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Authored by Bruce Wilds via Advancing Time blog,

It is far easier to believe the five favorite financial myths of our time when you are rolling in dough and flush with cash. Due to a slug of freshly printed liquidity being pumped into the global financial system stock markets are making new highs and asset bubbles continue to expand. An increase in liquidity results in people feeling comfortable to take on more risk and this tends to swell leverage. During such a time true price discovery has a way of being diminished.

Whether it is a question of people generally just being too lazy to question what they see or lacking the imagination to pull back the curtain to reveal the truth they often choose to accept what is presented to them as reality rather than go to the effort to seek the truth. A myth is often defined as any invented story, idea, or concept, an imaginary or fictitious thing, or an unproved or false collective belief that is used to justify a social institution. The entertainment industry has flourished as society seeks any diversion to pull our attention away from the sharp edges of reality and into the soft comfort of escape. This may be the result of past experiences where we have learned reality can be hard to face and we can’t handle the truth! In some ways, it could be said that our culture has become obsessed with avoiding what is real. 

Central Banks Failed To Stop (click to enlarge)

To say the system has been stoked by the actions of central banks is an understatement. In just the last few months nearly a trillion dollars of new stimulus has been poured into the markets. It comes in the form of  repo injections, new infrastructure programs, and things like slashing bank reserve requirements. A desperate attempt by central banks to keep the wheels from coming off the bus has been interpreted by many as confirmation the current trend of never-ending growth will continue. Rather than considering it is time for a reality check it is both easier and more comforting to adopt an “all is well” attitude and ignore the signs of danger lurking around the corner.

The crux of this article is about some of our society’s favorite myths that feed directly into the economy and how we feel about our financial security. While it could be argued the myths below have more to do with how we feel about life than about money, it cannot be denied that most people make many of their financial decisions based on the assumption the below statements are true. As a society, we rapidly choose to embrace and often choose not to question them because of the discomfort it would undoubtedly create. Sure many other myths exist or you can slice and dice them in other ways but the five below are very common and should be enough to remind you and even shed a bit of light upon the fact we are vulnerable at any time to having reality raise its’ ugly head.

Believing Myths Is A Head In Sand Approach

1. Government is for the people and by the people – Seriously? After the last few years and dog and pony show, we experienced during the last presidential primary all illusions of that should have been erased. After often being forced to choose between the least of two evils it is difficult to praise our political system. After all the talk about “we the people” the fact is the average “person” is far removed from the power to decide important issues.

2. Financial planning means you only have to start saving a little money each year to guarantee an easy retirement.  – The fact is life is a casino where our future is tenuous at best. Much of our circumstances and lives revolve around money and the number of options it gives us when we possess it. I intentionally used the term “casino” to conjure up the image of financial fortune. Which you can lose in a blink of an eye if things go against you. This myth includes things such as the promises made by the government and others such as pension plans and financial institutions will indeed be honored.

3. You have rights and that we are not slaves – I defer to a few lines from a blog by Gerry Spence who has spent his lifetime representing and protecting victims of the legal system from what he calls The New Slave Master: big corporations and big government. In his blog, Spence wrote; The Moneyed Master has closed its doors against the people and sits on its money like an old hen on rotten eggs. The people will not prevail. With its endless propaganda the Moneyed Master has caused its slaves to believe they are free.

4. Your life will progress and move along pretty much as you have planned – When you think back over the years of your life if you are like most people things have not unfolded as you had planned. You may not be in the occupation you trained for or with your true love. Throughout our life watershed events occur that we have little control over, this holds true when it comes to your finances as well. Things such as having an investment or pension plan go south can be very unsettling. The thought that things could be worse does not mean they will become so, this is a reason to count your blessings.

5. Those in charge or above you care about you and will protect you –  Well of this we can hope but more than one person has been sliced and diced by the people he or she trusted most. History shows when push comes to shove it is not uncommon for a person to look out for the person they treasure the most and that is often him or her self. Politicians and those in power tend to throw people under the bus rather than rise up and take responsibility for the problems they create.

My apologies if this post has been a downer or seems overly negative, however, it is what it is and it was written for a reason. Best stated by a comment I read on another site, these myths add up to where “This is not a can of worms but a warehouse stacked with pallets of cans of worms.”  Because of how believing the above myths can impact our lives it is important we recognize their existence. This is not to say that we cannot by making good and reasonable choices eliminate much of the risk we encounter by just getting out of bed each morning. Developing the habit of pressing on and forward to complete solid and reasonable goals is the best medicine to combat a deck that is often stacked against us. Be careful out there!

