D.C.’s Cash-strapped Public Transit Agency Didn’t Know It Had Hundreds of $400 Gold Pins Sitting in Storage

Washington, D.C.’s largest public transportation agency has been sitting on a stash of gold and didn’t even know it.

A recent report found that the Washington Metropolitan Area Transportation Authority (WMATA)—which is responsible for running bus and rail transit service in and around the nation’s capital—was unaware that it had 204 14-karat gold pins (worth on average $426 per pin) in storage.

The revelations come as part of a critical report from WMATA’s Office of the Inspector General (OIG) on the transit agency’s storage practices, which found numerous problems with how the agency stored and accounted for its $144 million inventory of spare parts and equipment.

As other reporters have noted, the excess, unaccounted-for gold pins and sloppy storage practices are a bad look for a cash-strapped agency that is trying to save money through service cuts to some bus routes and fare hikes.

According to the OIG report, WMATA purchased 900 gold pins, for a total cost of $143,000, in 2013 as part of its Length of Service Recognition Program. The pins would be rewarded to employees to denote their years of service to WMATA.

During the course of the OIG investigation, the pins were discovered in WMATA’s main storeroom. The current official in charge of the service recognition program was unaware that the pins had been purchased, or that WMATA still had $87,000 worth of the pins in its possession. The actual distribution of the pins was also untraceable according to the OIG report.

Inspectors had two of the pins appraised, and determined that they were both made of 14-karat gold, and were worth $400 to $750 apiece.

The pins have since been moved to WMATA’s Human Recourses department, which runs the agency’s service recognition program. It’s unclear from the OIG report if the 204 pins were all from that 2013 order, and, if so, if the remaining 696 pins were distributed to employees or remain in storage.

WMATA did not respond to a request for comment for this article.

In addition to the pin problems, the OIG report also found that WMATA’s supply chain inventory responsibilities were fragmented across a number of different divisions and that the agency “could not accurately account for its total supply chain inventory or determine its value or location.”

The OIG found that WMATA had spent $800,000 in rent since 2012 on a remote storage facility, but didn’t have any staff assigned to control or distribute the items stored there. Inspectors who visited the facility found equipment left outside, or stored in unopened boxes marked 2008.

Since 2018, WMATA has, according to the OIG report, been trying to improve its inventory practices with its Supply Chaim Management Transformation Program. That initiative aims to centralize supply chain organization and hand over inventory management to WMATA vendors.

The OIG praised the initiative. It also issued five recommendations for further improvement, including using barcodes to track inventory and ensure all storerooms have video surveillance.

The report is another black eye for an agency that has suffered severe ridership declines and recently had a board member resign amidst corruption allegations.

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‘It Was Never About Corruption’: Giuliani Associate Says Trump Was Involved in Ukraine Scandal

An associate of Rudy Giuliani said this week that “President Trump knew exactly what was going on” in reference to a secret campaign to pressure Ukrainian President Volodymyr Zelenskiy to announce investigations into Trump’s political rivals. 

In a Wednesday evening interview with MSNBC’s Rachel Maddow, Lev Parnas, who was born in Ukraine and is now a naturalized U.S. citizen, disputed the idea that Trump was unaware of his and Giuliani’s efforts to compromise Democratic presidential frontrunner Joe Biden. Parnas said that the “main lie” he can correct is that “Trump didn’t know” about their actions in Ukraine. Both Parnas and Giuliani, who is Trump’s personal lawyer, are implicated in efforts to have Zelenskiy publicly announce probes into former Vice President Joe Biden and his family. In December, the House of Representatives impeached Trump for the scandal.

“It was never about corruption,” said Parnas.

Parnas is currently under indictment for multiple campaign finance violations, which include allegedly making hundreds of thousands of illegal straw donations to a super PAC that supported Trump. 

“I wouldn’t do anything without the consent of Rudy Giuliani or the president. I have no intent, I have no reason to speak to any of these officials,” Parnas told Maddow. “I mean, they have no reason to speak to me. Why would President Zelenskiy’s inner circle or Minister Avakov or all these people or President Poroshenko meet with me? Who am I? They were told to meet with me. And that’s the secret that they’re trying to keep. I was on the ground doing their work.”

His statements coincide with documents released by House Democrats on Tuesday, which provide additional evidence that Trump was aware of Giuliani’s actions. The records include a letter from Giuliani to Zelenskiy in which Trump’s lawyer requests a meeting and says the president has “knowledge and consent” of his efforts. Also among the documents was a handwritten note from Parnas that says, “get Zalensky to Annouce that the Biden case will Be Investigated.” 

Democrats are likely to highlight evidence of that suggests Trump knew about the efforts to persuade Zelenskiy, particularly since Republicans have repeatedly claimed in congressional hearings that the president could have been unaware and therefore not directly involved with the effort. 

