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Federal Judge Orders Georgia Sheriff To Stop Ritualistically Humiliating Registered Sex Offenders on Halloween

It’s Halloween, which means it’s time to panic about the threat allegedly posed by candy-distributing sex offenders. This week a federal judge in Georgia threw some cold water on such fearmongering, ruling that Butts County Sheriff Gary Long may not force three registered sex offenders to post signs warning trick-or-treaters to stay away from their homes.

Last October, Long’s deputies “placed signs in front of every registered sex offender’s house to notify the public that it’s a house to avoid.” The signs, identified as “a community safety message from Butts County Sheriff Gary Long,” read: “Warning! No Trick-or-Treat at This Address!!”

The deputies also left a notice on the front door of each targeted home, saying a “Halloween Safety sign has been placed in front of your residence by Order of Sheriff Gary Long. This order is due to a registered Sex Offender is registered to be living at this address with the Butts County Sheriff Office.” It added that “THIS SIGN IS PROPERTY OF THE BUTTS COUNTY SHERIFF OFFICE SHERIFF GARY LONG,” and “IT SHALL NOT BE REMOVED BY ANYONE OTHER THAN THE BUTTS COUNTY SHERIFF OFFICE.” Residents who objected were threatened with arrest, and they were forbidden to post any countervailing messages of their own.

Long tried to repeat the stunt this year, but he was stymied by a federal lawsuit that three Butts County residents, Christopher Reed, Reginald Holden, and Corey McClendon, filed last month. They argued that deputies were illegally trespassing on their property to put up the signs, which are not required by state law. The plaintiffs also said the signs were a form of constitutionally prohibited compelled speech that caused “anxiety, embarrassment and humiliation.”

U.S. District Judge Marc Treadwell found the claims compelling enough to issue a preliminary injunction against Long’s signs on Tuesday. “The Defendants have provided no evidence showing that the Plaintiffs have posed or will pose any threat to children trick-or-treating on Halloween, and Holden and McClendon testified that they planned to shut off their lights and not answer the door on Halloween, just as they have in years past,” Treadwell wrote. “On the other hand, the public interest always is served when citizens’ constitutional rights are protected, including sex offenders’.”

Treadwell noted that Reed, Holden, and McClendon are required to register with the sheriff’s office “because many years ago they committed offenses that fall within the State of Georgia’s definition of sex offenses.” Yet “they have served their terms of imprisonment and have, as far as the law is concerned, paid their debts to society.” Treadwell added that “by all accounts, they are rehabilitated” and “live productive, law-abiding lives.” Furthermore, the state, under its system for classifying sex offenders, “has not determined that they pose an increased risk of again committing a sexual offense.” Hence “the Sheriff’s decision is not based on any determination that the Plaintiffs are dangerous.”

Treadwell noted that “the Defendants have not cited any evidence or authority indicating that they may use the right-of-way in front of the Plaintiffs’ homes for their speech.” He concluded that the plaintiffs were likely to prevail in their claim that the signs violated their First Amendment rights by forcing them to participate in speech to which they object.

“By requiring the Plaintiffs to display these signs, Sheriff Long and his deputies are requiring the Plaintiffs to effectively endorse or adopt, or at least acquiesce in, his message, not theirs, because the only message Sheriff Long will allow is his,” Treadwell said. “The Defendants plan to compel the Plaintiffs to promote Sheriff Long’s speech. These facts are sufficient to demonstrate that the Plaintiffs are substantially likely to show that the Defendants will burden the Plaintiffs’ First Amendment rights.”

Treadwell noted that “the question the Court must answer is not whether Sheriff Long’s plan is wise or moral, or whether it makes penological sense.” Rather, “the question is whether Sheriff Long’s plan runs afoul of the First Amendment of the United States Constitution. It does.”

Treadwell nevertheless declined to issue a broader injunction on behalf of all 54 registered sex offenders in Butts County. “Although, as a practical matter, it might be
assumed that anyone would object to such a message from law enforcement in front of their homes, the Court is not comfortable making that assumption as a foundation for injunctive relief,” he wrote. “Moreover, different circumstances could exist with regard to particular registrants.”

