iftttwall

Usually the excuse “nothing is working” is used by finance professionals when speaking to their clients, desperate to explain their woeful performance, when there are no other excuses left. Only in 2018, that excuse may be spot on.

After another abysmal day, in which every single sector in the market closed in the red as stocks tumbled 2%, capping a dreadful two-month stretch since the S&P hit its all time highs exactly two months ago, which has seen both the S&P and the Dow turn red for the year with the Nasdaq just barely holding onto green, while oil crashed 6% slumping to a one year low, junk bonds matched a record streak of losses, the overall market just suffered one of its worst sessions in the past three years.

But what is most remarkable is the following chart from Bloomberg which shows the year-to-date return of the best performing asset between US and global equities, corporate bonds, Treasuries, gold and real cash, and according to which 2018 is shaping up as what may be the worst year on record for cross-asset investors. Indeed, nothing at all has worked this year!

The inability of any single asset class to escape the dismal black hole supergravity of devastating losses in a brutal post-BTFD catharsis that has mutated into an equal-opportunity rout, crushing returns across all assets, has left investors reeling, shellshocked and paralyzed, and dreading what may come tomorrow let alone next year when both the US economy and corporate earnings are expected to see their supercharged recent growth rates come crashing back down to earth.

“While there’s still no ‘panic in the streets,’ most traders are unconvinced that the selling will slow down anytime soon,” said Instinent’s head of trading Larry Weiss. “The flight to quality is now a flight to cash. It’s tough to convince anyone that now is the time to put money to work.”

Meanwhile, amid radiosilence of hope for the bulls as the market breaches one support level after the next, the Federal Reserve shows no sign of easing back on its tightening crusade or delaying the interest rate hikes that have become the source of nightmares for holders of some $5 trillion in corporate bonds that were sold by S&P 500 companies in the past decade, and whose proceeds were largely squandered in the pursuit of stock buybacks and fleeting shareholders gains and higher management compensations.

Beneath the turbulent surface of the stormy market, even stronger undercurrents threaten to tear apart what’s left of investor optimism. After a decade of outperformance by growth stocks, the sector has seen a historic flight as rotation into the unloved, largely forgotten value sector has emerged on a scale unseen in years.

Hedge funds, who hoped that “buy the dip” would work one last time and who rushed into the traditional “safety” of tech stocks at the end of October, were whipsawed, and turned net sellers this month, with the group accounting for the most selling among major industries according to Goldman Sachs. Meanwhile, as if sensing the coming storm, Goldman writes that hedge fund net exposures steadily declined throughout 2018, including during 2Q and 3Q while the broad equity market rallied, leaving most investors in the cold. Net long exposure calculated based on 13-F filings and publicly-available short interest data registered 49% at the start of 4Q, a decline from 56% at the start of 2018, and one of the lowest in years.

Meanwhile, as Bloomberg writes, while the buzzword for the first half was rotation, the latest losses are taking on a troubling unanimity:

Every sector in the S&P 500 fell on Tuesday, a day after every member of the 67-company S&P 500 Information Technology Index dropped. Disparate corners of the stock market are seeing reversals, from the tech high-flyers like Apple and Alphabet that led the way up to higher-leverage names that have been trailing for months.

“There isn’t an industry that doesn’t have something wrong with it,” Fort Pitt senior portfolio manager Kim Forrest told Bloomberg. “Every industry is getting sold. Every industry has a little black mark on it – at least one. So everyone is selling those stocks that are tainted with bad news – everything.”

But the biggest harbinger of even more sorrow for equities is not even in the stock market, but in bonds. After years of relentless gains in both the investment grade and junk bond space, corporate credit has finally cracked, with both yields and spreads blowing out to multi-year highs. Indeed, after hitting near record tights just over a month ago, investment-grade bonds are on track for their worst year in terms of total returns since 2008 as the Fed continues to raise rates, while high yield spreads have exploded higher.

“You always must respect what the credit markets are signaling,” said Prudential’s chief market strategist, Quincy Krosby. “Very often it starts with the credit markets and works its way to the equity market. But this time, it’s suggestive of a credit market getting worried about the equity market, and more about the economy.”

What is perhaps scariest, is that at this moment the US economy is firing on all cylinders; this will change in 2019 and 2020 when Goldman forecasts US GDP will slide below 2.0% and grind to a crawl.

Minneapolis Fed President Neel Kashkari, one of the Fed’s biggest doves who’s repeatedly called for a stop to raising interest rates, repeated his warning and said further tightening could trigger a recession.

“One of my concerns is that if we preemptively raise interest rates, and it’s not in fact necessary, we might be the cause of ending the expansion” and triggering the next recession, Kashkari said in a National Public Radio interview posted online Tuesday.

Which, of course, will not come as a surprise to regular readers who know very well that every single Fed tightening – like the one right now – has resulted in a crisis.

It won’t be different this time.

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Via CaseyResearch.com,

Hundreds of migrants have showed up at the U.S.-Mexico border.

They’re part of a “caravan” that includes about 5,000 people from Central America. The rest of the caravan, as far as we know, is still in central Mexico. But make no mistake. They’ll show up at the border any day now.

And no one can agree on what to do with these people. Some say we should just let them into America. Other people, including President Trump, think we should keep the migrants out. In fact, Trump recently called the caravan an “invasion.” Not only that, he deployed thousands of U.S. troops to the border to keep these people from entering.

In short, it’s very controversial. So I called Doug Casey earlier this week to see what he thinks about this…

Justin: Doug, the migrant caravan has captured the attention of the mainstream media as well as Donald Trump. Why’s this such a big deal?