Parnas told Maddow that Vice President Mike Pence was also aware of the situation and that he canceled his trip to attend Zelenskiy’s inauguration because the Ukrainian leader had not yet agreed to publicly announce the probes into the Bidens. Parnas further said that he worked with Rep. Devin Nunes (R–Calif.) and one of his close aides to secure the investigations; he noted that he was surprised to see Nunes front-and-center at the House impeachment hearings because he was “involved in getting all this stuff.” Nunes admitted Wednesday that he spoke with Parnas, but characterized him as a “person who doesn’t tell the truth.”

And while he says he never communicated directly with Attorney General Bill Barr, Parnas claimed that he was privy to “lots of conversations” between Giuliani and Barr that the two had in front of Parnas. “Mr. Barr had to have known everything. I mean, it’s impossible,” Parnas told Maddow. “Attorney General Barr was basically on the team.”

The articles of impeachment accuse Trump of abuse of power and obstruction of Congress. His Senate trial is likely to start next week, where he is expected to be acquitted.

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D.C.’s Cash-strapped Public Transit Agency Didn’t Know It Had Hundreds of $400 Gold Pins Sitting in Storage

Washington, D.C.’s largest public transportation agency has been sitting on a stash of gold and didn’t even know it.

A recent report found that the Washington Metropolitan Area Transportation Authority (WMATA)—which is responsible for running bus and rail transit service in and around the nation’s capital—was unaware that it had 204 14-karat gold pins (worth on average $426 per pin) in storage.

The revelations come as part of a critical report from WMATA’s Office of the Inspector General (OIG) on the transit agency’s storage practices, which found numerous problems with how the agency stored and accounted for its $144 million inventory of spare parts and equipment.

As other reporters have noted, the excess, unaccounted-for gold pins and sloppy storage practices are a bad look for a cash-strapped agency that is trying to save money through service cuts to some bus routes and fare hikes.

According to the OIG report, WMATA purchased 900 gold pins, for a total cost of $143,000, in 2013 as part of its Length of Service Recognition Program. The pins would be rewarded to employees to denote their years of service to WMATA.

During the course of the OIG investigation, the pins were discovered in WMATA’s main storeroom. The current official in charge of the service recognition program was unaware that the pins had been purchased, or that WMATA still had $87,000 worth of the pins in its possession. The actual distribution of the pins was also untraceable according to the OIG report.

Inspectors had two of the pins appraised, and determined that they were both made of 14-karat gold, and were worth $400 to $750 apiece.

The pins have since been moved to WMATA’s Human Recourses department, which runs the agency’s service recognition program. It’s unclear from the OIG report if the 204 pins were all from that 2013 order, and, if so, if the remaining 696 pins were distributed to employees or remain in storage.

WMATA did not respond to a request for comment for this article.

In addition to the pin problems, the OIG report also found that WMATA’s supply chain inventory responsibilities were fragmented across a number of different divisions and that the agency “could not accurately account for its total supply chain inventory or determine its value or location.”

The OIG found that WMATA had spent $800,000 in rent since 2012 on a remote storage facility, but didn’t have any staff assigned to control or distribute the items stored there. Inspectors who visited the facility found equipment left outside, or stored in unopened boxes marked 2008.

Since 2018, WMATA has, according to the OIG report, been trying to improve its inventory practices with its Supply Chaim Management Transformation Program. That initiative aims to centralize supply chain organization and hand over inventory management to WMATA vendors.

The OIG praised the initiative. It also issued five recommendations for further improvement, including using barcodes to track inventory and ensure all storerooms have video surveillance.

The report is another black eye for an agency that has suffered severe ridership declines and recently had a board member resign amidst corruption allegations.

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“Reckless” Fed-Liquidity-Driven Momo Meltup Is Creating “Dangerous Market Conditions”

“Reckless” Fed-Liquidity-Driven Momo Meltup Is Creating “Dangerous Market Conditions”

Authored by Sven Henrich via NorthmanTrader.com,

Watch This!

Don’t tell the complacent but the never ending rally is becoming ever more dangerous. As $ES is currently trading above 3300 it’s now not only extending over 10% above the 200MA it is also now already within a stone’s throw of what used to be considered aggressive price targets for year end of 2020. On January 16. Lol.

Recall on December 16 BAML called for an aggressive front loaded $SPX target of 3,333 by March 3. Heck, we may get there this week. More lol.

And of course at 3305 $ES is already a mere 3%-5% from the highest 3,400-3,500 year end targets outlined by several Wall Street analysts baking in good news and earnings growth:

As if earnings still matter. They didn’t last year. At the current rate of continued levitation $SPX would simply need another few weeks to get to these targets.

