It`s Time To Raise Rates

By EconMatters


The Fed has argued that it is easier to respond to an upsurge in economic growth from here by staying conservative at the zero bound than it is to continue hiking and the economy takes a downturn from here. Actually this isn`t even correct, as they could very easily just cut rates again much easier than trying to chase runaway inflation.

But we think there are more dangerous precedents being set by the Federal Reserve right now. First of all, given the economic condition of the economy based on a broad spectrum of indicators, that if the Federal Reserve cannot normalize interest rates now, that the bar is so high for normalization, this is setting a bad precedent for Federal Reserve policy in a capitalistic economy. If you cannot raise rates under these conditions, then you are committing yourselves to never being able to normalize rates, and this has dire consequences, and the unintended consequences of this extreme monetary policy stance are far worse than any minor incremental benefits to be squeezed out from  a continual zero bound approach.

The second precedent that is being set by this Federal Reserve is that US Monetary policy is being set by external factors outside their mandates which are inflation, employment and market stability and not Chinese stock market bubbles, a British Independence Vote, International Terrorism or the effects of a strong dollar on emerging markets.

The third poor precedent being set by the Federal Reserve is being so highly data dependent as to become “knee-Jerk” in responding to every little wiggle in the economic data. To the extent that in preparing for a rate hike which was long overdue the Federal Reserve overreacted to a Brexit vote (which will take two years to fully negotiate) and a poor employment report (after eight years of solid employment improvement and an overall tight labor market) which for all intents and purposes is probably at Full Employment Levels right now. This is the entire role of economists to take a high level or Bird`s Eye view of the economy and economic data. A responsible Federal Reserve cannot be this stop and start in regards to their economic outlook, their economic forecasts and embarking on a normalization rate hiking schedule.

It doesn`t matter whether the markets sell off, or the economy takes a slight downturn, or even goes into a slight recession from this point on a natural business cycle downturn, as remember we are at “emergency financial crash level” monetary policy measures. This was never supposed to be permanent, only a temporary measure to respond to emergency conditions in the credit markets after the financial crisis of 2007/08. It is unhealthy to run emergency monetary policy for 8 years. The most important role for the Federal Reserve should be in reestablishing a normal rate environment that resembles a healthy finance and capitalistic structure – which we can see is hurting the banking sector right now in regards to a flattening  yield curve and bizarre low yield environment. The proper analogy is getting a patient back to normal after major surgery, the benefits derived from returning the patient to normal activities as opposed to enabled activities becomes self fulfilling and reinforcing in nature.

The fourth bad precedent is that the United States has always been a leader as the strongest capitalistic, free market society in the world. We are not Japan, China, or Europe and the more we resemble their dysfunction with overly intrusive central bank intervention in financial markets the worse off we become – this dysfunction feeds off itself in a growth draining manner. We need to be setting the example in terms of normalizing monetary policy, not following the negative interest rate black hole paradigm that is highly deflationary and growth stunting in nature. You have to respect capital – and ZIRP is the antithesis of respecting capital and has negative consequences for a capitalistic financial model. 

The final precedent is that financial market stability is a Federal Reserve mandate whether explicitly or implicitly defined in their mission statement. And the level of poor positioning right now in financial markets given the economic conditions relative to current asset prices in multiple markets is off the charts and unprecedented in nature. The Federal Reserve is basically setting the necessary conditions for the biggest collapse in the Bond Markets, the bond markets were a bubble two years ago, now they have gotten so out of whack due to central bank insanity, that we are talking about multiple standard deviations from historical norms, all with a 2.2% core inflation rate – this just never ends well.

And moreover, the Fed is directly causing and acting irresponsible in setting this entire market crash scenario up because they fail to normalize interest rates in a timely manner, i.e., they keep stalling on every little excuse from a strong dollar to Chinese Investors bidding up stocks and running for the exits to a British self governing decision to a weak job`s report. None of this matters, these are all small picture items taken into the context of the bubble and respective tail risk that currently resides in the bond markets right now at current prices – it is unsustainable by any financial models. I have run them all and this is the real risk the Fed needs to be paying attention to regarding their FOMC meetings.

If we cannot raise rates and normalize interest rates now given these economic conditions (Just look at all these economic charts) in our economy, then we are committed to never being able to normalize monetary policy. So in essence just set the Fed Fund`s Rate at Zero and get rid of the Federal Reserve entirely, at that point they serve no useful function if we are permanently committed to the Zero Bound.

 

 

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In Latest Shooting, Two Houston Police Officers Kill Gunman Who Aimed Gun At Cops

Among the numerous mostly peaceful protests across the country overnight, another deadly incident between a lone black gunman and police took place shortly after midnight on Saturday, one which will further raise tensions and likely lead to more deadly escalation of this week’s events.

According to ACB13, two Houston officers shot and killed an armed man on the city’s south side early this morning. Police says the officers involved were wearing body cameras and they each fired multiple shots.

Houston Police Department officials say the shooting happened on Cullen near Ward around 12:40am. Officers say they saw a man with a revolver standing in the road. There were two officers in one vehicle and they asked the man to put the revolver down. Police say a witness also asked him to drop the weapon. Officers say instead of dropping the gun, the man raised his weapon pointing it in the air. He then lowered it and pointed it at the two officers.

Immediately after, HPD says they each fired multiple shots and he died at the scene.

Bystander Eric Puckett told KTRK-TV that the victim was a black male. The officers’ races were not immediately known.

 

A woman who says she’s the man’s wife later identified him as Alva Braziel. 

KTRK says one of the unidentified officers is a 10-year veteran of the force, and the other is a 13-year veteran. As is routine following any officer-involved shooting, the officers will be investigated by internal affairs, along with Harris County.

