Category: zerohedge

Authored by Sven Henrich via NorthmanTrader.com,

I’m of the long standing view that Fed chairs have one prime responsibility above all others: Keeping confidence up, and if it requires to sweet talk problems then that’s what it takes. 

The often classic quote by Ben Bernanke of “subprime is contained” right before it blew up in everybody’s face being a prime example.

Is the Fed that blind to reality or just on an elaborate marketing mission to ensure that nobody panics and sells stocks? I leave that judgment to the reader.

But I can see differing messaging coming out the Fed when people are in office and when not.

Take corporate debt for example.

Here’s Jay Powell in May of this year sweeting talking and dismissing any concerns:

“Business debt does not present the kind of elevated risks to the stability of the financial system that would lead to broad harm to households and businesses should conditions deteriorate. Moreover, banks and other financial institutions have sizable loss-absorbing buffers,” he said. “The growth in business debt does not rely on short-term funding, and overall funding risk in the financial system is moderate.”

Sweet, no worries then. Odd then that Janet Yellen, no longer in office, feels free to say in essence the exact opposite:

“I have expressed concerns about leveraged lending,” Yellen said during a keynote discussion that was closed to the press. “I do think non-financial corporations have run up, really, quite a lot of debt.”

“What I would worry about is if the economy encounters a downturn, we could see a good deal of corporate distress. If corporations are in distress, they fire workers and cut back on investment spending. And I think that’s something that could make the next recession a deeper recession,” “I have concerns about the deterioration in lending standards that we have seen,” Yellen said. “A large share of it is covenant-lite and some of the explicit ways in which covenants have weakened are a concern to me.”

No worries from Powell, worries from Yellen.

What’s reality?

Well, for one corporate debt has increased by 64% in the last 9 years now reaching $10 trillion:

Good thing profits have vastly increased in that time:

Oh wait, corporate profits have actually peaked in 2014. Well that’s odd, as markets keep racing higher from high to high you’d think there’d be this massive expansion in profits. Well of course not, profit growth peaked last year on the heels of the corporate tax cuts resulting in corporate tax payments collapsing to levels only seen during big recessions:

Ponder this: Corporations now pay roughly the same about of taxes as they did in the mid 90’s when the economy and aggregate profits were much smaller.

Quite the historic deal.

No, we know why stock markets kept rising in 2019: Thanks to Fed intervention:

Goldman admits reality: “With S&P 500 earnings on track for roughly 0 growth from this time last year, solid returns likely would not have been possible without central bank support. Central bank easing accounts for almost all of the price return since the start of the year” https://t.co/Akv3Zll7HL

— Sven Henrich (@NorthmanTrader) November 22, 2019

Indeed if you take a look at corporate profits versus the market’s ascent we can observe a large deviation from the actually profit picture:

The above mentioned tax cuts did help the bottom line of course and one can argue the picture looks slightly better when viewed on an after tax basis:

Thanks tax cuts, but the deviation remains. And it remains if you view it through the lens of EPS:

Have #equities got ahead of themselves? S&P 500 Index vs. #earnings per share. pic.twitter.com/sQGfmGtuIS

— jeroen blokland (@jsblokland) November 24, 2019

The aggregate picture is stunning:

And of course EPS growth is in the eye of the beholder as earnings are regularly overstated via non GAAP versus GAAP accounting:

Not to mention the insidiously deceiving growth illusion created by buybacks.

So what you have is a market disconnecting ever farther from the underlying already weakening and overstated earnings growth picture, earnings that require an exorbitant amount of debt expansion to produce with much of the tax cut benefits going toward buybacks while half of the debt expansion is running on BBB fumes:

“The growing universe of triple-B rated US corporate debt — the lowest rung of the higher-quality bond market — has garnered the most attention. At $2.5tn, it is now twice as big as the entire junk bond market beneath it. The hunger for yield has “paved the way for unprecedented erosion in capital structures and credit quality”, Moody’s noted in a recent report.”

Do worry says Janet Yellen, but don’t worry says Jay Powell. The economy is in a good place he says apparently instructing all the Fed speakers to read off the same script:

Sweet. How do they all get on the same page when determining their market communication strategy? Sadly the Fed minutes are void of any such discussions. Must be a different meeting.

Yea, the economy is in a good place:

https://t.co/epTdz8ceiM pic.twitter.com/rRKwgeiWLb

— Sven Henrich (@NorthmanTrader) November 24, 2019

And subprime is contained and corporate debt is not a problem as long as you are Fed chair. It only becomes a problem when you’re no longer Fed chair.

No, corporate debt is a massive problem, it’s a ticking time bomb that millions of workers get to pay for during the next recession. That’s not my hyperbole, no Sir, or have you already forgotten what Janet Yellen already told you?

“if the economy encounters a downturn, we could see a good deal of corporate distress. If corporations are in distress, they fire workers and cut back on investment spending. And I think that’s something that could make the next recession a deeper recession”.

No financial crisis in our lifetime when Fed chair, the next recession could be deeper thanks to extended corporate debt when not Fed chair. Funny that.

She knows and so does Jay Powell, he’s just busy keeping confidence up by telling you everything is fine and dandy. After all that’s precisely why he cut rates 3 times and expanded the Fed’s balance sheet by over $280B in 2.5 months. Cause that’s exactly what you do when the economy is in a good place.

