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Authored by Gareth Porter via TheGrayZone.com, 

The New York Times dropped another Russiagate bombshell on June 26 with a sensational front-page story headlined, “Russia Secretly Offered Afghan Militants Bounties to Kill U.S. Troops, Intelligence Says.”  A predictable media and political frenzy followed, reviving the anti-Russian hysteria that has excited the Beltway establishment for the past four years.

But a closer look at the reporting by the Times and other mainstream outlets vying to confirm its coverage reveals another scandal not unlike Russiagate itself: the core elements of the story appear to have been fabricated by Afghan government intelligence to derail a potential US troop withdrawal from the country. And they were leaked to the Times and other outlets by US national security state officials who shared an agenda with their Afghan allies.

In the days following the story’s publication, the maneuvers of the Afghan regime and US national security bureaucracy encountered an unexpected political obstacle: US intelligence agencies began offering a series of low confidence assessments in the Afghan government’s self-interested intelligence claims, judging them to be highly suspect at best, and altogether bogus at worst.

In light of this dramatic development, the Times’ initial report appears to have been the product of a sensationalistic disinformation dump aimed at prolonging the failed Afghan war in the face of President Donald Trump’s plans to withdraw US troops from it.

The Times Quietly Reveals Its Own Sources’ Falsehoods

The Times not only broke the Bountygate story but commissioned squads of reporters comprising nine different correspondents to write eight articles hyping the supposed scandal in the course of eight days. Its coverage displayed the paper’s usual habit of regurgitating bits of dubious information furnished to its correspondents by faceless national security sources. In the days after the Times’ dramatic publication, its correspondent squads were forced to revise the story line to correct an account that ultimately turned out to be false on practically every important point.

The Bountygate saga began on June 26, with a Times report declaring, “The United States concluded months ago” that the Russians “had covertly offered rewards for successful attacks last year.” The report suggested that US intelligence analysts had reached a firm conclusion on Russian bounties as early as January. A follow-up Times report portrayed the shocking discovery of the lurid Russian plot thanks to the recovery of a large amount of U.S. cash from a “raid on a Taliban outpost.” That article sourced its claim to the interrogations of “captured Afghan militants and criminals.”

However, subsequent reporting revealed that the “US intelligence reports” about a Russian plot to distribute bounties through Afghan middlemen were not generated by US intelligence at all.

The Times reported first on June 28, then again on June 30, that a large amount of cash found at a “Taliban outpost” or a “Taliban site” had led U.S. intelligence to suspect the Russian plot.  But the Times had to walk that claim back, revealing on July 1 that the raid that turned up $500,000 in cash had in fact targeted the Kabul home of Rahmatullah Azizi, an Afghan businessmen said to have been involved in both drug trafficking and contracting for part of the billions of dollars the United States spent on construction projects.

The Times also disclosed that the information provided by “captured militants and criminals” under “interrogation” had been the main source of suspicion of a Russian bounty scheme in Afghanistan. But those “militants and criminals” turned out to be thirteen relatives and business associates of the businessman whose house was raided.

The Times reported that those detainees were arrested and interrogated following the January 2020 raids based on suspicions by Afghan intelligence that they belonged to a “ring of middlemen” operating between the Russian GRU and so-called “Taliban-linked militants,” as Afghan sources made clear.

Furthermore, contrary to the initial report by the Times, those raids had actually been carried out exclusively by the Afghan intelligence service known as the National Directorate of Security (NDS). The Times disclosed this on July 1. Indeed, the interrogation of those detained in the raids was carried out by the NDS, which explains why the Times reporting referred repeatedly to “interrogations” without ever explaining who actually did the questioning.

Given the notorious record of the NDS, it must be assumed that its interrogators used torture or at least the threat of it to obtain accounts from the detainees that would support the Afghan government’s narrative. Both the Toronto Globe and Mail and the United Nations Assistance Mission in Afghanistan (UNAMA) have documented as recently as 2019 the frequent use of torture by the NDS to obtain information from detainees.  The primary objective of the NDS was to establish an air of plausibility around the claim that the fugitive businessman Azizi was the main “middleman” for a purported GRU scheme to offer bounties for killing Americans.

NDS clearly fashioned its story to suit the sensibilities of the U.S. national security state. The narrative echoed previous intelligence reports about Russian bounties in Afghanistan that circulated in early 2019, and which were even discussed at NSC meetings. Nothing was done about these reports, however, because nothing had been confirmed.

The idea that hardcore Taliban fighters needed or wanted foreign money to kill American invaders could have been dismissed on its face. So Afghan officials spun out claims that Russian bounties were paid to incentivize violence by “militants and criminals” supposedly “linked” to the Taliban.

These elements zeroed in on the April 2019 IED attack on a vehicle near the U.S. military base at Bagram in Parwan province that killed three US Marines, insisting that the Taliban had paid local criminal networks in the region to carry out attacks.

As former Parwan police chief Gen. Zaman Mamozai told the Times, Taliban commanders were based in only two of the province’s ten districts, forcing them to depend on a wider network of non-Taliban killers-for-hire to carry out attacks elsewhere in the province. These areas included the region around Bagram, according to the Afghan government’s argument.