Abc13 cites a bystander, Eric Puckett, who told abc13 he thinks black men in the area are being targeted. “It’s like we got a target on our back even if we’re innocent, it hurts,” said Puckett. “You don’t even want to walk outside your house any more. But to all the young black men and young black women out there, all black people, do something positive.” It was unclear if Puckett had anything to say about the alleged shooter pointing his gun at police officers when told to stand down.

 

A nearby gas station captured the scene and police say the video will confirm what happened, along with witness testimony. Police continue to investigate at the scene where a large crowd has gathered. abc13 writes that its reporters saw shell casings and the revolver among the evidence markers.

Dwight Boykins tells abc13, “The biggest gorilla in the room is very clear. We need to put officers in neighborhoods that reflect the neighborhood.”

Meanwhile, speaking in Warsaw, President Obama addressed the ongoing events in the US and said that America is “not as divided as some suggest” while admitting this has been “a very tough week” for the nation. Obama added that Americans of all races and backgrounds are “rightly outraged” by the deadly attack on Dallas police officers, and “rightly saddened and angered” by the fatal police shooting of two black men in Louisiana and Minnesota. 

The president also said that those who protested the killings of the two black men are as outraged as anyone by the killings of five police officers in Dallas.

Obama says that “as tough, as hard, as depressing” as has been the loss of lives this week, “we’ve got a foundation to build on.”

He then proceeded to pivot to his favorite topic, gun control, saying that it should be “harder for disturbed people to get guns.” It was unclear if he was referring to US police officers, whose response he broadly criticized on Thursday, and tried to placate today by saying that there has been a “huge drop” in murder rates in the US which is a “testament to smarter policing.”

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The Rise Of Hillary Clinton – Survival Of The Morally Unfittest?

Submitted by Patrick Buchanan via Buchanan.org,

Does Hillary Clinton possess the integrity and honesty to be president of the United States? Or are those quaint and irrelevant considerations in electing a head of state in 21st-century America?

These are the questions put on the table by the report from FBI Director James Comey on what his agents unearthed in their criminal investigation of the Clinton email scandal.

Clinton dodged an FBI recommendation that she be indicted for gross negligence in handling U.S. security secrets, a recommendation that would have aborted her campaign. But Director Comey dynamited the defense she has been offering the country.

Comey all but declared that Clinton lied when she said she had State Department approval for the email server in her home.

He all but declared that she lied when she said she had only one server, and that no classified or secret material was transmitted. He also implied that she lied when she said she had used only one device and had turned over all of her work-related emails to State. The FBI found “several thousand” more.

Clinton said her emails were stored in a secure area. This, too, was false. Hostile actors and hostile regimes, said Comey, had access to email systems of those with whom she communicated.

Comey said he found no criminal “intent” in what Clinton did.

Yet, he charged her with having been “extremely careless” with U.S. national security secrets, a phrase that seems synonymous with the gross negligence needed to indict and convict.

While recommending against prosecution, Comey added, “This is not to suggest that in similar circumstances, a person who engaged in this activity would face no consequence. To the contrary, those individuals are often subject to security or administrative sanctions.”

Translation: Were Clinton still the secretary of state and were such recklessness with secrets to be discovered, she could have been forced to resign and stripped of her security clearance forever.

Yet if Clinton is elected president, our commander in chief for the next four years, and her confidantes Huma Abedin and Cheryl Mills, will all be individuals the FBI has found to be reckless and unreliable in the handling of national security secrets.

We will have security risks running the armed forces of the USA.

Nor is this the first time Clinton’s truthfulness has been called into question. Twenty years ago, she fabricated a tale about crossing a tarmac in Bosnia “under sniper fire,” and running with “our heads down.” Photos showed a peaceful arrival featuring a smiling little girl.

Family members of the dead heroes of Benghazi’s “13 Hours” say Clinton told them she would see to it that the creator of the anti-Islamic video that incited the mob that killed their sons would be run down, all the while knowing it had been a planned terrorist attack.

In 1996, The New York Times’ William Safire went over all of the statements Clinton had made in Whitewater and related scandals of Bill Clinton’s first term, compared them with subsequently revealed truth, and pronounced Hillary Clinton a “congenital liar.”

She has claimed she tried to join the Marines in 1975, and long contended she was named for famed mountaineer Edmund Hillary, who conquered Mount Everest. Only Sir Edmund climbed Everest when Hillary was 6 years old. The perfect running mate for this serial fabricator would be the Cherokee lass Elizabeth Warren.

Still, a question arises as to Comey’s motives in airing the findings of an FBI investigation. Normally, the bureau passes on the evidence it has found, along with its recommendation, to the Justice Department. And Justice decides whether to prosecute.

Instead, Comey called a press conference, documented the charge that Clinton was “extremely careless,” contradicted, point by point, the story she has told the public, then announced he was recommending against prosecution.

What was behind this extraordinary performance?

By urging no prosecution, but providing evidence for a verdict of criminal negligence in handing classified material, Comey was saying:

I am not recommending prosecution, because, to do that, would be to force Hillary Clinton out of the race, and virtually decide the election of 2016. And that is my not decision. That is your decision.

 

You, the American people, should decide, given all this evidence, if Clinton should be commander in chief. You decide if a public figure with a record of such recklessness and duplicity belongs in the Oval Office.

Comey was making the case against Clinton as the custodian of national security secrets with a credibility the GOP cannot match, while refusing to determine her fate by urging an indictment, and instead leaving her future in our hands.

And, ultimately, should not this decision rest with the people, and not the FBI?

If, knowing what we know of the congenital mendacity of Hillary Clinton, the nation chooses her as head of state and commander in chief, then that will tell us something about the America of 2016.

And it will tell us something about the supposed superiority of democracy over other forms of government.