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

After weeks of secret impeachment testimony followed by public testimony from House Democrats’ cherry-picked witnesses, support for impeaching President Trump is sinking.

While witnesses have testified that Trump requested Ukraine investigate former VP Joe Biden for corruption, support for impeachment has decreased significantly, while opposition has increased

According to the FiveThirtyEight average of national polls, support for impeachment has shrunk from 50.3 percent in mid-October to 46.3 percent presently, while opposition has risen from 43.8 percent to 45.6 percent.

Among independents in the FiveThirtyEight average, support for impeachment topped out at 47.7 percent in late October but has sunk to 41 percent over the past three weeks. –The Hill

“After three years, the country was sick of hearing about Russia, and now the average American either doesn’t understand or doesn’t care about the case we’re making on Ukraine,” one Democratic fundraiser told The Hill.

Another poll registering declining support for impeachment is YouGov, which has independent support dropping from 39% weeks ago to 35%, while opposition has grown from 35% to 40%.

“American public loses enthusiasm for impeachment despite blockbuster hearings”

Emerson Poll:

October:
• Support: 48%
• Oppose: 44%

Nov. 17- Nov 20:
•Support: 43%
• Oppose: 45%https://t.co/Zdb4YsZKrJ

— Benny (@bennyjohnson) November 24, 2019

Impeachment support began fading during the House hearings, with a POLITICO/Morning Consult Poll from last week revealing a 2% decline in support and a 3% increase in opposition to the inquiry.

Polls have now turned very strongly against Impeachment, especially in swing states. 75% to 25%. Thank you!

— Donald J. Trump (@realDonaldTrump) November 24, 2019

And according to the Washington Post‘s Rachael Bade, some moderate Democratic lawmakers are now getting “cold feet.”

WaPo’s Bade: some Democrats getting “cold feet” as worries grow about public opposition to impeachmenthttps://t.co/koIHxsHdhb pic.twitter.com/RRe6zFkSCS

— RNC Research (@RNCResearch) November 24, 2019

Schiff, meanwhile, swears it’s not true! 

Adam Schiff says that public support for impeachment has grown dramatically in the past two months.

He conveniently left out the polls from this week showing a decrease in support, especially among independents, after finally allowing public testimonies. pic.twitter.com/rLalX1PEqb

— Benny (@bennyjohnson) November 24, 2019

Whatever the case, according to Rep. Eric Swalwell, who farted on live TV last week,  “I’m not focused on the polls, I know my colleagues aren’t either… this president used his great vast power to ask a foreign government to help him cheat an election,”

Authored by Daniel Larson via TheAmericanConservative.com,

There Is No Accountability In U.S. Foreign Policy

For some bizarre reason, The New York Times asked Paul Wolfowitz to write about U.S. foreign policy in the Middle East:

If we abandon the allies who made possible the victory over ISIS, and perhaps now also abandon the Afghan allies who enabled us to drive Al Qaeda out of their country in 2001, the United States will make the same mistake as Mark Twain’s cat, viewing everything in the greater Middle East through the prism of the painful experiences of the “hot stoves” — the Iraq and Afghanistan wars [bold mine-DL]. Abandoning allies who have advanced American interests, while fighting courageously for their own, is not a formula for avoiding another large-scale United States military engagement in the Middle East, but rather for ending up in another one. Next time, however, will be without the local allies we need.

Before we get to Wolfowitz’s argument, such as it is, can we just marvel at the shamelessness of Wolfowitz when he presumes to lecture anyone about sound foreign policy decision-making? Wolfowitz was one of the most enthusiastic supporters of the invasion of Iraq, and in his role at the Pentagon he was also one of the top officials most responsible for the ensuing debacle. He then has the gall to liken that war and the war in Afghanistan to “hot stoves,” as if the consequences of these wasteful wars were no more than being briefly burned. What an awful way to trivialize almost two decades of failure and massive loss of life.

No one needs to hear from Wolfowitz on this or frankly any other foreign policy issue. There must be dozens of other writers who would argue for the same general position without helping to rehabilitate one of the architects of the biggest U.S. foreign policy blunder in the last forty years. If we want to know why there is no accountability in U.S. foreign policy, this Wolfowitz op-ed is Exhibit A. Former officials and policymakers can get things as wrong as can be, advocate for truly disastrous policies that claim hundreds of thousands of lives, and yet their opinions will still be taken seriously and published as if nothing had ever happened. There have been no professional or legal consequences for the officials responsible for the great crime that was the Iraq war, and instead they are asked for their advice on what the U.S. should do next in the same region that they set on fire.

The main flaw in the substance of Wolfowitz’s op-ed is that he assumes that the U.S. will always be “sucked back in” to more regional conflicts if it ever tries to leave any of them. According to this view, withdrawal is more destabilizing than intervention, and so while Wolfowitz never disagrees with the interventions he is dead-set against the withdrawals. If the U.S. can’t ever leave a foreign conflict that it has chosen to fight for fear of creating a “vacuum,” that amounts to saying that some U.S. forces must remain in these countries in perpetuity. No U.S. interests are being served by refusing to bring these wars to a conclusion. It just traps the U.S. in prisons of our own making. Instead of thinking about how to prepare local partners for the inevitable U.S. departure, our politicians and policymakers waste that time by concocting implausible stories for why we can never leave.