Like many US interventions in the Middle East before, this story seems to continue changing by the day. The rationale for taking out the “imminent” threat of Qasem Soleimani has now centered on President Trump’s claim, first presented before reporters Thursday, that the IRGC Quds force chief was “looking to blow up our embassy”.

And now the president has given further details on those prior statements, saying in a new interview with Fox News there was a plot to bomb four embassies across the region. 

“I can reveal that I believe it would’ve been four embassies,” Trump told Fox’s Ingraham in an exclusive interview set to air in full Friday night. When pressed on specific targets, the president revealed: “We will tell you that probably it was going to be the embassy in Baghdad.”

This followed statements earlier in the day by Secretary of State Mike Pompeo over the president’s Thursday assertion Soleimani sought to “blow up” embassies. Pompeo was pressed by reporters over the nature of the “imminent threat” claims. 

“We had specific information on an imminent threat and that threat stream included attacks on U.S. embassies. Period. Full stop,” he said. Asked about what made it imminent, Pompeo simply said: “It was going to happen.”

See President Trump’s newest statement asserting four embassies were being targeted in the Fox interview:

Trump: Actually, Soleimani was about to attack four separate US embassies. pic.twitter.com/FbiJklbbmc

— Josh Marshall (@joshtpm) January 10, 2020

At first it was unclear whether President Trump saw specific intelligence outlining such a threat, or perhaps was speaking generally and hyperbolic (“blow up” the embassy) of the pro-Iranian mob’s actions besieging the US embassy in Baghdad days prior to the Soleimani assassination. The demonstrators had been filmed setting the outer walls of the compound on fire during the chaotic events of early last week which resulted in a contingent of Marines rapidly deploying from Kuwait to bolster embassy security. 

Given Trump and Pompeo’s newest statements, it appears clear they’re referencing a previously unknown plot which they are presenting as tied to specific US intelligence data. 

CNN also reveals as much in the following: 

A senior defense official told reporters Thursday the US had intelligence about multiple plots and threats involving Soleimani, including one that involved a plan to attack the embassy using explosives.

The plot was separate and more sophisticated than the attempts to storm the US embassy in Baghdad by Molotov-cocktail wielding Khatib Hezbollah members and its supporters, an effort US officials have said was also orchestrated by Soleimani.

During Trump’s prior Thursday remarks, he tied the newly revealed alleged embassy bombing plot to the specific decision-making to go after Soleimani via drone strike, alongside other reasons including the Dec.27 death of a US contractor during a rocket attack by Khatib Hezbollah on a base in Kirkuk. 

“We caught a total monster. We took them out. And that should have happened a long time ago. We did it because they were looking to blow up our embassy,” Trump said during those initial remarks.

“We also did it for other reasons that were very obvious. Somebody died… people were badly wounded just a week before. And we did it. We had a shot at it … that was the end of a monster,” Trump added, referring to the death of the American contractor by Khatib Hezbollah.

Trump’s new claims have already resulted in push back from Congressional leaders briefed on the matter Wednesday. Sen. Chris Murphy was the first to slam the new statements late Friday, saying no such intelligence on planned embassy bombings was presented:

Let’s be clear – if there was evidence of imminent attacks on four embassies, the Administration would have said so at our Wednesday briefing. They didn’t.

So either Fox News gets higher level briefings than Congress…

or…wait for it…

there was no such imminent threat.

— Chris Murphy (@ChrisMurphyCT) January 10, 2020

And yet, confusion persists within the administration itself, as CNN reported that “Earlier Thursday, administration officials had explained Trump’s comments about the plot to blow up the US embassy by saying he was referring to the public demonstrations by Khatib Hezbollah.”

But in a separate Thursday rally in Toledo, Ohio, the president made it clear it was more than mere violent embassy protests: “Soleimani was actively planning new attacks, and he was looking very seriously at our embassies, and not just the embassy in Baghdad.” Trump added: “But we stopped him, and we stopped him quickly, and we stopped him cold.”

The latest interview with the president will air Friday night at 10 p.m. ET on Fox’s “The Ingraham Angle.”

Authored by Charles Hugh Smith via OfTwoMinds blog,

Perhaps even PhD economists notice that manic-mania bubbles always burst–always.

Just a friendly heads-up to all the Bulls bowing and murmuring prayers to the Golden Idol of the Federal Reserve: the Fed just slashed its balance sheet–yes, reduced its assets. After panic-printing $410 billion in a few months, a $24 billion decline isn’t much, but it does suggest the Fed might finally be worrying about the reckless, insane bubble it inflated:

Just to review the numbers, which you can ponder on this chart from the St. Louis Federal Reserve (FRED).

