Category: zerohedge

President Trump announced that the lawlessness surging in some US cities – like NYC and Chicago, where the number of shootings have skyrocketed as local police have pulled back –  has inspired him to send in federal law enforcement to cities where violent crimes –  murders, shootings, rapes and of course vandalism – are rapidly rising.

The decision comes as Portland and other ultra-liberal mayors (like Seattle) have said they don’t want federal agents in their cities. The acting DHS head has ordered federal agents to police protests in Portland, as local police had been ordered to hold back as protesters vandalized public property (including a federal courthouse) and pelted cops with rocks, bottles and other projectiles.

Chicago is one city where agents will be sent as part of a federal program that Trump called “Operation Legend”.

“The operation in Chicago will be done as part of Operation Legend, which was recently launched in Kansas City…it was named after a four-year old, Legend Ruggiero, who was shot and killed while he slept,” Trump said. He was joined by the boy;s family members.

During his speech, Trump blamed “local elected leaders” for “abdicating their duty” by undermining police departments, inspiring officers to pull back. Criminals, especially gang members warring for turf, respect or whatever other reason, has swiftly stepped in to the breach.

He also slammed Albequerque New Mexico where a young woman was murdered last year. The woman was the wife and mother of two Texas state police officers.

“We will hire more great police…what cities are doing is insanity…many politicians who want to make their cities less safe have also offered protection to criminal illegal aliens.”

AG Barr, FBI chief Chris Wray, Acting DHS Secretary Chad Wolf and families of crime victims (along with Trump) during the briefing, committing federal resources to tamp down hot spots of local crime, even though – as Barr pointed out – maintaining peace in America’s cities hasn’t traditionally been a federal responsibility.

Watch live:

Vaccine hope trumped rising China tensions and uncertainty about government handouts continuing for a while but worsening COVID headlines (Ohio mandatory masks, Cali record case jump, etc) spooked stocks lower as the day wore on with mega-tech and small-caps underperforming. But, as is usual now, around 1400ET, everything was magically bid back into the green…

The Nasdaq’s rebound into green today extends the streak to 48 trading days without consecutive losing days.

The seemingly endless rise puts the tech-heavy index on the verge of matching the longest streak without back-to-back losses since May 7, 1978, according to Dow Jones Market Data.

As politicians fight over the bailout (weighing people’s livelihoods against their election odds)…

…Jim Millstein, the co-chairman of Guggenheim Securities, summed the worries up by warning that the financial system would be at risk if the U.S. fails to extend aid to consumers unable to pay their bills.

“If those folks do not have continuing support, we’re going to see a spike in delinquencies and defaults in consumer credit,” Millstein said Wednesday in a Bloomberg Television interview.

“That will have some contagion effects across the banking system and a variety of financial institutions.”

And that dear readers is why UBI is here to stay…forever…

Which perhaps explains the sudden surge in precious metals…

Spot Silver soared to $23…

Source: Bloomberg

Spot Gold tagged $1870 intraday…

Source: Bloomberg

…and the weakness in the dollar…

Source: Bloomberg

Longer maturity bonds were also bid on the day, but the short-end saw yields rise very modestly…

Source: Bloomberg

With 10Y yields back below 60bps again…

Source: Bloomberg

The decoupling between stocks and bonds is becoming farcical…

Source: Bloomberg

Having soared amid a massive short squeeze on Monday, FANG stocks continued to fade today…

Source: Bloomberg

Led by AMZN’s rollover…

But tonight will be all about TSLA keeping the dream alive…

But of course – fun-durr-mentals don’t matter…

Source: Bloomberg

Cryptos were higher on the day led by a surge in altcoins relative to bitcoin…

Source: Bloomberg

While silver and gold surged today, copper had a down day and oil was flat…

Source: Bloomberg

Funny how quiet everyone is about Dr.Copper now that he is not confirming highs in stocks (making a lower high)…

WTI dropped overnight in API inventory data, dropped again this morning on DOE confirmation but was then mysteriously bid back to unch…

Finally, we note that it’s that time of year again… the third week in July, when things have historically gone a little bit turbo in stocks…

Source

Philadelphia’s top prosecutor says he’s ready to ‘fight fascism’ and will take legal action against federal law enforcement officers sent to enforce the law as BLM protests continue to rage across the city.