Syria is the more straightforward example. Even when ISIS was in control of a significant amount of territory, the U.S. did not have to go to war there. The U.S. was not defending itself, and our forces had no business going into Syria five years ago. Now that ISIS is a fraction of its former self, there is really no reason for U.S. forces to stay. The U.S. should be able to avoid another “large-scale military engagement” in the region because there is no good reason for the U.S. to get involved in another one. The idea that the U.S. has to keep forces in Syria illegally in Syria to prevent our government from launching another war on the scale of the Iraq invasion is preposterous, but Wolfowitz presents it as if it needs no argument.

Wolfowitz likes to fault the U.S. for its “inaction” in the region, by which he always means that the U.S. chose not to become even more actively involved in conflicts inside other countries. It is telling that he repeats the falsehood that the U.S. didn’t support the Syrian opposition, when support for the opposition from the U.S. and our allies and clients helped to fuel the war and keep it going longer than it otherwise might have. In one breath, he lists the terrible human costs of the war, and then in the next condemns the U.S. for not having done more to add to them. There is no acknowledgment anywhere in his op-ed that U.S. intervention frequently makes things worse, and there is no consideration that avoiding deeper involvement in these conflicts was actually in the best interests of the United States. Of course there isn’t. Wolfowitz is a tired neoconservative ideologue and he isn’t going to learn anything from the catastrophic failures of policies he supported.

Of course, there is no ineluctable force that drags the U.S. into these conflicts. It is the faulty assumptions of ideologues like Wolfowitz who imagine that there are vital American interests at stake in conflicts where there aren’t any. The U.S. is never “sucked back in.” Our government goes running back in at the first chance it gets. Sometimes this is driven by threat inflation, sometimes it is driven by headlines that prompt calls for “action,” sometimes it is driven by a misguided need to show “leadership,” and sometimes it is just old-fashioned “do-somethingism” where the U.S. intervenes because it can. It is almost never driven by a need to protect the United States or even our treaty allies. One president after another chooses to entangle the U.S. in conflicts in the Middle East that the U.S. could easily avoid. Having failed to avoid these entanglements, we are then told that disentanglement is never an acceptable option. If the U.S. is ever going to extricate itself from endless wars, we have to learn that our ongoing military involvement in these conflicts is a greater source of instability than our departure ever could be.

After three weeks of impressive inflows reversing what in 2019 had been the worst outflows from equity mutual funds on record, equities once again saw outflows this week to the tune of $1.5 billion ($4.1 billion out of the US), while bond funds saw $7 billion in inflows as flight to safety returned.

What happened?

More than a month after Trump’s October 11 announcement that a Phase 1 trade deal with China had been reached, and following the realization that this was obviously not the case nor was an imminent deal likely as the newsflow on a US-China trade deal became far less optimistic over the past month, there has been a clear move away from risk assets with bond yields, non-US equities and copper turning down and IG and HY spreads widening. In short, as Deutsche Bank puts it, jitters are again evident across asset classes and below the surface in the S&P 500.

And yet, as has been the case much for the past decade, US equities have been a notable exception to this increasingly bearish pattern, with the S&P 500 continuing to creep higher to reach a new high earlier in the week (largely because as SocGen explained previously, companies continue to engage in unprecedented stock buybacks in an increasingly illiquid market).

Yet even within US equities, below the surface there are signs that market turmoil may be making a comeback, with DB’s Parag Thatte pointing out that Low Vol and Momentum stocks are moving higher and Value and Small caps are once again declining, alongside bond yields, as optimism for an economic rebound fades. Meanwhile, both foreign- and China-exposed US stocks have clearly underperformed in the past two weeks, and going against the uptrend since early September, are pointing to renewed uncertainty on trade as the likely culprit behind the broader weakness.

Below we show visually how still-bullish US stocks are diverging not only from the increasingly bearish narrative, but from virtually every asset narrative.

We start with a chart showing that global asset class returns over the last two weeks have shown a clear risk off pattern but with US equities a notable exception:

Once again, bonds and stocks are diverging. Virtually every time this has happened in the recent and not so recent past, bonds were eventually right (and stocks were not).

It’s not just bonds that are diverging away from US stocks: all global stocks are doing the same.

Junk bonds – especially CCCs – have been among the hardest hit with HY spreads divergence notably from stocks…

… although investment grade has also not been spared.

Meanwhile, in commodities copper is also diverging from US stocks:

Looking below the surface of US stocks, those companies with foreign exposure have been underperforming in recent weeks.

So have companies with exposure to China:

Meanwhile, just as Wall Street piled into value and high-beta stocks after JPM said it was a “once in a decade” opportunity to go long value and short momentum, it is precisely momentum stocks that have outperforming in the last two weeks…

… while value and small caps have underperformed:

So what happened? As Bloomberg reported on Friday: 

At UBS, Francois Trahan warned that an uptick in U.S. manufacturing coupled with the Federal Reserve’s interest rate cuts created an illusion that the slowdown is over. But interest rates argue the downtrend in leading economic indicators like the ISM New Orders Index isn’t finished, he said.

