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Update: President Trump has also noticed the ridiculous choice of Kris as FBI overseer…

You can’t make this up! David Kris, a highly controversial former DOJ official, was just appointed by the FISA Court to oversee reforms to the FBI’s surveillance procedures. Zero credibility. THE SWAMP! @DevinNunes @MariaBartiromo @FoxNews

— Donald J. Trump (@realDonaldTrump) January 12, 2020

The President appears to be referencing Maria Bartiromo’s report from earlier this morning:

.@DevinNunes tells @MariaBartiromo the ICIG was actually a lawyers for some of the people involved in the FISA abuse scam. The ICIG in theory works for the Congress. So it wouldn’t be hard for them to get the documentation of their stupidity. pic.twitter.com/t4NfErFw7C

— The Dirty Truth “Josh” (@AKA_RealDirty) January 12, 2020

*  *  *

Sharyl Attkisson, via SharylAttkisson.com,  reports that on Friday, the FISA Court posted an order naming anti-Trump lawyer David Kris to “assist the court” in assessing the FBI’s response to the court-ordered cleanup of lapses and abuses identified by Department of Justice Inspector General (IG) Michael Horowitz.

In a report released last month, the IG found FBI officials violated rules, policies and law in their applications to wiretap former Trump volunteer Carter Page. Horowitz testified the FISA surveillance process needs to be fixed “from top to bottom.”

To some, the appointment of Kris is as mysterious as why the FISA Court’s judges failed to flag the FBI abuses on their own.

In social media posts, Kris has called Republican Congressman Devin Nunes “a politicized, dishonest [Intelligence Community] overseer who attempts to mislead.”

“The Nunes memo was dishonest,” said Kris.

“And if it is allowed to stand, we risk significant collateral damage to essential elements of our democracy.” 

He tweeted that Trump and his advisors should be “worried” that the “walls are closing in on him” regarding the Mueller probe.

Kris also bought into the now-disproven conspiracy theory about Trump colluding with Russia and Putin.

But even more importantly, since that time, Kris has advocated for President Trump’s removal.

Kris’s vocal opinions on President Trump and politics present numerous, obvious conflicts of interest.

Regardless, however, America is now faced with a very stark choice: do we want to be a country in which elected officials can use their governmental power to attack political opponents? If not, it’s pretty simple: Trump has to go. 5/5

— David Kris (@DavidKris) October 3, 2019

In addition, Kris writes for the anti-Trump blog “Lawfare” and called Lawfare’s chief, Benjamin Wittes, “incisive.” Wittes is the man who wrote of the need for an “insurance policy” against Trump prior to Trump’s election.

[O]ur democracy needs a health insurance policy…The courts have a few obvious advantages, starting with hundreds of independent judges of both parties whom Trump cannot remove from office and who don’t have to face his supporters in forthcoming elections…The goal…will be to offer a systematic defense of the values the Coalition of All Democratic Forces holds in common and to have the ability to respond rapidly to actions that threaten those values: to forestall such actions in court as long as possible, to whittle them down, and to block those that can be blocked. The goal is to use the courts to render Trump’s antidemocratic instincts as ineffectual as possible.

Benjamin Wittes, blogger, “Lawfare,” Oct. 24, 2016

Wittes is also a friend of ex-FBI Director James Comey who was referred for criminal charges for mishandling and leaking government information in his anti-Trump efforts. (The Justice Department passed up charges, with officials stating they didn’t believe Comey meant any harm.)

IG Horowitz flagged 17 mistakes in the FBI’s surveillance applications against Page and testified, “I think it’s fair for people to … look at all these 17 events and wonder how it could be pure incompetence.”

Likewise, one could look at the FISA Court’s appointment of Kris to help fix things… and wonder whether it could be pure incompetence. 

The latest FISA Court action could be construed as a moment of chilling charity in the ongoing questions about how these abuses could have occurred, and the challenges with fixing them.

“He’s not going to do anything because in the end Kris doesn’t believe there was anything wrong with what went on at the FBI,” said a former law enforcement official.

“His selection by the FISC is how bureaucrats protect themselves and could care less about the American people or the Constitution.”