In a message on Facebook, Long said he would abide by the judge’s order but maintained that he was simply trying to “protect the public, especially the children.” Last year, however, Long conceded that the risk supposedly addressed by his signs was slight. “I’m not trying to humiliate ’em or anything like that,” he told CBS News. “Let’s face reality: We have a greater chance of children getting run over by a car [on Halloween] than being a victim of sexual assault by a repeat offender. But at the end of the day if, in fact, we had a child that fell victim to a sexual assault, especially by a convicted sex offender, I don’t think I could sleep at night.”

Last year Lenore Skenazy noted that “a thorough study of 67,000 cases of child molestation found zero increase in sex crimes against children on Halloween.” The authors of that 2009 study, reported in the journal Sexual Abuse, observed that “states, municipalities, and parole departments have adopted policies banning known sex offenders from Halloween activities, based on the worry that there is unusual risk on these days.” Yet their analysis of cases involving sex crimes against children committed by people other than relatives found “no increased rate on or just before Halloween.” Furthermore, “Halloween incidents did not evidence unusual case characteristics.” The researchers concluded that “these findings raise questions about the wisdom of diverting law enforcement resources to attend to a problem that does not appear to exist.”

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Why the Middle Class is Better Off Than You Think

“A lot of people think the middle class is dead, dying, hollowed out,” says Russ Roberts, an economist at Stanford University’s Hoover Institution and host of the podcast Econtalk. “And that’s a view that’s held now increasingly by not just the left…but by conservatives, Republicans, [and] economists across the spectrum.”

But is it true? Roberts says that many of the leading studies that support this claim offer “a misreading of the data, or at least an incomplete reading of the data, [ignoring] a much fuller story of opportunity and progress.”

In this video, Roberts offers some examples of the assumptions that economic researchers have made, leading them to offer an incomplete picture of American prosperity. He argues that the middle class has fared much better since the 1970s than most people think.

Produced by John Osterhoudt. Camera by Todd Krainin.

Photo credit: Sen. Sanders—Michael Brochstein/Sipa USA/Newscom

Photo credit: Skyline Drawing—ID 46457018 © Vladimir Yudin | Dreamstime.com

Photo credit: Farm House—ID 137745545 © iigraphics | Dreamstime.com

Photo credit: Suburban Aerial Photo—ID 82905318 © Bryan Roschetzky | Dreamstime.com

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Voters In Key Battleground States Oppose Impeachment: Polls

New polling from several 2020 battleground states reveal that more people oppose than support using impeachment to remove President Trump from office, according to The Hill, which describes the results as “a potential danger sign for Democrats.”

Voters in Wisconsin and Florida – two key states which Trump won in 2016, oppose impeachment. Of note, Wisconsin turned red for the first time in decades, while Florida flipped red again after Obama won the state twice.

In the swing states of Arizona and New Hampshire, most voters similarly oppose impeachment.

A New York Times–Siena College battlegrounds poll released Wednesday found that majorities in Michigan, North Carolina, Pennsylvania, Wisconsin, Arizona and Florida oppose removing the president from office through impeachment. Majorities or pluralities do support an investigation of Trump, however.

Trump’s reelection campaign is emboldened by the polling, which it believes shows that Democrats are running against public opinion in the states that matter the most. –The Hill

“We’ve known for a long time that everybody in California and New York want Trump to be impeached, they’ve wanted that since the day he came into office,” one Trump campaign official told The Hill, adding “But in these states where the election is really going to be fought, we’re seeing that voters oppose impeachment, and there’s an intensity to that opposition.“

Meanwhile, FiveThirtyEight’s impeachment polls tracker reveals that 51% of voters across the country support the House impeachment inquiry vs. 42% who don’t support it. 47.6% of voters support impeaching and removing Trump vs. 43.4% who oppose it.

According to the report, “some Republicans believe those surveys are overly weighted by left-leaning independents in states that won’t matter in 2020” – a theory which may hold water given the polling in swing states.

A Marquette University Law School survey of Wisconsin released last week found 46 percent supporting the impeachment inquiry, but 49 percent opposed. Just 44 percent say Trump should be impeached and removed from office, compared to 51 percent opposed.