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Bahamas Issues Travel Advisory: “Avoid Interaction With US Policemen”

You know it’s bad when… The Bahamas government Friday is urging nationals to exercise caution if they intend on travelling to the United States following the shooting deaths of five police officers in Dallas on Thursday night.

Over 90 percent of residents in the Bahamas are black, and Monday is a national holiday – commemorating its 43rd anniversary of political independence from Britain – which, as WaPo notes, means some will travel north from the archipelago to vacation in the United States.

And so, it apperars the Bahamian government is taking a page out of the US government foreign policy play book (having recently advised travelers to avoid repressive regimes such as Laos and Nicaragua – beware of secutiy and street demonstrations).

In a statement, the Ministry of Foreign Affairs said it had taken note of the recent  tensions  in some American  cities  over  shootings  of young  Black  males by policemen.

“We wish to  advise  all  Bahamians  travelling  to  the  US  but  especially  to the  affected cities  to exercise  appropriate caution  generally.  In particular young males are asked to exercise extreme caution in affected cities in their interactions with the police.

 

“Do not be confrontational and cooperate. If there is any issue please allow consular for the Bahamas to deal with the issues. Do not get involved in political or other demonstrations under any circumstances and avoid crowds,” the Ministry of Foreign Affairs said.

 

The island commemorates its 43rd anniversary of political independence from Britain this weekend “many Bahamians will no doubt use the opportunity to travel, in particular to destinations in the United States.

 

“While it is prudent for travellers to conduct themselves in an orderly manner at all times, in light of recent episodes of involving police officers and young black men in the United States, the Ministry of Foreign Affairs and Immigration wishes to advise the Bahamian Public to exercise due care and attention especially when travelling to particular cities in the United States.”

What next? Somalia warns its warlords to avoid vacationing in America?

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Due Process? A Drone Was Used To Blow Up A US Citizen Without Trial This Week

Submitted by Daniel McAdams via The Ron Paul Institute for Peace & Prosperity,

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The Dallas shootings have ushered in a very new world for US citizens. For the very first time, drones have been used on US soil to kill Americans without trial or charges. The suspected shooter in yesterday's tragic killings, US Army veteran Micah Xavier Johnson, was, according to police and press reports, holed up in a parking garage and would not give himself up. After hours of what police claimed were fruitless negotiations with Johnson, a weaponized robot was sent to where he was hiding and blown up, taking Johnson with it.

Get past the horror of what Johnson was accused of doing and think about that precedent for a moment. Is it not chilling?

RPI regular contributor Peter Van Buren, a retired State Department official who did a tour in Iraq, put a very fine point on the "robot" bomb:

Indeed, even without wings, this was a drone sent in to kill an American suspected of a crime

Police claim that continuing the negotiations was pointless and attempting to capture him would have put officers at risk. He was supposedly shooting. While no sane person wants police officers to be killed, risk is something we are told they willingly accept when they sign up for police duty. There are plenty of low-risk jobs out there. 

The media and opinion-leaders are presenting us with a false choice: if we question the use of drones to kill Americans — even if we suspect they have done very bad things — we somehow do not care about the lives of police officers. That is not the case. It is perfectly possible to not want police officers to be killed in the line of duty but to wholeheartedly reject the idea of authorities using drones to remotely kill Americans before they are found guilty.

African-American Dallas protester Mark Hughes was wrongly identified by Dallas Police as a suspect in the shootings. Police tweeted photos of Hughes marching with protesters openly carrying a rifle, as is permitted in Texas. Police claimed was involved in the shooting. He was a suspect just like Johnson was a suspect. During questioning they told Hughes that they had video of him shooting people, which was a lie. What if police had sent in a drone to take out Mark Hughes? What will happen in the future to a future Mark Hughes, falsely accused by police of being involved in a shooting? Will we come to accept murder without trial?

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Bank of America Throws In The Towel: “The Profits Recovery Won’t Live Up To Expectations”

Next week the second quarter earnings season begins in earnest (as usual with Alcoa reporting after the close on Monday), with some 5% of the S&P reporting Q2 results, a number which will rise to 89% by August 5.

During this period, most corporate buybacks, arguably the only source of stock buying, will remain in a blackout period. Whether this means the S&P will again remain rangebound for the next 4 weeks is unclear: with rampant central bank intervention now a daily fixture of “markets”, it remains a folly to attempt any predictions.

A more interesting question will be what earnings will be reported. As is widely known, Q2 will be the fifth consecutive quarter of declining earnings, the first time this has happened since the financial crisis. Curiously, in just the past week, analysts have further taken down their estimates, with average EPS now seen a declining 5.6% from a year ago, compared to a drop of 5.4% as of June 30 (with revenue set to drop by 0.7% Y/Y).

And for those wondering, no – it is not just energy companies whose earnings are plunging: as the chart below shows, a majority, or 6 of the S&P’s 10 sectors, are expected to report negative earnings growth with only Telecom, Consumer Discretionary, Utilities and Healthcare posting an increase (largely due to the daily ongoing collapse in interest rates to all time lows).

But while a Q2 earnings contraction is a given (even when factoring the last minute “beats”, which traditionally push up the final result by 3-4%), another question is what to expect out of Q3: will the earnings recession last for an unprecedented 6 quarters even as the S&P hits all time highs? For now, the answer is borderline: while consensus expects a sharp drop in the second quarter, Q3 EPS, as of this moment, are expected to rise a modest 0.7% (however this number too is declining).

 

To be sure, what is going on here is the traditional optimism bias prevalent among all analysts: we expect that as we get closer to the end of the third quarter, the Q3 EPS consensus will drop sharply lower.