Additionally, House Intelligence Committee Devin Nunes’ told SaraACarter.com Sunday, that:

“It’s a ridiculous choice. The FBI lied to the FISC, and to help make sure that doesn’t happen again, the FISC chose an FBI apologist who denied and defended those lies. The FISC is setting its own credibility on fire.”

Read the FISA Court order naming Kris below:

With the S&P meltup accelerating into the first full week of the new year, Friday’s modest pullback on the subpar December jobs report notwithstanding, sellside strategists are tripping over themselves to come up with even more reasons to justify the risk surge higher despite S&P valuations (price to sales and EV/EBITDA) which are now at all time highs, surpassing the prior dot com peak (which prompted Bloomberg to write “S&P 500 Bulls Make Peace With Valuations at 2018 Meltdown Levels“)…

… even as retail, institutional, and systematic (CTA/risk parity/vol targeting) investors are now all in the market, just as buybacks are rapidly fading.

Sure enough, in his latest Weekly Kickstart note, Goldman’s chief equity strategist, David Kostin writes that “the combination of accommodative monetary policy, low interest rates, range-bound oil prices, and continued economic expansion is constructive for US equities.”

Still, with the massively overbought SPX rapidly approaching not just his (3,400) but the consensus S&P target (3,318) for the end of 2020 less than half a month into 2020, the risk of a “Feb 2018”-like swoon grows with every passing day of the the melt up euphoria, which is probably why to hedge his bets, Kostin lays out four macro risks – and associated equity strategy implications – that can derail the S&P on its path to Goldman’s year-end target of 3,400 (which is less than 4% away from Friday’s close of 3,265), namely

1. What if the US and Iran enter into a prolonged conflict and oil prices rise?
2. What if interest rates rise rapidly in 2020?
3. What if the dollar strengthens this year?
4. What if economic growth is weaker than we expect?

Below, we take a detailed look at each of these “biggest risks”:

1. What if there is a sustained period of conflict between the US and Iran and higher oil prices? Oil prices initially rose by 4% alongside US-Iran tensions. But Goldman’s commodity strategists believe the current risk premium is already elevated and they expect Brent oil prices will be roughly flat at $63/bbl during the next 12 months. According to Kostin, oil price shocks should have limited impact on S&P 500 returns, given offsetting impacts from higher Energy earnings and higher gasoline prices for consumers. Separately, in terms of geopolitical risk, the S&P 500 shrugged off the developments this week but a prolonged conflict could eventually weigh on US equities. Using the national security component of the US Policy Uncertainty Index, Goldman finds a loose negative relationship between changes in uncertainty and S&P 500 returns (Exhibit 1).  However, previous notable examples of national security uncertainty also coincided with other exacerbating macro events (the first Gulf War and recession, the September 11th attacks and the Tech Bubble unwind).

And while energy stocks have given back their gains, suggesting little investor belief in higher long-term oil prices, Defense and Cybersecurity stocks have rallied. Energy – the cornerstone of all value investing strategies – was the worst-performing sector last year, lagging the S&P 500 by 20%. Here Goldman points out that although Energy equities have diverged from spot oil prices, they trade roughly in line with 10-year oil prices (Ex. 2).

For this reason, Energy sector rallies alongside the Saudi Arabia facility bombing and the most recent US-Iran tensions, which lifted spot prices but not long-dated prices, have been short-lived. Without a sustained supply shock that impacts long-term oil prices, Goldman maintains its underweight recommendation in Energy stocks. In contrast, Aerospace & Defense and cybersecurity firms with business models more clearly linked to geopolitical conflicts have each rallied by 2% (here Goldman notes the stocks with the fastest 2020E EPS growth: FEYE, RPD, MIME, SAIL, and HII).