“My dad volunteered and served in World War II to fight fascism, like most of my uncles, so we would not have an American president brutalizing and kidnapping Americans for exercising their constitutional rights and trying to make America a better place, which is what patriots do,” Philadelphia DA Larry Krasner told Bloomberg CityLab in an interview published Wednesday.

“Anyone, including federal law enforcement, who unlawfully assaults and kidnaps people will face criminal charges from my office,” he added.

President Trump suggested this week that he would deploy federal agents in New York, Chicago, Philadelphia, Detroit, Baltimore and Milwaukee after Homeland Security officers were deployed to Portland, Oregon – where they came under fire for grabbing protesters off the street and detaining them in what Trump described as a “fantastic job.”

Trump says the troops are necessary to maintain order and protect federal property, in what Elizabeth Goitein of the Brennan Center for Justice said was a pretext to have federal agents supplant local police.

In short, the use of a secret federal paramilitary force in Portland (and soon Chicago and likely other cities) is every bit the abuse of power that it appears to be. And it’s an abuse we can expect to see again in November if the administration isn’t called to account. 14/14

— Elizabeth Goitein (@LizaGoitein) July 21, 2020

More from Bloomberg CityLab‘s interview with Krasner (emphasis ours): 

Have you received official confirmation from the Trump administration that it is in fact deploying federal officers in Philadelphia?

Nope. We have not.

What is your understanding of the legality of the Trump administration deploying officers in any city in this context?

There are certain areas of shared jurisdiction between federal and local authorities, and frankly, there’s a frequent collaboration between federal and local law enforcement on certain types of cases. Often it’s cases involving drugs and guns or explosives, for example. So there’s nothing unusual about feds being involved in law enforcement in the city. And there’s nothing unusual about collaborations between local and federal authorities. They’re going on right now in my office.

What’s unusual here is the fluffy rhetoric about taking over cities. What’s unusual is the politicization of a normal relationship between federal law enforcement and local law enforcement. And what is really unusual is the apparently illegal Stormtrooper tactics that have been used by federal law enforcement in Portland.

It is not OK to fracture skulls with what they like to call non-lethal rubber bullets or tear gas canisters. It is not OK when there is no probable cause to jump out of a rental van and just requisition people off the street. That looks like a dictatorship. That looks like a kidnapping. That looks like a crime. So there’s nothing unusual about federal law enforcement doing law enforcement work, where it may follow the law and where they have jurisdiction to do so. That’s not what we’re dealing with here, though. We’re dealing with a shiny object that the president is waving around to distract from his outrageous failures in many other areas. And to try to use his usual tactics of neo-fascist division, hate, and racism to improve his almost deceased campaign.

So you are prepared to prosecute federal law enforcement officials if they do in Philadelphia what they are doing in Portland?

If we have clear probable cause for the commission of crimes, by anyone, including law enforcement, including federal law enforcement, we will prosecute that. We’re not going to tolerate any kidnappings and assaults going on in Philadelphia streets. We’re not going to tolerate showing up under the guise of making things safer and [instead] causing violence.

Is there precedent for this — local police arresting federal police?

There are instances, and there have been in many major cities. Often it relates to corruption where you have arrests that are made. Sometimes they’re made by federal authorities. Sometimes they’re made by local authorities. The Philadelphia police department and the Philadelphia D.A.’s office, absolutely have jurisdiction to arrest and to charge federal law enforcement officials if they commit crimes. The only wrinkle to this is that under certain circumstances the case may eventually end up being handled in federal court. But there’s no question that the law applies to the feds, including the president, whatever he may want to say otherwise.

Can you walk us through what that would look like?  

It can come in a number of ways. It can come through the police, because the primary investigative agency is the police department. But it can originate within the D.A.’s office, where we then collaborate with the police or where we do it without the police using our own attorneys, D.A. detectives, etc. Sometimes there is simply an arrest and we charge them by complaints or we can convene a grand jury where in a less public fashion, civilians decide whether or not there is probable cause to arrest a person for the commission of crime. So there’s a few different ways it can be initiated.

I would like to think that this mayor and this reform commissioner mean what they say when they say we’re not going to tolerate federal law enforcement committing crimes on Philadelphia streets. I think they probably do. But I can tell you to some extent, it doesn’t matter because I’m not going to tolerate it. And the D.A.’s office is able to act either independently or in collaboration with the Philadelphia police department.