And in Wisconsin, support for impeachment is far lower among independent voters. Just 35 percent of independents in Wisconsin say the impeachment hearings are warranted, and 33 percent say Trump should be impeached and removed from office.

Trump won Wisconsin by about 23,000 votes in 2016, in part because late-breaking undecided voters went his way. He was the first GOP presidential candidate to win the state since 1984. –The Hill

“On average, the national polls are showing slightly more support for the impeachment hearings and removal than Wisconsin is,” said Charles Franklin, who ran the Marquette University poll. “Independents are a little more reluctant to support impeachment at this point, although that could change as the evidence continues to roll out.”

New Hampshire polling, meanwhile, also reflects lower support for impeachment vs. national numbers, after a CNN-University of New Hampshire survey found that 42% support impeaching and removing Trump, while 51% are opposed. Notably, Hillary Clinton won New Hampshire by fewer than 3,000 votes.

And in Arizona, where Trump won by 3.6% over Clinton, an Emerson College poll finds that 50% of respondents oppose impeachment, while 44% support it.

Still, while voters in key swing states may oppose impeachment – the sheer number who do in the first place is concerning according to some Republicans.

“It’s not a good thing that bare majorities oppose removing Trump from office in these key states,” one GOP pollster told The Hill. “Removing the president from office should be a really big deal, almost unthinkable, and reserved for the biggest scandals or wrongdoing. So only eking out 51 percent or 52 percent opposition in these states isn’t good.”

“That said, these numbers definitely show that there’s lots of room for Democrats to handle this badly and hand Trump a second term,” they added.

“These data show that there’s still a lot of skepticism that Democrats have proven their case or are doing this for factual reasons rather than for purely partisan reasons. Right now, Trump’s numbers in these swing states aren’t good. He trails basically any Democrat. But Democrat over-reach on impeachment could give him a message to turn that around.“

Tyler Durden

Thu, 10/31/2019 – 12:19

Record Low Temps, Up To 50 Degrees Below Normal, Threaten To Wreck Rest Of Harvest Season

Authored by Michael Snyder via The End of The American Dream blog,

It isn’t supposed to be this cold in October. The official start of winter is still almost two months away, and yet the weather in much of the western half of the country right now resembles what we might expect in mid-January. All-time record lows for the month of October are being set in city after city, and this extremely cold air is going to push into the Midwest by the end of the week.

Temperatures in the heartland will be up to 50 degrees below normal, and unfortunately about half of all corn still has not been harvested. Due to unprecedented rainfall and extreme flooding early in the year, many farmers faced extraordinary delays in getting their crops planted, and so they were hoping that good weather at the end of the season would provide time for the crops to fully mature and be harvested. Unfortunately, a nightmare scenario has materialized instead. A couple of monster snow storms have already roared through the Midwest, and now record low temperatures threaten to absolutely wreck the rest of the harvest season.

When temperatures get significantly below zero for more than a few hours, scientists tell us that it will kill standing corn…

A significant freeze (28°F or colder for a few hours) will kill the whole plant, and any frost will act to defoliate plants, resulting in diminished grain filling for the seeds, especially on the upper half of the plants.

And right now we are facing a crisis because less than half of all U.S. corn has been harvested.

In fact, according to the latest USDA Crop Progress Report just 41 percent of all U.S. corn has been harvested so far…

In its weekly Crop Progress Report, the USDA pegged the U.S. corn harvest at 41% complete, below the trade’s expectation of 48% and below a five-year average 61%.

Minnesota is behind the most regarding picking corn: 22% vs. a 56% five-year average.

So when I used the term “nightmare scenario” earlier, I was not exaggerating.

The low temperatures that we have seen this week are hard to believe. According to USA Today, the temperature in one community in Utah actually hit 45 degrees below zero on Wednesday…

Subzero cold was recorded as far south as the Grand Canyon on Wednesday morning, the Weather Channel said. Big Piney, Wyoming, plunged to minus 24 degrees before sunrise Wednesday.