* * *

2. What if bond yields rise rapidly in 2020? Needless to say, near record low bond yields have been a boon to equity valuations, driving more than 90% of the S&P 500 return in 2019. Although valuations are elevated in absolute terms, Goldman’s macro model suggests that equities trade at roughly fair value relative to the low level of bond yields (which is ironic because most “experts” claim that while bonds are in a massive bubble, equities aren’t, even though you can’t have one without the other). Goldman’s economists expect the Fed will remain on hold in 2020 and the 10-year US Treasury yield will gradually rise to 2.25% by year-end. For equities, Goldman (and UBS) previously found that the speed of rate changes matters more than the level of rates. Historically, equities have been able to digest gradual increases in bond yields of less than 1 standard deviation in a month (16 bp in today’s terms). However, when bond yields rise by more than 2 standard deviations in a month (34 bp), S&P 500 returns have typically been negative.

Here Goldman points out that its interest rate sensitive basket has lagged since early 2019, consistent with a falling rate environment; the bank’s sector-neutral basket comprises 50 S&P 500 stocks with the highest positive stock price sensitivity to changes in the 10-year US Treasury yield. The basket has continued to underperform since late November even as rates moved higher, reflecting skepticism that rates will rise substantially. However, these stocks should outperform if interest rates rise sharply (even as the broader market tumbles).

* * *

3. What if the US dollar reverses course and strengthens in 2020? The dollar fell by 2% in December as US-China trade tensions eased and global economies showed signs of improvement. And alongside virtually every other Wall Street desk, Goldman’s FX strategists expect the trade-weighted dollar to fall by another 2% during the next 12 months. Why? Because a stronger dollar would pose a headwind to S&P 500 sales, particularly within industries with high non-US sales such as semiconductors. Based on Goldman’s top-down earnings model, the bank estimates that every 10% change in the trade-weighted dollar equals roughly $3 (2%) of S&P 500 EPS.

* * *

4. What if economic growth is weaker than expected? Perhaps the $64 trillion question, Goldman admits that economic data in the US have been mixed. While the ISM non- manufacturing index was above consensus, the ISM manufacturing index unexpectedly declined to the lowest level since 2009. Goldman economists expect US real GDP growth will equal 2.2% in 2020, above consensus of 1.9%, as the easing in financial conditions lifts economic activity; as a result of central bank easing in 2019, the forward P/E multiple expanded from 15x to nearly 19x. Looking forward, Kostin believes economic and earnings growth will drive stock prices higher. Every 1 pp change in US real GDP growth equals $5 (3%) in S&P 500 EPS. Ironically, the muted outperformance of cyclical equities, in particular Industrials, suggests limited growth optimism in equity markets, which in turn means that traders are betting that central banks will again push stocks to new nosebleed highs in 2020. Here Kostin notes that Goldman’s Cyclical (GSSBCYCL) and Defensive (GSSBDEFS) baskets closely track changes in the GS US Current Activity Indicator (Exhibit 4).

And as we have extensively pointed out in recent weeks, the S&P 500 has surged but Cyclicals have only modestly outperformed Defensives, as “bullish” strategies actually generated a negative return in 2019. In Goldman’s view, “receding trade tensions rather than overly optimistic growth expectations have driven equity returns”, which is amusing because the real driver have been central banks. In any case, Goldman sees scope for upside to Cyclicals in the near term if growth reaccelerates towards its economists’ forecast, and as such the bank recommends an overweight in Industrials.

* * *

One final point: just as Deutsche Bank noted yesterday, Goldman confirms that investor positioning in US equities is close to “stretched” territory and could exacerbate equity price moves if one of these risks materializes. Goldman’s Sentiment Indicator (“SI”) combines six weekly and three monthly indicators of stock positioning across institutional, retail, and foreign investors. As equities rallied during the final weeks of 2019, investors added length, bringing the SI to 1.8 standard deviations above the 52-week average. This is notable because as Kostin concludes, “readings in “stretched” territory above +1.0 standard deviations have typically corresponded with below-average equity returns during the subsequent eight weeks.”

Authored by Sara Carter via SaraACarter.com,

Was President Donald Trump’s short term campaign foreign policy volunteer Carter Page set up by an FBI informant or the informant’s handler at the FBI?

On the The Sara Carter Show, Page discussed the recent revelations in Department of Justice’s Inspector General Michael Horowitz’s report and his interview in The Federalist where questions surfaced regarding his first meeting with Stefan Halper, one of the FBI’s spies in the Trump campaign.