And nowhere is this more evident than in a note released overnight by Bank of America’s Dan Suzuki who is the first analyst to admit that an earnings recession that will have lasted well over one year is not normal, and as a result he has thrown in the towel, saying that “The profits recovery is unlikely to live up to expectations.” Here is his full note which admits that the “hockeystick” EPS rebound in 2016 and 2017 is a mirage that will promptly float away in the coming months.

Cutting forecasts to reflect a weaker recovery

 

Trimming EPS by 3% in 2016 and 2% in 2017

 

In the wake of the weaker-than-our-expected 1Q results and recent macro headwinds, we are trimming our S&P 500 EPS forecasts by 3% in 2016 and 2% in 2017. Our revised forecasts of $117 (flat y/y) in 2016 and $125 (+7% y/y) in 2017 suggest downside to the bottom-up consensus of 1% and 7%, respectively. Excluding the extremely volatile earnings of the Energy sector, which we expect to decline by more than 50% for a second consecutive year, we forecast S&P 500 earnings growth to trend from 7% in 2015 to 0% in 2016 and 4% in 2017. At 2098, the S&P 500 currently trades at 17.9x our 2016E EPS while our year-end target of 2000 implies a 16x multiple on our 2017E EPS.

 

 

 

Headwinds from Brexit, pensions, FX and oil

 

As a result of the UK referendum, we now assume slower global growth and a modestly stronger dollar. Our biggest cuts for 2016 were to the global cyclicals’ earnings (Chart 2): Financials (-$14bn), Tech (-$11bn), Energy (-$10bn) and Industrials (-$5bn). We assume that the impact of net buybacks (+1ppt), a stronger dollar (-1ppt) and declining Energy profits (-2ppt) will result in a net drag of 2ppt in 2016 vs. a drag of 10ppt in 2015 (Chart 4 and Table 3). Excluding these factors, our forecasts imply a slowdown in non-Energy constant currency earnings growth from roughly +10% to +4%. See the detailed forecast table on page 3. Given the fall in interest rates this year, we think pension expense is likely to be another modest headwind to earnings growth next year. And just as the GAAP gap was closing, we could see it widen at the end of the year, as those companies that have transitioned to mark-to-market pension accounting take charges that hit GAAP EPS.

 

The profits recovery is unlikely to live up to expectations

 

Earnings season for 2Q is about to kick off, and despite our expectation of a 3% beat vs. consensus, we think S&P 500 EPS is still likely to come in below 2Q15. While this would mark the fourth consecutive quarter of negative y/y EPS growth, in our view, what is encouraging is that 1Q likely marked the trough. Despite the negative impact of the Brexit vote, we see EPS growth accelerating throughout the rest of the year, but not nearly at the trajectory of consensus expectations, which imply growth will accelerate from -6% in 1Q to +9% by 4Q (Chart 1) and +16% by 1Q17. And given the S&P 500’s 15% rally since mid- February, we are concerned that much of the improvement in earnings growth may already be priced in, especially with signs that earnings revision trends may be rolling over.

We expect other banks to promptly join the crowd and slash their own overly optimistic forecasts which will never materialize.

So does that mean that stocks will stop rising in a world in which they are unable to generate incremental income growth? Of course not: since the S&P’s GAAP PE is currently north of 24x, there is no reason central banks can’t push it even higher: after all any time the market has rallied over the past 1.5 years, a time when earnings have been steadily declining has been on multiple expansion. And since even the Fed admits the stock market is in bubble territory, saying “forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades“, and yet does nothing about it, we expect the bubble to keep growing ever bigger until the day it finally bursts. What concerns us more, however, is that the world will be engaged in both regional and global conflict and/or war at that time, for anyone to really care too much.

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Thousands Protest Police Violence Across US Cities; Tear Gas Used In Phoenix “Black Lives Matter” Rally

In the aftermath of Thursday’s Dallas and Tennessee shootings, thousands of mostly peaceful protesters took to the streets of U.S. cities for the second night in a row on Friday to denounce the fatal shooting by police of two black men this week. Overnight demonstrators clogged roadways in New York City, Atlanta and Philadelphia, and events in San Francisco and Phoenix also drew large crowds.

Arizona

Six people were injured and three were arrested in Phoenix, after confrontations broke out between protesters and police. Officers in riot gear used pepper spray on protesters, some of whom threw rocks at the police, the Phoenix Police Department said in a statement. The use of impact munitions didn’t lead to any injuries, and no arrests have been made, Phoenix Police Chief said. The Black Lives Matter march kicked off outside Phoenix City Hall at 8 pm.




An estimated 1,000 participants chanted: “Black lives matter” and “Hands up, don’t shoot” as they marched. Police officers escorting the march weren’t dressed in riot gear. Rev. Jarrett Maupin, one of the civil rights leaders that helped stage the march, acknowledged the route of the march was changed to shut down Interstate 10.

Around 11 pm, the police declared the demonstration an “unlawful assembly.”


The time had come to disperse the crowd, Phoenix Police Chief Joe Yahner said, declaring the protest “successful” and saying the demonstrators’ message had been heard, ABC News reported.

Louisiana

In Baton Rouge, where Alton Sterling was fatally shot Tuesday, protesters marched near police headquarters. About 300 protesters faced officers in riot gear under heightened tensions. Community leaders and local officials tried to calm down the crowd by forming a line between police and protesters. Tempers flared when several protesters hurled plastic bottles of water and cups of ice at police.
Most demonstrators dispersed later in the evening only after police agreed to pull away cops in riot gear and rifles.

New York:

Protesters in Rochester, New York, sat in the street chanting “black lives, black lives.” Some protesters stood in front of police who were clad in riot gear. Video from CNN’s affiliate in Rochester showed officers attempting to move protesters farther back as screams and arguments ensued. The protests resulted in approximately 74 arrests for disorderly conduct and two charges of resisting arrest, said Rochester police Chief Michael Ciminelli in a news conference. No one was injured, he added. Protesters flooded New York’s Grand Central Station, leading to disruptions and travel delays.