Doug: There are several things going on here. One is that the leftists believe that nation states shouldn’t exist. Now, I’m not a believer in the nation state either. It’s only been around since the 17th century; it’s not inscribed in the cosmic firmament. There are better ways to organize a society.

The United States, for one, is way too big to be a single country at this point. I’m pretty confident that over the next couple generations, the U.S. is going to break up into several different countries. But that’s a different question. The last thing it needs is another alien group trying to forcibly insert itself into the mix.

The Democrats and the leftists don’t really believe in freedom of movement and travel. That’s no more than a talking point, to make them seem righteous. They believe in State control of almost every area of life. Since when has the freedom to travel and cross borders been important to them?

Personally, I believe in freedom of movement and freedom of travel – but that doesn’t mean you can violate others’ property rights. If you have one person requesting legal entry, that’s one question. But if a group of 1,000 or 10,000 is looking to illegally and forcibly cross into a different political area, it’s a different question entirely.

The people abetting this migration are purposefully trying to force a confrontation.

Justin: Why make such a long trek?

Doug: Apparently, they presume that the U.S. government will roll over, and put the migrants up when they arrive. That’s not an unreasonable presumption. It’s well-known the U.S. government has no guiding principles.

The groups financing them are, I would say, trying to make a moral point with the gullible U.S. public. “These are poor helpless immigrants, like your own ancestors. So you have to do the right thing, and take care of them.” Of course that’s a lie from start to finish – except for the poor part. But it’s effective psychological warfare in today’s world.

They’re also trying to demoralize the Trump administration, showing they have no real power or support.

The migrants themselves are acting stupidly. I don’t mean they necessarily have low IQs – although the caravan certainly isn’t full of rocket scientists and brain surgeons. Nor am I using the word “stupid” in a necessarily pejorative way. A definition of the word that applies here is “an inability to predict, not just the immediate and direct consequences of an action, but its indirect and delayed consequences.”

What do they really think is going to happen after they leave Mexico, and try to enter the U.S.? They’ll be arrested, fingerprinted, and charged with a crime. Which means they’re not likely to ever get legal entrance to the U.S. in the future. The poor fools are just tools being used by the people organizing and financing the migration, to prove some points.

It’s very bold for thousands of migrants to show up and ask to be fed, sheltered, and clothed. But also occupied, employed, given medical treatment, and have their children cared for. They’ve done zero to deserve any favors. But it’s not only an economic problem. It’s a moral problem.

These people – or those who are encouraging them – think they have a right to impose themselves. And the U.S. government, and the U.S. public, never even question the ethics of all this – so they’re foredoomed to failure. The Americans, idiotically, just say it’s against the law. But laws are arbitrary, and can change. It’s really a question of what’s right and wrong. The leftists, however, cleverly say that they have morality on their side.  

It’s said that these people are from Honduras and El Salvador. But who knows? The quality of reporting in the media is so poor, that you can’t really know where they’re coming from or who they are. It’s said that they’re “families fleeing from violence.” That’s irrelevant. But from looking at video feed, they seem to be mostly young males, with a few women and children for cosmetic purposes. One report I’ve heard, from a man that was actually there, is that over 90% are young men.

The whole sideshow is full of unanswered questions. How is it that these people from Central American countries were able to cross the southern Mexican border? Did the Mexicans try to keep them out? How do poor people expect to march all the way up Mexico? We’re talking well over 1,000 miles. Who’s paying for their food? Are they just sleeping in the bushes on the roadsides every night? What happens when one of them gets sick? These are questions that need to be answered. The whole thing is crazy.

Justin: Do you think the migrants might be receiving outside help or funding? It wouldn’t be the first time that something like that’s happened. Non-governmental organizations [NGO] have transported migrants by the boatload from Africa to Europe.

If so, who might be helping them? And why?

Doug: Well, if I was really that interested, I would get on a plane, fly to Mexico and start interviewing these people to find out what the facts are. But there are about a hundred other things that are more important to me. That’s the job of a reporter, or a news organization. Where are they? They should be all over this. But whether you could trust the reporting is another question.

But the big question is how did these thousands of people get the idea that they could leave their homes in Honduras and El Salvador, walk up through Mexico, and enter the U.S.? Did they expect to be received with open arms, and get free food, shelter, and clothing for however long? Where did this idea come from?

I hate to bring up George Soros, who’s justifiably the bête noire of the right wing. But he, along with Hillary Clinton, has been quoted as saying that it’s time for a “Purple Revolution” in the U.S. “Purple” comes from a merging of the red and the blue. A Purple Revolution in the U.S. might be similar to the Arab Spring revolution and the colored revolutions of Eastern Europe – very unpleasant, with unpredictable results. Perhaps it’s already underway; there’s plenty of antagonism, actual hatred, and irreconcilable views in evidence.

I believe the migrants are being led and financed; they have to be. It takes money to turn theory into practice. Whether it’s Soros and his NGOs or a bunch of other NGOs is irrelevant. Elements of the Democratic Party could be financing this stuff, helping the peasants organize, and just seeing how much it embarrasses Trump. It’s definitely not a spontaneous movement.

But suppose this is just a test run. If 5,000 – what’s guessed as the current number – people show up at the border, you could stop them. What if 100,000 well-financed and well-organized people show up at the border next time? How are you going to stop them? You couldn’t, unless you shoot them. They’ll just walk across as a human wave.