What about the fact that the city is currently being sued due to how its own police department has treated protestors?

I can tell you that we have a very large number of ongoing investigations relating to, among other things, the things that were done by civilians or law enforcement during the period that people are generally calling the unrest or the uprising. The police commissioner referred some investigative information to our office relating to the use by an officer of OC spray on the faces of three people who were kneeling or sitting, and he pulled masks away from their faces when he sprayed them. There is other ongoing activity. I can’t be more specific in the middle of investigations, but stay tuned. We will all be seeing more about at least some of the activity that occurred there and also very similar activity that occurred in a less affluent area of the city in West Philly where there were fewer cameras, but there was some pretty outrageous use of tear gas and other forms of sprays on people that needs to be carefully considered by my office.

Acting Homeland Security Chief Chad Wolf said he doesn’t need cities’ permission or invitation to send troops in. What’s your response to that?

It is true that the feds can travel pretty much wherever they want, as long as they’re obeying the law. It is also true that it is inappropriate and uncommon for them to try to do law enforcement activity without coordinating with local authorities, because all kinds of problems can come up when you do that. But the president has made it clear that he’s basically opposed to and against large groups of diverse people, he’s against big cities and he is against all the freedoms Philadelphia stands for. So I am not surprised that that would be their response.

Do we need clearer laws and guidelines around what federal law enforcement officials can and cannot do when they’re in a city jurisdiction?

No, I actually think the law is adequate. What’s not adequate is our president who doesn’t really care what the law is, and he doesn’t really care what the truth is. He’s perfectly willing to behave like his heroes in tyrannical countries. He’s perfectly willing to act like Putin. He’s perfectly willing to act like some historical Argentinian dictator. He likes it. He likes the image of the strong man. Never mind that he avoided military service. He wants to be a strong man who is somehow going to use his singular force and not let any law or constitution get in the way to get what he wants. That’s all a bunch of crap. I mean, here’s the reality. He’s talking about deploying 150 federal law enforcement [officers] to Chicago. The police force in Chicago is over 12,000 people. He’s talking about deploying maybe the equivalent of 1% of their ordinary active police force. This is fluff. This is politics. This has nothing to do with actual law enforcement. It is a diversion of tax funds to try to bolster a campaign that is close to defunct. It’s just the worst kind of deception, division and hate, and we all know what happens to haters, which is they lose.

Do you have any concerns that this deployment is leading to a further erosion of trust and legitimacy in law enforcement in general?

Absolutely. You know, the whole point of the George Floyd protests was that they somehow became emblematic of, I don’t even want to say decades, but more than a couple hundred years of police abuse and unaccountable policing. That was the whole point. And when you respond to a national outcry for more police accountability, more racial justice by sending in law enforcement dressed and behaving like military to engage in conduct that’s clearly illegal, and anonymous requisitioning of people on public streets, then what you are saying is that the police should be above the law. There should be no limits on their conduct, and there should be no limit on this president’s conduct. It goes in exactly the wrong direction. It erodes trust even more. You might say it dynamites trust.

What about the looting, property destruction and other violence that has occurred in the uprisings? Is there any obligation for the federal government to intervene if it looks like local authorities don’t have it under control?

There have not been any kind of widespread burglaries, criminal trespass or looting, as you put it, in Philadelphia for weeks. The protest activity that was going on in the past weeks has been almost 100% peaceful. [Trump] is saying things that are not true. He is manufacturing a crisis that does not exist. I’m not going to tell you that there’s no city in America that has some unrest that includes things like looting. I’m going to tell you what I see in my city. He’s saying he’s going to come here to take over. And there’s nothing to take over. We don’t have rioting, we don’t have looting. We haven’t had anything like that going on here for a very long time. What we have is a precipitous decline in his polling over the past few weeks.  

There might be some city that had some problems, but that’s not what he’s talking about. What he’s talking about is going to pick a list of cities, which not coincidentally are mostly big cities in battleground states. They are mostly or completely Democratically controlled. And perhaps most importantly, they have a very large population of people who are Black and Brown. He knows what he’s doing when he attacks Kim Foxx in Chicago. And he attacks Philadelphia where the white population, which includes me, is about 35-40% of the total city. He’s going after Marilyn Mosby in Baltimore. He’s going after Eric Gonzalez in Brooklyn. He has an agenda. It is a strictly political, racist, divisive, fear-based fictional agenda. All of this stuff comes out of the fascist playbook. All this stuff comes out of the white supremacist playbook.