Questions Linger

Questions still loom regarding Halper’s and his FBI handler. It appears that Horowitz’s report raises more answers than questions, said Page, who was not given the opportunity to review the report or discuss his circumstances with Horowitz. Page, who was an officer in the Navy and graduate from Annapolis Naval Academy, assisted intelligence and law enforcement, said all he ever wanted to was “to help his country.”

Unfortunately, Page became the target of some of very corrupted officials within the agencies he had assisted in the past. They did this to target President Donald Trump.

Based on information Page revealed to both The Federalist and The Sara Carter Show it appears that either Halper, or his FBI handler, didn’t tell the truth to Horowitz’s investigators about the circumstances surrounding Halper’s first meeting with Page.

Page told this reporter that the origination of his meeting with Halper must be investigated by Attorney General William Barr’s appointed prosecutor John Durham. Page would not tell this reporter whether or not he’s already been interviewed by Durham but said he has always stressed that he would “cooperate fully” with any investigation.

“The FBI and CIA definitely made some very serious very egregious mistakes, but, you know one of the primary drivers of this was the Democratic National Committee and their operatives,” said Page, referring to the DCN and Hillary Clinton campaign financing the debunked dossier through the private research firm Fusion GPS.

Fusion GPS hired former British spy Christopher Steele to compile the now debunked dossier, which was the main source for leaking false information on Trump and Page to the media. The dossier’s information came from former Russian spies tied to Steele and suggested that Page was an asset of the Russian government, which was patently false.

“I’ve been very cautious,” said Page, regarding his concern over Halper’s contact with him.

“I’ve been very meticulous, as you have been meticulous, Sara in your reporting. I wanna know for sure. I don’t point fingers at people until there is really some very solid evidence and it’s been firmly established that these things have actually happened.”

“Tip of the Iceberg” 

Page, who has received numerous death threats since stories began leaking about him in 2016, told this reporter what the public knows is only “the tip of the iceberg.”

Page said he is “encouraged and appreciative that last month Inspector General Horowitz and his team started uncovering this, but there’s so much more and, to me, these life or death situations that the DNC disinformation campaign created for myself and so many other Trump supporters and volunteers on the Trump team that is a huge issue and I think some of the important revelations you’ve talked about and just mentioned are really the tip of the iceberg.”

Moreover, Horowitz discovered in the course of his investigation that FBI attorney Kevin Clinesmith altered and omitted extensive information on Page when he submitted the Foreign Intelligence Surveillance Act warrant to the secret court in order to spy on Page. The information Clinesmith omitted was that Page had been cleared by the CIA and that he had been assisting the CIA with information on Russians.

“You know, again, I had worked and supported the CIA and FBI for many years and so you know I had a long series of meetings about ten plus hours in March of 2017, just a couple months after the election,” said Page, regarding his meetings with Clinesmith in 2017.

Clinesmith, along with other FBI agents, were well aware at the time that Page was being defamed by the media and that the disinformation being spread through main stream outlets was false.

Interview with The Federalist

During his interview with The Federalist, which listed out the FBI’s 17 significant inaccuracies or omissions in the secret federal surveillance applications, noted that the agents interviewed by the Inspector General reiterated that they launched the July, 31, 2016 Crossfire Hurricane probe and used Halper because of pure coincidences.

What? Really, they expect the public to buy this unbelievable explanation, he stated with regard to the knew information that was inaccurate in the IG report.

Let me explain, Halper’s handler told the IG that it was “serendipitous” that Halper, referred to in the IG report as Source 2, “had contacts with with three of their four subjects, including Carter Page.”

The FBI agents told Horowitz’s team that “couldn’t believe [their] luck.” Halper’s handler said it was during that time that he learned that his source, Halper, also knew Michael Flynn and Paul Manafort. The FBI source also asked Halper to target George Papadopolous and Sam Clovis, a senior campaign aide at the time.

“I hope we start getting some honest answers sometime soon,” he told me during the podcast. “We’ve got some honest answers in the Inspector General report, but it’s very incomplete and there are many inaccuracies in there.”