It’s the same problem that Europeans are going to face with the Africans in the years to come. Over the next generation or two, the population of Africa is set to double and triple. At the same time, Europe’s population is shrinking and getting very old. More important, Europeans no longer have any backbone, or belief in the value of their civilization. When the Africans – mostly Mohammedans – show up it won’t be just 100,000 or 200,000 as was the case a couple summers ago. We’re talking about a million… two million… or tens of millions. It’s going to change the whole character of the continent.

Justin: So what do you make of Trump’s handling of this situation? He’s reportedly sent more than 5,000 troops to the U.S.-Mexico border to defend what he’s calling an “invasion.”

Doug: As I mentioned a moment ago, embarrassing Trump is undoubtedly one reason why this march was organized and financed. They realize that it presents Trump with a real conundrum. What are the troops going to do? Are they going to be issued live ammunition? And at what point will they be given the orders to fire? Rifles don’t even have bayonet attachments anymore. Will it just turn into a pushing and shoving contest?

What the caravan may do is put their token women and children up front because it’s very bad PR to shoot or club women and kids. Perhaps they’ll try to push the fence down and then walk across the border. More likely they’ll try to walk through the border station, where hundreds of cars are lined up.

How are you going stop them? Well, if there are only a few thousand, you can arrest them. But then they’re in the U.S. And you don’t want them in the U.S. Now, you have another problem. How are you going to get rid of them? In any event, soldiers are completely ineffectual and unsuited for the job.

How can you get them back into Mexico, once they’ve crossed the border? At most of the California official crossings, there’s a “no man’s land,” a neutral zone. You’re out of Mexico, but not really in the U.S. The Mexicans don’t want them back. So, either the U.S. will have 5,000 people milling around, or it’s going to have to incarcerate them. Then they’re definitely in the U.S.

Justin: What would you do if putting troops on the border isn’t the answer?

Doug: I’ve said before that two things could solve this problem.

Number one, there should be absolutely zero welfare benefits to anyone. Ideally that includes U.S. citizens – however that’s totally impossible at this point. But certainly for non-U.S. citizens, so there’s nothing to draw these people in. Benefits draw in the wrong kind of person. That’s the most important difference between today’s migrants, and the legitimate immigrants of the past. Before the 1960s, they had to pay their own way to get here, and support themselves once they arrived.

Number two, all property in the U.S. should be privately owned, so there aren’t any bridges for them to sleep under, or unowned sidewalks where they can panhandle. No government-owned parks where they can camp out. If you can’t pay the rent for wherever you are, or if the owner of the sidewalk or road doesn’t want you on it, you’ve got to go elsewhere. That would solve the problem. But neither is feasible in today’s America.

It should be up to individual property owners to defend their property. In other words, they should be the ones making the decisions. And if they need to use force to defend their property, that should be perfectly acceptable and within the law. Of course, you want to minimize the use of force. But we simply cannot let people, in effect, confiscate your property.

What I’m saying is this shouldn’t even be a government problem. The government is no better at solving this problem than they are at solving any other problem. As a result, it’s just going to get worse.

I suspect this caravan is just a trial balloon. The next time they’ll make sure there are 50,000 or 100,000 people at the border. We’re not going to be able to keep them out. And once they’re in, unless you just let them go anywhere they want, they’ve got to be incarcerated. And once they’re incarcerated, what are you going to do with them? You can’t send them back across the Mexican border. The Mexicans aren’t going to want them. How are you going to sort them out and fly them back to whatever country they came from? I doubt any of them have passports.

The present system is totally incapable of coping with the problem of mass migration, and the problem will get bigger. Once Trump is out of office in 2020, some hardcore leftist will be elected. Presumably they’ll welcome these people. Or maybe not. They’ll see them as a real welfare burden – penniless, devoid of skills, and unable to even speak English. On the other hand, they’ll be a boon to MS-13 and other gangs.

At that point, we’re going to witness a major change in the demography of the U.S. We’re already in the middle stages of the transformation. As late as the ’60s, the U.S. was about 85% people of European extraction, and 15% “other.” Now it’s 60-40. Soon the U.S. will be truly multi-ethnic and multi-cultural. They’ll all be voting, to garner bennies for their own groups, at the expense of others. It will make for a highly unstable situation, with lots of resentment. Explosive, actually.

Justin: Doug, I read that the bulk of the caravan is in Mexico City now and headed for Tijuana next before crossing into San Diego.

Do you find it interesting that the caravan would head for California rather than taking a more direct route into Texas? Supposedly, this is the safest route available.

But I can’t help but wonder if California was chosen because it might be a more welcoming environment. What are your thoughts?

Doug: That’s an interesting point. I suppose it ties into Trump’s idea of building a wall, because there is actually a serviceable fence at Tijuana. My guess is that they’ll attempt to get arrested at the Customs and Immigration booths and get into the U.S. that way. California won’t use the state troopers to arrest them, nor will the local municipality use their police. It will be up to Washington.

It would be too hard to have this motley crew of migrants try to walk through the Mexican desert to swim across the Rio Grande. Which is why they aren’t choosing Texas, New Mexico, or Arizona.

Maybe their intention is just to go through the actual border crossing, and just push their way through there. I can’t wait to see what their strategy is. Again, it’s a sign of how bad the reporting is that no news man, no journalist has gone down there to ask these questions and get the answers from the horse’s mouth. All we can do is speculate.

But look at the bright side. This is free entertainment.

Justin: Thanks for your time, Doug.

Doug: You’re welcome.

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According to a new report from West Hawaii Today, the Big Island (officially named Hawaii), the largest island in the US’ Hawaiian archipelago in the Central Pacific, is currently experiencing a significant third-quarter slowdown in real estate.