“This is just another false start,” he wrote in a note this week.

Which, incidentally, is what we said last Monday in “Here’s The Simple Reason Why A Global Economic Recovery Is Not Coming.“

In other words, expect all asset classes to continue their divergence from US equities, until eventually the S&P itself also snaps.

Via AlmasdarNews.com,

The U.S. military reportedly attacked four tanker ferries on Saturday that were attempting to smuggle oil from the SDF-held areas in eastern Syria to the Syrian government territories.

According to local reports, the U.S. warplanes targeted these ferries while they were traveling through the southern region of Syria’s Euphrates River Valley.

The reports said the U.S. military managed to destroy the four ferries before they could reach their intended destination, resulting in a number of explosions that were heard in the Euphrates River Valley.

The total number of casualties are still unknown at this time.

While the ferries did not belong to the Syrian government, they were believed to have been transporting the oil to their territories, which is something that many people in Syria have been forced to do as the U.S. currently occupies some of the Levantine nation’s biggest oil fields.

Neither the Syrian government nor the U.S. Armed Forces have reported on this attack that took place on Saturday.

It should be noted that the U.S. Armed Forces have carried out similar attacks in the past, especially in the Deir Ezzor Governorate.

What happens when a billionaire finance and media mogul announces he is running for president? How does his media empire avoid running into countless conflicts of interest? Well, in the case of Bloomberg News, which is the sole domain of Michael Bloomberg who just officially entered the 2020 presidential race, the company’s editor-in-chief just announced that it will extend its long-running policy of not doing any investigative reporting on its owner to all of his Democratic competitors who are also running for president.

Or, as Bloomberg editor-in-chief John Micklethwait said, “We cannot treat Mike’s Democratic competitors differently from him.”

And that’s why handing America’s free media into the hands of a handful of organizations and a few billionaires is generally a bad idea, because sooner or later one or all of them decide that the world will be better if they run it, and the conflicts of interest explode, which means far less coverage of precisely those who need the most investigation at precisely the most important time – just when they are about to be elected president.

On the other hand, while Bloomberg News will no longer cover any of the potential Democratic presidents, period, its “P&I team will continue to investigate the Trump administration, as the government of the day“, albeit with the running disclaimer that its boss sees himself as Trump’s biggest challenger. Good luck with objective reporting there.

What happens in the odd chance that Mike Bloomberg does win the nomination, at which point the billionaire will effectively have a massive “objective” newsroom as a PR weapon? According to Bloomberg News, it is still determining if and how it will continue to investigate the Trump administration if Bloomberg were to win the Democratic nomination and run against Trump in the general election. Until then, however, Bloomberg will clearly continue to focus on the president who for better or worse, remains the biggest traffic draw not only for Bloomberg but for every other media outlet out there.

All this was revealed in a memo to Bloomberg employees sent on Sunday morning after Bloomberg officially announced his candidacy, in which editor-in-chief John Micklethwait said also that:

• Going forward, the company will disclose that Bloomberg owns the company in all of its stories about the election.
• If other outlets publish stories about Bloomberg, Bloomberg Media would “either publish those articles in full, or summarize them for our readers – and we will not hide them.”
• He noted that the company is following the same policy that it has applied to its coverage of corporate rivals CNBC and Reuters. Bloomberg doesn’t investigate those companies, but it does report on the news of the day if it involves them.
• He said that Bloomberg News has already assigned a reporter to follow Bloomberg’s presidential campaign, just as the company did when Bloomberg was running for New York City mayor.
• Bloomberg News would suspend its editorial board and that David Shipley, Tim O’Brien and other editorial board members will take a leave of absence to join Bloomberg’s presidential campaign. Opinion columnists will continue to produce pieces, but editorial board bylines will cease.

The full memo is below:

So Mike is running.

There is no point in trying to claim that covering this presidential campaign will be easy for a newsroom that has built up its reputation for independence in part by not writing about ourselves (and very rarely about our direct competitors). No previous presidential candidate has owned a journalistic organization of this size. We have electoral laws to follow – to do with both balance and opinion. We will certainly obey them, but I think we need to do more than just that – and I believe we can. So this is how we will proceed.

We are not going to follow an exhaustive rulebook. That is partly because I believe that in journalism you “show” your virtue, you don’t “tell” it. You prove your independence by what you write and broadcast, rather than by proclaiming the details in advance. And I am loath to tie our hands at this stage. We cannot predict every detail of the future: we will have to make some decisions on a case-by-case basis. But we can follow some basic principles, and we will make a few organizational changes.

The place where Mike has had the most contact with Editorial is Bloomberg Opinion: our editorials have reflected his views. David Shipley, Tim O’Brien and some members of the Board responsible for those editorials will take a leave of absence to join Mike’s campaign. We will suspend the Board, so there will be no unsigned editorials. Our columnists, who produce the majority of Bloomberg Opinion’s content, will continue to speak for themselves, and we will continue to take some op-ed articles from outsiders (although not op-eds on the election). Bloomberg Opinion will be led by Bob Burgess, with Reto being the main overseer on the Editorial Management Committee.