• August 28, 2019: $3.760 trillion

• December 25, 2019: $4.165 trillion

• January 1, 2020: $4.173 trillion

• January 9, 2020: $4.149 trillion

There are two noteworthy items here. One is of course the panic-printing of $410 billion between September 1, 2019 and January 1, 2020 as the Fed’s assets zoomed from $3.760 trillion to $4.173 trillion in a mere 17 weeks.

But also note that the Fed only added a paltry $8 billion in the final week of 2019. Given the hundreds of billions of expansion being promised, this works out to a monthly run-rate of around $30 billion–not quite the $60 billion promised as a baseline, or the $100 billion per month panic-printed in Q4 2019.

Bu-bu-but wait–the Fed promised us $100 billion a month forever! Buying the SPX at 3,280 and Apple at $312 only makes sense if the Fed promised us SPX 3,500, 4,000 and 5,000, and AAPL $350, $400 and $500.

While all the faithful were busy bowing to the Fed’s mesmerizing Golden Idol, maybe the mortals in the Fed awakened from their dreams of omnipotence and realized that their “insurance against a recession” panic-printing had inflated the mother of all manic-mania bubbles.

Perhaps even PhD economists notice that manic-mania bubbles always burst–always. And just before they burst, devastating all those worshiping the Fed’s Golden Idol, pundits always declare “this time it’s different,” “the Fed has our back,” “stocks have reached a permanently high plateau,” “stocks have plenty of room to run higher,” and other platitudes mumbled by the Fed faithful.

Blinded by their own hubris, the Fed’s economists refuse to accept the impossibility of gently deflating the bubble they so recklessly inflated, and so their plan is to real quiet-like reduce the balance sheet, hoping nobody notices.

Perhaps they imagine they can lock the S&P 500 in at a permanently high plateau around 3,250, and that will be enough to banish the demons of a business/credit-cycle recession.

Maybe, maybe not. Can a Golden Idol control not just the stock market but the karmic consequences of hubris and false idolatry? The curtain just opened and the second act of the tragedy is just beginning.

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*  *  *

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Today in “Skynet pivots toward becoming a 1950’s housewife” news…

The maker of the Roomba robotic vacuum cleaner, iRobot, is now working on a household robot that will have arms, legs and could possibly help you do the dishes or load the washing machine.

The company, which is based out of Bedford, Mass., says it won’t start selling this type of product for another 5 years, according to Bloomberg. But prototypes of these robots already exist, according to the company’s CEO, Colin Angle. 

Angle said during an interview at CES in Las Vegas that the company’s new hardware launch for 2020 will instead be its Terra robotic lawnmower. 

iRobot had previously developed robotic-arm technology for its military unit, but the company sold that business in 2016. It kept the “arm assets” however, despite at the time not understanding how to adapt the technology for mainstream use. Angle said that new advancements in computer vision and the ability for robots to map out homes have made these devices possible again.

Other companies like Amazon and Samsung are following suit in developing home robots. So far, however, they are focused on devices with video conferencing and voice assistants, and not home robots with arm devices that actually conduct physical tasks. 

Not unlike the role they will be playing in many dysfunctional households, we’re sure, iRobot’s CEO is already using the new robots as scapegoats for his problems. The robots, along with the trade war, have apparently created financial headwinds for the company. 

“We are having to scale back R&D and profitability targets,” Angle concluded.

 

Authored by Tuomas Malinen via GnSEconomics.com,

We have been following China closely for nearly four years. We first warned about the unsustainability of China’s growth in March 2017 and have continued to issue warnings ever since (see, e.g., this, this and this).

Now, China is reaching the end of its debt-driven economic model, and thus well-along in the end-game of the ‘Chinese Miracle’. This will bring drastic changes to the world economy, which will fuel the global economic collapse of 2020-2023.

Let’s examine why.

The stimulus of 2019

China stimulated its economy aggressively in Q1 and Q3 2019, but we have not observed a similar emphasis on infrastructure investments as we saw in 2015/2016. In its record-breaking stimulus program in Q3, for example, China concentrated on providing loose credit to enterprises through both conventional and “shadow” banks.

What is notable is that even with this record stimulus, China has kept its economy growing barely above the “official rate”. This tells us that the Chinese economy has reached or is very close to reaching the point of debt saturation, where households and corporations simply cannot absorb any more debt, and any new debt-issuance fails to stimulate the economy. We’ve been warning about the proximity of this point since September 2017.

