Bitcoin “has all the hallmarks and antecedents that are the precursor to a bubble.”

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Authored by Mac Slavo via SHTFplan.com,

The impending economic collapse is hidden from most. People only see a rising stock market, not the negative underlying factors that will cause the whole system to crash.

The weakening of the U.S. dollar is just getting started, warned veteran market forecaster Peter Schiff, CEO of Euro Pacific Capital. “We have just begun a major, long-term bear market in the dollar,” he said, which should cause a spike in oil prices. He thinks oil will reach $80-$100 a barrel in 2018. The commodity currently trades at roughly $63 a barrel. Shiff focuses on oil as just one example of the inflation that will help collapse the dollar.

When the price of oil rises, it reverberates through the economy. Peter called it a gigantic tax hike for consumers. But the Fed is still worried prices aren’t going up fast enough and that they won’t hit the mystical 2% goal.

“They’re going to hit that out of the park. They’re going to be looking at 2% in the rearview mirror – in the distant rearview mirror. That is going to be the big story. They’re going to way overshoot and they’re not going to be able to do anything about it.” –Peter Schiff

Schiff also warns that the dollar’s decline is just getting starting.  He also says “everything that can go wrong, will.” We are not experiencing economic growth.  We are experiencing inflation.

“High inflation is not good for the dollar. By definition, high inflation means the dollar is losing purchasing power. If the dollar is losing purchasing power, that is bad for the dollar,” Shiff explains.

“If they [the public and investors] don’t think there’s going to be inflation, they’re wrong. Those expectations are totally wrong. People are ignoring what is going on in the currency market, what’s going on in the commodities markets, what’s going on in the bond markets. All of this stuff is flashing inflation – at least the way you measure it – consumer prices.” –Peter Schiff

 

Shiff continues with even more dire news. “We are very close to a major breakdown in the bond market. Now, I know the bond market has dodged a lot of bullets…so you could say ‘cryin’ wolf. Look how long the bond market has held in there. But you know what? It’s gonna hold up until it doesn’t. And when it breaks…this bond market is gonna unravel. The whole thing could unravel very, very quickly. This is what is so dangerous here. You have the bond market potentially about to break down, a major 30-year bull market about to unravel, you have the dollar getting ready to go over the edge of a cliff. “

Shiff also warns to not put your trust in the government or their bonds.

“Everybody belives the fed is going to shrink it’s balance sheet. Now, I don’t believe that but the markets believe it. Now, I checked the balance sheet on Thursday again. So far, it hasn’t shrunk at all. So there’s been no tapering.

The risk of a big drop in the bond market has never been this high. And what happens if the bond market tanks? That’s it. The stock market is gonna crash…there’s a massive crash coming. And if the fed is gonna panic, they’re gonna try to stop it.”

[ZH: NOTE that since The Fed began “normalization” of the balance sheet, it has dropped a pitiful 0.22% in almost 4 months]

 

The feds will try to fix a stock market crash by not raising rates, which will lead to the imploding of the dollar.  Everything that can go wrong, will.

“I don’t know if this is going to unravel very quickly.  But it is close,” Shiff warns.

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Secretary of State Rex Tillerson spoke at Stanford University Wednesday afternoon about the future of Syria and the US role in the war. In his talk entitled, “The Way Forward in Syria,” Tillerson once again reiterated the US desire to eventually see President Bashar al Assad removed from power while also pledging US commitment to staying in Syria in order to counter Iran’s influence in the region.

Ultimately, according to Tillerson, “the Unites States will remain in Syria” until certain conditions are met which include the complete destruction of ISIS, Assad’s removal from power, and the return of refugees to a stabilized country. 

Secretary of State Rex Tillerson spoke alongside former Secretary of State Condoleezza Rice at Stanford University on Wednesday. Image source: KGO-TV

The talk – which was seen as the clearest articulation of Trump’s future strategy in Syria thus far – comes after the Pentagon announced plans on Sunday for the US coalition in Syria to establish a 30,000-strong new border security force with the Kurdish dominated Syrian Democratic Forces (SDF), which many analysts see ultimately as a US commitment to the partitioning of Syria along ethnic and sectarian lines. Currently there are over 2,000 US troops in Syria according to recent Pentagon statements. 

Notably, Tillerson also articulated President Trump’s plan for US personnel to stay in Syria to complete “stabilization initiatives in liberated areas” while simultaneously on the international front waging economic war against the Syrian government.  “We will discourage economic relationships between the Assad regime and any other country,” Tillerson said. “Once Assad is gone from power, the United States will gladly encourage the normalization of economic relationships between Syria and other nations.” 

Keep it simple: Yes, there were some catchy phrases and blunt attacks on Assad and Iran but there wasn’t really Anything new here. For all practical purposes, nothing will change tomorrow after this speech. http://pic.twitter.com/p7HJUAig4Z

— EHSANI2 (@EHSANI22) January 17, 2018

Assad has in recent days called for an end to the US and all foreign presence in Syria, and has also repeatedly vowed to liberate all parts of the country. China, Iran, and Russia also stand poised to engage in massive reconstruction efforts and investment, which international organizations have estimated to be in the hundreds of billions of dollars. 