Authored by Jonathan Turley,

We recently discussed a Vermont principal who was told that she would have to retire after expressing her opinion of Black Lives Matter on her personal Facebook page. Now, a popular social studies teacher and baseball coach at Walled Lake Western High School in Michigan has been fired after tweeting his support for President Donald Trump and reopening the schools. 

For free speech advocates, the firing of Justin Kucera, 28, raises concerns that he might be another teacher terminated for expressing unpopular views expressed outside of the school.  The District denies that it fired Kucera over his support for Trump but that means that someone is lying: either Kucera or the District.  For his part, Kucera said that it was the tweets that were raised by the District, not some other ground for termination.

Kucera was called into a Zoom meeting after three tweets.  In the first tweet, he retweeted the President saying “SCHOOLS MUST OPEN IN THE FALL!!!” He also tweeted: “I’m done being silent. @realDonaldTrump is our president … Don’t @ me.” When someone responded to that tweet, Kucera responded “Liberals suck man.” He later deleted that last tweet.

A few days later, he was called in for a meeting with Michael Lonze, assistant superintendent of human resources for Walled Lake Consolidate Schools and Bradley Paddock, executive manager for human resources, as well as two union representatives. He was questioned about his tweets and later told that he must resign or be fired.

As is often the case on the blog, I am not interested in the merits of these views. Indeed, we have often defended teachers who have expressed anti-Trump views.  Kucera supports the President and wants schools open.  He also insulted liberals and then deleted that insult.  The question is whether a teacher should be allowed to participate in expressing such political views.

Expressing anti-Trump or anti-conservative views do not seem a problem in most schools.  Indeed, my own school of George Washington is under fire for recommending that incoming students to read a book entitled Conservatism and Racism, and Why in America They Are the Same. Imagine if you are a conservative student coming to GW and that is the book that the school wants you and others to read.  When confronted on this recommendation, George Washington University did not send out an apology to all conservative students or include a book criticizing all liberals. It did not send out an apology to the small minority of conservative faculty at the school to assure them that it does not consider them de facto racists.

Conservative critics have noted that Walled Lake teachers have assigned articles on such topics as “how to beat Trump.” That was not on personal social media but in the classroom.  Likewise, a kindergarten teacher in the district, reportedly called Trump a “sociopath” and a “narcissist” on Facebook in 2016 but was not fired. I would not want either teacher fired.  The question is why Kucera is not accorded the same freedom of expression.

This brings us back to the denial.  The district is quoted as saying “no disciplinary action was taken as a result of any support of President Trump.” It then refused to address the reasons for the termination.

Since Kucera has already spoken publicly about the reasons for his termination, he should not release the district from any confidentiality obligation on the cause for this termination. Again, someone is lying or shading the truth.  If the tweets were raised in the meeting, the District should have (at a minimum) admitted that they were part of the reason that he was pulled into the meeting.  If he was fired for the tweets, he should be reinstated and others reviewed for discipline for not only curtailing free speech but lying about the controversy to the public.

This is a major concern for families if the District is applying a content-based discriminatory policy on speech. It is also a major concern if they have been lied to by either the teacher or the Administrators. It should not be difficult to find out who if Kucera will waive confidentiality or seek a written explanation for termination.

As covered here repeatedly over the past 24 hours, gold and silver (and oil) had a great day yesterday, with the rally continuing on Wednesday, sending silver nearly 100% higher than its March lows. 

Furthermore, as DB’s Jim Reid notes, on a YTD basis, Gold (+21.4%) and Silver (+19.3%) have had standout moves compared with global risk – which as a reminder is what central banks are doing everything they can to prop up – even if WTI (-26.1%) is down.

What followed next was shocking as it came from the mouth of a respected legacy banker and not some tinfoil conspiracy theorist: admitting that he is “a gold bug”, Reid says that in his opinion, “fiat money will be a passing fad in the long-term history of money”, a shocking admission for most financial professionals who are expected who are expected to tow the Keynesian line and also believe in the primary of fiat and its reserve currency, the US Dollar.