Evidence also suggests that during the fall China has been desperately forcing debt into the economy, probably to appear “strong” in trade negotiations.  The November data on aggregate financing, for its part, confirms this (see Figure 1). It rose at the second-fastest pace in November surpassed only by the year 2016, when China was engaged in “maximum stimulus”.

Figure 1. Yearly cumulative aggregate financing to the real economy (flow) in China. Source: GnS Economics, People’s Bank of China

However, it’s clear that China cannot keep such an extreme pace of debt-growth going. The debt load is just too high while productivity growth has stagnated.  Though a massive infrastructure-spending program, for example, could revive growth, the ability of China to issue fiscal stimulus is starting to be seriously limited.

The end of the runway

At the end of 2018, the budget deficit of the Chinese government was close to five percent. However, if the off-balance sheet (“shadow”) financing of local governments is taken into consideration, the budget deficit rises to over 11 percent. At the end of 2014, the official government deficit was less than one percent, but an accounting which includes local “shadow” funding was around five percent.

This effectively means that China is fiscally unable to underwrite massive infrastructure projects and so any new world-economy-saving stimulus from China, as in 2015/2016, will be practically impossible. A new infrastructure initiative could only be realized if its costs are monetized by the PBoC, and so should be regarded as a last-ditch option reserved for an existential crisis. We also suspect that Chinese authorities would like to have some ‘ammunition’ left over for an actual recession.

We have also heard reports that smaller local lenders have become wary of expanding their loan portfolio as requested by Beijing. This is most likely due to the fact that the policy line has changed from “bailouts” to “defaults”, and the banks fear that they will be forced to bear the brunt of non-performing loans in full. It’s also clear that there are massive amounts of non-performing loans burdening the balance sheets of Chinese banks.

This is why China, ultimately, will be unable to rescue the world economy this time around.

The endgame

The big question is:  what will Chinese leaders do? Will they try to force debt into the economy in a desperate effort to postpone the impending recession? If so, this would probably extend the global business cycle for few quarters.

But, as China has already surpassed all historical examples of ‘credit bonanzas’ (see Figure 2), this would also guarantee that by 2021 the Chinese economy would be in for a ‘hard landing’ (crash) taking the global economy with it.

Figure 2. The GDP per capita, share of non-financial private sector debt to GDP and the onset of financial crises. *The Q2 GDP per capita for China is based on our calculations. Source: GnS Economics, BIS, World Bank

The second option for Chinese leaders is to enact short-term “surgical” stimulus measures to keep the economy from collapsing. This would mean that the global economy would continue to sink and enter into a recession in 2020. While this could shelter Chinese economy from utter collapse, it could still lead to serious political instability (see Q-Review 3/2019 for more info).

As we have insisted in our work since September 2017, the “Chinese Miracle” has been more of a “Potemkin Village” for more than a decade. Because China has been kept growing by an  incomprehensibly large increase in debt, its economy is actually a massive  and vulnerable Ponzi-scheme waiting to collapse.

Alas, the end of the ‘Chinese Miracle’ approaches, and it’s going to painful for everyone.

Earlier today we discussed why BofA’s chief investment strategist, Michael Hartnett, remains stoically bullish on the market, at least until March 3, when he sees the S&P hitting the nice, odd number of 3,333: as he defines the current period, it is one of  “maximum liquidity, minimal growth”, as a result of a firehose of QE liquidity from the ECB, BOJ and the Fed (yes, the Fed is engaging in QE) with “QE annualizing a stunning $1.1 trillion in the past 4 months” even as global central banks have cut rates 80 times past 12 months, in the process “reducing concerns of recession, default, inflation in 2020.” One look at the chart below of the correlation between the global liquidity proxy and the S&P500 explains why all the market’s fears have been drowned, so to speak, in the past year.

However, the BofA strategist is far less sanguine about what happens after March, when the Fed is expected to start draining its repo liquidity, a process which began this week when the Fed’s “emergency” liquidity boost launched in the aftermath of the September repo debacle posted its first shrinkage in four months. It is also why Hartnett believes that “asset upside will be very front-loaded in 2020.”

And so, as we approach that moment in 2020 when the Fed’s liquidity glut turns from a massive risk tailwind into a headwind, and as the tension between market optimists and pessimists braces for a return, below Hartnett outlines the more interesting bull and bear arguments for risk assets in 2020.