Notorious cold spot Peter Sinks, Utah, dipped to an incredible minus 45 degrees early Wednesday. This appeared to be the coldest October temperature on record anywhere in the Lower 48 states, according to Utah-based meteorologist Timothy Wright.

That is seriously cold.

And we have also seen many other all-time October lows in cities all across the western half of the country…

-Bozeman, Montana: minus 14 degrees (Oct. 29 and 30)

-Casper, Wyoming: minus 8 degrees (Oct. 29 and 30)

-Grand Junction, Colorado: 12 degrees (Oct. 30)

-Livingston, Montana: minus 12 degrees (Oct. 29)

-Rawlins, Wyoming: minus 20 degrees (Oct. 30)

-Rock Springs, Wyoming: minus 6 degrees (Oct. 30)

-Salt Lake City: 14 degrees (Oct. 30)

We have never seen anything like this during the month of October ever before.

In Denver, they have actually set record lows for three days in a row…

The temperature in Denver officially dropped to 3 degrees above zero early Wednesday morning. It was cold enough to shatter the previous record low for October 30 by 4 degrees. It was our third record temperature in 3 days and one more record is expected Thursday morning.

It is strange that so much of the nation is experiencing such bitterly cold weather while much of California is being burned to a crisp by horrific wildfires.

But this continues a theme that we have been tracking all year. Everywhere we look there have been bizarre weather extremes, and many expect that to continue into the winter season.

This week, even “warm weather cities” are experiencing extremely cold temperatures. For example, the forecast called for a record low of just 19 degrees in Albuquerque, New Mexico on Thursday morning…

Thursday morning in Albuquerque is expected to have a record low temperature of 19 degrees. It will feel like 11 degrees with the wind chill. The current record low for Oct. 31 in the city is 21.

According to the National Weather Service, locations from Albuquerque southward, including east central and southeast New Mexico, “have not seen temperatures this cold since February.”

But the real damage will be done as this extraordinarily cold air moves into the Midwest. According to USA Today, we could see temperatures “30 to 50 degrees below normal” in the central plains…

High temperatures Wednesday were forecast to be 30 to 50 degrees below normal across Colorado, Texas and the central Plains, according to meteorologist Ryan Maue of BAM Weather.

Right now, much of the Midwest is currently covered by snow. This has prevented a lot of farmers from being able to harvest their crops, and now devastatingly cold air is moving in.

It is likely that the crop losses in many areas will be severe. And considering what is going on elsewhere in the world right now, this is something that we cannot afford.

Despite all of our advanced technology, farmers are still deeply dependent on good weather, and if farmers do not grow our food we do not eat.

This was already going to be an absolutely abysmal year for U.S. agriculture, and now this snap of record cold weather is going to be the nail in the coffin for many U.S. farmers.

Without a doubt, this is an incredibly important story, and I will continue to keep you updated as I learn more.

Tyler Durden

Thu, 10/31/2019 – 12:00

Federal Judge Orders Georgia Sheriff To Stop Ritualistically Humiliating Registered Sex Offenders on Halloween

Long tried to repeat the stunt this year, but he was stymied by a federal lawsuit that three Butts County residents, Christopher Reed, Reginald Holden, and Corey McClendon, filed last week. They argued that deputies were illegally trespassing on their property to put up the signs, which are not required by state law. The plaintiffs also said the signs were a form of constitutionally prohibited compelled speech that caused “anxiety, embarrassment and humiliation.”

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How you can save tens of thousands of dollars in taxes by moving abroad

Milton Friedman, one of the most influential economists of the 20th century, once said that “nothing is more permanent than a temporary government program.”

The same can be said about temporary taxes.

Take 1861 for example, when the first-ever federal taxes were levied on American citizens to help pay for the Civil War.

At first these taxes were levied only on residents living in America. But the people in power argued that Americans living outside the country were evading their patriotic duty of helping pay for the war.

And so Congress temporarily extended the taxes to include all Americans, even those living abroad.

Of course, after the war was over, Congress ratified an amendment that cemented taxation by citizenship into the US constitution.

Over a hundred years later, the United States is still one of the only two countries in the world, (the other one is Eritrea) that imposes a worldwide taxes on all of its citizens, no matter where they live.