Data from multiple listing service (MLS) showed a broad contraction in residential and vacant 3Q 2018 land sales, respectively dropping 10% and 23% from 3Q 2017.

The report said residential sales volume over the quarter plunged by 25% and vacant land volume dropped by 11%.

The epicenter of the real estate bust is located in Puna, where vacant land sales dropped by 36%, and residential sales fell by 14%. Residential sales volumes, meanwhile, plunged by 20%, while vacant land sales volumes crashed by 37%.

Last month, MLS data continued to show the bearish trend is intact across the Big Island, residential land sales remained down by 21%, while vacant land sales were down by 29%.

West Hawaii Today said all residential markets on the island were stalling. 

Nancy Cabral, president of Coldwell-Banker Day-Lum Properties, said some of the declines originated from the Kilauea eruption, which was active in Puna for much of the third quarter.

“I think the island is going to be less attractive to mainland buyers who are misinformed about the eruption and the different regions on the island,” Cabral said.

Cabral said displaced Puna residents bought new homes using Federal Emergency Management Agency grants, which have helped some markets on the Big Island stay active during the slowdown but will only serve as a temporary boost.

Meanwhile, the Hawaiian residential median sales prices remain in an upward trajectory, rising by 1.79% to $355,000 this year to date.

“Make sure you understand where you’re buying and why you’re buying,” Cabral advised.

It seems the Kilauea eruption has undoubtedly slowed the momentum in the Hawaiian real estate market. 

West Hawaii Today did not mention the other factors that are currently pricking housing bubbles on the mainland: monetary tightening, rising interest rates, home affordability, and depressed real wages.

Hawaii’s real estate market could be nearing a top as a confluence of factors from volcanic eruptions to tightening credit markets has recently crimped demand.

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Authored by Cyril Widdershoven via Oilprice.com,

U.S. president Trump is facing strong internal pressure to punish Saudi Arabia in the coming days.

For Washington, however, this could be a double-edged sword, as turning on Saudi Crown Prince Mohammed bin Salman could result in two unwanted major geopolitical consequences. The still fresh Jamal Khashoggi murder case continues to make headlines due to a relentless anti-Saudi media and a diplomatic offensive by Turkey, Qatar and Western diplomats, and it could trigger the largest U.S.-Saudi/Arab crisis in decades.

U.S. politicians have set their sights on the position of the young Saudi Crown Prince, based on still unsubstantiated claims of direct involvement by Ankara and unnamed CIA-officials, U.S. president Trump finds himself backed into a corner to deal directly with the Kingdom.

Until now, the U.S. Administration has refrained from mentioning the direct involvement of MbS in the murder of the former Saudi journalist, but has put sanctions on the officials being connected to the case. Inside of the Kingdom, the pressure is also increasing but this time not to remove MbS, but instead to prepare a harsh response to any possible U.S. claims or sanctions on Royal Family members. Senior Saudi officials have already indicated that a direct attack by Washington or European leaders will be met by severe repercussions. 

A Western-Turkish move to pressure Saudi King Salman to remove his son from power is at present unrealistic. Looking at the ongoing situation inside of the Kingdom, and in the Arab world, the support gathered the last weeks by the Saudis from their allies UAE, Bahrain, Egypt, Jordan and Lebanon, is clear. No Arab country will allow for a ruling Crown Prince to be removed from power by an outside, non-Arab entity. Inside of the Kingdom, the atmosphere is very clear, keep your hands off MbS. In contrast to the ongoing discussions in the Western media or Turkish outlets, there are no clear signs of a growing opposition to the plans and rule of MbS. The Crown Prince has not only been able to weather the storm before and during the FII2018 period, when global media reported on a failure of the Desert in the Storm financial conference, he has also removed potential opposition to his Saudi Vision 2030 strategy and power plays before.

Still, some opposition exists, even if it is not vocal at the moment. Conservative elements in the Saudi power constellation, supported by former high-ranking Royals, will be waiting for any sign of weakness, trying to hit where it really hurts. Currently, three major factors could lead to instability: MbS’s future depends on a partial success of the high profile diversification of the Saudi economy, weaning it from its oil addiction, and implementing some hard needed changes to give future perspective to the large young population of the country.

At the same time, the diversification needs a reasonably high volume of FDI, which is supported by higher oil prices. For the immediate and mid-long term, MbS will need to have the support of the regional power players, Sheikh Mohammed bin Zayed (Abu Dhabi), Bahrain’s Crown Prince, Egypt’s President Sisi and King Abdullah II of Jordan. Looking at FII2018 and the last weeks, these factors he still has in place. To counter the U.S., Saudi Arabia’s Crown Prince has made the right choices the last couple of years. MbS and Russia’s Vladimir Putin are reading out of the same book. The ongoing OPEC-Russia cooperation comes out of the screenplay written by MbS (and Khalid Al-Falih) and Putin (supported by Novak). Even before the Khashoggi case, both leaders understood that in times of need new friends could be needed. At the same time, the advantages of changing sides or alliances had become clear after the disaster called the Arab Spring. The West went flat on its face, and left the region to bleed. The only strong man willing to bleed with the Arabs has been Putin, which is currently being appreciated in all Arab capitals, from East to West.