As for Page’s future and the next steps in his ongoing lawsuits to seek justice against some of the most powerful bureaucracies in the country:

“I’m definitely taking some important actions and I’ve got a great team of great legal experts who are helping me on that and I’ve been literally working round the clock with our team over the last several days and weeks and last couple of months,” said Page.

“I think as you correctly alluded to I’ll have more to say on that real soon so stay tuned.”

A Thursday evening software update at Facebook accidentally allowed anyone to view exactly who is posting under the accounts of public figures, businesses and other entities, according to Wired.

The result? For starters, some 3 million followers of teenage climate activist Greta Thunberg have been reading posts made by her father, Svante Thunberg, and a climate activist in India who serves as a delegate at the UN’s Climate Change organization, Adarsh Prathap. Thunberg, Inc. claims Greta is still the one writing the content.

Greta, Inc. explained this in a Saturday Facebook post purporting to be the young climate activist.

“Some people have been asking who manages this page. First of all, since last spring I only use Facebook to repost what I write on my Twitter and Instagram accounts,” reads the post, in which ‘she’ says she tried Facebook “early on,” but didn’t like it, so she uses “my father Svantes account to repost content.”

“The rest that is shared on Facebook is reposted from Twitter and Instagram by the guy who founded the Greta Thunberg Facebook page long before I knew it existed. His name is Adarsh Prathap and he lives in India. Since a lot of people thought it was my official page in the beginning I asked if I could co-manage it and he said yes.“

Greta claims to have written all the content posted by her father and Prathap.

In other words, “of course it’s not me silly – you should have known I just ‘co-manage’ the fan page.”

Except – by all outward appearances it appeared to be her page alone.

Facebook’s ‘page transparency’ shows Greta as the confirmed owner – with the only clue suggesting she might have help being a page manager located in India.

According to Facebook, the flaw was quickly fixed – but not before the people behind famous accounts were revealed and shared on public forums such as 4chan.

“We quickly fixed an issue where someone could see who edited or published a post on behalf of a Page when looking at its edit history,” said the company in a statement. “We are grateful to the security researcher who alerted us to this issue.”

Facebook says the bug was the result of a code update that it pushed Thursday evening. It’s not something most people would have encountered on their own, since it took navigating to a Page, viewing an edit history, and realizing that there shouldn’t be a name and profile picture assigned to edits to exploit it. Still, despite the Friday morning fix, screenshots circulated on 4chan, Imgur, and social media appearing to show the accounts behind the official Facebook Pages of the pseudonymous artist Banksy, Russian president Vladimir Putin, former US secretary of state Hillary Clinton, Canadian prime minister Justin Trudeau, the hacking collective Anonymous, climate activist Greta Thunberg, and rapper Snoop Dogg, among others.

Facebook points out that no information beyond a name and public profile link were available, but that information isn’t supposed to appear in the edit history at all. And for people, say, running anti-regime Pages under a repressive government, making even that much information public is plenty alarming. –Wired

“People who run sensitive Pages from their own Facebook should now consider that their identity may be known,” said Lukasz Olejnik independent privacy adviser and Oxford University Center for Technology and Global Affairs. “While mistakes happen, this one is unexpected.“

Authored by Merrill Matthews, op-ed via TheHill.com,

Nine years ago I published a piece that asserted, “Voters around the country are concluding it’s better to be red than dead,” applying almost the exact opposite meaning to an old phrase referring to communism. New Census Bureau figures appear to confirm my prediction — mostly.

My point was that many voters were, and are, increasingly fed up with the high taxes, heavy regulations and increasing social wokeness that have come to characterize most blue states — i.e., those dominated by liberal politicians and policies.

I argued that voters wanting to live in a business-friendly, fiscally responsible state that minimizes its tax burden would either vote out the liberals destroying their state’s economy or flee to a red state. The latest Census Bureau report highlights the red-state shift.

According to an Election Data Services analysis of the Census Bureau report, “The population projections point toward a ten [congressional] seat change over 17 states across the nation by year 2020.”

Seven states are projected to gain one or more congressional seats after the 2020 election; 10 states are projected lose one seat.