That makes it particularly difficult for US citizens to lower the amount of taxes they pay.

In spite of this, the good news is that there are several ways that US citizens can still slash their tax rates to virtually 0.

Reducing the amount of taxes that you pay is one of the best decisions you can make.

Rather than continue to finance wars, ballooning debt, body scanners and drone strikes, you can put that money to work in a way that actually benefits yourself, your family, or anyone else you choose.

For example, earlier this year I used my tax savings to personally pay rent for furloughed government employees during the government shutdown.

And the years prior to that I financed the recovery of a village in Nepal that was devastated by an earthquake.

I also paid more than $70,000 to fund an experimental surgery for a disabled veteran who lost his leg in Afghanistan.

(As a result of the procedure, he was able to dance at his wedding, and he has participated in a 5K race.)

All of these things were possible because I applied perfectly legitimate provisions in the tax code to reduce the amount that I owe.

And these strategies are available to everyone.

One of them is a special provision in the US tax code called the Foreign Earned Income Exclusion (FEIE).

It allows Americans who live abroad to earn up to $105,900 tax-free in 2019.

That amount varies and is indexed to inflation. So for example, in 2016, the amount was $101,300. In 2017, it was $102,100. And in 2019, it is $105,900.

Naturally, the IRS has strict rules as to what qualifies as foreign income, and whether or not you can qualify for the Foreign Earned Income Exclusion in the first place.

For example, the exclusion only applies to earned income from wages or salaries.

Investment income (dividends, capital gains, interest, etc.) or variable income (rents, royalties, etc.) will not qualify.

But if you also qualify for the Housing Exclusion or Deduction, you can save even more.

That’s because the Housing Exclusion or Deduction allows you to exclude your housing costs from your income tax as well, subject to certain limits depending on where you live.

That’s an unbelievable deal – and not one you come across very often.

Of course, you will still be required to pay taxes on your foreign income in the country that you live in.

However, you can move to a country that doesn’t tax the foreign income of its residents – like Panama – and pay no tax on that income (up to $105,900) at all.

That’s a pretty good deal (and Panama is a fantastic place to live).

The only requirement is that you actually live abroad and that the income is not US-sourced.

If you have a US LLC for example, and you are self-employed, you will still have to pay self-employment tax in the US, even if you qualify for the FEIE.

But you could re-incorporate offshore in a lower-tax jurisdiction, move overseas, and potentially pay zero tax on that income.

And paying no tax is just one of the many benefits of moving overseas.

It can potentially increase your freedom, your options, and your overall quality of life.

That’s why I made the leap over 15 years ago to seek greener pastures abroad. And I’ve never looked back.

If you want to learn how to lower your taxes by moving abroad, my team has created a free, in-depth article about the Foreign Earned Income Exclusion that you can read here.

Source

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ISIS Media Teases “Big Announcement” As Pentagon Warns Revenge Attack Imminent

As US officials say they are bracing for some of kind of ISIS revenge attacks after the successful American special forces raid which killed Abu Bakr al-Baghdadi, and as speculation abounds over just who will be named as successor to head the terror group, a prominent ISIS media channel is promoting that a “big announcement” is imminent.

Islamic State’s Al-Furqan Foundation, which has according to terrorism analysts released statements over the years only related to major developments, on midday Wednesday issued an Arabic statement which reads, “Coming Soon … By the Willingness of Allah the Almighty,” but did not reveal any further details.

BREAKING – #ISIS‘s high-level media channel, al-Furqan, says an announcement is forthcoming.

– #Baghdadi news & successor announcement, I’d assume. pic.twitter.com/R0RLuI8Eo5

— Charles Lister (@Charles_Lister) October 30, 2019

According to VOA News, the message has been shared widely on jihadist social media platforms, and is considered authentic:

The SITE Intelligence Group, which monitors jihadist communications, said supporters quickly began distributing the poster on social media platforms, with some expressing hope that Baghdadi was still alive while others were preparing to celebrate his martyrdom.

A number of Middle East analysts said they believed the announcement relates to naming a successor to the ‘caliphate’ and that a statement on the terror group’s future is likely to be included.