Bulls say…

• There’s always a bubble in the ’20s: South Sea Company bubble in 1720s, UK mining stock bubble in 1820s, Dow Jones bubble in 1920s; big overshoot of asset prices (SPX 4,444) possible so long as Fed fixes rates at low & stable levels.
• There’s no inflation: Japanese wage growth YoY in December was negative in both nominal and real terms; this in an economy in which the population declined by 512k last year, the unemployment rate fell to its lowest rate in 30 years, and the assets owned by the central bank ($5.3tn) now larger than Japan GDP ($5.2tn); no inflation in Japan, Europe, US means no rate rises and cheap financing for populist politicians.
• There’s lots of liquidity: central banks net purchases were $92bn in Q3, $326bn in Q4 and are forecast to total $447bn in the next 6 months; global central banks cut rates 80 times in past 12 months, 789 times since Lehman (that’s 1 rate cut every 3½ trading days).
• There’s the Great Rotation: for all the bubbly stock market talk, global equities have only just exceeded their 2007 highs versus global bonds, and remain below their 2000 highs versus global bonds; and higher yields can cause Great Rotation from bonds to stocks, credit to commodities, US to non-US, large to small, growth to value, tech to banks and so on.

• There’s an inflection point in profits: BofA Global EPS Growth Model (function of global PMIs, Asian exports, Chinese financial conditions, and UST 2s10s yield curve) forecasts EPS growth of -5.4% in the next 12 months, below consensus of 1.2%; crucially for bulls both forecasts for 2020 EPS are inflecting higher.

 

Bears say:

• Impotence rising: equities are at highs & spreads at lows, but volatility in fixed income (MOVE Index) and equities (VIX Index) has crept higher in recent quarters despite renewed QE; higher risk prices and higher volatility a precursor to end of bull market.
• Inequality rising: S&P500 ended 2010s in longest bull market of all-time, & just 7% away from becoming the largest (3498); the absolute gains in stocks and bonds mean that the value of US financial assets (Wall St) grew to over 5.5x the size of US GDP (Main St) by 2019E, another all-time high; further Wall St gains, particularly via stock buybacks, increasingly politically unacceptable (note past 5 years 20 S&P500 companies spent $975bn on stock buybacks, that’s $381,000 for every person they employ).

• Inflation rising: US wage growth exceeds unemployment rate for first time since 2000, has historically coincided with big steepening of the US yield curve either because of inflation, defaults, or recession (Chart 7); note in 2019 US budget deficit surpassed $1tn and US federal government spent $4.4tn, that’s $35,500 for every income tax payer.
• 2020 recovery “priced-in”: semiconductor prices are “pricing-in” US ISM of 60, the highest since the financial crisis (vs. 47.2 today – Chart 8); Global FMS profit expectations (Nov/Dec = biggest 2-month jump since May’09) “pricing-in” global PMIs of 55 next 6-months; Global FMS 2020 ISM expectations was 53.5 in Dec.

Authored by Walter Williams, op-ed via Townhall.com,

A voter may dislike a black, homosexual or female candidate, but it’s not likely that he would openly admit it. However, diversity-crazed leftist/progressive Democrats have openly condemned the physical characteristics of some of their 2020 presidential candidates.

Joe Biden and Bernie Sanders are to be leading the polls despite the fact that they have been condemned as old white men. While Pete Buttigieg is homosexual, something that pleases diversity crazies, he is also a white man, young and religious. With Kamala Harris’ departure from the race, the Democratic field has lost one of its persons of color. Another, Senator Cory Booker, stands at 2% in the polls; his days are numbered. That means the only Democratic candidates polling high are those condemned as old white people — two men and one woman, Elizabeth Warren.      

LaTosha Brown, the co-founder of Black Voters Matter, said she was initially eager for Joe Biden to enter the race but now has second thoughts. Brown said:

“I’m over white men running the country. I don’t know if him (sic) getting in changes the field. He has name recognition, but his strength is also his weakness.”

Former presidential candidate Howard Dean lamented,

“If we have two old white guys at the top of this ticket, we will lose.”

The newest entry into the presidential sweepstakes, Michael Bloomberg, had to apologize for what some see as his diversity insensitiveness namely that of calling fellow presidential candidate Cory Booker “well-spoken” in a TV interview. The New Jersey senator said he was “taken aback” by what he saw as Bloomberg’s racist “trope.”       

Michael Moore gave us his racist warning:

“Two-thirds of all white guys voted for Trump. That means anytime you see three white guys walking at you, down the street toward you, two of them voted for Trump. You need to move over to the other sidewalk because these are not good people that are walking toward you. You should be afraid of them.”    