On News, we will write about virtually all aspects of this presidential contest in much the same way as we have done so far. We will describe who is winning and who is losing. We will look at policies and their consequences. We will carry polls, we will interview candidates and we will track their campaigns, including Mike’s. We have already assigned a reporter to follow his campaign (just as we did when Mike was in City Hall). And in the stories we write on the presidential contest, we will make clear that our owner is now a candidate.

That covers the vast majority of what this newsroom does. We will continue our tradition of not investigating Mike (and his family and foundation) and we will extend the same policy to his rivals in the Democratic primaries. We cannot treat Mike’s Democratic competitors differently from him. If other credible journalistic institutions publish investigative work on Mike or the other Democratic candidates, we will either publish those articles in full, or summarize them for our readers – and we will not hide them. For the moment, our P&I team will continue to investigate the Trump administration, as the government of the day. If Mike is chosen as the Democratic presidential candidate (and Donald Trump emerges as the Republican one), we will reassess how we do that.

To those who would rather that we did not write about Mike at all, I would reply that Bloomberg News has handled these conflicts before – and proved our independence. We are following the same policy that we have applied to Bloomberg LP and our direct rivals in the financial markets and media: we report on but do not investigate Reuters and CNBC. When Mike ran for mayor, we reported on the facts of his campaign and summarized other articles.

So those are the principles that we will follow. They are broad – and so there will be decisions to be made at the margin. That is what editors are for. And that leads to an organizational change, designed to add even more managerial clout.

Our news coverage of the 2020 race will be run on a day-to-day basis by Wes Kosova, Craig Gordon and our team in Washington, DC. If questions arise, we have Laura Zelenko’s Standards team to call on. But I have asked Marty Schenker, our Chief Content Officer who works alongside Reto and myself on the Editorial Management Committee, to take special responsibility for overseeing our news coverage of Mike and his rivals (and the questions that may occur about this election all the way round the world), in the same way that Reto will oversee Opinion. We may well have to make quick decisions across many platforms. Marty has covered every election since Watergate; we need his experience and judgment, even if responsibility for any mistakes we make ultimately rests with me.

Given the workload this will involve, I have asked Heather Harris to take on Marty’s responsibilities as Chief Content Officer for EMEA and APAC – and she will join Reto, Marty and me on our management committee.

I think this is a structure that can cope with many eventualities. No doubt, many of you are already thinking of possible complexities that may arise. My response is: let’s get back to work. We can spend a long time debating “what ifs”. I would rather that we got on with the journalism and let that speak for itself. So write, blog, broadcast – and the rest will take care of itself.

— John

Authored by Andrew Moran via LibertyNation.com,

Is foreign policy the main issue for voters heading into 2020? For the Democratic base, the top priority is ousting President Donald Trump by any means necessary, even if that is casting a ballot for a far-left candidate or sticking with a Swamp establishment creature. While the men and women vying for the nomination squabble over minute details regarding free stuff, there seems to be a broad consensus among the presidential contenders – minus a couple – of maintaining an interventionist foreign policy.

Kamala Harris

The all-female team of NBC/MSNBC debate moderators questioned Rep. Tulsi Gabbard (D-HI) and her criticism of Hillary Clinton as the “personification of the rot that has sickened the Democratic Party.” Gabbard then responded that the donkeys are no longer the party “of, for, and by the people.” In an obvious attempt to renew the rivalry and give her an opportunity for retribution, Sen. Kamala Harris (D-CA) was asked for her thoughts, even though it had nothing to do with Harris whatsoever.

Hillary Clinton (left), Vladimir Putin, and Tulsi Gabbard (right)

While the two ladies sparring was meant to capture headlines, the quarrel and her subsequent foreign policy comments exposed Harris as someone who will inevitably continue the status quo.

Sen. Harris slammed Gabbard for appearing on Fox News and calling out former President Barack Obama and other Democrats for pushing regime change wars. This was ironic because she later spoke with a Fox News reporter following the debate. She also grieved that Gabbard and President Donald Trump are engaging with adversaries. Harris was ostensibly upset that Trump opened the dialogue with North Korean dictator Kim Jong-un and has been even more perturbed that the U.S. and South Korea ended joint military exercises in the region.

Unfortunately for Americans who value peace over war, Harris has followed other Democrats in goading Russia and North Korea. Rather than celebrate potential positive diplomatic relations with Pyongyang and Moscow, Harris has depicted the process as some odious scheme concocted by the president. Like every other mainstream politician, she wants to have her cake and eat it too. On one hand, Harris claims that she wants to remove troops from Iraq, Afghanistan, and Syria. On the other, she says that it is important to do so responsibly and to listen to the generals. In other words, expect an indefinite stay.

What makes this laughable is that Harris believes President Trump is the greatest threat to national security. Yet, she refused to put her convictions on display, choosing to vote for the $677 billion National Defense Authorization Act (NDAA) for 2018. She also abstained from casting a vote on a massive $750 billion defense authorization bill for next year.

If you think the Commander in Chief poses a risk to the safety and security of a nation, wouldn’t you want to ensure that person does not get an extra nickel in defense money?