That said, he also concedes that in his long-term work “I’ve always found many commodities difficult to recommend on a buy and hold basis as most underperform inflation over the long run – probably as they are mostly used in production and alternatives are found if too expensive. We also become more efficient at using them.“

All… except gold:

Indeed, between 1860 and 1971 (move from a gold-based system to fiat money), Reid notes that the real price of Gold fell by 75% and over 80% for Oil and Silver. Since then, while oil and silver have only doubled in real terms and are still less than half their 1860 values, Gold is up 7 times, double its 1860s real level.

Some context: since 1971, the S&P 500 is up 22 times in real total return terms and 40,000 times since 1860, but one has to remember that whereas equities are actively pumped up by central banks, gold has been repeatedly hammered by monetary authorites, so its performance is nothing short of remarkable having had to “fight the Fed” for near 40 years.

Reid’s conclusion: “Gold is definitely a fiat money hedge” and not only that, but more importantly a transitionary asset to whatever monetary system is next.

Via SchiffGold.com,

The world is drowning in debt.

And central bank policies globally are encouraging even more borrowing. Most people don’t seem to care. “This is necessary during this time of crisis,” has become the mantra. But the ugly truth is the world was already drowning in debt before the coronavirus pandemic. The government response to COVID-19 has merely exacerbated the problem. And it’s important to understand that debt is neither free nor irrelevant.

Just look at the US government budget deficits. The shortfall in the month of June totaled nearly the entire 2019 fiscal year deficit and would rank sixth largest-ever if it were a yearly deficit.

The June deficit came in at $864.1 billion dollars. To put that into perspective, here are the biggest annual budget deficits in US history.

1. 2009 – $1.413 trillion (G.W. Bush/Obama)

2. 2011 – $1.300 trillion (Obama)

3. 2010 – $1.294 trillion (Obama)

4. 2012 – $1.077 trillion (Obama)

5. 2019 – $984 billion (Trump)

6. June 2020 – $864 billion (Trump)

Of course, Uncle Sam was already hurtling toward a $1 trillion deficit for fiscal 2020 before the pandemic.

It’s not just governments running deeper and deeper into the red. The second quarter was the busiest ever for corporate debt issuance. Approximately $1.2 trillion of investment-grade paper was sold in the first half of the year. It was the highest issuance volume recorded by the Securities Industry and Financial Markets Association.

Corporations were leveraged to the hilt before the pandemic. So much so that the Federal Reserve issued warnings about the increasing levels of corporate indebtedness late last year.

Borrowing by businesses is historically high relative to gross domestic product (GDP), with the most rapid increases in debt concentrated among the riskiest firms amid weak credit standards.”

The Fed’s response to COVID-19 was to wade into the corporate bond market and this has only exacerbated the debt problem.

Economist Daniel Lacalle highlighted just how much global debt has grown in an article published by the Mises Wire.

According to the International Monetary Fund (IMF), global fiscal support in response to the crisis will be more than $9 trillion, approximately 12 percent of world GDP. This premature, clearly rushed, probably excessive, and often misguided chain of so-called stimulus plans will distort public finances in a way which we have not seen since World War II. The enormous increase in public spending and the fall in output will lead to a global government debt figure close to 105 percent of GDP.

“If we add government and private debt, we are talking about $200 trillion of debt, a global increase of over 35 percent of GDP, well above the 20 percent seen after the 2008 crisis, and all in a single year.”

It’s easy to simply shrug off the debt. People have been warning about it for years. But as Peter Schiff has said, it’s not a problem until it is.

Lacalle called it a “brutal increase” in indebtedness. And here’s the bad news. It’s not even going to prevent economies from falling rapidly.

Most of this new debt has been created to sustain a level of public spending that was designed for a cyclical boom, not a crisis, and to help large companies that were already in trouble in 2018 and 2019, the so-called zombie companies.

“According to Bank of International Settlements, the percentage of zombie companies—those that cannot cover their debt interest payments with operating profits—has exploded in the period of giant stimuli and negative real rates, and the figure will skyrocket again.

“That is why all this new debt is not going to boost the recovery; it will likely prolong the recession.”

“Debt is neither free nor irrelevant, as interventionists want us to believe, even if interest rates are low. More debt means less growth and a slower exit from the crisis, with lower productivity growth and a tepid employment improvement.”

Schiff has also said that the central bank policy of creating money out of thin air and encouraging more debt isn’t helpful. It’s merely creating inflation.