Washington now has to decide what it wants from the region. Without any doubt, Washington and Brussels, even combined with Ankara, will not be able to remove the Crown Prince from power. When looking at the power composition of the Kingdom, and the intertwining of the future of the UAE, Bahrain and Egypt with the future of the Saudi Kingdom. The rapprochement between Cairo and Riyadh, the in-depth economic and military cooperation between Riyadh and Abu Dhabi, and the bloodline between Riyadh and Manama, are not to be underestimated. Outside threats have brought them together, maybe even with the help of the invisible powers of the Jordanians, but these relationships cannot be easily dissolved by outside powers. A decade ago, all of the above relied on Washington, or some positive feelings in the EU, but at present a new kid is in town, called Vladimir the Bear. Any pressure from Washington, even if based on facts or relevant assessments, will result in a countermove in the Arab capitals. The removal of Gadhafi, Hosni Mubarak and others, helped by Westerners, has left deep and ugly scars in the mind of the Arab leadership.

As long as U.S. president Trump is not openly showing a confrontational course with the Saudi Royals, some ‘’friendship or partnership” is still on the table. However, if Trump, maybe forced by the U.S. Senate and Congress, addresses MbS as the main culprit in the Khashoggi case, the gloves will be off. An anti-Western/U.S. move by the mainstream Arab countries will be a threat not only to Western influence in the region, but also confirms Russia’s growing influence in the region.

Intensified cooperation between Russia and Arab power players will be a nightmare scenario for U.S. and EU policy strategists. The first effects will be that Trump’s Tweets and Brussels’ warnings will be met by a one-sided NOPEC oil production cut and price strategy. Without any doubt, one of the outcomes could be that OPEC and Moscow, already accused of playing a price cartel strategy, will no longer keep the wishes of Western partners in mind. There will be no more room for policy negotiations on volumes, prices and economic growth as Putin and Crown Prince will decide their own fate.

The second issue will be that Russia and the Arab world will decide their own new geopolitical structures and power plays, in which the U.S. and Europe are no longer on their priority list. A full-scale 180 degree strategic turn by the Arab world is not in the interest of the world, and especially not of the West.

A strong NOPEC oil strategy, based not only on market fundamentals, but infused with geopolitical backlashes and power play, will result in a very volatile and risky environment. Politics always have been playing an important role, even if Khalid Al Falih continues to reiterate that OPEC is not a geopolitical policy maker, but a producer of commodities.

Strangely none of the major analysts have looked at the position of Moscow in the Khashoggi affair. Putin and his consorts have been totally quiet, not addressing the case at all. At the same time, Moscow and Riyadh have been working out major investment deals, energy cooperation for the next century, while Russian forces have been flying into major Arab capitals for so-called military exercises with friends. While we have been reading newspapers and listening to one-sided news analysis coming from Turkey and unnamed sources, the main players have discussed already the full answer to any threat possible.

The OPEC meeting in December could be the first sign of a new energy/geopolitical reality, in which U.S. shale is being met by a Russian dreadnought fueled by Saudi oil. The signs are written on the wall that changes are imminent, but don’t expect it to be news about the removal of the Saudi Crown Prince. OPEC is changing, while geopolitical power brokers have already created a new theater of powers. Trump will have to switch gears to cope with this growing threat. Without some real brinkmanship, Khashoggi could be the next millstone around the neck of the U.S. president, not on the head of MbS.

via RSS https://ift.tt/2FvU8N3 Tyler Durden

Traditional television is dying at an accelerating pace and the “solution” – streaming “skinny” bundles – isn’t looking that much better.

The Wall Street Journal reports that more than 1 million consumers canceled their cable TV or satellite subscriptions over the last quarter, marking one of the largest seasonal drops ever. This ratchets up the pressure on traditional pay-TV providers to find new ways to generate revenue and it continues to shine a focus on streaming services and “skinny” content bundles being offered by traditional cable companies.

The WSJ arrived at the same conclusions that we wrote about a few weeks ago: the tactics of traditional cable companies to try and get consumers to switch to their streaming services are not helping stop the erosion of business – an avalanche set into motion by “cord cutters” – and may in fact be making it worse.

Companies like Verizon and AT&T have seen their pay-TV customers fall off at the quickest rate in recent years even though they had the smallest subscriber bases to start with. Overall, satellite operators like DirecTV and Dish have lost the most customers. These firms are said to be more vulnerable to subscriber losses because they don’t provide internet access, like many traditional cable providers. Internet is, of course, still in demand.

Research from MoffettNathanson has found that more than 10 million US homes have either cut the cord or have never even subscribed to a pay-TV company in the first place since 2010, which is when the share of households with traditional cable service “peaked.”

To combat this, companies like Dish have launched their own online video streaming services offering a select group of channels, “skinny” bundles, which are growing – but at a decelerating rate and not quick enough to offset the decline coming from the traditional TV business.

Now, traditional cable companies are starting to warm up to embracing services like Netflix and YouTube, once thought to be their competition. For instance, Comcast now offers access to both of these services through their new set top box. They are also offering availability to Amazon Prime.

Still, competition remains robust as companies like Sony, Alphabet and FuboTV are all in the market for these “skinny” bundles of content and they’re all growing quickly. Despite this, these types of bundles don’t generate the higher margin profits that pay-TV brings; in fact in order to capture market share, they are frequently offered far below cost resulting in even greater losses for media companies.

We  recently highlighted that it wasn’t just cable that is “cratering”: streaming TV growth has also slowed and recent trends have been ominous. Dish’s Sling TV signed up just 26,000 new subscribers in the third quarter after attracting 41,000 in the previous three months and 91,000 prior to that. In aggregate, the company lost 341,000 customers in the third quarter. DirecTV Now added 49,000 subscribers last quarter after signing up 342,000 customers in the prior three months.

YouTube TV added about 100,000 customers over the past two quarters, after signing up 125,000 in the first quarter of this year. Hulu attracted 175,000 new viewers last quarter after signing up 200,000 in the two quarters prior to that, according to estimates. 