Pete Buttigieg

In another moment that involved Gabbard, South Bend Mayor Pete Buttigieg’s record and experience were a bit more scrutinized by his rivals during the debate. She called out Buttigieg’s recent ideas to send U.S. troops to Mexico to fight the drug cartels, which he argued were comments taken out of context. According to Buttigieg, who has surprisingly surged to the top of some latest polls, troops would be sent to Mexico as part of security cooperation and not as an invasion.

Pete Buttigieg

The two veterans got into a back-and-forth spat about diplomatic engagement. Like Harris, the mayor took a jab at Gabbard’s meeting with Syrian President Bashar al-Assad in 2007, saying he would have had “enough judgment that I would not have sat down with a murderous dictator.” Gabbard shot back noting that Buttigieg “would lack the courage to meet with both adversaries and friends to ensure peace and national security of our nation,” referencing Presidents Franklin Delano Roosevelt, John F. Kennedy, and Ronald Reagan.

This has been a common theme in this primary season: It is bad to speak with the enemy or someone who might be unfriendly toward the United States. The Democrats and the media continually harp on Gabbard’s conference with Assad, which suggests that they believe the U.S. should isolate adversarial states.

Were the Democrats and the mainstream press always this hostile to diplomacy? Not always. In 2007, when he was running for president, Obama conceded that he would be “willing to meet separately, without precondition, during the first year of an administration, in Washington or anywhere else, with the leaders of Iran, Syria, Venezuela, Cuba and North Korea, in order to bridge the gap that divides our countries.”

The sudden change of heart could be because Trump and some Republicans are the ones who are trying to initiate peace negotiations.

Elizabeth Warren

War is hell and having a loved one serving in the military can be a stressful experience every day. There is a constant anxiety that you will be told that your parent, spouse, sibling, or best friend was killed in combat. It is devastating and ruins lives. The best way to celebrate troops and to honor veterans is to stop sending brave young men and women overseas to fight in these endless wars that do nothing for America’s national security.

Elizabeth Warren

When asked if more Americans should serve in the military, Sen. Elizabeth Warren (D-MA) said she thinks so. Warren, who had three brothers serve in the military, posited that “it’s an important part of who we are as Americans and I think the notion of shared service is important.” She then went into some nostalgic bit about her mother checking the mailbox and waiting for letters from her sons.

“And if there was a letter, she was brighter than the day. And if there wasn’t, she would say, well, maybe tomorrow.

This is about building for our entire nation. And I believe we should do that. I also believe we should have other service opportunities in this country.”

This sounds like the language of the local PTA leader working at a neoconservative think-tank in the Swamp and trying to muster enrollment numbers so kids can die in vain overseas. The preferable answer would have been: Not one soldier more until we end these wasteful and endless regime change wars that obliterate lives, destabilize regions, and exacerbate the destruction of the last 30 years.

Sen. Warren’s foreign policy is vague, using the same platitudes as she does on taxes or health care: “U.S. foreign policy should not prioritize corporate profits over American lives.” At a recent CNN debate, Gabbard attempted to ask Warren a serious question about what makes her qualified to be Commander in Chief, but the debate moderators cut her off and went to a commercial break.

Warren is, at best, a moderate hawk and will employ a foreign policy vision that pleases the globalists. She lacks anti-war convictions that will keep the U.S. from embarking upon another adventure of seeking dragons to slay.

Foreign Policy

Has President Trump’s foreign policy been perfect? Nope, not by a long shot. Has it been an improvement from his predecessors? Certainly – if only for the simple fact that he has not started any new wars. And this is what seems to bother his opponents because the Nobel Peace Prize winner launched and expanded wars. Foreign policy has attracted far less attention in the primaries, and most of the candidates do not possess any original ideas on ending conflicts and hostilities. They seem content on permanent intervention, neo-isolationism, and expanding the presidency’s militarism power.

What happened to the Democrats? The façade of anti-war and pro-civil liberties and being a friend of the middle-class has vanished. They will not even pretend to be against militarism and the Patriot Act, and their disdain for flyover folk remains ubiquitous. The only identifying traits of the Democrats are their hatred of the president and their love of free stuff. That could be the slogan in 2020: Hate Trump, Love the [Deep] State.

A liberal watchdog group’s attempt to nail Rudy Giuliani has backfired in spectacular fashion after their FOIA request resulted in the US State Department releasing detailed accusations of corruption against the Bidens – based on interviews with former Ukrainian officials who were in charge of the investigations.

Responding to a Freedom of Information Act lawsuit from the group American Oversight, the State Department on Friday night released almost 100 pages of records detailing efforts by Trump attorney Rudy Giuliani to investigate corruption, which include contacts with Secretary of State Mike Pompeo and Rep. Devin Nunes (R-CA) earlier this year.

While American Oversight’s ‘gotcha‘ is that Giuliani had “multiple contacts” with Mike Pompeo and others while investigating Ukraine corruption, they completely ignore interview notes containing detailed allegations by former Ukraine Prosecutor General Viktor Shokin – who Joe Biden had fired, as well as his successor, prosecutor general Yuriy Lutsenko – who “believes Mr. Viktor Shokin the former Prosecutor General is honest.” 

