The U.S. Needs New Nukes? Really?: New at Reason

|||Paul Zinken/dpa/picture-alliance/NewscomLast week, Sen. Elizabeth Warren (D–Mass.) and Rep. Adam Smith (D-Wash) introduced the No First Use Act, designed to prevent the U.S. from using nuclear weapons in a first strike without congressional approval. What should be the lowest possible standard of sanity—that the Oval Office shouldn’t be able to drop the big one without any oversight—has been introduced before, but it didn’t make progress.

Rep. Ted Lieu (D–Calif.), whose similar Restricting First Use of Nuclear Weapons Act of 2017 stagnated, but was re-introduced last week as well, makes no secret of the fact that Donald Trump makes him particularly nervous here, but the broader idea of not letting any president have the uncontested power to start global thermonuclear war is something libertarians and Ted should share, writes Lucy Steigerwald in her latest at Reason.

View this article.

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Reddit Valued At $3 Billion In New Massive Capital Raise

In a time when much of contemporary digital media is forced to downsize amid private “down rounds” and delayed IPOs, due to continued industry headwinds whether as a result of shrinking ad revenues or declining readership, Reddit continues to impress with both its solid growth and unprecedented investor backing. Case in point, TechCrunch reports that Reddit is raising $150 million to $300 million to keep “the front page of the Internet” growing, with the forthcoming Series D round said to be led by Chinese tech giant Tencent at a $2.7 billion pre-money valuation, which depending on how much cash Reddit can round up from other investors, would mean its post-money valuation could hit an epic $3 billion. By reference the market cap of the NYT is not that much higher, at $4.5 billion.

The key factor behind this staggering valuation, is Reddit’s continued growth, with TechCrucnh reporting that 330 million monthly active users now frequent its 150,000 link-sharing subreddits, most of which are entirely user-created and supervised.

That warrants the 50% boost to its valuation, which previously reached $1.8 billion during the company’s last capital raise in July 2017 when Reddit raised $200 million. As of then, Reddit’s majority stake was still held by publisher Conde Nast that bought in back in 2006 just a year after the site launched.

With Reddit having raised $250 million previously, the new round will give the company a massive, for online media companies, warchest of $400 million to $550 million in total funding, which it can then use to acquire new content or rollup competing businesses.

The company’s capital raising aspirations were first noticed in December when Reddit announced it had reached 1.4 billion video views per month, up a staggering 40% from just two months earlier after first launching a native video player in August 2017. It also announced to much fanfare that it would start selling cost per click ads in addition to promoted posts, cost per impression, and video ads. A 22 percent increase in engagement and 30% rise in total view in 2018 pushed it past $100 million in revenue for the year, CNBC reported.

That said, supporting and moderating all that content isn’t cheap with TC reporting that the company had 350 employees just under a year ago, and is headquartered in pricey San Francisco — though in one of its cheaper but troubled neighborhoods.

As noted above, China’s tech giant Tencent will be the anchor investors, kicking in the first $150 million of the D round. The Chinese conglomerate owns China’s most popular messaging app WeChat and is the biggest gaming company in the world thanks to ownership of League Of Legends and stakes in Clash Of Clans-maker Supercell and Fortnite developer Epic. Yet even Tencent has seen its growth moderate in recent months, mostly due to China’s crackdown on gaming addiction has hammered Tencent’s valuation while Chinese competitor Bytedance’s news reader app Toutiao has grown enormous. Those facts make investing in American news board Reddit a savvy diversification, according to TechCrunch, even if Reddit isn’t accessible in China.

In addition to the $150MM Tencent investment, Reddit could see legacy investors fill out the round with up to $150 million in additional cash from previous investors like Sequoia, Andreessen Horowitz, Y Combinator, or YC’s president Sam Altman. They could see potential in one of the web’s most unique and internet-native content communities.

Reddit is where the real world is hashed out and laughed about by a tech savvy audience that often produces memes that cross over into mainstream culture. And with all those amateur curators toiling away for Internet points, casual users are flocking in for an edgier look at what will be the center of attention tomorrow.