But Dr. Thomas H. Johnson of the Naval Postgraduate School, a leading expert on insurgency and counter-insurgency in Afghanistan who has been researching war in the country for three decades,  dismissed the idea that the Taliban would need a criminal network to operate effectively in Parwan.

“The Taliban are all over Parwan,” Johnson stated in an interview with The Grayzone, observing that its fighters had repeatedly carried out attacks on or near the Bagram base throughout the war.

With Withdrawal Looming, the National Security State Plays Its Bountygate Card

Senior U.S. national security officials had clear ulterior motives for embracing the dubious NDS narrative. More than anything, those officials were determined to scuttle Trump’s push for a complete withdrawal from Afghanistan. For Pentagon brass and civilian leadership, the fear of withdrawal became more acute in early 2020 as Trump began to demand an even more rapid timetable for a complete pullout than the 12-14 months being negotiated with the Taliban.

It was little surprise then that this element leapt at the opportunity to exploit the self-interested claims by the Afghan NDS to serve its own agenda, especially as the November election loomed. The Times even cited one “senior [US] official” musing that “the evidence about Russia could have threatened that [Afghanistan] deal, because it suggested that after eighteen year of war, Mr. Trump was letting Russia chase the last American troops out of the country.”

In fact, the intelligence reporting from the CIA Station in Kabul on the NDS Russia bounty claims was included in the Presidential Daily Brief (PDB) on or about February 27— just as the negotiation of the U.S. peace agreement with the Taliban was about to be signed. That was too late to prevent the signing but timed well enough to ratchet up pressure on Trump to back away from his threat to pull all US troops out of Afghanistan.

Trump may have been briefed orally on the issue at the time, but even if he had not been, the presence of a summary description of the intelligence in the PDB could obviously have been used to embarrass him on Afghanistan by leaking it to the media.

According to Ray McGovern, a former CIA official who was responsible for preparing the PDB for Presidents Ronald Reagan and George H.W. Bush, the insertion of raw, unconfirmed intelligence from a self-interested Afghan intelligence agency into the PDB was a departure from normal practice.

Unless it was a two or three-sentence summary of a current intelligence report, McGovern explained, an item in the PDB normally involved only important intelligence that had been confirmed.  Furthermore, according to McGovern, PDB items are normally shorter versions of items prepared the same day as part of the CIA’s “World Intelligence Review” or “WIRe.”

Information about the purported Russian bounty scheme, however, was not part of the WIRe until May 4, well over two months later, according to the Times. That discrepancy added weight to the suggestion that the CIA had political motivations for planting the raw NDS reporting in the PDB before it could be evaluated.

This June, Trump’s National Security Council (NSC) convened a meeting to discuss the intelligence report, officials told the Times. NSC members drew up a range of options in response to the alleged Russian plot, from a diplomatic protest to more forceful responses. Any public indication that US troops in Afghanistan had been targeted by Russian spies would have inevitably threatened Trump’s plan for withdrawal from Afghanistan.

At some point in the weeks that followed, the CIA, Defense Intelligence Agency and National Security Agency each undertook evaluations of the Afghan intelligence claims. Once the Times began publishing stories about the issue, Director of National Intelligence John Ratcliffe directed the National Intelligence Council, which is responsible for managing all common intelligence community assessments, to write a memorandum summarizing the intelligence organizations’ conclusions.

The memorandum revealed that the intelligence agencies were not impressed with what they’d seen. The CIA and National Counter-Terrorism Center (NCTC) each gave the NDS intelligence an assessment of “moderate confidence,” according to memorandum.

An official guide to intelligence community terminology used by policymakers to determine how much they should rely on assessments indicates that “moderate confidence” generally indicates that “the information being used in the analysis may be interpreted in various ways….” It was hardly a ringing endorsement of the NDS intelligence when the CIA and NCTC arrived at this finding.

The assessment by the National Security Agency was even more important, given that it had obtained intercepts of electronic data on financial transfers “from a bank account controlled by Russia’s military intelligence agency to a Taliban-linked account,” according to the Times’ sources. But the NSA evidently had no idea what the transfers related to, and essentially disavowed the information from the Afghan intelligence agency.

The NIC memorandum reported that NSA gave the information from Afghan intelligence “low confidence” — the lowest of the three possible levels of confidence used in the intelligence community. According to the official guide to intelligence community terminology, that meant that “information used in the analysis is scant, questionable, fragmented, or that solid analytical conclusions cannot be inferred from the information.”

Other intelligence agencies reportedly assigned “low confidence” to the information as well, according to the memorandum. Even the Defense Intelligence Agency, known for its tendency to issue alarmist warnings about activities by US adversaries, found no evidence in the material linking the Kremlin to any bounty offers.

Less than two weeks after the Times rolled out its supposed bombshell on Russian bounties, relying entirely on national security officials pushing their own bureaucratic interests on Afghanistan, the story was effectively discredited by the intelligence community itself. In a healthy political climate, this would have produced a major setback for the elements determined to keep US troops entrenched in Afghanistan.