Viktor Shokin:

On a January 23, 2019 phone call between Shokin and Giuliani, Igor Fruman, Lev Parnas and George Boyle, Shokin said:

“He was appointed to the position of General Prosecutor of Ukraine from 2015 until April of 2016, when he was removed at the request of Mr. Joseph Biden the Vice President of the United States.”

“He [Shokin] became involved in a case against Mr. Mykola Zlochevsky the former Minister of Ecology and Natural Resources of Ukraine. The case was opened as a result of Mr. Zlochevsky giving himself/company permits to drill for gas and oil in Ukraine. Mr. Zlochevsky is also the owner of Burisma Holdings.”

“Mr. Shokin stated that there are documents that list five (5) criminal cases in which Mr. Zlochevesky is listed, with the main case being for issuing illegal gas exploration permits. The following complaints are in the criminal case.

1. Mr. Zlochevsky was laundering money
2. Obtained assets by corrupt acts bribery
3. Mr. Zlochevsky removed approximately twenty three million US dollars out of Ukraine without permission
4. While seated as the Minister he approved two addition entities to receive permits for gas exploration
5. Mr. Zlochevsky was the owner of two secret companies that were part of Burisma Holdings and gave those companies permits which made it possible for him to profit while he was the sitting Minister.

“Mr Shokin further stated that there were several Burisma board appointments were made in 2014 as follows:

1. Hunter Biden son of Vice President Joseph Biden
2. Joseph Blade former CIA employee assigned to Anti-Terrorist Unit
3. Alesksander Kwasnieski former President of Poland
4. Devon Archer roomate to the Christopher Heinz the step-son of Mr. John Kerry United States Secretary of State

“Mr. Shokin stated that these appointments were made by Mr. Slochevsky in order to protect himself.“

Shokin then details how in July 2015, “US Ambassador Geoffrey R. Pyatt told him that the investigation has to be handled with white gloves, which according to Mr. Shokin, that implied do nothing. On or about September 2015 Mr. Pyatt gave a speech in Odessa where he stated that the cases were not investigated correctly and that Mr. Shokin may be corrupt.”

“Mr. Shokin further stated that on February of 2016 warrants were placed on the accounts of multiple people in Ukraine. There were requests for information on Hunter Biden to which nothing was received.“

“It is believed that Hunter Biden receives a salary, commission plus one million dollars.”

“President of Ukraine Petro Poroshenko [who Joe Biden threatened to withhold $1 billion in US loan guarantees] told Mr. Shokin not to investigate Burisma as it was not in the interest of Joe and/or Hunter Biden. Mr. Shokin was called into Mr. Poroshenko’s office and told that the investigation into Burisma and the Managing Director where Hunter Biden is on the board, has caused Joe Biden to hold up one billion dollars in US aid to Ukraine.

“Mr. Shokin stated that on or around April of 2016 Mr. Petro Poroshenko called him and told him he had to be fired as the aid to the Ukraine was being withheld by Joe Biden. Mr. Biden told Mr. Poroshenko that he had evidence that Mr. Shokin was corrupt and needed to be fired. Mr. Shokin was dismissed in April of 2016 and the US aid was delivered within one and one half months.”

“On a different point Mr. Shokin believes the current Ambassador Marie L. Yovanovitch denied his visa to travel to the US. Mr. Shokin stated that she is close to Mr. Biden. Mr. Shokin also stated that there were leaks by a person named Reshenko of the Ukrainian State Secret Service about the Manafort Black Book. Mr. Shokin stated that there is possible deceit in the Manafort Black Book.”

Yuriy Lutsenko:

Lutsenko takes Shokin’s interview one step further in a January 25 phone interview with Giuliani and associates – describing how Ukraine has two secretive units which are protected by a US Ambassador.

“Mr. Lutsenko went on to explain that there is a unit called Specialized Anticorruption Prosecutor’s Office (SAP) which has under its purview National Anticorruption Bureau Ukraine (NABU) which investigates corruption cases that involved public figures from Mayors upward. He stated that the current US Ambassador protects SAP and NABU,” adding “His office has absolutely no control over SAP or NABU and can’t even ask what they are working on however they fall under his “control.”

Of note, NABU was established in October 2014 “by Mr. George Kent who was the Deputy Chief to the Mission in Ukraine.”

Bidens and Burisma

Lutsenko “went on to say that he began looking at the same case Mr. Shokin was looking at (mentioned above) and he believes Hunter Biden receives millions of dollars in compensation from Burisma. He produced a document from Latvia that showed several million dollars that were distributed out of Burisma’s account. The record showed two (2) companies and four (4) individuals receiving approximately sixteen million dollars in disbursements as follows:

Companies:

1. Wirelogic Technology     $14,665,982
2. Digitex                         $1,900,000

Individuals:

1. Alexsander Kwasnewski $1,150,000
2. Alan Apter                    $302,887
3. Devon Archer   Amount not revealed by Latvia
4. Hunter Biden   Amount not revealed by Latvia

“Mr Lutsenko stated that there was also a payment of $900,000 to Rosemont Seneca Partners LLC for consulting fees. Hunter Biden is a partner in Rosemont Seneca Partners LLC along with Devon Archer and the dates of this transaction are approximately anywhere from January to December 2015. According to Mr. Lutsenko the $900,000 invoice was for services rendered for lobbying by Joe Biden.“

TRUTH ALERT:

The statement I’ve made several times of having an insurance policy, if thrown under bus, is sarcastic & relates to the files in my safe about the Biden Family’s 4 decade monetizing of his office.