The red-state leader is Texas, with a projected pickup of three congressional seats following the 2020 census — and that after gaining four congressional seats after the 2010 election. Florida will pick up two seats, and Arizona, Colorado, Montana, North Carolina and Oregon will each gain one, according to the analysis.

All 10 losing states — Alabama, California, Illinois, Michigan, Minnesota, New York, Ohio, Pennsylvania, Rhode Island and West Virginia — lose only one seat.

Of the seven states gaining seats, five voted for Donald Trump in the 2016 presidential election. Of the 10 states losing seats, five voted for Trump and five for Hillary Clinton. 

But two of those five losing states that voted for Trump — Michigan and Pennsylvania — surprised most analysts since they have been blue-leaners for several years. And West Virginia is losing population in part because of a struggling state economy that has been so dependent on coal.

Arguably, even some of the blue-state gainers may support my general point.

If you are blue-leaning Californian who wants to escape the Golden State’s drift into madness but stay on the left coast, Oregon might be a reasonable alternative.

Ditto for Colorado, which has turned from red to bluish over the last decade or so as Californians increasingly head for the hills, so to speak.

But that trend also highlights a problem: Some of the people fleeing destructive blue-state taxes and regulations appear to drag their pro-big-government philosophy with them — apparently oblivious to the fact that those policies destroyed the state they are trying to escape. 

One can even see that dynamic occurring in Texas. For a decade or so, liberals have been predicting (not to mention hoping) that Texas’s growing Hispanic population would turn the state from deep red to purple and perhaps even blue.

But there is another factor: Texas has become one of the primary destinations for disaffected Californians, as more and more California businesses have concluded it’s time to go where they will be appreciated.

In addition, many California families have decided to migrate to Texas simply to find more affordable housing, lower taxes and streets that aren’t rife with homeless people, feces and used drug paraphernalia. And Texas even has a 367-mile-long coast!

But we cannot overstate the significance of the Census Bureau’s top-line finding: Texas will gain two or three congressional seats after 2020, while California will likely lose one.

That’s a big deal for California, which has never lost a congressional seat. It is a tacit repudiation of California’s over-the-top taxes and policies. Some of the other blue states, such as New York and Illinois, have been bleeding people for years. 

Several years ago, I interviewed the editor of Chief Executive magazine, which conducts an annual CEO survey of the best and worst states to do business. The editor told me the survey had two constants: Texas always comes in as the best state to do business, and California always comes in dead last. Oh, and Florida, which is projected to gain two seats, usually comes in second place.

It was only a matter of time before both businesses and individuals began voting with their feet. And that time has apparently come.

More importantly, the blue-state exodus is only a snapshot of what dissatisfaction will emerge if those blue-state policies take over the White House.

The Philippine Institute of Volcanology and Seismology (PHIVOLCS) has raised the alert level on Sunday after a volcano south of the Philippine capital of Manila erupted, prompting evacuations and canceled flights, reported Reuters.

PEA ASHFALL ADVISORY #1
Issued at 6:00 PM, 12 January 2020, Sunday
Cause: Taal Volcano Phreatic Eruption

Ash from Taal Volcano is currently affecting portions of Calabarzon, Metro Manila and Central Luzon pic.twitter.com/uYTXT9im8A

— Philippine Emergency Alerts – PEA (@AlertsPea) January 12, 2020

PHIVOLCS raised the alert level at Taal Volcano from Alert Level 1 to Alert Level 2 at 2:30 p.m. Sunday – then several hours later, raised the alert level to Level 3, indicating “magmatic unrest” that could destabilize the region in the coming days. The highest level is 5, and that is when a magmatic eruption is underway.

“Taal Volcano Main Crater has escalated its eruptive activity, generating an eruption plume 1 km [3,280 feet] high accompanied by volcanic tremor and felt earthquakes in Volcano Island and barangays of Agoncillo, Batanga. Ashfall is currently being showered on the southwest sector of Taal,” PHIVOLCS said in a statement.

The country’s National Disaster Risk Reduction and Management Council (NDRRMC) has already started to evacuate communities situated around the volcano. 

The eruption has already triggered a massive plume of volcano ash that is upwards of a mile high.