Of course we know why all his happening. I’ve talked about it in Ghosts of 2000, Repo Lightning and He Knows.

Yesterday Dallas Fed President doubled down on admitting it as well: The Fed’s behind it all.

Kaplan:

“Recent Federal Reserve interest-rate moves seem to have given investors a green light to buy risky assets and this is a concern, said Dallas Fed President Robert Kaplan on Wednesday. “I’m conscious all three of those actions are contributing to elevated risk asset valuations and I think we ought to be sensitive to that at the FOMC and I certainly am,” he said. 

While the Fed’s recent purchases of short-term Treasury bills is not technically quantitative easing (QE) because the Fed is not buying securities all along the yield curve, it is having similar effects, he said.

“My own view is [buying bills] is having some effect on risk assets. It is a derivative of QE in that when we buy bills and we inject more liquidity, it affects all risk assets,” Kaplan said.

“Growth in the balance sheet is not free. There is a cost to it,” he said.”

He knows, they know, we know. What we’re seeing here is all the Fed, nothing else.

And as such the liquidity program is relentlessly driving asset prices higher and stretching charts and producing massive technical disconnects.

As such this liquidity event is not that different from the one we saw in the lead up to the January 2018 blow-off top:

Relentless, vertical one way action, massive overbought readings and then suddenly a risk reversion that came suddenly and within a 9 day period 3 months of relentless buying were wiped out.

Could something similar set up here? Possibly. Certainly within the realm of possibilities.

Here was the run up to January 2018:

On the way down it sliced through all the support and didn’t stop until the 200MA.

Back then $SPX extended over 13% above its 200MA. Currently $SPX is 10% extended above its 200MA with $VIX very much compressed.

Watch this:

Liquidity driven momentum rallies can keep going beyond all reason or fundamental basis, that’s what bubbles are all about.

The Fed knows what it’s doing and keeps insisting on doing it:

As the liquidity machine remains in operation one can’t exclude the possibility that this keeps going. Who’s to say it can’t? A repeat of January 2018 with a 13%+ extension above the 200MA would drive $SPX cash into the 3400 zone.

In Popping the Bubble I talked about a technical fib zone just above as a technical possibility:

Am I calling for this move from here? No. I’m merely pointing out the technical precedence following a massive liquidity event. Tax cuts back then, Fed printing now. And hence such a repeat cannot be excluded as a possibility.

At the same time patterns and valuations are so stretched that this market remains under immediate reversion risk and once that reversions triggers (markets will find an excuse) then it’ll become a matter of Fed control and technical support levels to determine where the correction then stops and runs its path. So yes, in a way I’m saying we can keep going up while at risk of reverting at any moment. I’m saying this because that’s the reality of the situation.

I maintain that volatility is setting up for an event and this Fed driven liquidity momentum rally is producing reckless behavior and dangerous market conditions, none of which will matter until a reversal kicks in. But when it does, not if, watch this. It will be fast and furious.

*  *  *

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Tyler Durden

Thu, 01/16/2020 – 15:05

Tags
Business Finance

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Pentagon Confirms ISIS Resurgent In Libya At Moment Turkey Transfers 2,000 Syrian Fighters

Pentagon Confirms ISIS Resurgent In Libya At Moment Turkey Transfers 2,000 Syrian Fighters

This might come as a surprise to the broader American public and a mainstream media which has largely ignored recent escalating events in Libya, but guess who’s back?

“The Donald Trump administration is seeing a “small” resurgence in the Islamic State’s numbers in Libya since strongman Khalifa Hifter began a bloody march on the capital Tripoli more than two months ago, the Pentagon’s second-ranking military official said” reports Al-Monitor’s Pentagon correspondent.

Fighters of Libyan forces allied with the U.N.-backed Government of National Accord (GNA) fire a rocket at Islamic State fighters in Sirte, Libya, on August 4, 2016. Source: Reuters.

The Pentagon official, Vice Chairman of the Joint Chiefs of Staff Paul Selva, described the currently stalemated fight for Tripoli between Benghazi-based Gen. Khalifa Haftar and the UN-recognized and Turkey-backed GNA in the capital as giving breathing space for the Islamic State’s return to the country.

Within the past three years, amid the chaos in the wake of the US-NATO 2011 war which toppled Gaddafi, ISIS actually had a stronghold in the coastal city of Sirte before being booted by US-backed Libyan forces. 

But now, as General Paul Selva explains: “Because they’re now going after one another in the capital, it’s actually taking their attention off of IS and we’ve seen a small resurgence of those [IS] camps in the central region.” Alarmingly, per Al-Monitor’s report, this gives an opening for ISIS to become a “third party” in the war:

US troops helping to fight IS in Libya left the country in April as security conditions deteriorated. Selva said he worried about IS becoming a “third party in the fight in Libya.”