While Reddit has avoided much of the backlash hitting fellow social site Facebook, in the past, the anonymous site has had plenty of problems with racist, mysoginistic, and homophobic content. In 2015 it implemented quarantines and shut down some of the most offensive Subreddits. But harassment by users contributed to the departure of CEO Ellen Pao, who was replaced by Steve Huffman, Reddit’s co-founder. Huffman allegedly went on to abuse that power, secretly editing some user comments on Reddit to frame them for insulting the heads of their own Subreddits. He escaped the debacle with a slap on the wrist and an apology, claiming “I spent my formative years as a young troll on the Internet.”

via ZeroHedge News http://bit.ly/2DaSRGI Tyler Durden

Gabbard Reveals The Bankruptcy Of American Left

Authored by Tom Luongo,

Rep. Tulsi Gabbard (D – HI) is a perfect case study with what is wrong with American politics. She represents fairly standard Democratic party positions on issues like gay rights, gun control, health care and redistributive tax policy.

But on the crucial issue of foreign policy she’s a dissenter. And, from what I can figure out, this dissension comes from a principled position.

And that makes her persona non grata in the current political climate of partisanship.

If there has been one thing that Donald Trump has been useful for it is exposing who the real enemies of peace in the world are. He is useless to stop them, but at least he has been such a lightning rod that he’s outed what truly animates Washington, London, Berlin, Brussels and Paris. We have him to thank for that.

Gabbard is the next generation of US politician but I fear she is too little, too late. Much like Rand Paul in the GOP. She understands, as a veteran of our foreign adventurism, that the game of geopolitics is built on fundamentally flawed premises. And that the best way to win that game is not to play.

And for this she has been the target of the worst kind of smear campaign, one that was internally generated by a US funded, DNC-enabled, opposition firm. No longer is it enough to bomb or gas people overseas in false flag operations to keep the electorate braying for war.

Now it’s come to the land of mundane political campaigns.

That’s how desperate the Democrats are to regain the White House in 2020. They will eat themselves before allowing any variation of message. No dissension is allowed. No Bernie Sanders to split the base and confuse the simpletons in Flyover Country they need to win back the Rust Belt.

It’s why we’ve seen them go after Bernie himself and why Bernie is now one-upping Elizabeth Warren’s patently stupid 70% top tax bracket. Whatever Fauxcahontas wants, I want 10% more, because I’m 10% more leftie than she is.

It’s all so predictably pathetic it would be laughable if Donald Trump wasn’t such a hopeless mess on everything else.

Gabbard, for all of her faults from this libertarian’s perspective, is still a welcome breath of very fresh air on the main reason I voted for Donald Trump in 2016 – to end the foreign wars that are bankrupting us financially, culturally and spiritually.

Because she understands what many reasonable and principled liberals understand: The Swamp is filled with the runoff from the overseas Empire.

We can argue about taxes and health care after we stop spending $1 trillion a year subjugating the world for the profit of the weapons producers, military contractors, oil companies, lobbyists, spies, oppo research firms, generals at NATO and all the bureaucrats that money subsidizes.

So the demonization of Tulsi Gabbard started before she even had a chance to officially enter the race. Because if there is one thing that unites the vultures in D.C. it is the threat of peace breaking out in the public discourse.

Every day the case for staying overseas in places like Syria and Afghanistan frays a little bit more. Every election since 2008 in the US has been a referendum in some way on the Empire abroad. Obama in 2008 and again in 2012 as Romney and McCain positioned the Republicans to look like warmongers worse than Obama was.

And then Trump in 2016. It all started with Ron Paul and Gabbard is yet another in a long line of critics of that which is not to be criticized in D.C.

She has smartly positioned herself as the outsider on the one issue that unites the center of the US electorate – left and right – ending the Empire. Trump makes the point that it is too expensive. He’s a transactional kinda guy.

Gabbard is making the case on moral grounds, and good for her.

She defied her party to go to Syria and meet with President Bashar al-Assad to get a better look at what was happening there. She knows there are millions of votes to be mined from being anti-war.

But, the Democrats, so thoroughly suffused with the anti-Trump animus, have turned the mere suggestion of changing course in the Middle East as giving advantage to the evil Vladimir Putin. It’s beyond silly in the extreme and yet the constant barrage of anti-Russian propaganda has 72% of Americans viewing Russia unfavorably.

And 85% of Democrats.

These are worse than Cold War numbers, folks. And yet, what are the Democrats so scared of?