TAAL VOLCANO at the moment.
Magnificent yet scary. 🗻🌋 pic.twitter.com/fte5k5OfL3

— joeyboyputotoy (@JoeyboyPutotoy) January 12, 2020

NDRRMC said 8,000 residents had been asked to evacuate on a Level 3. The number could significantly increase if the alert level is elevated to 4 or 5. 

All flights at Ninoy Aquino International Airport have been suspended due to the volcano ash that lingers in the atmosphere. 

Lightning strikes at the Taal Volcano smoke after its phreatic eruption earlier today.

📸: TO Owner pic.twitter.com/bc55nfJlGj

— Jayc (@Iamjaygarcia1) January 12, 2020

my dumb ass thought this was the TAAL volcano pic.twitter.com/iqJPZIpvOh

— hh (@NotSeanMabuti) January 12, 2020

Taal Volcano Eruption & Wedding.

Beautiful Disaster 🙏 pic.twitter.com/zr1PCRVn5w

— ❌ROYCE❌ (@RoyceDePaz) January 12, 2020

not bts related but the taal volcano has erupted earlier this morning. may all the locals around the calabarzon are safe and i hope this won’t cause any serious damages. #TaalVolcano pic.twitter.com/6VTgxDth0b

— pran ♡’s bts ⁷ (@beemyhope_) January 12, 2020

Renato Soldium, PHIVOLCS officer-in-charge, told CNN Philippines that “magma is intruding from below. If eventually, this will continue to move up, then there can be a magmatic eruption which is more dangerous.” 

ash cloud from taal now reaching NCR. Keep Safe. pic.twitter.com/zzVJh1gTiG

— robb (@chinitsko) January 12, 2020

Watch live coverage of the volcano via ABS-CBN News: 

 

Authored by Sven Henrich via NorthmanTrader.com,

Amid all the ferocious market rallying there’s a gap building and nobody seems to notice, and nobody seems to care. I say: Mind the gap.

The banking index, much like the rest of the market, has been rallying furiously ever since the Fed began expanding its balance sheet on an accelerated pace since October. $BKX jumped on the liquidity train and broke above its previously well contained 2018-2019 range, except it didn’t make new all time highs yet.

A chart I’ve been highlighting again in my latest weekend update keeps highlighting a glaring gap:

What was a comfortable relationship between the 10 year ($TNX) and the banking index ($BKX) broke down in early 2019 and remains broken to this day.

Despite both yields and the banking index improving in recent months the gap remains and signals something profoundly afoot:

The yield gap remains with $TNX contained in a rising channel not confirming a resurgence of economic growth and strength the larger markets appears to want to price in.

But note something else here. While the main indices, $DJIA, $SPX and $NDX went on to make new all time highs here in early 2020, the $BKX did not. It never made new highs versus 2018 and so far it hasn’t made new highs versus 2019.

Incidentally the same story applies to small caps with heavy exposure to financials:

So it’s not just $BKX dragging its heels.

How big is the gap in performance? It’s quite dramatic actually.

What if I told you $BKX has gone nowhere during the past month while $NDX has tagged on another 7%+ in performance?

So I have some questions: Why is the banking sector not running wild with all this artificial liquidity? Why are yields not confirming the economic growth the larger market price action wants you to believe is just around the corner? If the banking index and small caps can’t make new highs with a $400B+ balance sheet expansion by the Fed what’s that say about the underlying true strength of the economy? What does the banking sector know that the main indices don’t know? Why’s nobody talking about it?

So many questions, so few answers as of yet. But perhaps the questions themselves send a message: Mind the gap.

Because maybe, just maybe, it’s not different this time:

Yield curve update
Grey areas = recessions. pic.twitter.com/J7j1iLdz0O

— Sven Henrich (@NorthmanTrader) January 12, 2020

*  *  *

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

Protests in Iran have spread for a second consecutive day after student-led demonstrations and clashes with police at a Tehran university Saturday saw crowds chanting “death to liars!” and “Khamenei] resign, resign!” They are demanding that Iran’s leaders, including Ayatollah Khamenei step down over their initially concealing the truth about the accidental Ukrainian airline shoot down, which killed all 176 people on board. 