In short: growth has hit a wall, even for these consumer-friendly services. 

Meanwhile, the “unthinkable” scenario of supersaturation – or simply just more debt laden Americans on a budget that need to cut back – linger as an obvious explanation for the recent peak in growth.

Matthew Niknam, an analyst at Deutsche Bank, estimates that the profit margins of “skinny” bundles are about -6%, versus the 38% margins for traditional pay-TV. Thus, the basis of its appeal to the consumer. Yet if media giants can’t even grow product lines which are “loss leaders”, what hope is there for future industry growth?

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Authored by Daisy Luther via The Organic Prepper blog,

DOES THIS SCARE YOU? According to “leading research” in the UK, using all-caps in university instructions could “frighten students into failure.”

The staff at Leeds’ Trinity School was given a handful of instructions to help the future journalists of the United Kingdom succeed. Do keep in mind that these suggestions are no more outrageous than the ones here in the United States of Safe Spaces.

A few lowlights highlights of the internal document obtained by Express UK follow. (Don’t worry. The document does not contain any frightening all-caps)

Staff at Leeds Trinity’s school of journalism have also been told to “write in a helpful, warm tone, avoiding officious language and negative instructions”. Some blasted the move as “more academic mollycoddling” of the snowflake generation. An “enhancing student understanding, engagement, and achievement” memo lists dos and don’ts – with “do” and “don’t” among words frowned upon.

Course leaders say capitalising a word could emphasise “the difficulty or high-stakes nature of the task”.

The memo says: “Despite our best attempts to explain assessment tasks, any lack of clarity can generate anxiety and even discourage students from attempting the assessment at all…

The memo also says that staff must be “explicit about any inexplicitness” in their assignment briefs…

And it warns that when students are unsure of an assessment, “they often talk to each other and any misconceptions or misunderstandings quickly spread throughout the group (usually aided and abetted by Facebook).

This can lead to further confusion and students may even then decide that the assessment is too difficult and not attempt it”…

The university said the guidance was sharing “best practice from the latest teaching research”, adding: “We take pride in supporting our students to be the very best they can be. (source)

It would be difficult to be surprised by this.

After all, we live in a world in which clapping has been banned and replaced with “jazz hands” to avoid the potential of anxiety for students. We live in a world with coloring books, puppies, and safe spaces for college students who require respite from a world with President Trump.  We live in a world where a prof at Harvard Law – HARVARD FREAKING LAW (oh sorry – all caps, are you okay?) is dealing with law students who believe that rape law should not be taught. We live in a world in which practically everything must be prefaced with a trigger warning.

We live in a world in which anything that goes against the official rhetoric of the Big Tech gods is immediately censored out.

All of this coddling comes at a high price for mental health.

The mental health of young people is truly suffering and it isn’t because of words written in all-caps.

Greg Lukianoff and Jonathan Haidt of The Atlantic wrote about harm being caused by the politcal correctness epidemic:

…it presumes an extraordinary fragility of the collegiate psyche, and therefore elevates the goal of protecting students from psychological harm. The ultimate aim, it seems, is to turn campuses into “safe spaces” where young adults are shielded from words and ideas that make some uncomfortable. And more than the last, this movement seeks to punish anyone who interferes with that aim, even accidentally. You might call this impulse vindictive protectiveness. It is creating a culture in which everyone must think twice before speaking up, lest they face charges of insensitivity, aggression, or worse…

…What are the effects of this new protectiveness on the students themselves? Does it benefit the people it is supposed to help? What exactly are students learning when they spend four years or more in a community that polices unintentional slights, places warning labels on works of classic literature, and in many other ways conveys the sense that words can be forms of violence that require strict control by campus authorities, who are expected to act as both protectors and prosecutors?

…vindictive protectiveness teaches students to think in a very different way. It prepares them poorly for professional life, which often demands intellectual engagement with people and ideas one might find uncongenial or wrong. The harm may be more immediate, too. A campus culture devoted to policing speech and punishing speakers is likely to engender patterns of thought that are surprisingly similar to those long identified by cognitive behavioral therapists as causes of depression and anxiety. The new protectiveness may be teaching students to think pathologically. (source)

And it’s so true. If you can’t withstand words you don’t like, how will you withstand the cold, hard world of the workforce? How will you deal with financial problems, divorce, or even sassy offspring?

Now imagine an SHTF event with these kids in the starring roles.

If you will, take a moment to imagine the kind of thing for which we are all preparing. Some sort of societal breakdown. Now add to the chaos these young people who have been coddled, nurtured, and inoculated with viral political correctness.

How will they possibly deal with the chaos that Selco describes in his shocking book about the reality of an SHTF environment? Will they demand their human right to food while shrouded in a weighted, anxiety-reducing blanket? Will they color while the building they are in is being shelled? How would they muster up the wherewithal to fight back and protect themselves if they’ve never dealt with even a modicum of violence in their sheltered lives?

It would be utter chaos. Bloody mayhem. They’ll be fodder for the psychopaths who are not so politically correct. It’s a terrible disservice that has been done to these young people.

If you think I’m exaggerating, please remember, I’m talking about kids who are scared of words typed in all-caps. Heaven forbid we ever face an invading force of young adults who have not been babied into incapability.

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Eight years after its maiden voyage followed by February claims of a Syrian deployment, Russia’s single-seat, twin-engine SU-57s fighter jet is finally ready for its close-up. 