 

Georgia

The largest demonstration appeared to be in Atlanta, where a crowd of about 2,000 people blocked a downtown interstate ramp during a march organized by the NAACP.

The protest resulted in two arrests by Georgia State Patrol, according to Atlanta Police spokeswoman Elizabeth Espy. Atlanta Mayor Kasim Reed, who attended the march, told CNN’s Don Lemon that peaceful protesters in the city are practicing their First Amendment right Atlanta Mayor Kasim Reed tweeted that the rally was largely peaceful, though about 10 people had been arrested.

The protest resulted in two arrests by Georgia State Patrol, according to Atlanta Police spokeswoman Elizabeth Espy. Atlanta Mayor Kasim Reed, who attended the march, told CNN’s Don Lemon that peaceful protesters in the city are practicing their First Amendment right.

Young black people today have higher expectations, which is a sign of progress, he said. “One of the things that is exciting about this protest tonight: Our young people have an expectation that they will be treated fairly and justly … Every generation makes their demands.”  “Their tolerance level is much different to perhaps my parents’ generation or their parents generation.” he added. Reed said that while his father instructed him to go out of his way to be deferential and compliant in any encounters with police, “this generation has a different expectation.”

Reed said in 2015, Atlanta law enforcement officers fired their weapons less than 10 times in 1.6 million interactions. “We have to respect the 99.9% of law enforcement officials who do good everyday but we have to act decisively when individuals in the law enforcement community do wrong,” Reed said.

* * *

Protests are expected to continue over the weekend.

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How George Soros Singlehandedly Created The European Refugee Crisis – And Why

By David Galland and Stephen McBride, Garret/Galland Research

 

How George Soros Singlehandedly Created the European Refugee Crisis – And Why

George Soros is trading again.

The 85-year-old political activist and philanthropist hit the headlines post-Brexit saying the event had “unleashed” a financial-market crisis.

Well, the crisis hasn’t hit Soros just yet.

He was once again on the right side of the trade, taking a short position in troubled Deutsche Bank and betting against the S&P via a 2.1-million-share put option on the SPDR S&P 500 ETF.

More interestingly, Soros recently took out a $264 million position in Barrick Gold, whose share price has jumped over 14% since Brexit. Along with this trade, Soros has sold his positions in many of his traditional holdings.

Soros had recently announced he was coming out of retirement, again.

First retiring in 2000, the only other time Soros has publicly re-entered the markets was in 2007, when he placed a number of bearish bets on US housing and ultimately made a profit of over $1 billion from the trades.

Since the 1980s, Soros has actively been pursuing a globalist agenda; he advances this agenda through his Open Society Foundations (OSF).

What is this globalist agenda, and where does it come from?

The Humble Beginnings

The globalist seed was sowed for young George by his father, Tivadar, a Jewish lawyer who was a strong proponent of Esperanto. Esperanto is a language created in 1887 by L.L. Zamenhof, a Polish eye doctor, for the purpose of “transcending national borders” and “overcoming the natural indifference of mankind.”

Tivadar taught young George Esperanto and forced him to speak it at home. In 1936, as Hitler was hosting the Olympics in Berlin, Tivadar changed the family name from Schwartz to Soros, an Esperanto word meaning “will soar.”

George Soros, who was born and raised in Budapest, Hungary, benefited greatly from his father’s decision.

Allegedly, in 1944, 14-year-old George Soros went to work for the invading Nazis. It is said that until the end of the war in 1945, he worked with a government official, helping him confiscate property from the local Jewish population.

In an 1998 interview with 60 Minutes, Soros described the year of German occupation as “the happiest time in my life.”

Soros’s Venture into Finance

When the war ended, Soros moved to London and in 1947 enrolled in the London School of Economics where he studied under Karl Popper, the Austrian-British philosopher who was one of the first proponents of an “Open Society.”

Soros then worked at several merchant banks in London before moving to New York in 1963. In 1970, he founded Soros Fund Management and in 1973 created the Quantum Fund in partnership with investor Jim Rogers.

The fund made annual returns of over 30%, cementing Soros’s reputation and putting him in a position of power—one he utilizes to this day to advance the agenda of his mentors.

The Currency Speculations That Threw Britain and Asia into Crisis

In the 1990s, Soros began a string of large bets against national currencies. The first was in 1992, when he sold short the pound sterling and made a $1 billion profit in a single day.

His next big currency speculation came in 1997. This time Soros singled out the Thai baht and, with heavy short-selling volume, destroyed the baht’s artificial peg to the US dollar, which started the Asian financial crisis.

“Humanitarian” Efforts

Today, Soros’s net worth stands at $23 billion. Since taking a back seat in his company, Soros Fund Management, in 2000, Soros has been focusing on his philanthropic efforts, which he carries out through the Open Society Foundations he founded in 1993.

So who does he donate to, and what causes does he support?

During the 1980s and 1990s, Soros used his extraordinary wealth to bankroll and fund revolutions in dozens of European nations, including Czechoslovakia, Croatia, and Yugoslavia. He achieved this by funneling money to political opposition parties, publishing houses, and independent media in these nations.

If you wonder why Soros meddled in these nations’ affairs, part of the answer may lie in the fact that during and after the chaos, he invested heavily in assets in each of the respective countries.

He then used Columbia University economist Jeffrey Sachs to advise the fledgling governments to privatize all public assets immediately, thus allowing Soros to sell the assets he had acquired during the turmoil into newly formed open markets.

Having succeeded in advancing his agenda in Europe through regime change—and profiting in the process—he soon turned his attention to the big stage, the United States.