Well, if you just increase the supply of money, it doesn’t do anything to change the supply of goods and services. So now, when you divvy those goods and services up, you just have to assign a higher price to all of those goods and services so that the market clears. But nothing of real value is actually added.”

Lacalle said the borrowing and spending with its accompanying ballooning level of indebtedness are exacerbating the disconnect between financial markets and the real economy. It has reached record levels and is presenting “bubble-like features.”

First, these huge stimuli are probably too big, too soon, and clearly geared toward sustaining low-productivity sectors. All this is supported by a monetary policy that has gone from providing liquidity to being the enabler of asset bubbles.

“The balance sheet of the European Central Bank has increased by almost €2 trillion so far this year and is already more than 52 percent of the eurozone’s GDP, much higher than that of the Federal Reserve, which is 32.6 percent of the US GDP, or the Bank of England, which is 31.1 percent. The Bank of Japan’s balance sheet already accounts for 117 percent of GDP, and its consequences should be a warning sign to all nations. Consumption has plummeted again in May and the country has been stagnant for two decades, with debt that will exceed 260 percent of GDP. Copying Japan is the recipe for secular stagnation.

“The huge increase in the balance sheets of central banks to artificially keep bond yields low has pushed stock markets higher just as 80 percent of listed companies have abandoned their business profit targets and analysts are slashing estimates for 2020, 2021, and 2022 at the fastest speed in the past decade, according to JP Morgan and Bank of America.

“This enormous action of central banks leads to an unprecedented disconnect between the real economy and the stock markets. The expansion of multiples has accelerated just as earnings estimates plummet.

“By making sovereign bonds prohibitively expensive, two dangerous things happen: governments believe that low bond yields are due to their policies, and investors take much more risk than what they think they have in their portfolios.

“All of this looks harmless if the bubble expands and the placebo effect works, but if macro earnings and employment data remain disappointing, the next crash may be worse than the economic shutdown, because it may add a financial crisis to the already weak economy. Unfortunately, when the next crash happens, governments and central banks will tell us that more stimulus is warranted.

While Ghislaine Maxwell hasn’t disclosed which banks managed tens of millions of dollars for the British socialite, Bloomberg reports that one of them was JPMorgan.

Not only that, the bank run by Jamie “That’s why I’m richer than you” Dimon continued to do business with Maxwell after they kicked Jeffrey Epstein to the curb in 2013 – despite her well-known affiliation as the dead pedophile’s ‘madam.’

Epstein played a pivotal role in the rise of Barclays CEO Paul Staley, while Staley ran JP Morgan’s private bank – referring wealthy clients to the banker and helping to arrange the bank’s 2004 acquisition of Highbridge Capital Management. 

Staley left JPMorgan in 2013 – the same year the bank severed ties with Epstein.

Going back about two decades, Epstein regularly brought Staley business when he ran JPMorgan’s private bank and the two were close professionally, according to a person familiar with the matter. One of those introductions Epstein made was to hedge fund billionaire Glenn Dubin, the New York Times reported. –Bloomberg

Maxwell, meanwhile, had at least $10 million under management at JPMorgan private bank, according to Bloomberg, citing two people with direct knowledge of the matter – one of whom said she was a client on or before 2009. 

Her money there was handled by a team that included several dozen relationship managers, advisers and others who specialize in closely held businesses. The bank continued to work with her after Epstein moved funds to Deutsche Bank AG in 2013.

…

Maxwell’s finances are coming into focus after federal authorities in Manhattan accused her this month of conspiring with Epstein to sexually abuse minors, with prosecutors delving into how she funded her activities and lifestyle. Authorities require banks to provide a bulwark against financial crimes by filing reports of potentially suspicious activities. The reports aren’t made public. –Bloomberg

According to Assistant US Attorney Alison Moe, Maxwell’s claims that she has less than $1 million in the bank and no monthly income is “implausible,” according to Bloomberg. Her lawyers have suggested that the 58-year-old is far less wealthy than people believe, despite the fact that she was an integral part of deceased pedophile Jeffrey Epstein’s life – who left an estimated $630 million estate behind after he was found dead in a Manhattan jail cell last year.

According to prosecutors, over $20 million was transferred from Epstein-linked offshore accounts to Maxwell – of which millions were later transferred back. Maxwell sued Epstein’s estate in March to cover her legal costs, asserting that the financier promised to financially provide for her.