These dire statements also follow on the heels of US ally King Abdullah of Jordan warning while attending a NATO conference in Belgium that ISIS is indeed on the rise in Libya and now sits closer than ever to Europe’s shores. He specifically identified Turkey’s efforts to transfer Syrian ‘rebel’ militants from FSA factions to Libya as potentially fueling the crisis. 

ISIS attack on Libyan foreign ministry building (GNA) in Tripoli, Libya in 2018. Image source: Reuters

New reporting in The Guardian confirms that some two thousand Syrian militants are already en route with Turkish military support:

Two thousand Syrian fighters have traveled from Turkey or will arrive imminently to fight on the battlefields of Libya, Syrian sources in all three countries have said, in an unprecedented development that threatens to further complicate the north African state’s intractable civil war.

The deployment came after Turkey agreed last month to come to the aid of the Libyan prime minister, Fayez al-Sarraj, who is backed by the UN, in the face of a months-long campaign by his rival, the warlord Khalifa Haftar.

We previously described this as a jihadists and arms “rat line” in reverse of sorts. It must be remembered that both Turkish and US intelligence oversaw the transfer of both heavy weaponry and jihadist fighters to Syria from already war-torn Libya for the purpose of toppling Assad in the early years of the Syrian war. It’s just now the jihadist pipeline across the Mediterranean has been reversed. 

The Guardian report also details that the Syrian mercenaries are getting paid significant sums via Turkish state coffers to deploy in support of the Tripoli government, which Ankara has long backed against Haftar: 

The fighters have signed six-month contracts directly with the UN-backed Government of National Accord (GNA), rather than with the Turkish military, SNA sources said, for $2,000 (£1,500) a month – a vast sum compared with the 450-550 Turkish lira (£52-£72) a month they earn in Syria. All have been promised Turkish nationality, a carrot Ankara has used to cajole fighters in brigades on its payroll for several years.

And at least four Syrian FSA militants have already died during recent fighting in Libya:

Turkey is also paying medical bills for injured soldiers and is responsible for repatriating the dead to Syria. At least four Syrians have died in Libya already, the Guardian can confirm…

Though again long ignored in the media (which has by and larged “moved on” after Obama and Hillary’s so-called “liberation” of the country from Gaddafi), the Libya War 2.0 is set to possibly be 2020’s biggest conflict alongside the potential for the Iran situation to explode further. 

* * *

“We came, we saw, he died!”… Thanks Hillary. 


Tyler Durden

Thu, 01/16/2020 – 14:50

Tags
War Conflict
Politics

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Trump’s Trade Deal With China Is Better Than a Trade War With China. But a $200 Billion Question Remains.

President Donald Trump inked his so-called “Phase One” trade deal with China earlier this week, putting in place a framework that the White House says will boost economic growth and protect American intellectual property.

As the “Phase One” name would indicate, this isn’t really an end to the trade war—in fact, nearly all the tariffs imposed by both the United States and China since hostilities commenced in July 2018 will remain in effect. Still, after 18 months of escalation and retaliation, the signing of a partial trade deal is a welcome sign that cooler heads have prevailed in Washington and Beijing.

And, indeed, the Trump administration does deserve credit for getting stronger protections for intellectual property into the deal, though it remains unclear whether those provisions can be meaningfully enforced. China has also agreed to make a series of changes to its financial services regulations that should allow competition from U.S. banks. That’s potentially more important than it might appear because it reduces the odds that the world’s two largest economies will fully de-couple from one another in the future.

Outside the specifics of the deal, the past year and a half may have altered the U.S.-China relationship in productive ways. “American credibility has been greatly enhanced” by the trade war, writes Tyler Cowen, an economist at George Mason University, in a column for Bloomberg. By standing up to China and demonstrating a willingness to endure the economic pain caused by the tariffs, Cowen argues, Trump has changed the calculus for how China can expect the U.S. to respond as it continues to grow. Only time will tell if that’s right.

And, of course, the deal is a political win for Trump as he heads into a re-election campaign

But the biggest part of the trade deal—a promise that China will boost its purchases of U.S. exports by $200 million over the next two years—should be viewed with skepticism. That part of the deal might also make pro-market reforms in China more difficult, and it reveals (once again) something about Trump’s own, skewed views of international trade.

Using 2017, the last year before the trade war began, as a baseline, China has agreed to buy $77 billion in additional U.S. goods (agricultural, manufacturing, and energy exports all count towards that total) this year, and another $123 billion extra in 2021.

In 2017, total U.S. exports to China equaled about $186 billion. That means Trump is asking China to increase its purchases of U.S. goods by around 60 percent—a great leap forward that The Wall Street Journal describes as “an unprecedented jump in bilateral trade.”