What’s sad about the attack on Gabbard is not just that it was obviously made up and then breathlessly amped up by NBC news. It is that 17 out of 20 Democrats would likely never vote for her in the primaries because of this irrational hatred of Russia created by the Clintons as payback for Hillary losing an election she had no business winning.

It reeks of weakness, fear and desperation. It reeks of moral bankruptcy.

Gabbard will have a better shot at an independent run. But she won’t do that. She will continue to snipe from the sidelines, like Rand Paul, and wait for the country to come to her, if ever.

War is and should always be the bellwether by which a candidate for President is measured. And the Democrats are using Russiagate hysteria to keep the most expensive part of the empire off the table while they talk about how they are going to pay for universal health care by taxing assets and Unicorn farts.

Gabbard is smart throwing her hat in the ring now. I don’t think she has much of a chance of affecting the race in 2020 because the intensity with which Trump Derangement Syndrome burns within the party faithful.

But if she is capable of connecting with people by separating ending the Empire from giving Russia an advantage she could be useful in keeping things from getting any worse, while her party sinks into a frothing, gibbering mess, especially if somehow Trump wins re-election.

via ZeroHedge News http://bit.ly/2HT2eR1 Tyler Durden

US Military Holds Unexpected War Drill In Downtown Los Angeles

Helicopters swarmed overhead…

Loud booms echoed through the streets…

No, this is not Beirut, Damascus, or Kabul – it’s Downtown Los Angeles.

As The LA Times reports, a series of loud booms that rocked downtown LA on Monday night startled some people, but LAPD said there was no need to be concerned, as the noises were part of a U.S. Army training exercise involving aircraft and weapon simulations in urban settings.

The training is set to run through Saturday in Los Angeles and Long Beach.

“Residents may hear sounds associated with the training, including aircraft and weapon simulations” the LAPD said in a news release.

“Each location selected enables special operations teams and flight crews to maintain maximum readiness and proficiency, validate equipment and exercise standard safety procedures.

The training is essential to ensure service members are fully trained and prepared to defend our nation overseas.”

The army also noted that:

“The local terrain and training facilities in Los Angeles provide the Army with unique locations and simulates urban environments the service members may encounter when deployed overseas.

“There is no replacement for realistic training.”

But not everyone got the message…

As MCViewPoint noted, Not the first ‘urban training’ article of late. The war machine can never remember to tell anyone ahead of time. Because you don’t want to take a chance on advertising the real thing (martial law) when it happens.”

via ZeroHedge News http://bit.ly/2RGw3nx Tyler Durden

Attkisson: Intel Operation Against Trump Still Going Strong

Authored by Sharyl Attkisson , op-ed via The Hill,

There was a great deal of news this past week about President Trump’s audacious disregard for the advice and warnings from his own intelligence community experts.

Perhaps there’s good reason for alarm.

But I think there’s one shocking aspect – perhaps a larger story – that’s gone virtually unreported. It appears that anonymous intelligence officials are executing an operation against the sitting commander in chief. It might not qualify as all-out mutiny, but it’s also not all that far from one.

Right under our noses, while still under investigation for allegedly orchestrating leaks and undermining candidate Trump in 2016, some in the intel community are orchestrating leaks and undermining President Trump in 2019. 

There’s evidence of the existence of such an operation from the inspector general, various congressional probes and investigative reporting. They’ve alleged, and in some cases concluded, that some top intel officials improperly leaked information to the news media and engaged in politically motivated surveillance practices involving multiple Trump associates. 

In the newest press salvo, unnamed intel officials fanned out to air anonymous grievances against their commander in chief. They provided details of classified briefings and made inflammatory charges, such as that Trump is “endangering American security” with his “stubborn disregard” and “willful ignorance.” Disseminating these details, if true, could be seen as assisting our enemies.

Also cause for concern is the media’s role in this operation, whether witting or not. Many in the press dutifully parroted these grievances in one-sided accounts with virtually no counterpoints, as if it’s inconceivable that these intel officials could be capable of flaws or conflicted by political motivations. Some reporters seem to think that “intel,” as distilled and presented by these officials, is somehow beyond question.

In fact, history teaches us the opposite can be true.

Past intel failures

The 9/11 terrorist attacks are perhaps the most dramatic modern example of failures within our intelligence community, and a reason to question intel assessments.