If I disappear, it will appear immediately along with my RICO chart.

— Rudy Giuliani (@RudyGiuliani) November 23, 2019

Read the interviews below (and see the full release here):

Submitted by Nick Colas of DataTrek

Over the course of 2019 we have been tracking three states – Michigan, Ohio and Indiana – because we believe the next US recession will start in the American upper-Midwest. Our thesis in a nutshell:

• Every slowdown has its own particular “Patient Zero”, the economic equivalent of epidemiology’s first patient to fall ill from a new disease. Identify that source and you can begin to understand how to treat the ailment or, for our purposes, sound the recessionary alarm.

• Marginal increases in specific state level unemployment during prior cycles correctly identified the root cause of each subsequent recession.

• In 2000, Massachusetts and Connecticut (heavily exposed to financial services) saw increasing joblessness ahead of national trends as the dot com bubble burst. In 2007, Nevada and Florida (the bubbliest housing markets) were the first to see spiking unemployment.

• In this cycle, states exposed to manufacturing saw the largest changes from 2009 – present in terms of unemployment, making them this cycle’s most likely candidates for Patient Zero status.

The latest state-level unemployment data (through October) is just out, and here is how it looks for MI, OH and IN, plus Pennsylvania (more on that one in a minute) from 2015 – present:

Here’s what we see in the data:

• All 4 states have seen noticeably lower unemployment in recent years. Only one – Indiana (blue line) – is consistently below the national average, however. And its labor market remains robust today.

• Ohio’s (orange line) current unemployment rate of 4.2% is slightly higher than the trough of 4.0% in June/July 2019 but still well below last year’s 4.6%.

• Michigan’s (red line) unemployment rate stands at 4.1%, down from the 4.3% peak this July and basically the same as last year’s 4.0%.

• Pennsylvania (green line) was not on our original “states to watch” list, but unemployment here is clearly moving in the wrong direction. October 2019’s reading of 4.2% is noticeably higher than earlier in the year (3.8% in Q2) and seems to be climbing quickly.

We can also use the “Sahm Recession Indicator” to evaluate this data. This rule, created by Fed economist Claudia Sahm, posits that a 0.5-point increase in unemployment over a year means a recession is coming. By that measure, Michigan, Ohio and Indiana are in the clear. Pennsylvania, however, is in some trouble.

As a second data point on this topic, consider the Philadelphia Fed’s State Coincident Indexes. These use a combination of unemployment and wage data to measure the 3-month change in a state’s economic health.

Here is the current 50-state map of that data, coded by shades of green (growing economies), grey (flat) and red (shrinking economies):

This graphic shows a similar story to the rolling changes in unemployment data:

• Indiana is doing the best of our 4-state focus group.

• Michigan, despite the GM strike, is still marginally positive.

• Ohio and Pennsylvania are flat, the only 2 US states currently stuck in neutral.

• While there are 4 US states seeing outright contraction – Wyoming, North Dakota, Kentucky and West Virginia – we would note that 2 (WY, ND) have populations well below 1 million people.

The bottom line to both these cuts of the state-level data: there is little risk of an imminent US recession. Things could be better in Ohio and Pennsylvania, to be sure, and we’ll have to keep watching those states. Michigan is better than we would have thought given the US-China trade war and wavering demand for light vehicles. Indiana is doing just fine. Our Patient Zero may not be in exactly rude health, but they are still getting around just fine.

US Africa Command (AFRICOM) has stated in a press release that an unarmed, likely a surveillance drone, or what AFRICOM calls it a remotely piloted aircraft (RPA), was lost over Tripoli, Libya, last Thursday [Nov. 21]. 

AFRICOM’s statement doesn’t provide a lot of details of the incident, nor does it mention if the drone crashed because of technical failures or if it was shot down by rebel forces. 

The military says the incident remains under investigation but noted that surveillance drones had been a crucial tool in counter-terror missions across Libya. 

US military operations “are conducted in Libya to assess the ongoing security situation and monitor violent extremist activity,” the statement said.

The loss of the drone last week came several days after the Libyan National Army led by Khalifa Haftar allegedly shot down an Italian drone in western Libya.

In September, the US military carried out several airstrikes against ISIS groups in the country, killing dozens of militants. The airstrikes were some of the first bombing missions in more than a year. 

We don’t want to speculate on the type of drone that was lost, but if we had to, it could’ve been the General Atomics MQ-9 Reaper (price tag $16.9 million). 

Oil-rich Libya was thrown into civil war nearly a decade ago when NATO forces overthrew Moammar Gadhafi. It’s been another great blunder in Western military forces who’ve spent the last several decades crusading around the Middle East, sparking wars across the continent. 

The latest outbreak of fighting has been based in Tripoli. Since about 2015, Libya has seen its government splintered into two, one based in Tripoli and the other in the country’s east.

The eastern government forces have been attempting to recapture Tripoli since April, and fierce fighting in the capital continues into the late year.