Even if China manages to stuff that much American corn and soy down the gullets of its people and livestock, it might be worth asking if $200 billion in exports is worth the cost.

Forcing China to buy more U.S. goods “directly contradicts the negotiating demand that China liberalize its economy and relax centralized control over trade and investment,” writes Dan Griswold, a senior research fellow at the Mercatus Center, a free market think tank. “With its demand that the Chinese government fulfill what are in effect quotas on purchases of U.S. goods and services, the Trump administration is only reinforcing the sway of the hardliners in Beijing at the expense of more pro-market reformers. All for a promise of more exports that may or may not ultimately materialize.”

In many ways, this speaks to Trump’s fundamental misunderstanding about how trade works. The president sees countries as if they were corporations: employing people to produce goods, while buying and selling with other countries. This is why he’s been so fixated on the trade deficit. If you think of America as a single company, then buying more than you sell means you are losing money.

But, of course, America is not a single company, American companies are not subsidiaries of the White House’s fictional national corporation, and American workers are not the president’s employees.

While national government aggregate data about trade for a variety of reasons, the reality is that trade happens in an incredible diffuse way. It is the result of millions of individual decisions made by consumers and businesses every day. When “America” trades with “China,” what’s really happening is that some individual within America is trading with some individual inside China.

Or at least that’s how it should be. It’s true, of course, that China’s communist government retains considerable control over markets inside the country. But requiring China to buy more American goods isn’t the way to encourage more liberalization.

“This is essentially the administration saying, ‘We’ve given up on saying we want you to become more market-oriented,'” Chad Bown, a senior fellow at the Peterson Institute for International Economics, tells The Wall Street Journal.

It’s also not clear whether China buying $200 billion of additional U.S. exports will actually add to overall American economic growth. It’s possible that China could simply buy up exports that would have otherwise gone to other countries. That outcome might reduce America’s trade deficit with China, but it wouldn’t boost U.S. exports overall or help grow American farms or manufacturing—yet another reason why Trump’s fixation on the trade deficit is counterproductive.

And as long as Trump’s tariffs remain in place—there are no plans to lift them right now—they will continue to harm American manufacturing and be a drag on exports. Because tariffs raise the cost of manufacturing in the United States by taxing imported component parts, they have the added effect of making finished products more expensive, and thus less competitive on the global market. The Institute of International Finance estimates that the trade war has cost the U.S. about $40 billion in “lost exports.“

China agreeing to buy more farm goods and energy from the United States won’t fix those underlying issues. Unless the tariffs are lifted, Trump’s “Phase One” trade deal could end up helping China’s socialist regime tighten its grip on free markets while providing little to no relief for Americans.

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‘It Was Never About Corruption’: Giuliani Associate Says Trump Was Involved in Ukraine Scandal

An associate of Rudy Giuliani said this week that “President Trump knew exactly what was going on” in reference to a secret campaign to pressure Ukrainian President Volodymyr Zelenskiy to announce investigations into Trump’s political rivals. 

In a Wednesday evening interview with MSNBC’s Rachel Maddow, Lev Parnas, who was born in Ukraine and is now a naturalized U.S. citizen, disputed the idea that Trump was unaware of his and Giuliani’s efforts to compromise Democratic presidential frontrunner Joe Biden. Parnas said that the “main lie” he can correct is that “Trump didn’t know” about their actions in Ukraine. Both Parnas and Giuliani, who is Trump’s personal lawyer, appear to have used congressionally approved military aid as a carrot to get Zelenskiy to publicly announce investigations into former Vice President Joe Biden and his family. In December, the House of Representatives impeached Trump for the scandal.

“It was never about corruption,” said Parnas.

Parnas is currently under indictment for multiple campaign finance violations, which include allegedly making hundreds of thousands of illegal straw donations to a super PAC that supported Trump. 

“I wouldn’t do anything without the consent of Rudy Giuliani or the president. I have no intent, I have no reason to speak to any of these officials,” Parnas told Maddow. “I mean, they have no reason to speak to me. Why would President Zelenskiy’s inner circle or Minister Avakov or all these people or President Poroshenko meet with me? Who am I? They were told to meet with me. And that’s the secret that they’re trying to keep. I was on the ground doing their work.”

His statements coincide with documents released by House Democrats on Tuesday, which provide additional evidence that Trump was aware of Giuliani’s actions. The records include a letter from Giuliani to Zelenskiy in which Trump’s lawyer requests a meeting and says the president has “knowledge and consent” of his efforts. Also among the documents was a handwritten note from Parnas that says, “get Zalensky to Annouce that the Biden case will Be Investigated.” 

Democrats are likely to highlight evidence of that suggests Trump knew about the efforts to persuade Zelenskiy, particularly since Republicans have repeatedly claimed in congressional hearings that the president could have been unaware and therefore not directly involved with the effort. 