Because of the attacks, widespread reforms were instituted. Yet after the reforms, there’s been a legacy of intel abuses flagged by the inspector general, investigative reporters and the Foreign Intelligence Surveillance Court overseeing sensitive requests for surveillance of U.S. citizens.

Further, some intel officials sometimes have proven they simply are not to be believed. For example, FBI Director Christopher Wray repeatedly has insisted there have been no “702” surveillance abuses — a reference to Section 702 of the Foreign Intelligence Surveillance Act (FISA), authorizing intelligence-gathering from internet traffic and phone calls — despite detailed findings from the inspector general and the FISA Court saying just the opposite.

Former Director of National Intelligence James Clapper, now an anti-Trump activist, provided false information under oath to Congress in 2013 when he said no mass spying occurred on tens of millions of Americans. When his testimony was proven inaccurate, he apologized and said he’d misunderstood the question.

Former CIA Director John Brennan, also now an anti-Trump activist, falsely assured the Senate that the CIA had not spied on Senate staffers. He, too, later apologized after an inspector general confirmed the spying had happened.

Are such officials to be uncritically, automatically believed when they bring complaints about their political enemies to the press?

Besides alleged deception by some intel officials in the past, the judgment and assessments of the intelligence community have been called into question on occasion.

For example, Russia twice alerted our intel officials about a man who had come to the U.S. and was known to be affiliated with Islamic extremists. However, the FBI’s assessment didn’t find any particular risk. The man went on to become one of the Boston Marathon bombers in 2013, murdering three people and injuring several hundred. There are many other examples of foreign terrorist threats being on the intel community’s radar but going unrecognized or undeterred.

On the anniversary of the 9/11 attacks in 2012, the intelligence community failed to anticipate potential risks in the Middle East. Even after protesters attacked the U.S. embassy in Egypt, U.S. officials failed to respond by repositioning resources in the area. Hours later, the terrorist attacks on the U.S. compound in Benghazi, Libya, seemed to catch officials by surprise; four Americans, including the U.S. ambassador, were killed. A post-mortem revealed there had been a great deal of intelligencethat warned of an impending attack.

Presumably, presidential briefings and assessments prior to these events would have been flawed or incomplete.

Presidential interactions with intel

Trump isn’t the first commander in chief to question his intelligence briefers, yet the officials typically didn’t go public with their gripes.

Some of the leaked information is designed simply to embarrass and discredit him, deriding his lack of knowledge. For example, one intel leaker said that, in a briefing, Trump didn’t know Nepal was an independent nation. Yet, no such official concern was expressed about gaffes or information lapses under other presidents.

In 2014, for example, President Obama publicly called ISIS the “J.V.” team, creating one of two implications: Either his intel briefings sorely failed to identify the threat of this emerging Islamic extremist terror group or, if they did correctly assess the ISIS threat and convey it to the president, he disagreed with them.

According to intel sources, there were instances of Obama refusing intelligence on certain matters on which he’d made up his mind. In at least one case, he reportedly told a briefer not to bring him any more information on one terrorism topic; if the material were presented to him, he said, he wouldn’t read it. 

Obama withdrew from Iraq against the recommendations of his military advisers, generals and secretary of State. He approved the disastrous takedown of Libyan leader Moammar Gadhafi, and reportedly ordered aid to the wrong side in Syria, instead helping jihadist groups. All of these actions were either with the advice — or against the advice — of his intel officials.

And there’s one infamous case where it can be argued that we could have benefited from a president treating his intel with skepticism. Before President George W. Bush launched the war against Iraq in 2003, a huge intelligence lapse led to the erroneous reporting that Iraq had weapons of mass destruction.

In the end, Trump could be right or wrong. And the way he interacts with his intel officials deserves news coverage and scrutiny. But we should refrain from one-sided reporting based on anonymous, orchestrated leaks by people who clearly seek to use the media to sway public and political opinion.  

Our intel community — especially today, with its recent conduct under scrutiny — should not be immune from healthy skepticism. These latest press reports are a pretty good indication that, for some intel officials, their operation against the commander in chief continues.

via ZeroHedge News http://bit.ly/2HS0IPe Tyler Durden

New York City Lawmaker Could Sabotage Amazon’s Move To Queens

New York City politicians led by then-Congresswoman-elect Alexandria Ocasio-Cortez greeted news that Amazon would be building a massive new campus in Long Island City, Queens with outrage after the company revealed that it would receive up to $3 billion in “performance-based” city and state tax incentives, as well as money from Empire State Development – money that, some argued, would be better spent fixing the goddamn subway. And in the months since the announcement, an inchoate resistance of left-wing lawmakers has formed to try and sabotage the company’s plans to build its new (helipad-equipped) campus just blocks away from the infamous Queensbridge Projects.