But the political hysteria generated by the Times and the hyper-partisan elements triggered by the appearance of another sordid Trump-Putin connection easily overwhelmed the countervailing facts. It was all the Pentagon and its bureaucratic allies needed to push back on plans for a speedy withdrawal from a long and costly war.

Hot on the heels of his CNBC interview in which he praised both bitcoin and gold, predicting that in a world where central banks are doing nothing but printing money “gold is going to take old highs and keep going”, billionaire investor Mike Novogratz, Galaxy Digital founder appeared on Bloomberg TV, where he essentially confirmed what we have been saying for years: that the stock market has become totally “unhinged from reality” as it rises higher due to now relentless central bank intervention, and said that small investors should get out before it crashes.

“We are in irrational exuberance – this is a bubble,” he told Bloomberg TV on Friday adding that “the economy is grinding, slowing down, we’re lurching in and out of Covid, yet the tech market makes new highs every day. That’s a classic speculative bubble.”

Echoing what BofA CIO Michael Hartnett said on Friday, when he cautioned that the disconnect between macro and markets has never been greater, which however is to be expected now that “government and corporate bonds have been fixed (“nationalized”) by central banks, so why would anyone expect markets to connect with macro, why should credit & stocks price rationally“, Novogratz – like Stan Druckenmiller and David Tepper – has been sounding alarms about the stock market for months, yet the S&P 500 index has inched higher, erasing losses spurred by the coronavirus pandemic and notching its best quarter since 1998.

While so far Novogratz’ warnings have fallen on deaf ears, with Robinhooders clearly chasing momentum in such mega-bubble stocks as Tesla…

… whose market cap is now greater than that of Ford + GM + BMW + Daimler + Volkswagen combined…

… the man who made a killing buying bitcoin and ethereum ahead of the herd, said that the surge in equities, especially tech stocks, reminds him of the rally in Bitcoin prices in 2017, when the cryptocurrency went from $8,000 to almost $20,000 within a couple months due to retail interest… before crashing just as fast. It now trades at roughly half the price it reached during the December 2017 peak.

Of course, there is the possibility that Novogratz is merely talking his book, admitting to Bloomberg that he largely missed out on the tech-stock rally, and has been investing instead in gold and Bitcoin, which are also benefiting from the liquidity propping up the stock market.

Then again, with gold the best performing asset of 2020 we won’t begrudge him for being right.

“We’re at really dangerous valuations on the growth side, on the tech side,” he said. “If it’s Zoom or Tesla or Beyond Meat, whatever stock has a story, everyone’s rushing in. That gets me worried.”

Watch the full interview below:

An alleged former Jewel thief who says he had group sex with Ghislaine Maxwell but ‘drew the line at under-age girls’ claims he was forced to watch pedo videos involving ‘two high-profile US politicians’ and ‘two high society figures having a threesome with an under-age girl.’

Whether one believes an anonymous ex-jewel thief’s exclusive interview with The Sun is up to the reader. That said, Epstein accuser Maria Farmer claimed there was a ‘secret media room‘ in the dead pedophile’s New York mansion which was full of recording equipment.

What’s more, former Israeli spy Ari Ben-Menashe – alleged “handler” of Ghislaine’s father, Robert Maxwell, told the authors Epstein: Dead Men Tell No Tales, that the Epstein was operating a “complex intelligence operation” at the behest of Mossad, and ‘filmed US politicians and power players having sex with underage girls to blackmail them.’

Jumping into the salacious claims by the jewel thief, who goes by the name William Steel, the story begins in the mid-1990s when Steel claims he met Epstein in the “upstairs room at a very high-end diamond dealer, the kind of place where only a few people are allowed in at a time.”

“I was there doing what I do. I was meeting my fence.

“I saw Jeff with a young girl who looked only about 13 or 14 and he had his hand in the back of her shorts.

“That’s what first got my attention.

“She was so young and he was much older. That’s when I knew that he was dirty.

“I had about 200,000 dollars worth of jewellery that I was getting rid of and later I struck up a conversation with him.

“He later said the girl he was with was his niece but I called bulls**t on that, telling him I saw what he was doing with her. –The Sun

At some point later, Steel says he met Ghislaine Maxwell – who he says he had sex with on multiple occasions – and wanted to see how she could use him to help Epstein. Steel says he was trying to do the same thing:

“I wouldn’t say it was a relationship — it was all about what she could use me for to help them. Me being a cocky young guy from New York City, seeing their arrogance and their wealth — I just looked at it as an opportunity to milk them for what I could.

I used to brag about what I was capable of to them.”

Steele added that “When I wanted to impress or scare somebody, I’d get my briefcase out and it would have police scanners in it, gloves, lock picks, guns with silencers,” adding “I even owned an ultra-thermic torch which would burn a hole into anything in seconds.”

“That impressed Ghislaine and Jeff.“

SEX, LIES AND VIDEOTAPE:

Steel claims that he saw a parade of underage girls ‘coming and going’ from Epstein’s Palm Beach oceanfront mansion, but that he never participated in pedophilic sex acts.