The initial hundreds or possibly thousands strong gatherings in Tehran spread to other cities amid a broad heightened security response which the day prior saw authorities briefly detain the British ambassador, reports Reuters; however, the size still pales in comparison to the tens of thousands which took to the streets in November, and more recently the some two million which took to the streets in support of slain IRGC Quds chief Qasem Soleimani during his funeral. 

Riot police have been deployed to the University of Tehran campus after fresh protests there, with reports of tear gas and after the previous day opposition social media accounts advanced unconfirmed claims that live fire was being used. On this point, President Trump had an early Sunday message for the Islamic Republic’s leaders and security forces:

To the leaders of Iran – DO NOT KILL YOUR PROTESTERS. Thousands have already been killed or imprisoned by you, and the World is watching. More importantly, the USA is watching. Turn your internet back on and let reporters roam free! Stop the killing of your great Iranian people!

— Donald J. Trump (@realDonaldTrump) January 12, 2020

But it also appears that some counter-protests have begun in Tehran, as The Guardian notes that “Pro-regime protesters also gathered outside the UK embassy calling for its closure after the British ambassador to Iran was briefly detained on Saturday evening after leaving the site of a demonstration.”

Upon the very start of the new protests over the airline downing, Trump on Saturday issued a series of tweets in English and Farsi voicing support for what was as that moment a mere hundreds in the streets, crowds which appear to have since grown. 

🔴Now Tehran.

Iranian protesters chant against Khamenei. They say shame on Khamenei.#IranProtests #IranProtests2020 pic.twitter.com/ud9WRcOLjT

— Mohammad Mozafari (@mohmd_mozafari) January 12, 2020

“To the brave, long-suffering people of Iran: I’ve stood with you since the beginning of my Presidency, and my Administration will continue to stand with you,” he tweeted. “There can not be another massacre of peaceful protesters, nor an internet shutdown. The world is watching.”

Given we appear possibly set for a November repeat, which saw hundreds killed at the hands of Iranian security according to most international reports and human rights organizations (though the US claimed at the time the dubious number of up to 1,000), local security forces aren’t taking any chances. 

At the height of the Iranian establishment anti Americanism, Tehran Beheshti university’s students refused walking over the US and Israel flag while participating in #IranProtests . They all grew up to hate the two countries but seems like the revolutionary ideology is failed. pic.twitter.com/ABQY3GzWMo

— Ali Hamedani (@BBCHamedani) January 12, 2020

Reports Bloomberg:

Iranian security forces stepped up patrols in Tehran, seeking to quell further anti-government protests after the regime admitted downing a Ukrainian passenger jet, triggering anger on the streets and global outrage.

Videos on social media, which couldn’t immediately be verified by Bloomberg, showed motorcycle-mounted security forces in green camouflage and anti-riot body armor stationed on the city’s Valiasr square on Sunday morning. There was also a heavy police presence outside Tehran university.

Meanwhile, in an interview with CBS’ Face the Nation, Defense Secretary Mark Esper said he doesn’t expect more retaliatory missile strikes out of Iran. 

The US State Department is poised to make much of these initial weekend student protests, though it’s as yet unclear if they will gain in momentum. 

The Iranian people continue their protests against the lies, incompetence, and cruelty of the ayatollah’s regime. #IranProtests pic.twitter.com/iF6aJFc0T3

— Department of State (@StateDept) January 12, 2020

“You can see the Iranian people are standing up and asserting their rights, their aspirations for a better government – a different regime,” he said of the weekend protests, also echoing prior similar statements from Pompeo.

Jan 12, Tehran, #Iran
Students of Alame Tabatabaie University chant against the regime’s state-run TV for deceiving the public for the past 3 days saying that flight #PS572 crashed due to “technical reasons”.
“Our state-run TV is our disgrace”, they chant. #IranProtests pic.twitter.com/BqjPQxk4w0

— Iran News Wire (@IranNW) January 12, 2020

Should the momentum of the protests carry into this coming week, Iran’s leadership will likely brace for the worst given Trump is publicly backing anti-regime demonstrations, and the proverbial gloves of the security forces will be coming off.