Until this week, the resistance consisted mostly of a few scattered protests and angry tweets. But for the first time on Monday, opponents of Amazon took a step giving them a real shot at sabotaging the company’s plans when the leader of the New York State Senate selected Queens state lawmaker Michael Gianaris to serve on the Public Authorities Control Board.

Amazon

The board must still approve the development grant to Amazon. And with one of the state Senate’s most vocal opponents of the deal now on the board, it stands a very real chance of getting voted down.

Andrea-Stewart Cousins informed Gov. Andrew Cuomo, who has taken credit as the chief architect of the incentives deal, of her decision in a letter obtained by the New York Times.

Screenshot

Gianaris has denounced the incentives for Amazon as “offensive” and has intimated that he would block the project, if he could. But assuming that Cuomo doesn’t block his appointment to the board (which is a very real possibility since the governor must confirm all of the board’s members), Gianaris would effectively have unilateral authority to kill the deal. The PABC has three voting members, any one of whom can derail a proposal by voting against it.

“My position on the Amazon deal is clear and unambiguous and is not changing,” said Mr. Gianaris, who has been present at protests against the deal. “It’s hard for me to say what I would do, when I don’t know what it is I would be asked to opine on.”

“I’m not looking to negotiate a better deal,” said Mr. Gianaris. “I am against the deal that has been proposed and don’t believe that it can form the foundation of a negotiation.”

Despite early doubts that the deal wouldn’t come to a vote before the board, Cuomo said last year that the board would be expected to vote on $505 million state capital grant that’s part of the package offered to Amazon. But in an interview with WNYC on Tuesday, Cuomo refused to say whether he would block Gianaris’s appointment. He also said that Amazon “hasn’t done a very good job” communicating its message, which one journalist on twitter mocked as “the understatement of the year.” However, a spokeswoman for his office blasted Senate Democrats for opposing “the greatest economic growth potential our state has seen in 50 years.” Amazon has promised to create some 40,000 jobs at its new campus – jobs that reportedly will carry an average salary of $130,000.

The question is: Gianaris vetoes public funding for the project, would Amazon press ahead with its plans? Or would it simply opt for a single HQ2 located in Virginia? Or perhaps it would seek another location altogether.

via ZeroHedge News http://bit.ly/2BlU4ei Tyler Durden

S&P Tumbles Into Red After Failing At Key Technical Level

Having broken above its 100DMA yesterday, the S&P 500 pushed up towards its key 200DMA this morning. But, along with Nasdaq, it failed to breakout…

and has now given back all the early day’s gains…


 

Once again, futures show the real chaos as cash markets open…

All of which may remind some non-machine traders that the rest of the market is not buying this post-Powell bounce in stocks…

 

via ZeroHedge News http://bit.ly/2t6sNYL Tyler Durden

Bank of America: “Powell Has Boxed Himself Into A Corner”

A little under a month ago we explained why, with the Fed Chair having capitulated to the market, pausing the tightening cycle and with rate cuts now imminent even as inflation continued to rise, “Powell May Not Know It Yet, But The Fed Is Now Trapped.”

Fast forward to today when our assessment of the dilemma facing Powell – whose 1 year anniversary as Fed chair is today, one day after he spent his 66th birthday eating stake with president Trump – has trickled down to Bank of America which in an overnight note writes that “Powell is getting boxed” and explains:

The abruptness of Chair Powell’s policy U-turn did not help the Fed’s credibility (some have argued it’s the largest shift in Fed policy intentions in history absent a market shock), and the Fed will have an uphill battle in communicating a hike if so intended.  In this sense, Powell seems to have boxed himself into a corner, compared to either Yellen or Bernanke, whose high market sensitivity and complete policy flexibility (with inflation risks far in the distance) helped create the low vol bubble.