Meanwhile, a Swiss Trust holding over $4 million may be at her disposal as well.

Did JPMorgan’s compliance department skip a few ‘know your customer’ requirements, and were they involved in any of these large financial transfers?

By Ian Lyngen and Jon Hill of BMO Capital Markets

Two of the mainstays of investor anxiety are once again setting the tone in financial markets;

1. fears the pandemic is worsening and
2. devolving China/US relations.

The first has been highlighted by not only the recent surge in Covid-19 cases, but also a fresh round of concern that the autumn (and typical flu season) will represent an especially challenging period for the battle with the coronavirus. These worries have been combined with the reinstatement of lockdowns/closures and thereby undermined any lingering recovery optimism. Although to be fair, the extent of positive sentiment related to the bounce back of the global economy was already in short supply as the summer unfolds and a second fiscal stimulus deal from Washington begins to take on a more elusive quality than previously assumed. This isn’t to suggest the odds for a deal are low, rather that the scope and magnitude of the second round of stimulus appears poised to disappoint.

The State Department’s order to close China’s consulate in Houston “to protect American intellectual property and Americans’ private information” represents another step in the ongoing tension between Beijing and Washington. The Chinese Foreign Ministry spokesman characterized the move as an “unprecedented escalation” and investors are now awaiting details on any potential retaliation. It’s an all too familiar dynamic and one which the market has been relatively sanguine about, all things considered. While equity futures are off the highs, the -0.4% move is only a fraction of the reaction such a development would have triggered in January. This is, in part, due to the more significant economic ramifications from the pandemic, but it also reflects investors’ perception that a shift in the White House will make it easier for both sides to discount any escalation seen during the second half of 2020.

The Presidential election is quickly approaching on the horizon and as the nuances of Biden’s policy agenda come into focus we’ll be eager to see how resilient the bid for domestic equities remains. Conventional logic suggests if the White House is controlled by a Democrat, less pro-business policies will weigh on risk asset valuations; an influence which would only be exaggerated in the event of a blue sweep which similarly achieves control of Congress. If we’ve learned anything from 2020 (aside from the importance of washing our hands), it’s that “conventional logic” hasn’t been in the driver’s seat for a very long time.

In fact, it’s well within the set of potential outcomes that a blue sweep implies a welcome return to establishment politics which clears the way for US equities to rally into the end of the year; even if the kneejerk would be risk off. While this might initially sound somewhat counter-intuitive, the process of moving beyond the divisive political environment of the last several years could resolve into a net positive for the business community; particularly if combined with continued progress through the depths of the pandemic.

That said, the needed level of clarity on the political front will not be on offer in the Treasury market at this stage and instead, we’ll continue to trade off the incremental influences from risk assets as earnings season progresses. 10s have extended the stealth rally with yields dropping as low as 58.4 bp overnight. For context, since April 30 10-year rates have only been this low on one other occasion; July 10 – when 56.8 bp redefined the lower-bound. We’re focused on two sell levels; 56.8 bp and 53.9 bp (low from April 21). Our baseline expectation is that both levels will be sold on the first attempt and if yields manage to close above the floor, a second attempt isn’t a foregone conclusion. In the event of a shift in the macro narrative, a more durable bid could easily push through the bottom of the range and put a <50 bp 10-year yield on the table as the summer drags on. 

In keeping with our range-trading thesis for Q3, we’re anticipating selling interest as rates creep lower and the fundamentals remain comparatively steady. The omnipresent uncertainties created by the pandemic will limit any significant selloff back toward 75 bp in 10s; even if low volumes and diminished risk-taking capacity clear the path for sharp price action.

Today in news about the radical left-wing censorship machines our social media companies have become, it was exposed this week that Facebook’s fact-checker, Lead Stories, is an outfit that is stocked to the brim with ex-CNN staffers.

The organization presents itself as neutral yet “most of its employees” have donated to the Democratic party, according to RT.  

The National Pulse reached out to Facebook’s fact checkers this week after a story they published about Black Lives Matter was flagged as “partly false” by the platform. This led TNP to “do some digging” on who was behind the smear. 

What they found was stunning: an organization “staffed almost entirely by Democratic donors, half of whom had worked for CNN in the past.”

THREAD #1:

So Facebook just put a “Partly False” flag on one of our @TheNatPulse exclusives. Except… it’s not false at all.