The planes, which flew a total of ten sorties, were pushed to the limit as the military wanted to see how they would perform during a real-life mission. The jets’ aerodynamics, avionics, fire control, and weapons systems were all put to test amid high temperatures and complicated terrain, the ministry said on Facebook. –RT

The Russian Defense Ministry, which has ordered 12 of the supersonic stealth jets to be delivered in 2019, has released footage of an Su-57 taking off from an undisclosed location presumed to be Khmeimim air base in north eastern Syria. The official release comes nine months after unverified photos and video footage emerged in February purporting to show the new fighter jet landing at Khmeimim. 

The new footage shows two Su-57s taking off, traversing the skies over Syria and then simultaneously landing on the runway “with or without the parachute brakes,” according to Russian state-owned news network RT. 

Though little is verifiably known about the Su-57’s features and capabilities, the jet has given a bit of publicity in recent weeks.

Recently, Russian TV was allowed to film the low-visibility fighter flying in formation during mid-air refueling. The jet approached close enough so that the flying tanker would be able to extend the refueling cable and far enough to avoid a collision.

The multirole, single-seat, twin-engine Su-57 jet, referred to as PAK FA and T-50 during research and development, is designed to give the Russian Air Force an unhinged superiority in aerial warfare. –RT

The Kremlin ordered its first dozen production-standard Su-57s in August 2018 according to The National Interest, and is expected to form the first regular squadron in 2019. According to Russian news agency Tass

“By the end of the summer, I think probably at the Patriot Park (in Moscow’s region, the venue for the 2018 Army forum on August 21-26 – TASS), we will sign contracts for the first batch with the defense ministry. Regular supplies will start next year,” said Yuri Slyusar, president of Russia’s United Aircraft Corporation (UAC) in August. 

“You know that today the Su-57 is considered to be one of the best aircraft produced in the world,” said Russia’s deputy defense minister, Yuri Borisov in August. 

According to RT, the Su-57 is coated in “special radio-absorbent paint,” and its “guided and unguided weapons are also hidden in domestic bays to ensure low radar signature.”

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Authored by Mike Shedlock via MishTalk,

Australia’s “crane index” hit a new record high. Expect a major home-builder bust along with an accompanying recession.

Still Raining Cranes

Despite the housing bust and a declining number of cranes in Sydney, It’s Still Raining Cranes in Australia.

Construction cranes have become a permanent feature of the urban landscape as developers compete to build more apartment and office towers and governments play catch-up with infrastructure. The latest edition of the RLB Crane Index shows that crane numbers in Australia have hit an all-time high of 735, up from 684 at the last count.

Sydney retains its mantle as crane capital of Australia, but has recorded a net loss of 21 cranes — by far the biggest drop in the survey. Other urban centers are taking up the slack, including the Central Coast, just north of Sydney, which saw a net gain of 15 cranes.

But the biggest mover was Melbourne. With the Victorian capital on track to become Australia’s most populous city by 2030, the city recorded a net gain of 35 cranes.

Moral of the Story

Looking for a moral to this story?

I just happen have one: Home builders build until they go bust. It’s what they do.

It happened in the US in 2007 and it’s happening in Australia today.

The national builders may survive but regional and small leveraged builders get wiped out every cycle.

Bust Will Be a Doozie

1. For a discussion of Canada please see Home Affordability: Canada vs. US

2. Also note 50 Million Empty Homes In China, Third-Home Purchases Soar

3. Zero Hedge comments Australian Home Prices Could Collapse 30%: UBS

I believe UBS comments understate the problem.

Expect lots of doozies. You won’t be disappointed.

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The euphoria-induced tactic of just buying any stock sight unseen over the last decade has now been adopted by hiring managers nationwide. A recent Wall Street Journal article points out that many employers looking to hire people are doing just that – without ever meeting the prospective candidate in person.

In what has become the tightest job market since 1969, employers have reached the point of hiring some candidates as quickly as after just one phone interview, worried someone else may snatch the job prospect. While the practice was once the most common for seasonal hiring, it is now reportedly spreading to roles like engineers and IT professionals.

The Journal highlights several examples of this practice occurring nationwide. Take 22-year-old Jamari Powell, who was hired by Macy’s for $12.25 an hour after just a 25 minute interview and was contacted back just 12 hours after submitting his online application.

Macy’s reportedly fills more than 33% of its in-store jobs within just 48 hours and is in the process of looking to expand its phone interview hiring process, according to a spokeswoman from the company. They call it “a fast and easy hiring process”.

In another example, Ashley Jurak, a 19-year-old student at Baylor University offered to drive in for a personal interview to her local Bath and Body Works, but the company told her not to worry about it because she had clinched the job over the phone. Upon arriving for her first day of work, the manager there told her that she “looked just like her picture”.

Another example is Tamia Howze, a 21-year-old hospitality and tourism major, who got a job at a catering company after just one phone interview that lasted 30 minutes. The pay for the job was $13 an hour plus tips. She told the Journal: “I was kind of shocked. I’m like, you know, should I be worried that I got hired?”

Even entry level positions at companies like Boeing are being filled after just phone interviews. Technical positions and other tough to fill engineering roles are filled with candidates sight unseen, according to a former Boeing recruiter.

A spokeswoman for Boeing said: “With almost 1 million applicants a year, we strive to create a contemporary candidate experience that uses the most current practices in candidate assessment.”

An elementary English language teacher in Tulsa, Oklahoma, Jodi Dean, was hired after one phone interview with the school principal. She was less surprised, stating that she had maintained plenty of relationships over the phone working with people that she had never met in her life. This hire came as the state of Oklahoma faces a widespread teacher shortage. A district spokeswoman called this type of hiring “thinking outside the box”.