And speaking of the low vol bubble, Bank of America highlights something that Morgan Stanley first observed last October, namely that the “Buy The Dip” strategy is dead, and writes that “central banks’ unprecedented policy created the low vol bubble through multiple channels, including direct purchase of risk assets, incentivizing investors to sell volatility for yield by keeping rates low, encouraging share buybacks through easy debt financing, but most importantly their verbal (at minimum) support for financial markets during periods of stress.”

It does not take rocket science then to infer that Powell’s recent shift from insensitivity to caring about financial markets is vol negative, and could help the VIX now average lower than in 2018 absent external shocks, according to BofA which further adds that “this could take our 2019 estimate for the average level of the VIX from the mid to high teens back toward the low to mid teens.” 

However, not even Powell’s dovish capitulation according to BofA will be sufficient to recreate the low vol bubble of 2017, in which the VIX averaged 11, for one reason the 2017 bubble was extreme, and took years of Pavlovian conditioning.

The DJIA traded in its tightest trading range in 110 years in 2017, driven by years of conditioning which induced a Pavlovian market response to buy every dip.  This learned response function took time to develop (it became progressively stronger from 2013-2017), and isn’t likely to be re-established quickly even with the Fed’s change of tack.

There are two caveats to assuming smooth sailing:

  • Fed policy is inherently more uncertain today: With unemployment near 50-year lows, and with the Fed intent on further policy normalization prior to the recent market weakness, the risk is that strength in the real economy (and stronger markets) pushes the Fed to hike again this year, something we noted yesterday.  Not surprisingly, BofA continues to call for 2 hikes in 2019 (most likely in the second half), and reminds its clients that “inflation is the real killer of low vol as it severely handcuffs central banks from being able to support markets.” While inflation isn’t constraining the Fed yet, it’s much more of a risk at this stage of the cycle than it was several years ago. With Fed policy now seemingly adrift, and at the mercy of what the data delivers, “the risks of further abrupt policy shifts are higher than before” according to BofA.
  • Cash is now a real alternative: The simple fact that rates are higher today and cash is a viable asset (best performer in 2018) means appetite for riskier short vol strategies will continue to wane, according to BofA’s Benjamin Bowler. Recall that 2018 was the worst year for simple S&P vol risk premia strategies in 30 years, and with many traders having gotten burned selling vol, it will be an uphill climb for this behavior to return at a systematic degree. Hence, BofA concludes that simply the lagged effect of higher rates should continue to support volatility as shown in Chart 7.

A more conventional reason why BofA believes vol is set to increase over the year, a dovish Fed notwithstanding: namely, that 90 years of data shows late-cycle equity markets are vol supportive:  Since 1928, looking at the S&P in phases of bull and bear markets shows that vol tends to rise in the later stages of a bull market. 

With most admitting the US economy is late cycle and with earnings beginning to deteriorate (as we reported, Q1 will see the first EPS decline Y/Y in three years), rising fundamental risks may also support volatility from here.

There is another reason why it is too early to bet on single digit vol, the first being that if the next move is a cut in rates, traders will intuitively expect higher vol for a simple reason: “what does the Fed know that we don’t.” Indeed, given the Fed’s abrupt U-turn in policy intentions despite what they admit is still strong economic data, the hurdle for the Fed to cut rates is also likely high. This suggests it would take a significant deterioration in the economy or much weaker financial markets to push the Fed to cut, both of which likely would be led by higher market volatility.

* * *

The last reason why Powell is trapped, is that with only 225bps of ammunition, tail risks are also rising. The inability for the Fed to raise rates further leaves them shy of the historically needed ammunition to stave off a shock (the average Fed rate cut since 1987 has been 375bps with much larger cuts common in bigger economic downturns). The Fed is also the only major CB with traditional ammunition, leaving the global policy tool chest quite bare. In other words, if the probability of a rate cut rises from here due to deteriorating conditions, markets may start to fear this increasingly precarious position. 

Luckily (for the Fed), just yesterday we showed that the San Fran Fed was setting the ground for not only QE (as the ECB did a few days earlier), but also Negative Rates, after a “researcher” there published a report “How Much Could Negative Rates Have Helped the Recovery?” and found that the answer is “a lot”, greenlighting the Fed chairman to cut rates as negative as needed, and effectively allow Powell to escape the trap he finds himselfin right now.

via ZeroHedge News http://bit.ly/2MSc3gK Tyler Durden

Strong 3Y Auction Stops Through For First Time Since March 2018

The refunding auction deluge is upon us with today’s $38 billion in 3Y notes pricing moments ago, in what was a strong auction which stopped at a high yield of 2.502%, the lowest since April 2018, and stopping through the When Issued 2.505% by 0.3bps. This was the first stopping through 3Y auction since April 2018, and followed 10 consecutive auctions which tailed as investors were less than eager to buy short-term debt during the Fed’s actively tightening phase which however is now officially over.