“I only ever had sex with Maxwell and threesomes with her and other adult females,” he said. “I suspected what they were doing with the under-age girls, I knew their routine, so when they tried to get me involved, I said, ‘No, I’m not into that — you’re not getting me on video doing any of that’.”

Steel also says Ghislaine is a “nymphomaniac” who would try “everything and anything in bed.”

…he was shown footage involving two high-profile US politicians having sex with minors and two high society figures having a threesome with an under-age girl.

Steel — who is not being paid for this interview — also branded Maxwell, 58, who was arrested last week in connection with trafficking young girls, a wild “nymphomaniac” who would try “everything and anything in bed”.

He says: “I was forced to watch their videos because they were trying to impress me.

“They wanted to convince me of their power and who they held in their grip.

“They boasted about ‘owning’ powerful people.

“Ghislaine was more into showing me those than Jeff.

“When you’re in a situation like that, you have to pretend to be non- judgmental. But it was shocking. –The Sun

“She said to me that she often thought she needed to do something about Epstein, telling me, ‘He is going to be the death of me’” claimed Steel. ” So while she protected him and helped him, she was simultaneously plotting against him and trying to distance herself. “

“She knew they could drag each other down,” adding “I think she saw herself as the more respectable of the two. She wanted me to do something about Jeff.“

Ghislaine allegedly told Steel she had a “Polanski plan,” named after disgraced pedophile and film director Roman Polanski, who fled the US after he was charged with the rape of a 13-year-old girl.

“She told me about her Polanski plan where she would flee to France because they couldn’t extradite her,” he said, adding “I was surprised to hear she’d been picked up in New Hampshire.”

“I want the authorities to know about her plan before her bail hearing.”

Steel claims he absconded with evidence – “discs and things they were trying to get rid of,” and says he “sent them to the authorities, but I don’t know if they did anything with them.”

Why he wouldn’t make copies is anyone’s guess.

Steel said the pair also asked him to help them find girls — but he refused.

He adds: “Ghislaine was always talking down to people.

“She tried to pull that on me but I told her straight, ‘Don’t speak to me like you speak to your f***ing staff. I’m doing favours for you guys. You’re not talking down to me. I don’t give a f how much money you have’.

“They knew I had connections in various places and they offered me money to bring in girls but I never took them up on any of that.

“They told me, ‘Whatever the girls want, I can help them with their modelling career if they want that or pay for their education, and it’s just massages’.

“And I said, ‘Yeah, I’m pretty sure what your massages turn into’.

“And he would just smirk at me and say that I could have what I wanted.
“I said I didn’t want that, it’s not fair to take advantage of these young girls. It’s not right.

“He wanted me to help him with a plan he had to kidnap or pay 100 young girls and take them to an island where he would have sex with them, orgies, use them for blackmail and have babies with them.

“I just told him to shut up. I didn’t even realise he was serious until years later.

“For him, at that time, his focus was getting girls that were not from the United States.

“He wanted girls from abroad because he felt they wouldn’t know how the criminal justice system in the US works and would be less likely to report him.

“He said he would help look after their families but I said, ‘I’m not going to help you ruin a teenage girl’s life’. –The Sun

And that, is the rest of the ex-jewel thief’s sordid tale.

Authored by Diana Thomas and Michael Thomas via The American Institute for Economic Research,

When you walk out of your house, or enter the public street, you are on shared ground, a community space. During the pandemic of 2020, community spaces that are private venues, like Disney, have closed down just as often as community spaces that are public venues, like schools and playgrounds. 

Public and private distinctions do not make a difference. Risk is the key factor to understanding why common spaces are closed and likely to remain so, at least in the way we were used to. In what is called the asymmetric loss function, a decision maker’s cost of a mistake in one direction is many times greater than the cost of error in the other direction. 

Individuals with asymmetric loss functions are extremely risk averse when it comes to potential losses. Individuals often employ asymmetric loss functions in everyday life. For most people being 30 minutes early for a flight, for example, is much less costly than being 30 minutes late. 

But, because people are different, individuals decide for themselves how late they can arrive and risk missing a flight. Things get trickier when decisions regarding risk tolerance are made for common spaces and groups, because one size doesn’t always fit all.

Weighing downside risks too heavily can be socially costly, because some valuable private activities are prohibited. 

Historically and across cultures, individual risk-taking is associated with growth and prosperity while minimizing risk and emphasizing potential social losses is not. In the last several decades, public tolerance of risk has shifted towards lower socially acceptable levels of risk-taking and in the long run, these changes may leave us all worse off.  

In her Bourgeois Virtues: Ethics for an Age of Commerce, Deirdre McCloskey details how attitudes toward risk-taking transformed at about the same time as the birth of capitalism. It was the ability of individuals to take risks and still recover from failure that paved the way for radical experiments. Prior to this, to take a risk and fail was to be labeled a prodigal, if one was thought to have wasted the money, or a projector, if one’s idea failed.