I called Alan Duke, the editor at the LeadStories website (I’ve never heard of it?) which apparently conducts fact checks for Facebook. pic.twitter.com/AwVFd1EO6Z

— Raheem Kassam (@RaheemKassam) June 17, 2020

25% of the organization’s employees were recurring Democratic donors and Lead Stories’ founder, Perry Sanders, has donated over $10,000 to Democratic political campaigns – including Hillary Clinton and Barack Obama’s Presidential runs. 

TNP also exposed that “several other writers” had Democratic contributions on their records. For example, one writer named Gita Smith, was listed in “99 separate small-dollar donations” to various Democratic candidates – in addition to contributions to ActBlue.

The org’s editor, Alan Duke, spent nearly three decades with CNN as a reporter and editor and the org’s senior editor, Monte Plott, spent over 10 years with CNN. Five other names at the organization were also found to have worked at CNN as some point. 

Writer Jessica Ravitz spent 10 years with CNN and also spent “nearly four years with the Anti-Defamation League, a self-styled anti-‘hate’ watchdog that spends most of its considerable resources demonizing political voices that deviate from the neoliberal centrist mainstream-media line.”

TNP’s investigation followed Lead Stories taking exception with their article titled:  “Black Lives Matter Website, ‘Defund the Police’ Donations Go to ‘Act Blue’, the ‘Biden for President’ Campaign’s Top Source of Donations”.

Facebook posted the story in the “Hoax Alert” section of its website as a result of Lead Stories’ flagging. The fact checked pointed out that “BLM’s donations go through, not to ActBlue, which is a payment processor for Democratic campaigns and not the ultimate source of the Biden campaign’s cash.”

TNP corrected the word “to” to “through” but claimed Lead Stories still would not lift the “partly false” flag on its story.

And so it appears to us what we have yet again is a social media platform clearly acting as a publisher yet not having to incur the legal liabilities that come with it. This slippery slope is going to continue – and only get worse, we predict – until at some point it gets even more blindingly obvious than it is now that these Silicon Valley firms are using their power to nudge the country toward the political ideologies they support, rather than providing unbiased “fact-checked” outlets for public discussion.

Via Dana Lyons’ Tumblr,

Monday’s market breadth was historically poor given the performance in the major averages.

Like a breath mint for halitosis, sometimes the performance in the popular, cap-weighted stock averages can mask underlying weakness in the overall market breadth (i.e., advancing vs. declining stocks). As such, market conditions may not be quite as robust as the indices would suggest. Monday’s action was a good example of that as market breadth was historically poor given the performance of the large-cap indices. To wit:

On Monday, the cap-weighted large-cap S&P 500 (SPX) gained 0.84%. Despite that solid gain, the broad NYSE Composite actually closed slightly down on the day as there were more declining issues than advancers on the exchange. In the 55 years of data in our database, that is just the 4th time – and the first in 40 years – that the SPX has gained that much on a day that the NYSE was down.

Relaxing the parameters a bit, we dove a little deeper into the data and identified all days during that period that saw the SPX gain at least 0.55%, while within 12% of a 52-week high, when the NYSE closed down on the day. This chart shows all 9 such days in the past 55 years.

As you can see, several of the previous incidents occurred at quite inauspicious times in the market – including near cyclical peaks in 1973, 1980, 2000 and 2008. History does not have to repeat, but these are not exactly optimistic precedents.

Another example of the disparity between the performance of the popular large-cap averages and those broader indices on Monday can be seen in a comparison between the large-cap Nasdaq 100 (NDX) and the Russell 2000 (RUT) small-cap index. Specifically, the NDX closed up nearly 3% on Monday to a new all-time high. On the flip side, the RUT actually closed down on the day by 0.36%. The only other date in our 30 years of data on the 2 indices that saw this combination of behavior was the 1st day of the millennium (also not a great time to be buying stocks).

So, what is the takeaway here? Is the stock market doomed? Well, we wouldn’t put a ton of stock into a 1-day phenomenon, despite the ominous precedents. There are certainly more important factors that go into our investment decision-making process, namely our objective, quantitative models. However, this is another among a growing collection of red flags – and it will definitely garner more attention from us should this pattern of “bad breadth” continue.

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How much “stock” are we putting into this data point? How is it impacting out investment posture? If you’re interested in an “all-access” pass to all of our charts, research — and investment moves — please check out our site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!