The Big Time

In 2004, Soros stated, “I deeply believe in the values of an open society. For the past 15 years I have been focusing my efforts abroad; now I am doing it in the United States.”

Since then, Soros has been funding groups such as:

  • The American Institute for Social Justice, whose aim is to “transform poor communities through lobbying for increased government spending on social programs”
  • The New America Foundation, whose aim is to “influence public opinion on such topics as environmentalism and global governance”
  • The Migration Policy Institute, whose aim is to “bring about an illegal immigrant resettlement policy and increase social welfare benefits for illegals”

Soros also uses his Open Society Foundations to funnel money to the progressive media outlet, Media Matters.

Soros funnels the money through a number of leftist groups, including the Tides Foundation, Center for American Progress, and the Democracy Alliance in order to circumvent the campaign finance laws he helped lobby for.

Why has Soros donated so much capital and effort to these organizations? For one simple reason: to buy political power.

Democratic politicians who go against the progressive narrative will see their funding cut and be attacked in media outlets such as Media Matters, which also directly contribute to mainstream sites such as NBC, Al Jazeera, and The New York Times.

Apart from the $5 billion Soros’s foundation has donated to groups like those cited above, he has also made huge contributions to the Democratic Party and its most prominent members, like Joe Biden, Barack Obama, and of course Bill and Hillary Clinton.

Best Friends with the Clintons

Soros’s relationship with the Clintons goes back to 1993, around the time when OSF was founded. They have become close friends, and their enduring relationship goes well beyond donor status.

According to the book, The Shadow Party, by Horowitz and Poe, at a 2004 “Take Back America” conference where Soros was speaking, the former first lady introduced him saying, “[W]e need people like George Soros, who is fearless and willing to step up when it counts.”

Soros began supporting Hillary Clinton’s current presidential run in 2013, taking a senior role in the “Ready for Hillary” group. Since then, Soros has donated over $15 million to pro-Clinton groups and Super PACs.

More recently, Soros has given more than $33 million to the Black Lives Matter group, which has been involved in outbreaks of social unrest in Ferguson, Missouri, and Baltimore, Maryland, in 2015. Both of these incidents contributed to a worsening of race relations across America.

The same group heavily criticized Democratic contender Bernie Sanders for his alleged track record of supporting racial inequality, helping to undercut him as a competitive threat with one of Hillary Clinton’s most ardent constituencies.

This, of course, greatly enhances the clout Soros wields through the groups mentioned above. It is safe to assume that he is now able to drive Democratic policy, especially in an administration headed by Hillary Clinton.

Simply, what Soros wants, he gets. And it’s clear from his history that he wants to smudge away national borders and create the sort of globalist nightmare represented by the European Union.

In recent years, Soros has turned his attention back to Europe. Is it a coincidence that the continent is currently in economic and social disarray?

Another Home Run: the Ukrainian Conflict

There’s no doubt about Soros’s great influence on US foreign policy. In an October 1995 PBS interview with Charlie Rose, he said, “I do now have access [to US Deputy Secretary of State Strobe Talbott]. There is no question. We actually work together [on Eastern European policy].”

Soros’s meddling reared its ugly head again in the Russia-Ukraine conflict, which began in early 2014.

In a May 2014 interview with CNN, Soros stated he was responsible for establishing a foundation in the Ukraine that ultimately led to the overthrow of the country’s elected leader and the installation of a junta handpicked by the US State Department, at the time headed by none other than Hillary Clinton:

CNN Host: First on Ukraine, one of the things that many people recognized about you was that you during the revolutions of 1989 funded a lot of dissident activities, civil society groups in Eastern Europe and Poland, the Czech Republic. Are you doing similar things in Ukraine?

Soros: Well, I set up a foundation in Ukraine before Ukraine became independent of Russia. And the foundation has been functioning ever since and played an important part in events now.

The war that ripped through the Ukrainian region of Donbass resulted in the deaths of over 10,000 people and the displacement of over 1.4 million people. As collateral damage, a Malaysia Airlines passenger jet was shot down, killing all 298 on board.

But once again Soros was there to profit from the chaos he helped create. His prize in Ukraine was the state-owned energy monopoly Naftogaz.

Soros again had his US cronies, Secretary of the Treasury Jack Lew and US consulting company McKinsey, advise the puppet government of Ukraine to privatize Naftogaz.

Although Soros’s exact stake in Naftogaz has not been disclosed, in a 2014 memo he pledged to invest up to $1 billion in Ukrainian businesses, but no other Ukrainian holdings have since been reported.

His Latest Success: the European Refugee Crisis

Soros’s agenda is fundamentally about the destruction of national borders. This has recently been shown very clearly with his funding of the European refugee crisis.

The refugee crisis has been blamed on the civil war currently raging in Syria. But did you ever wonder how all these people suddenly knew Europe would open its gates and let them in?

The refugee crisis is not a naturally occurring phenomenon. It coincided with OSF donating money to the US-based Migration Policy Institute and the Platform for International Cooperation on Undocumented Migrants, both Soros-sponsored organizations. Both groups advocate the resettlement of third-world Muslims into Europe.

In 2015, a Sky News reporter found “Migrant Handbooks” on the Greek island of Lesbos. It was later revealed that the handbooks, which are written in Arabic, had been given to refugees before crossing the Mediterranean by a group called “Welcome to the EU.”

Welcome to the EU is funded by—you guessed it—the Open Society Foundations.

Soros has not only backed groups that advocate the resettlement of third-world migrants into Europe, he in fact is the architect of the “Merkel Plan.”

The Merkel Plan was created by the European Stability Initiative whose chairman Gerald Knaus is a senior fellow at none other than the Open Society Foundations.