Some of this dishonor would extend to the guilty party’s family as well. As a whole, society’s ethical norms were to avoid risk and as a result, many good ideas which were technically possible stayed as abstract thoughts and not as steps on the road of progress. For McCloskey, this, more than any other explanation, explains the when and how of the birth of the great divergence since all other factors that have been attributed occurred elsewhere in various combinations. 

Risk, therefore, can be expressed as an attitude about the commons more than anything else. If the rules of society protect those who are willing to take risks, this increases risk not only to the risk-takers but also has various effects on others around them regardless of their risk tolerance. There is no escape; the status of risk legally and socially impacts everyone. The risk-taker arrived in English via the French word, entrepreneur, describing the willingness to undertake risk. Jeremy Bentham, in a letter to Adam Smith, colorfully compares risk-taking in business to Marcus Curtius, a Roman martyr described in Livy’s history. Bentham was arguing against Smith’s defense of an interest rate cap, suggesting it would stifle innovation and advantage incumbents. 

We find ourselves at the other end of a collective conversation on risk-taking today. The tolerance of any level of risk is often cast often as a threat. We have justified unprecedented economic losses based on very uncertain risks. Merely mentioning a potential downside seems to carry more weight nowadays than it did in the past. 

Part of this might be due to years of public health rhetoric about externalities; e.g. second-hand smoke, the collective costs associated with obesity, and the health costs of pollution. 

In 2020, the implicit calculation of risk relating to the pandemic would have to be very large to justify the trillions of dollars in terms of economic losses that have been incurred so far, with a cumulative total economic cost that is even higher. We also must account for the human costs of worldwide economic contraction, measured in terms of starvation deaths alone. 

During the current pandemic, two astronauts boarded a previously unmanned rocket and rode it into near earth orbit to meet up with the International Space Station. As a percentage of people injured while attempting this feat, astronauts bear a much larger risk than ocean bathers. Doug Hurley and Bob Behnken took this risk which is understood as heroic by a society that is anxious for the technological progress that comes from making space accessible to human exploration. 

In an everyday sort of example, on June 2nd, a 17 year old named Paige Winter was attacked by a shark standing in waist deep water on the coast of North Carolina. A shark attack is precisely the sort of thing we remind people of when they visit beaches, but most of us consider the activity of standing in five-foot-deep water a reasonable risk. This activity is socially understood, currently, as a risk worth taking. The beaches remain open for this sort of activity.

Related specifically to the current pandemic, what message are venture capitalists getting about local businesses; smaller retail shops, restaurants, and venues? The shift from evaluating risk as an individual to collective risk evaluation may ultimately empower local public health officials to return to 2020 measures any time seasonal flu peaks. 

In all of these examples, we understand the role that perceptions play in evaluating risk. The recent willingness to elevate risk as a primary category cannot be understood without a growing concern over liability. The asymmetric loss is not only with respect to individual decisions, but it is a mental habit that administrators also take. 

From your school’s principal to your city’s mayor, to your governor or president. The focus they have is on the potential loss. Not only in terms of legal liability, but also in terms of social response. Every governor knows that they will get very little credit for a situation that is unremarkably safe, but they will get all the credit for rising numbers of deaths and hospitalizations. The calculation almost has to be toward safety. 

What we see, in addition to this, is that some safety measures people are taking do not actually move the needle on risk, but probably increase the risks we expose ourselves as well as others to. Wearing gloves to the grocery store is one discredited example of misguided safety measures. 

The logic of glove wearing requires changing gloves each time you touch a contaminant, and if you cannot do this, then you are far better off washing your hands and using hand sanitizer between washes. 

No one knows, of course, when they have touched a contaminated surface and so gloves give a false sense of security and may increase cross contamination. In this example as in many others, compliance alone doesn’t ensure best practices.

The use of ritualistic safety measures is as effective as a batsman making the sign of the cross on their bat as they step up to the plate. It does confer an important advantage, however, to the decision maker. The longer the list of safety measures a decision maker can point to when inevitably something undesirable happens, the better exonerated they are from popular sentiment. 

In the court of public opinion, the failure to enact more extreme safety protocols is seen as contributory negligence. The concept of due care, which does not hold an individual liable as long as they can show that they have taken due care has almost entirely disappeared. As a result, our leaders are focusing on compliance with popular standards rather than experimenting to find the right standard of safety.

In this environment it becomes excruciatingly difficult to argue for what is lost on the other side of the equation of risk. The implied trade-offs are of no consequence when compared to safety. We lose scientific advancement if the benefits of experimentation, even when it is risky, could not sometimes outweigh the costs—including the low but positive risk of losing astronaut lives. If all but the lowest risks are considered too large to take, then progress is essentially halted. 

In a time where the socially acceptable level of risk-taking is up for debate, we are moving toward too little risk tolerance. The attitude of low risk tolerance was the norm among aristocratic families, monarchies, and totalitarian regimes throughout history. All of these structures were essentially conservative in the worst sense of the word: they could not allow for change because it would threaten the power structure. 