Parnas also said that Vice President Mike Pence was aware of the situation and that he canceled his trip to attend Zelenskiy’s inauguration because the Ukrainian leader had not yet agreed to publicly announce the probes into the Bidens. Parnas also said he worked with Rep. Devin Nunes (R–Calif.) and one of his close aides to secure the investigations; he told Maddow he was surprised to see Nunes front-and-center at the House impeachment hearings because he was “involved in getting all this stuff.” Nunes admitted Wednesday that he spoke with Parnas, but characterized him as a “person who doesn’t tell the truth.”

And while he says he never communicated directly with Attorney General Bill Barr, Parnas noted that he was privy to “lots of conversations” between Giuliani and Barr that the two had in front of Parnas. “Mr. Barr had to have known everything. I mean, it’s impossible,” Parnas told Maddow. “Attorney General Barr was basically on the team.”

The articles of impeachment accuse Trump of abuse of power and obstruction of Congress. His Senate trial is likely to start next week, where he is expected to be acquitted.

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Trump’s Trade Deal With China Is Better Than a Trade War With China. But a $200 Billion Question Remains.

President Donald Trump inked his so-called “Phase One” trade deal with China earlier this week, putting in place a framework that the White House says will boost economic growth and protect American intellectual property.

As the “Phase One” name would indicate, this isn’t really an end to the trade war—in fact, nearly all the tariffs imposed by both the United States and China since hostilities commenced in July 2018 will remain in effect. Still, after 18 months of escalation and retaliation, the signing of a partial trade deal is a welcome sign that cooler heads have prevailed in Washington and Beijing.

And, indeed, the Trump administration does deserve credit for getting stronger protections for intellectual property into the deal, though it remains unclear whether those provisions can be meaningfully enforced. China has also agreed to make a series of changes to its financial services regulations that should allow competition from U.S. banks. That’s potentially more important than it might appear because it reduces the odds that the world’s two largest economies will fully de-couple from one another in the future.

Outside the specifics of the deal, the past year and a half may have altered the U.S.-China relationship in productive ways. “American credibility has been greatly enhanced” by the trade war, writes Tyler Cowen, an economist at George Mason University, in a column for Bloomberg. By standing up to China and demonstrating a willingness to endure the economic pain caused by the tariffs, Cowen argues, Trump has changed the calculus for how China can expect the U.S. to respond as it continues to grow. Only time will tell if that’s right.

And, of course, the deal is a political win for Trump as he heads into a re-election campaign

But the biggest part of the trade deal—a promise that China will boost its purchases of U.S. exports by $200 million over the next two years—should be viewed with skepticism. That part of the deal might also make pro-market reforms in China more difficult, and it reveals (once again) something about Trump’s own, skewed views of international trade.

Using 2017, the last year before the trade war began, as a baseline, China has agreed to buy $77 billion in additional U.S. goods (agricultural, manufacturing, and energy exports all count towards that total) this year, and another $123 billion extra in 2021.

In 2017, total U.S. exports to China equaled about $186 billion. That means Trump is asking China to increase its purchases of U.S. goods by around 60 percent—a great leap forward that The Wall Street Journal describes as “an unprecedented jump in bilateral trade.”

Even if China manages to stuff that much American corn and soy down the gullets of its people and livestock, it might be worth asking if $200 billion in exports is worth the cost.

Forcing China to buy more U.S. goods “directly contradicts the negotiating demand that China liberalize its economy and relax centralized control over trade and investment,” writes Dan Griswold, a senior research fellow at the Mercatus Center, a free market think tank. “With its demand that the Chinese government fulfill what are in effect quotas on purchases of U.S. goods and services, the Trump administration is only reinforcing the sway of the hardliners in Beijing at the expense of more pro-market reformers. All for a promise of more exports that may or may not ultimately materialize.”

In many ways, this speaks to Trump’s fundamental misunderstanding about how trade works. The president sees countries as if they were corporations: employing people to produce goods, while buying and selling with other countries. This is why he’s been so fixated on the trade deficit. If you think of America as a single company, then buying more than you sell means you are losing money.

But, of course, America is not a single company, American companies are not subsidiaries of the White House’s fictional national corporation, and American workers are not the president’s employees.

While national government aggregate data about trade for a variety of reasons, the reality is that trade happens in an incredible diffuse way. It is the result of millions of individual decisions made by consumers and businesses every day. When “America” trades with “China,” what’s really happening is that some individual within America is trading with some individual inside China.

Or at least that’s how it should be. It’s true, of course, that China’s communist government retains considerable control over markets inside the country. But requiring China to buy more American goods isn’t the way to encourage more liberalization.