The Secretary of State further peppered his comments with criticism of Iran, saying that “through its position in Syria, Iran is in a stronger position to extend its track record of attacking U.S. interests, allies, and personnel in the region. It is spending billions of dollars a year to prop up Assad and wage proxy wars at the expense of supporting its own people.” He further asserted as part of the prepared remarks that, “For many years, Syria under Bashar al-Assad has been a client state of Iran. A Syrian central government that is not under the control of Assad will have new legitimacy to assert its authority over the country.”

Tillerson says that “the Unites States will remain in Syria” until certain conditions are met. 1. ISIS destroyed 2. Assad gone 3. Refugees return https://t.co/zjqCQZzvnf

— Joshua Landis (@joshua_landis) January 17, 2018

Though Tillerson was aggressive in his anti-Assad and anti-Iran rhetoric, he stopped short of calling for military efforts toward regime change, claiming to desire de-escalation and diplomatic efforts at winding down the war. Yet at the same time he called for a new government: “The re-assertion of national sovereignty by a new government, along with de-escalation efforts and new flows of international aid, will lower violence, set better conditions for stability, and speed up the departure of foreign forces.” It was merely as recent as October that Tillerson said the “reign of the Assad family is coming to an end.” 

He said the current administrations strategy will seek de-escalation, political transition, and economic stability while avoiding the pitfalls of nation-building. Tillerson said of past “mistakes” in the region, “We will not repeat the mistakes of Libya. Well-intentioned military interventions, independent of stabilization and political strategies, can have a host of adverse unintended consequences.

He continued, “For this reason, we will seek to de-escalate the civil war in Syria, work for peace, and encourage all parties to head to the negotiating table. Continued fighting will likely lead to worsened humanitarian conditions, more chaos, and increased regional military intervention in Syria. Our focus is to build a positive political path forward that honors the will of the Syrian people and sustains the unity and territorial integrity of Syria.”

Ironically, Tillerson spoke alongside former Secretary of State Condoleezza Rice, one of the chief architects of the Iraq War and authors of chaos there, out of which ISIS was born. 

* * *

Nah…. doesn’t sound like nation-building at all, does it? 

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Crude edged higher as OPEC showed increased determination to curb production and tighten markets ahead of inventory data tonight, but extended gains after API reported a bigger than expected crude draw (9th in a row).

 

API

• Crude -5.121mm (-3.15mm exp)
• Cushing -3.936mm (2.5mm exp)
• Gasoline +1.782mm
• Distillates +609k

This is the 9th straight week of crude draws and gasoline builds…

 

There could be some weather-impact in this data as Bloomberg notes that at least two Gulf Coast refineries aren’t producing product because of issues related to sub-freezing temperatures sweeping across the South while multiple other sites are having cold-related upsets.

 

“The market continues to take support from signs that OPEC and Russia’s compliance with their production cuts is really high and it doesn’t seem that there are any worries that there is cheating going on yet,” Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut, said by telephone.

Prices were higher on the day but limped into the API data as the Dollar spiked but resumed climbing after the bigger than expected crude draw.

 

“WTI is continuing to outperform Brent as the reductions at Cushing have been really pronounced,” Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said by telephone.

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Apple stock jumped to end Wednesday’s session near the highs of the day after Bloomberg reported that the company has told employees it will issue individual bonuses worth $2,500 because of the Trump tax cuts.

Additionally, Bloomberg notes that the iPhone maker will begin issuing stock grants to most employees worldwide in the coming months, said the people, who asked not to be identified because they weren’t authorized to speak publicly.

The report followed an earlier company press release where Apple disclosed how much it expects to pay in repatriation taxes as it transfers its massive offshore cash pile back to the US.

Citing anonymous sources inside the company, Bloomberg  reported that the iPhone maker will begin issuing stock grants to most of its employees worldwide in the coming months. Earlier, the company said that it intends to use some of its repatriated cash to build an additional tech support campus, while also financing the construction of new data centers and the hiring of 20,000 employees.

Apple didn’t immediately respond to a request for comment. The Cupertino, Calif. company joins a growing list of American businesses that have celebrated the introduction of corporate-friendly tax law with one-time bonuses for staff. The other firms include AT&T Inc., Comcast Corp., JetBlue Airways Corp. and Wal-Mart Stores Inc.

Employees who rank below the director level (a rank that denotes senior employees) will be eligible to receive the bonus payment in stock. Apple – the world’s most valuable company – has more than 120,000 US employees, including those who work at its retail stores.

* * *

Apple shares were notably volatile today as they bounced from headline to headline, ending with a vertical rip that saw shares close around the highs of the session…

In its Wednesday press release, Apple calculated that in combination with new investments and the company’s current pace of spending with domestic suppliers and manufacturers – an estimated $55 billion for 2018 – Apple’s direct contribution to the US economy will be more than $350 billion over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products.

 

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