With the birth of capitalism, we tolerated social mobility: both downward and more heroically, upward. The churning of the social space is consistent with a greater toleration of risk. Maybe we haven’t convinced you with regard to public health issues during a pandemic, but at least consider the weight placed on safety the next time you use a satellite connected device, visit a beach, or take an antibiotic.

As the number of hospitalized COVID-19 patients in Maricopa County climbed to new highs late this week, Phoenix Mayor Kate Gallego appeared on MSNBC Friday morning for an interview with Chuck Todd and Katy Tur to discuss the situation in the state, which has moved to close bars, and rollback other reopening measures to combat the outbreak.

During the interview, Gallego claimed that the county’s public health agency had just put in an order for refrigerated trucks because they were running out of space in the morgue.

“Maricopa County, which is our county public health agency, just announced that they’re going to be getting refrigerated trucks because the Abrazo health care system has run out of morgue beds,” Gallego said.

Hours later, as the mayor’s comments started proliferated through the media, representatives for the hospital system called and complained that the mayor’s comment wasn’t true, despite the fact that she made the claim – seemingly with a high degree of certainty – on a popular cable new show.

Spokesman Keith Jones told azcentral.com that Abrazo hospitals have “adequate morgue space.”

Here’s the story: Phoenix and the rest of the state have been asked to implement their emergency plans to prepare for possible COVID-19 overloads.

Part of the plan, Jones said, was to proactively make sure there would be enough morgue space. So the hospital system ordered refrigerated storage weeks ago, but they have yet to be deployed.

“At this point, it is not needed,” Jones said.

Of course, it’s not difficult to imagine why Gallego made such a specious – and, some might argue, alarmist – claim: Democrats in the state believe they need to discredit Gov Doug Ducey’s COVID-19 response if they want to succeed in flipping John McCain’s old Senate seat, currently occupied by Republican Senator Martha McSally, on Nov. 3. The special election is being held to find a permanent successor to the former presidential candidate and longtime Republican Senator.

For some reason, we couldn’t find the video of the interview on YouTube.

On Friday Turkish President Recep Tayyip Erdogan announced that for the first time in nearly a century the historic Hagia Sophia church would be reopened as a mosque, sparking fury and outrage from Greece, Russia, and other East European predominantly Orthodox Christian countries.

Earlier this week as multiple countries and Christian religious leaders lodged formal protest over the plans, the head of the Russian Orthodox Church, Patriarch Kirill warned that “A threat to Hagia Sophia is a threat to the entire Christian civilization.”

Considered an architectural marvel and the top tourist attraction in Turkey, the 6th century building constructed under Byzantine emperor Justinian has been a museum ever since a 1934 presidential decree, which a Turkish court annulled Friday. But it remains the symbolic heart for half the Christian world, namely the Eastern Orthodox Church.

According to the WSJ:

In a ruling issued Friday via the official Anadolu news agency, the Council of State, the country’s highest administrative court, canceled a decades-old decision under which Hagia Sophia—originally a Byzantine cathedral then an Ottoman mosque—was transformed into a museum.

Friday’s ruling effectively returned the building to a place of Islamic worship, Turkish law experts said, the status it had after the Ottomans conquered Constantinople, as Istanbul was previously known, in the mid-15th century.

The move is broadly seen as part of Erdogan’s continuing program of reversing secularization in politics and the public sphere in favor of a more conservative Islamic face to modern Turkey.

The WSJ underscores that “By returning Hagia Sophia to a home for Muslim prayer, Mr. Erdogan moved closer to fulfilling his longtime pledge of making more room for Islam inside the secular republic, and showed that he still has control over the destiny of Istanbul, even after his ruling party suffered a stinging defeat in last year’s local elections.”

Greece slammed the move as an “open provocation to the civilized world” while Orthodox Church leaders decried it as an open attack on the world’s 300 million Orthodox adherents. “The nationalism displayed by Erdogan… takes his country back six centuries,” Greece’s Culture Minister Lina Mendoni said on Friday.

I strongly denounce #Turkey’s decision to convert Hagia Sophia into a mosque. I urge Erdogan to reverse course and restore Hagia Sophia’s remarkable legacy as a museum for people of all faiths and cultures to visit. https://t.co/AUfDgGP9f4

— Senator Bob Menendez (@SenatorMenendez) July 10, 2020

Erdogan however, has interpreted it more simply as a matter of “asserting Turkey’s sovereignty” over the site. Turkey argues that it can legally do what it wants with monuments and historic places within its sovereign territory.

Mike Pompeo has even weighed in on the side of the Greek government, urging that it be kept as a museum. “We urge the government of Turkey to continue to maintain the Hagia Sophia as a museum, as an exemplar of its commitment to respect Turkey’s diverse faith traditions and history, and to ensure it remains accessible to all,” the US Secretary of State said within the last weeks.

It’s but one more symbolic provocation, albeit a serious one further worsening Greece-Turkey relations, and risking Moscow’s wrath as well.

#HagiaSophia was a Greek Orthodox church before becoming an Ottoman mosque. It was converted into a museum in 1934 by Turkey’s first president Mustafa Kemal Ataturk.