The plan proposes that Germany should grant asylum to 500,000 Syrian refugees. It also states that Germany, along with other European nations, should agree to help Turkey, a country that’s 98% Muslim, gain visa-free travel within the EU starting in 2016.

Political Discourse

The refugee crisis has raised huge concern in European countries like Hungary.

In response to 7,000 migrants entering Hungarian territory per day in 2015, the Hungarian government reestablished border control in order to keep the hordes of refugees from entering the country.

Of course this did not go down well with Soros and his close allies, the Clintons.

Bill Clinton has since come out and accused both Poland and Hungary of thinking “democracy is too much trouble” and wanting to have a “Putin-like authoritarian dictatorship.”

Seeing through Clinton’s comments, Hungarian Prime Minister Viktor Orbán responded by saying, “The remarks made about Hungary and Poland … have a political dimension. These are not accidental slips of the tongue. And these slips or remarks have been multiplying since we are living in the era of the migrant crisis. And we all know that behind the leaders of the Democratic Party, we have to see George Soros.”

He went on to say that “although the mouth belongs to Clinton, the voice belongs to Soros.”

Soros has since said of Orbán’s policy toward the migrants: “His plan treats the protection of national borders as the objective and the refugees as an obstacle. Our plan treats the protection of refugees as the objective and national borders as the obstacle.”

It’s hard to imagine that he could be any clearer in his globalist intentions.

The Profit Motive

So why is Soros going to such lengths to flood Europe with hordes of third-world Muslims?

We can’t be sure, but it has recently come to light that Soros has taken a large series of “bearish derivative positions” against US stocks. Apparently, he thinks that causing chaos in Europe will spread the contagion to the United States, thus sending US markets spiraling downward.

The destruction of Europe through flooding it with millions of unassimilated Muslims is a direct plan to cause economic and social chaos on the Continent.

Another example of turmoil equaling profit for George Soros, who seems to have his tentacles in most geopolitical events.

We all understand correlation is not causation. However, given Soros’s extraordinary wealth, political connections, and his long track record of seeing and profiting from chaos, he is almost certainly a catalyst for much of the geopolitical turmoil now occurring.

He is intent on destroying national borders and creating a global governance structure with unlimited powers. From his comments directed toward Viktor Orbán, we can see he clearly views national leaders as his juniors, expecting them to become puppets that sell his narrative to the ignorant masses.

Soros sees himself as a missionary carrying out the globalist agenda taught to him by his early mentors. He uses his vast political connections to influence government policy and create crises, both economic and social, to further this agenda.

By all appearances, Soros is conspiring against humanity and is hell-bent on the destruction of Western democracies.

To any rational thinker, some global events just don’t make sense. Why, for example, would Western democracies take in millions of people whose values are completely incompatible with their own?

When we look closely at the agenda being actively promoted by the leading globalist puppet master, George Soros, things become a little clearer.

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On Soros & Gold

David, again.

While I’m not a conspiracy theorist per se, I do believe there is a naturally occurring and constant collaboration about shared interests occurring amongst the heads of governments, corporations, investment managers and all of the bottom feeders that survive off their scraps.

What I find most interesting about Soros is that he is so obvious in his intentions and persistent in their pursuit. Given the consequences of his actions, it is also clear he’s a believer in moral relativism and that the ends justify the means.

That he turns a nice buck in his crusade for what certainly rhymes with a one-world government is a Soros hallmark.

“It allows me the money needed to fund my philanthropies” he might answer to the charges he is profiting from blood in the streets he was instrumental in spilling.

Going forward when something big is happening geopolitically, I am going to start my analysis by checking under rocks for signs of Soros.

At the beginning of this article we noted that Soros has gone big into American Barrick (ABX), a leading gold producer. As of the end of March it was his single largest holding at 7.36% of his overall portfolio.

As telling, he has dumped a lot of his more conventional stocks in recent months.

Given the man’s inside track – and active manipulations – you might want to take the hint and pick up some physical gold as an insurance policy against a systematic shock.

If you already own gold, I probably wouldn’t chase it here as it has had a good run of late. Ditto silver which is up 46% year to date. But if you don’t own some, adding precious metals to your portfolio as a long-term holding, even at today’s prices, makes sense.

Per last week, I continue to believe the gold stocks have probably gotten ahead of themselves and could be in for a pretty significant correction. If so, I would be inclined to up my allocation to the sector to 20% of my total portfolio.

That said, no one can predict the future and gold could continue to power ahead, with the gold shares a more leveraged way to play the sector.

As always with gold shares, it is important to remember a few things:

  • In most cases, these are speculations. That’s because their financial metrics often don’t line up with anything looking like a good value. What you are really betting on is a revaluation of the ounces of gold or silver a company is sitting on.  Thus, if a company is sitting on one million ounces of gold and gold goes up by $100, the company just got a lot more valuable.
     
  • Never fall in love with a gold stock.  Set a rational return goal and once hit, at least scrape your original investment off the table. That way you are playing with the casino’s money.

    Also per my article last week, keep in mind that should gold stocks buck the trend in a future global equities correction, the money managers who own big positions in gold stocks will almost certainly dump their holdings in order to dress up the rest of their portfolios. As the trading volume in precious metals share is relatively thin, you want to beat them out the door.
     

  • Embrace the volatility. The low trading volume of most of these stocks is a key reason they have such explosive upside. Any significant uptick in investor interest can send a stock soaring.

    However, the flipside is also true. In the bear market that started in 2011, the majority of the precious metals stocks lost upwards of 75% of their value and many simply dried up and went away. Enjoy the ride, but don’t stay too late at the party.

Earlier this week I commented to a friend that if the EU was going to remain relevant, there had to be some major financial pain dished out post-Brexit. To let that seminal event pass with nothing more than the equivalent of a global shrug would entirely change how people view the European Union.