This is the new racism, much of it learned and taught at our nation’s colleges.

George Orwell said, “Some ideas are so stupid that only intellectuals believe them.”

The stupid ideas about inclusion and diversity originate with academics on college campuses. If their ideas didn’t infect the rest of society, they might be a source of entertainment. But these cancerous ideas have infected society. Statements such as “I’m over white men running the country,” or “If we have two old white guys at the top of this ticket, we will lose” are examples of that cancer.        

Last year, Philip Carl Salzman wrote “The War Against White People” in Minding the Campus. He declared:

“Anti-white hate is now mainstream American culture. Not just by racial extremists such as Black Lives Matter, for whom statements such as “all lives matter” or “blue lives matter” are racist. Our highest leaders sing the same song.”

When Barack Obama was campaigning for the presidency in 2008, he said of working-class white voters, “They get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”

During the 2016 presidential campaign, candidate Hillary Clinton claimed that half of Donald Trump’s supporters were “a basket of deplorables” who were “racist, sexist, homophobic, xenophobic, Islamophobic — you name it.”

Do you think Clinton was talking about Trump’s black, Asian and Hispanic supporters? No, she was talking about millions of Trump’s white supporters.   

Then there’s Sarah Jeong, a member of The New York Times editorial board and graduate of the University of California, Berkeley, and Harvard Law School. She expressed publicly many anti-white opinions. Among them are:

“The world could get by just fine with zero white people.”

“Dumbass f—ing white people marking up the internet with their opinions like dogs pissing on fire hydrants.”

It’s “kind of sick how much joy I get out of being cruel to old white men.”

I guarantee you that The New York Times would have fired any employee making similar statements about black, Hispanic or homosexual people.

The bottom line is that the new racism, born in academia, is just as ugly as the old racism. 

It looks like America’s favorite “creepy porn lawyer” just caught the legal break of a lifetime.

Lawyers representing celebrity attorney Michael Avenatti are pressing the judge in his federal extortion case to allow them to subpoena Nike lawyers who allegedly mocked the FBI in a string of text messages.

This isn’t the first hiccup in the Avenatti prosecution: Back in November, the Feds added an additional count of wire fraud, but were forced to drop 2 conspiracy charges that were widely seen as the crux of Nike’s case.

Avenatti gained a national profile thanks to his representation of former porn star Stormy Daniels, who published a book about her life that largely focused on a brief fling she allegedly had with President Trump. Avenatti was indicted last year for allegedly trying to extort Nike, the world’s largest manufacturer of sportswear, out of as much as $25 million after he uncovered what he described as ‘corrupt’ payments to youth basketball players.

News of his indictment broke just minutes after he tweeted about plans to hold a press conference implicating Nike in an undescribed scandal. During a conversation with Nike lawyers that was taped for the Feds, Avenatti allegedly said that his revelations could wipe as much as $1 billion off of Nike’s market cap.

But Avenatti’s lawyers are saying the text messages, apparently uncovered in what appears to be a lengthy discovery process, suggest Nike wasn’t serious about aiding the government, and was merely trying to kneecap an adversary. Avenatti is saying that the company tried to incriminate him to stop him from blowing the whistle.

“Nike’s contempt for the government’s investigation of its conduct is readily apparent from documents viewed by the defense for the first time just yesterday,” Avenatti’s lawyer Scott Srebnick said in the filing. “For instance, right in the middle of the FBI investigation, on April 11, 2018, two of the subpoenaed Nike executives were sending each other texts cursing at the FBI and pejoratively ridiculing the investigation.”

“Nike was motivated to (belatedly) self-report to those same prosecutors and point the finger elsewhere in order to curry favor with them,” according to the filing.

Unfortunately, the exact text of the messages that Avenatti’s lawyers are citing hasn’t been made public, and the names of the correspondents have not been revealed.

US District Judge Paul Gardephe is weighing Avenatti’s request to subpoena the executives before his trial, which starts Jan. 21 in Manhattan.

Nike said in a statement to Bloomberg that it “will not respond to the allegations of an individual facing federal charges of fraud and extortion. Nike will continue its cooperation with the government’s investigation into grassroots basketball and the related extortion case.”

This definitely looks good for Avenatti. But before you get all excited about the possibility that he might get back in the ring for the 2020 primary, remember: even if this case is eventually thrown out, he’s still facing separate charges that he tried to bilk a client out of settlement money.