“This is essentially the administration saying, ‘We’ve given up on saying we want you to become more market-oriented,'” Chad Bown, a senior fellow at the Peterson Institute for International Economics, tells The Wall Street Journal.

It’s also not clear whether China buying $200 billion of additional U.S. exports will actually add to overall American economic growth. It’s possible that China could simply buy up exports that would have otherwise gone to other countries. That outcome might reduce America’s trade deficit with China, but it wouldn’t boost U.S. exports overall or help grow American farms or manufacturing—yet another reason why Trump’s fixation on the trade deficit is counterproductive.

And as long as Trump’s tariffs remain in place—there are no plans to lift them right now—they will continue to harm American manufacturing and be a drag on exports. Because tariffs raise the cost of manufacturing in the United States by taxing imported component parts, they have the added effect of making finished products more expensive, and thus less competitive on the global market. The Institute of International Finance estimates that the trade war has cost the U.S. about $40 billion in “lost exports.“

China agreeing to buy more farm goods and energy from the United States won’t fix those underlying issues. Unless the tariffs are lifted, Trump’s “Phase One” trade deal could end up helping China’s socialist regime tighten its grip on free markets while providing little to no relief for Americans.

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Chief Inclusion Officer Flashes Profanity-Laced Anti-Trump Sign

Chief Inclusion Officer Flashes Profanity-Laced Anti-Trump Sign

Authored by Jonathan McCormick via CampusReform.org,

A head inclusion officer at one Michigan school is in hot water after appearing outside a Trump rally holding a profane protest sign.

On Dec. 18, President Donald Trump held a rally in Battle Creek, Michigan. During that time, Chief Equity and Inclusion Officer Jorge Zeballos of Kellogg Community College (KCC) protested, holding a sign that read, “F**K TRUMP, F**K McConnell, F**K GRAHAM,” outside the Kellogg Arena where Trump was speaking.

Zeballos posted a selfie of himself holding the sign on Facebook, then deleted it, according to multiple sources. However, at least one screenshot was acquired of Zeballos’ post before all traces were allegedly removed.

Zeballos later acknowledged posting the selfie with a follow-up post, as “Renk” from the radio show Live With Renk  pointed out. 

 “Recently I posted a picture on my [Facebook] page of me holding a sign at a rally to protest Trump’s visit to Battle Creek,” wrote Zeballos.

“While I stand by my first amendment right to express myself, I understand that my public and private actions have repercussions on the institution I work for, Kellogg Community College. Because of this, I deeply regret posting the picture on my Facebook page and the controversy it has generated.”

Zeballos insisted that “anyone that has interacted” with him “knows that he strives “to have respectful dialogue on some of the most challenging issues with anyone that holds a different opinion than mine. This incident doesn’t change who I am and what I stand for, creating a more equitable and inclusive society,” added Zeballos.

The KCC Board of Trustees issued a statement regarding Zeballos’ conduct clarifying that “The KCC employee in question was expressing his personal opinion on his own time, and not acting on behalf of the College.”

“KCC is a politically neutral, tax-funded institution of higher learning, and does not side with any political party or campaign message,” added the college. 

The school called the situation a “teachable moment” and a “healthy reminder” that individual actions can reflect poorly on the school.

“Whether that impact affects an individual’s employment status at KCC, positively or negatively, is a determination made via KCC’s ongoing performance management process, which is appropriately confidential and involves an employee and others empowered by the institution to manage performance,” the school added.

“At KCC, our mission is to provide accessible, high-quality education to enrich our community and the lives of individual learners. As a marketplace of ideas, we remain committed to freedom of speech and freedom of expression as guaranteed by the U.S. Constitution. We also remain committed to creating an inclusive environment where we celebrate commonalities and foster respect for others and our differences.”

Campus Reform previously reported on KCC getting sued for arresting YAL members recruiting on campus, for which KCC settled for $55,000 and updated its free speech policies. 

Regarding Zeballos’ profane protesting, a conservative student who asked to remain anonymous told Campus Reform, “Not surprisingly, local media seems to be largely silent on the story, including the local newspaper the Battle Creek Enquirer. …This past year the faculty and staff were required to attend several mandatory diversity training sessions led by Zeballos that were described by some as ‘hating whitey.’ Zeballos usually appears very unfriendly in the hallways and rarely has a smile to offer. How could any conservative student or employee feel comfortable with this man setting the tone for the institution’s one-way equity policy[?] As a conservative, I never open my mouth about anything to anyone at the school.” 

“I have yet to come across another conservative voice,” said the student.

“I’m sure they likely exist there, though probably a minority, but must remain hidden or face certain reprisal from a system that seemingly only values liberal thought.”