A video we published before the ruling: pic.twitter.com/pslc7Abi9x

— DW News (@dwnews) July 10, 2020

Meanwhile, Ecumenical Patriarch Bartholomew of Constantinople – who represents the Orthodox Church and its some 300 million adherents worldwide, is still in residence in Istanbul. He and his predecessors have been barred from using Hagia Sophia as a place of prayer since the 15th century, though over the years there’s been a few provocative instances where Greek clergy were said to have stealthily entered the now museum to “illegally” conduct Christian worship.

Recent protests by Turkish Islamist groups outside Hagia Sophia have witnessed people chanting: “Let the chains break and open Hagia Sophia” for Muslim prayers, and now Erdogan is making good on that demand.

Authored by Lance Roberts via RealInvestmentAdvice.com,

Twice In One Year

It is a bit hard to comprehend that twice, in the same year, I would be writing primarily the same article.

In early January, I penned the following:

“When you sit down with your portfolio management team, and the first comment made is ‘this is nuts,’ it’s probably time to think about your overall portfolio risk. On Friday, that was how the investment committee both started and ended – ‘this is nuts.’”

At that time, I tweeted the following chart, which compared the Nasdaq to the S&P 500 index. The bands on both charts are 2-standard deviations of the 200-WEEK moving average. there are a couple of things which should jump out immediately:

1. The near-vertical price acceleration in the markets has been a historical hallmark of late-stage cycle advances, also known as a “melt-up” phase.

2. When markets get more than 2-standard deviations above their long-term moving average, reversions to the mean have tended to follow shortly after that. 

That was so 6-months ago.

Here is where we are today.

As I warned then, not only has the price of the Nasdaq gone parabolic, this time it is pushing 3-standard deviations of the 200-dma.

Fundamentally Detached

The divergence is particularly notable when you consider the economic and fundamental differences between now and then. (While we are discussing the Nasdaq, to maintain consistency with previous reports, I am using earnings estimates for the S&P 500 to show the relative change.)

When looking at the acceleration in the price of the Nasdaq, and particularly within the small group of stocks driving that advance, you can begin to fathom our concerns. Furthermore, the divergence between the Nasdaq and the S&P 500 index is emulating the late 90’s. (The horizontal red line is where the ratio was last Friday just for perspective.)

Optimism in the Nasdaq 100 has also reached levels of exuberance seen only once previously in the last 25 years. Yep…the late 90’s.

Yes, “This Is Nuts.” 

For the second time in a single year, we have begun the profit-taking process within our most profitable names. Apple, Microsoft, Netflix, Amazon, Costco, PG, and in Communications and Technology ETF’s.

(Note: Taking profits does not mean we sold the entire position. It means we reduced the amount of our holdings to protect our gains.)

As discussed in this week’s #MacroView (below), the “bearish case” does have “teeth” and should not be summarily dismissed. As Doug Kass noted this past Monday:

“Several key labor-intensive industries – education, lodging, entertainment (Broadway events, concerts, movie theaters, sporting events), restaurant, travel, retail, non-residential real estate, etc. – face an existential threat to their core. For these industries, they simply cannot survive the conditions they face. For these gutted industries, we face, at best, an 80% to 85% recovery in the years to come. It should be emphasized that Covid-19 just sped up what was already a secular decline.”

When the market historically becomes this detached from the underlying fundamentals, reversions tend to happen fairly quickly.

A Very Narrow Market

In our subscriber service (RIAPro – 30-Day Free Trial) we recently added a new service with institutional money manager Jeffrey Marcus of Turning Point Analytics (TPA). One of his latest notes to subscribers drove home the point we are discussing now. To wit:

“It seems like we have dodged a bullet, yet a look under the surface reveals a much sicker market.  The relative performance chart below shows that while the S&P 500 is still down 1.88%, but TPA’s BIGTECH Index (the top 8 stock in the NASDAQ 100 by market cap)is up an astonishing 48.99% year to date (YTD).

The table below shows that these 8-stocks represent $8 trillion in market cap, which is 29% of the market cap of the S&P 500 ($27.3 trillion). TPA ran the numbers to see just what effect these 8 stocks have had on an index of 500 stocks. The BIGTECH effect has been to add 8.71% of performance to the S&P 500 YTD.

Just A Handful Of Stocks

At the time of the analysis, the S&P 500 is down 1.88% for the year. Without the BIGTECH stocks, the benchmark would be down 10.5% in 2020.

We have mentioned this before, but a healthy rally is one with broad participation. The current rally is very narrow, historically dependent on less than 2% of the S&P 500 member stocks. Such means the overall performance of the S&P 500 is not representative of the market as a whole. It also means the index performance hinges on a very small group of stocks.

In addition, TPA Canaries in the Coalmine (table below) shows that the 14-day RSI of the ratio of BIGTECH/S&P 500 is also at 70.87. That RSI level denotes that BIGTECH is overbought relative to the S&P 500. At this juncture, one of two things can happen to make the BIGTECH/S&P 500 ratio less overbought:

1. Stocks other than BIGTECH can rise faster than BIGTECH; or,

2. BIGTECH can fall. 

Given how much BIGTECH has meant to S&P 500 performance, investors should pray for the former.”