The bottom line, I’m expecting some volatility, perhaps triggered by Soros taking a second run at crushing the British pound, the source of much of his fortune and fame.

It’s promising to be a long, hot summer.

Here Come the Clowns

Nothing comes close to the Get Out of Jail card handed by the clowns at the FBI to Hillary over her private email servers. This despite pretty much no one disputes she broke any number of federal laws of the sort which would have landed a lesser clown in jail.

To quote FBI Director James Comey, “Although there is evidence of potential violations of the statutes regarding the handling of classified information, our judgment is that no reasonable prosecutor would bring such a case.”

There is nuance in that statement. For starters, that there is evidence of violations. But also the stark political reality that no “reasonable prosecutor” would enforce the laws, considering who the perp is: the standard bearer for the Democrats going into this election.

Besides, going after Clinton means crossing swords with Soros and no “reasonable prosecutor” would want to do that.

Just saying…

 

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A Portrait Of Quantitative Failure

Simply put, it's not working stupid!

 

 

Especially in Japan…

 

But, as BofAML's Michael Hartnett notes, the details of what has been done and the consequences of those actions is, simply put, just embarrassing for all the central planners…

  • Dec’17: first FOMC meeting which market assigns >40% probability of rate hike
  • 659: number of global rate cuts since Lehman bankruptcy
  • $12.9tn: outstanding amount of bonds currently yielding <0% (= 29% of total)
  • $24.6tn: outstanding amount of global central bank holdings of financial assets
  • -1.1%: the most negative bond yield in the world (3-year Swiss government bond)
  • 107 years: time it takes to double your savings in 1-year US deposit account
  • 1387 years: time it takes to double your savings in 1-year German deposit account
  • 6932 years: time it takes to double your savings in 1-year Japanese deposit account
  • 5.7%: level of investor cash as % AUM (Jul’16 FMS), highest since Nov’01
  • $1.6tn: level of cash at US corporate sector, near record high
  • 1978: the year US labor market participation rate was as low as it is today
  • 21,084,000: current number of unemployed men and women in Europe
  • 49%, 45%, 39%: youth unemployment rate in Greece, Spain & Italy

  • 0.16%: the infinitesimal increase in Japan’s real GDP in the past 8 years
  • 25%: annualized YTD return from global government bonds in 2016, a 30-year high

Eisteinian Yellenian madness… "doing the same thing over and over again and expecting different results."

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26 Million Americans Are Now “Too Poor To Shop” Study Finds

A new study finds that roughly 26 million Americans remain "too poor to shop". The study, performed by America's Research Group, found that about 26 million Americans work on average two or three jobs at a time which, when added together, nets just shy of $30,000 in annual income. All while supporting anywhere from two to four children.

The chairman of ARG, Mr. Britt Beemer, said in an interview with the NY Post that he first started looking into data when he was tracking a different indicator. Beemer first started tracking a group and surveying roughly 15,000 people to determine who had not finished Christmas shopping in 2014. During that year, the number was 21 percent but recently ran as high as 29%. From there Beemer decided to analyze the data further and learned American's are seeing increasing numbers of fellow citizens who are simply just too poor to shop.

Beemer told the Post: "The poorest Americans have stopped shopping, except for necessities" and "It's scary when you start to see things that you've never seen before"…"People are so pessimistic about their future"

Just this past April we wrote: "most Americans' savings continue to decline, and millions of US households not only don't have any money left over to save away, but are forced to resort to credit to fund day to day expenses."

Recall from January the piece from the Atlantic that review that weak state of American's finances. The Atlantic learned that nearly 50% of Americans were not in a position to find $400 to pay of a doctor visit without reaching out to friends So not only are 26 million Americans too poor to shop, there are also 2/3 of Americans who have no savings.

"Various surveys that I have talked about in the past have found that more than 60 percent of all Americans are living to paycheck to paycheck, but I didn’t realize that things were quite this bad for about half the country. If you can’t even come up with $400 for an unexpected emergency room visit, then you are just surviving from month to month by the skin of your teeth. Unfortunately, about half of us are currently in that situation."

As The NY Post details, retailers have blamed the weather, slow job growth and millennials for their poor results this past year, but a new study claims that more than 20 percent of Americans are simply too poor to shop.

These 26 million Americans are juggling two to three jobs, earning just around $27,000 a year and supporting two to four children — and exist largely under the radar, according to America’s Research Group, which has been tracking consumer shopping trends since 1979. “The poorest Americans have stopped shopping, except for necessities,” said Britt Beemer, chairman of ARG.

 

Beemer has been tracking this subgroup for two years, ever since his weekly surveys of 15,000 consumers picked up that 21 percent of consumers did not finish their Christmas shopping in 2014 due to being too busy working.

 

That number grew to 29 percent last year, and Beemer dug in to learn more about them, calling them on holidays. He estimates that this group has swelled from 6 million households four years ago, because their incomes have not kept pace with expenses like medical costs.

 

Nearly half of all Americans have not seen an increase in salary over the last five to seven years, and another 28 percent have seen their take-home pay reduced by higher medical insurance deductions or switching to part-time jobs, ARG found. “It’s scary when you start to see things that you’ve never seen before,” said Beemer.

 

“People are so pessimistic about their future.” Most of those living on the edge — 68 percent are women between the ages of 28 and 38 — work in retail or in call centers, according to Beemer.

 

Another sign that a chunk of the population has pulled back its spending is that discounters like Walmart and the Dollar Store have been “holding their own,” said Richard Church, managing director of Discern Securities.

The story of the increasing difficulty facing Americans in maintaining their standard of living continues… even after almost 10 years of Federal Reserve market-based intervention.

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