Local community member Joni Jones told Campus Reform, “I am a tax-paying citizen of Battle Creek. I  was directed to Jorge Zeballos’ publicly-available FB page and this picture by a friend who knew that I have deep concerns as to what we see happening with some of these ‘Equity,’ ‘Diversity’ & ‘Inclusion’ initiatives at our public institutions of higher education. I was shocked to find this picture and even more disturbed that some of KCC’s Board members (who are FB ‘friends’ with Mr. Zeballos) had not pressured him to remove the post.”

“Mr. Zeballos has every right to protest and to express himself, however, he is bound by a professional code of conduct as an employee of KCC, knowing that his conduct and speech will also be associated with the college,” said Jones. 

“He has violated the very goals that are listed on the ‘Equity & Inclusion’ page of KCC’s website. His behavior, in no way, fosters or promotes civility and does not advance dialogue. To the contrary, it will have the effect of squelching free speech on campus, as those students with conservative leanings are likely to be intimidated into silence. That is NOT what colleges and universities are supposed to be about and it has to stop.”

KCC pledges a commitment to, “creating an inclusive environment where we foster respect for others and our differences, support cultural understanding, demonstrate ethical behavior and champion social justice,” by “valuing the lived experiences and perspectives of others.”

Campus Reform has reached out to Zeballos, and the KCC Board of Trustees for comment but did not receive a response in time for publication.


Tyler Durden

Thu, 01/16/2020 – 14:39

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Education

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87% Of Participants At Goldman Conference Say Trump Will Get Re-elected

87% Of Participants At Goldman Conference Say Trump Will Get Re-elected

If Wall Street is where, for better or worse, the forward-looking “creme de la creme” of US society resides, then Democrats may as well pack it in: as Goldman strategist Lilia Peytavin writes, yesterday Goldman Sachs held its annual Global Strategy Conference in London, which was attended by over 250 clients. During two of the sessions the bank surveyed audience members on their views and outlook.

And while Goldman asked a bevy of interesting questions, the most interesting one was “Will President Trump Win A Second Term?” The answer? A whopping majority (87%) of respondents believe so, even though the S&P 500 12-month 25-delta skew stands in its 97th percentile (73th percentile in 3 months), suggesting that demand for equity put options has increased as investors seek protection against a post-election drawdown (then again, Wall Street was convinced that Hillary Clinton would win in 2016 so nobody really has any idea).

Some other questions asked at the conference:

When will the US economy go into recession? Recession fears have been pushed further out. 2022 is the modal expectation (38%), but only marginally more than 2021 (35%). Very few participants (5%) expect a recession this year, as is often the case. Recession fears have been pushed further out compared with last year. Indeed, while this year the modal result is 2022 (n+2), last year the mode was 2020 (n+1), with 45% of responses.

Will the Fed cut again this year?  A large majority of clients (67%) expect the Fed to remain on hold in 2020, in line with the Fed’s guidance and our expectation. The distribution of answers is skewed towards a cut rather than a hike, as slightly fewer than one-third of respondents believe that the Fed will cut. This is the opposite of last year’s results: while just 4% of respondents expect the Fed to hike this year, 71% of respondents were expecting at least one hike in 2019. The bond market was pricing zero cuts and just 2% of respondents thought the Fed would cut interest rates. This a posteriori inadequate positioning triggered a sharp re-rating for equities following the dovish ‘pivot’ in the Fed’s guidance in January 2019 and the actual three cuts of the Fed through the course of the year.

Where do you expect US 10-year yields to end 2020? Most clients (52%) expect US 10-year yields, currently trading at 1.79%, to remain in their current range (1.5% to 2.0%). The distribution of answers is skewed towards higher yields, given that 39% of clients expect them to be above 2.0%. Given that we saw in Question 2 that just 4% of clients expect the Fed to hike, this suggests that respondents expect a Goldilocks environment in 2020, with anchored policy rates and inflation/growth expectations pushing up bond yields modestly.

When will we have the next bear market? Two-thirds of respondents are constructive on global equities, expecting single-digit returns in 2020. That said, 45% expect a bear market in 2021.

In 2020, global equity returns will be:  There is little consensus: US, Asia ex Japan and Europe attracted a similar number of votes (around 25%, respectively). Japan is the least preferred region (only 10% of respondents expect it to outperform), followed by Other EM (17%).

Which equity region will perform best in 2020 (in local currency terms)? There is little consensus: US, Asia ex Japan and Europe attracted a similar number of votes (around 25%, respectively). Japan is the least preferred region (only 10% of respondents expect it to outperform), followed by Other EM (17%).

Which style will perform best in 2020?  Views are fairly mixed. A slight majority (54%) expect Cyclical and Value stocks to outperform in 2020. About 46% of respondents expect Defensives, Growth and Quality stocks to do better.


Tyler Durden

Thu, 01/16/2020 – 14:20

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Business Finance

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