ISIS spokesman Abu Hassan al-Muhajir was also identified as having been killed in a follow-up operation near Syria’s border with Turkey. Muhajir was believed one of a likely list of candidates to replace Baghdadi.

U.S. Central Command’s General Kenneth McKenzie, who oversaw the Saturday operation to kill Baghdadi, told reporters this week that he’s under no illusion that this marks the final demise of the terror group. “ISIS is first and last an ideology, so we’re under no illusions that it’s going to go away because we killed Baghdadi,” the top general said. “It will remain.”

Nearly 24 hours later, still waiting for the announcement teased by #ISIS‘ al Furqan media wing… https://t.co/yRDQPPuDF3

— Jeff Seldin (@jseldin) October 31, 2019

Crucially McKenzie echoed the Pentagon belief that a revenge attack is coming, though without saying they had any concrete intelligence over anything in the making.

“We suspect they will try some form of retribution attack, and we are postured and prepared for that,” he told reporters at a Pentagon briefing.

Tyler Durden

Thu, 10/31/2019 – 11:40

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House Advances Impeachment Proceedings Against Trump

The House of Representatives voted Thursday to formally advance impeachment proceedings against President Donald Trump amid allegations that he improperly leveraged his position to dig up dirt on former Vice President Joe Biden, one of the Democratic frontrunners in the 2020 election.

The vote passed 232-196, with the tally mostly falling on party lines. Also voting in favor of the resolution was ex-Republican Rep. Justin Amash (I–Mich.), the first and only congressperson affiliated with the GOP to publicly endorse impeachment. The libertarian-leaning lawmaker left the Republican Party shortly afterward. Only two Democrats—Reps. Jeff Van Drew (D–N.J.) and Collin Peterson (D–Minn.)—defected.

House Speaker Nancy Pelosi (D–Calif.) spearheaded the vote after months of insisting that impeachment would be a strategically inept choice for Democrats. She made an about-face following revelations that Trump threatened to withhold congressionally authorized aid from Ukraine if President Volodymyr Zelensky failed to investigate Biden and his family.

The House vote is politically significant, as it sets the stage for public hearings, but it does not actually impeach Trump. That will likely come later.

“This resolution establishes the procedure for hearings that are open to the American people, authorizes the disclosure of deposition transcripts, outlines procedures to transfer evidence to the Judiciary Committee as it considers potential articles of impeachment, and sets forth due process rights for the President and his Counsel,” wrote Pelosi in a letter on Monday.

Fifteen witnesses this week have testified behind closed doors, much to the ire of conservative lawmakers. Their frustration culminated in a petulant display last Wednesday, when some of them stormed an impeachment inquiry testimony and delayed it for five hours.

“One of the cornerstones of American jurisprudence is due process—the right to confront your accuser, call witnesses on your behalf, and challenge the accusations against you,” tweeted Sen. Lindsey Graham (R–S.C.). “None of this is occurring in the House.” Republican congresspeople echoed those grievances during the floor debate on Thursday morning, criticizing Democrats for what they say is an overtly opaque process.

House Minority Leader Rep. Kevin McCarthy (R–Calif.) made it a free speech issue. “What do you think the definition of due process is? What do you think the First Amendment is?” he asked. “Do you have the right to have a voice, or only the words that you agree with?”

Although that position is politically expedient, it’s also intellectually dishonest. Graham, for one, supported articles of impeachment against President Bill Clinton based on closed-door interviews conducted by Independent Counsel Kenneth Starr. And the remaining complainants would do well to remember that it was their own party who created the impeachment rules that sanction these initial closed-door hearings. In 2015, Republicans led by then-Speaker John Boehner (R–Ohio) fashioned that guidance for the fact-gathering process, knowing full well that any impeached president would have his or her public day on trial.

“Senator Graham continues to mislead,” tweeted Amash. “The Constitution divides impeachment and trial between the House and Senate. The House impeachment is an indictment. The process he’s demanding happens in the Senate trial. No defendant participates in an indictment in the way he’s suggesting.”