The internals were solid as well, with the Bid to Cover rising from 2.44 in January to 2.55, which was just below the 6 month auction average of 2.578.

The Indirects takedown also rebounded, rising from 41.9% in January to 45.7%, just below the recent auction average of 46.2. And with Directs taking down 18.5%, also above last month’s 17.7% and well above the 6 auction average of 17.7%, it left Dealers holding 35.9%, the lowest Dealer allotment since January 2018.

Overall a strong auction, and an indication that this week’s 10Y and 30Y auctions should all price with little indigestion.

via ZeroHedge News http://bit.ly/2t4oU6B Tyler Durden

The Libertarian Party State of the Union: ‘Americans deserve better’ than ‘Republicans and Democrats careen[ing] toward socialism and fascism’

||| Jeff HewittWhile Democrats bicker over who should give responses to tonight’s State of the Union Address, Libertarians have gone the prebuttal route, delivered by the party’s biggest star, the recently elected Riverside County Supervisor Jeff Hewitt.

Hewitt, the pension-reforming former mayor of tiny Calimesa, California, who now represents 438,000 constituents, starts off the message from America’s third-largest party by reciting piles of contextual good news that “you won’t hear in the torrent of doom and gloom from our nation’s capital”—one billion people lifted out of extreme poverty in just three decades, plummeting crime, miraculous advances in technology, and so forth.

But lest you think this a Ron Bailey or Steven Pinker recital, the mood does turn darker. “Our national debt has skyrocketed to almost $22 trillion,” Hewitt laments. In jails and prisons, “hundreds of thousands are behind bars for no just reason at all.” And: “Our sons and daughters have been deployed to far-flung, never-ending wars without constitutional authorization.”

And on the political conflict du jour, Hewitt comes out foursquare in favor of immigration, and against what immigration-prevention policies have turned America into:

At our southern border, government agents have committed acts of cruelty that shock the conscience in pursuit of the counter-productive and futile goal of controlling the free migration of people. America’s immigration bureaucracy has become an authoritarian monstrosity, aimed not just outward to would-be immigrants but also inward at American citizens. The prohibition of immigration requires an extensive apparatus for mass surveillance and government intrusion into our daily lives. Libertarians say: The United States should welcome immigrants.

Watch the whole message here:

Hewitt’s political talent lies less in reading speeches, and more in charming rooms (and talking ears off), as this Los Angeles Times profile today by occasional Reason contributor Gustavo Arellano illustrates.

Before swearing in Hewitt [to the Board of Supervisors], [L.P. National Chair Nicholas] Sarwark lectured the packed chamber about pension reform — a Libertarian battle cry ­­— and how his candidate was “one of maybe a handful of people around the country” who understood the issue.

Then Hewitt won the room over with an off-the-cuff speech speckled with jokes, asides, and praise of the board’s ethnic and ideological diversity. He didn’t offer much in terms of a vision, saying only that he would bring “fresh ideas” and a promise to always say the truth “the way I see it.” But his audience rewarded Hewitt’s folksy delivery with loud applause.

In a region and state where Republicans are growing rapidly extinct, Hewitt’s success has not escaped the notice of Golden State politics-watchers. Republican strategist Mike Madrid told Arellano that:

Hewitt “seems to have the recipe” for how the Libertarian Party can carry the mantle of conservatism in California as the Republican Party continues its decline: Focus on local issues and stop “being a hater.”

“It may be more unique than not, but that’s how these trends start,” he said of Hewitt’s upset victory. “It’s like baseball stats: It’s not a thing until it’s a thing. And then it’s a thing to watch.”

Jodi Balma, a political science professor at Fullerton College, said Hewitt’s success shows that Libertarian candidates could “build a pipeline to higher office” by first winning nonpartisan local races for school boards, city councils and other local positions.

Related: Read Steven Greenhut’s “California Libertarian’s Victory Could Be a Roadmap for Others.”

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