Here is a visual of what Jeff is talking about.

Throughout history, whenever there seems to be a “Can’t Lose Bet” in the financial markets, you are essentially guaranteed to “Lose Money.”

Updating Risk/Reward Ranges

As noted by Sentiment Trader this past week, the CNN Fear/Greed Proxy has turned down recently from very high readings. While this does NOT suggest stocks will crash, it does indicate over the next few weeks returns will likely be more muted with increased volatility.

With this in mind we can update our risk/reward ranges for next week.

As noted last week:

“The rally reversed much of the short-term oversold condition. While the bulls are in control of the market currently, the upside is somewhat limited. However, the downside risks are reduced with the improvement in the technical underpinnings. Such puts the risk/reward dynamics to a more equally balanced, than opportunistic, positioning. As such, risk controls and hedges should remain for now.”

That advice played out well this past week, given daily swings in the market. While the market was up for the week, it has not reclaimed the June highs. As such, the consolidation continues with risk/reward remaining primarily “neutral” with a “negative” bias.

• -2.6% to breakout level vs. +1.1% previous rally peak. (Neutral)

• -4.5 to 5.4% to 50 & 200 dma support vs. +4.0% to January peak (Neutral)

• -7.9% to previous consolidation peak vs. +5.5% to all-time highs. (Negative)

• -14.2% to previous consolidation lows vs. +5.5% to all-time highs. (Negative)

Reason To Focus On Risk

It seems appropriate to restate something I wrote the last time we saw these types of divergences.

“Our job as investors is to navigate the waters within which we currently sail, not the waters we think we will sail in later. Higher returns come from the management of ‘risks’ rather than the attempt to create returns by chasing markets. Robert Rubin, former Secretary of the Treasury, defined this philosophy when he stated;

‘As I think back over the years, I have been guided by four principles for decision making. First, the only certainty is that there is no certainty. Second, every decision, as a consequence, is a matter of weighing probabilities. Third, despite uncertainty, we must decide and we must act. And lastly, we need to judge decisions not only on the results but also on how we made them.

Most people are in denial about uncertainty. They assume they’re lucky, and that the unpredictable can be reliably forecasted. Such keeps business brisk for palm readers, psychics, and stockbrokers, but it’s a terrible way to deal with uncertainty. If there are no absolutes, all decisions become matters of judging the probability of different outcomes, and the costs and benefits of each. Then, on that basis, you can make a good decision.’”

An Honest Assessment

It should be evident that an honest assessment of uncertainty leads to better decisions. Still, the benefits of Rubin’s approach, and mine, goes beyond that. For starters, although it may seem contradictory, embracing uncertainty reduces risk, while denial increases it. Another benefit of acknowledged uncertainty is it keeps you honest.

“A healthy respect for uncertainty and focus on probability drives you never to be satisfied with your conclusions.  It keeps you moving forward to seek out more information, to question conventional thinking and to continually refine your judgments and understanding that difference between certainty and likelihood can make all the difference.” – Robert Rubin

We must be able to recognize and be responsive to changes in underlying market dynamics. If they change for the worse, we must be aware of the inherent risks in portfolio allocation models. The reality is that we can’t control outcomes. The most we can do is influence the probability of specific outcomes. Such is why we manage risk by investing on probabilities rather than possibilities. 

Such is essential not only to capital preservation but to investment success over time.

St. Louis authorities confiscated an AR-15 used by Mark McCloskey, who made headlines with his wife Patricia last month when they defended their historic mansion from protesters who had broken down a gate to trespass on their private road.

Police executed a search warrant Friday evening at the McCloskey’s home, seizing the rifle used in the June 28 incident, according to KSDK. The couple said their attorney was in possession of the pistol Patricia McCloskey brandished during the confrontation. The raid comes two weeks after St. Louis circuit attorney Kimberly Gardner vowed to work with the St. Louis Police Department to conduct an investigation into the incident.

According to the report, there are no charges against the McCloskeys at this time, as the warrant was just for the guns.

As Fox News reports, the McCloskeys appeared on “Hannity” where they said that protesters had returned to their neighborhood on July 3, however they had been tipped off and hired private security before “300 to 500 people” entered their gated community, according to Patricia McCloskey.

Mark & Patricia McCloskey from St Louis have now had to get security guards & board up their home. This is not how people in their 60s should be living, in fear, simply because they own guns & held them to protect themselves.
BLM & these rabid protestors – disgrace to humanity. pic.twitter.com/bNw27vE7pJ

— UK Resistance (@ResistanceUkip) July 7, 2020

“[They said] that they were going to kill us,” she said. “They were going to come in there. They were going to burn down the house. They were going to be living in our house after I was dead, and they were pointing to different rooms and said, ‘That’s going to be my bedroom and that’s going to be the living room and I’m going to be taking a shower in that room’.”

And now they’ve been disarmed.