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House Advances Impeachment Proceedings Against Trump

The House vote is politically significant, as it sets the stage for public hearings, but it does not actually impeach Trump. That will likely come later.

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Six Scary Charts To Spook Investors This Halloween

Authored by Laura Frost via BondVigilantes.com,

Financial markets can be a scary place for investors. The US economy is now in its longest expansion on record, the world is seeing record level of total debt and now even some corporate bonds have negative yields.

If you’ve carved a pumpkin, got your Halloween costume and been to see the latest scary movie, there’s only one thing left to do: take a look at the Bond Vigilantes team’s 2019 Scary Charts.

If you’re searching for some decent yield right now, high yield must be a good place to start, right? Year-to-date, investors have seen double-digit returns in high yield: around 12% and 9% in the US and EU index respectively. In our yield-deprived time, many who would normally be holding investment grade bonds have been willing to sacrifice credit quality and take a trip into high yield.

But watch out: when there has been the slightest sign of trouble in some large household names this year, these high yield tourists have wanted out at any price. Some high yield bonds have taken a plunge this year, even where the bonds have not defaulted.

So if you’re dipping your toes into high yield, make sure it’s based on a deep understanding of issuers and that there’s nothing lurking in the depths…

If you thought that bonds were the safe and boring part of your portfolio, think again. Take a look at these two bonds, the Argentina 8.75% 2024 and Austria 2.1% 2117.

After Argentina’s relatively market-friendly President Macri was trounced in the primary elections by populist Fernandez, Argentinian bonds were decapitated, with more than half their value chopped off. They now trade at around $40 per $100 par value.

Meanwhile, investors in Austria’s AA-rated 2117 bond this year will be patting themselves on the back for the trade of a lifetime. With a duration of over 50 years, downward pressure on bond yields this year saw the bond almost double in value.

Looking at European and US IG credit, trade wars clearly scared markets earlier this year. But the sell offs are getting smaller. It looks like the market may be suffering from trade war fatigue after so many headlines and tweets over the past few months. But might trade wars come back to spook the markets even further?

According to political hearsay, Democrat front-runner Elizabeth Warren is even more ferocious on trade than Donald Trump. She has also been called “the monopolist’s worst nightmare” due to her criticism of big tech companies, a large constituent of the US IG index. Although the 2020 elections seem a long way off, success for the Democrats may cause some ripples for markets.

While current IMF figures estimate that the US-China trade war has shaved 0.8% from global growth, with 0.5% added back by global monetary easing, could even more protectionism and larger potential tariffs in the future leave investors wishing for the days of Trump?

Equities are for growth and bonds for income, right? Not in Germany, France, Japan and the UK, where real yields are negative even up to 30 years. In Italy you need to invest for seven years to get a positive real yield.

No wonder investors are looking to emerging market debt in search of yield. Brazil and Mexico provide positive real yields, as does Turkey – but beware an upside surprise to inflation.

This is a scary measure of how far investors are being pushed just to get a positive yield.

If you’ve seen enough negative-yielding government debt by now not to be spooked by it, take a look at this next chart.

Even many corporate bonds are now negative yielding. This chart shows the face value of negative-yielding debt in the ICE BofAML Euro Corporate index: now as high as €1 trillion!

Most of this negative-yielding corporate debt is actually in the lower end of investment grade, namely A and BBB.

Here’s a scary statistic: total (public + private) debt in the world has never been higher. And looking at public debt alone, while its peak could be seen during and after the Second World War, government borrowing is at its highest peacetime level.

Taking UK debt as an example, a spike in borrowings can be seen since the 1700s whenever financing was required for a war or conflict. So what is going on now to explain the spike in government borrowing?

One answer may be the greater power of democracy in the world. In order to pay down its debt, a country must maintain a primary surplus. Put simply, it must raise more revenues through taxation than it spends on citizens. While governments in the past had the power to do this, who would vote to be subject to such an environment for long? We have seen the rise of populism in countries like Italy which have tried to move from deficit to surplus.

Governments and central banks have a scary problem in trying to keep public debt under control in this new world.

Tyler Durden

Thu, 10/31/2019 – 11:20