This unprecedented hiring spree comes at a time when the Labor Department has reported about 1 million more job openings than unemployed Americans. The unemployment rate right now is at a 49 year low of 3.7%, with Goldman warning that the US labor market is now beyond full employment.

CVS Health is also working on piloting a program where new hires don’t actually meet with a human being until the day they start their jobs. Rather, they are hired based on the results of a “virtual job tryout”.

Malik Bruce, who sought a job with in-flight caterer Gate Gourmet, said that his phone interview wasn’t even with a human being. Rather, he recorded answers to questions from an automated system that asked him to describe himself along with his future plans.

He said: “I was confused. You can’t have a conversation with a robot.”

Upon being invited for an in person interview, he found out that he had actually already landed the job. At that point, he said, “we all kind of looked around at each other, like, I thought this was an interview.”

Meanwhile, “academic” sources are backing up the idea of avoiding in-person interviews. After all, anything that supports the notion that employment should be the only gauge of how an economy is running needs to be protected. 

And that’s exactly what Peter Cappelli, a management professor at Wharton did: “Most companies are so bad at interviewing, and the interviews are so full of bias, that it’s not crazy to just ignore them altogether,” he said.

Ironically, it is economists like Cappelli who at the same time are confused why the productivity of the US economy has hit rock bottom.

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Authored by Tom Luongo,

Look who’s back in the news this week.  None other than Mr. Anti-Putin himself, Bill Browder.  But Browder isn’t happy at all as to why he’s in the news this time.

A number of things have happened in the past few days which pushed Mr. Browder’s future into uncertainty.  The first occurred on September 30th when the Chinese President of Interpol Meng Hongwei was recalled to China on unspecified corruption charges.

As we noted earlier, now that his formal resignation letter has been received by Interpol, the most likely person to replace Meng is Russian Interior Ministry official Alexander Prokopchuk.  And Mr. Prokopchuk is no fan of Mr. Browder.

On the heels of this news Russia has now opened up multiple new lawsuits against Browder (who they convicted in absentia last year to nine years in prison for tax evasion) citing him as the creator and coordinator of a criminal conspiracy.

From Sputniknews:

“Last Friday, a decision was made regarding Browder to initiate a criminal case for creating a criminal organization and directing it, that is, for the crime provided for by Part 1 of Article 210 of Russia’s Criminal Code,” Atmonyev said at a briefing of the Russian Prosecutor General’s Office.

He said Russia would soon put Browder on an international wanted list under the UN Convention Against Transnational Organized Crime.

To add to the bad press, Russia is now openly implicating Browder in the deaths of five people via poisoning, including his cause celebre Sergei Magnitsky himself.  Browder has been the person pushing Magnitsky’s death as the basis for global sanctioning of governments and people for human rights abuses.

In 2012 the U.S. passed the so-called Magnitsky Act which has been replicated around the world and is the basis on which nearly all of the U.S. sanctions have been issued over the past six years.

Russia isn’t forthcoming with any details at this point other than to say that a highly toxic water-soluble Aluminum compound was found in the liver’s of multiple victims with strong ties to Browder.

Then citing clear motive the Russians are now pursuing the matter domestically.  But, they are also doing so internationally.  Remember, Browder was picked up last year by Interpol on a warrant issued by the Russians in Spain but was soon released thanks to intervention by the U.K., of which he is now a citizen.

One has to think this will not be the case the next time Mr. Browder and Interpol’s paths cross in a country where he does not have implicit protection from Russia.

I do believe that when Russian President Vladimir Putin brought Mr. Browder up at the post-Helsinki Summit press conference he was doing so to begin the process of flushing Browder out into the open while Russia continues to investigate his offshore business dealings.

I talked about this a few weeks ago when no less than the European Union threatened Cyprus with Article 7 sanctions for simply assisting Russia in their investigations of Browder’s business dealings there.

Now this is a dangerous escalation in service of an investigation into someone who, agree or not, Russia has a legitimate interest in pursuing.  Dismissing all of Russia’s concerns about Browder as ‘politically motivated’ is pure grandstanding.  It carries no weight of law and stinks of a far deeper and more serious corruption.

Because if Browder was as pure as the driven snow as he presents himself to the world then he would have no issue whatsoever in Cyprus opening up his books to Russia and put his question of guilt to rest once and for all.

One has to wonder what’s going on here.  The U.S. has used if not outright abused the Magnitsky Act and its sequel, CAATSA, to sanction and threaten to sanction nearly everyone in the world that doesn’t go along with our version of events in Ukraine, Syria, Yemen and Iran.

We sanctioned Turks earlier this year over Pastor Brunson.

Browder has deep ties to deposed Russian oligarch Mikael Khordokovsky, who bankrolled the lobbying for the Magnitsky Act’s and CAATSA’s passage.   Browder was tied up with Edmund Safra at Republic National Bank who Martin Armstrong believes was part of a major conspiracy to overthrown Yeltsin by framing him for the theft of a $7 billion loan from the IMF.

Now, Browder is involved in blowing the whistle, supposedly, on Danish bank Danske’s Estonian branch over hundreds of billions in money laundering, some of which passed through Russia.

The Magnitsky Act has been the lynchpin that holds together the entire U.S. aggressive hybrid war against anyone we determine to be acting against our interests. So, to me it makes perfect sense for Russia and China, in the wake of sanctions being placed on Iran, to up the stakes on the Magnitsky Act itself by going after Browder and outing him as the architect of a global putsch by U.S. and European power brokers to consolidate power via the international banking and finance system.

That’s why this change at Interpol seems so convenient to me. The leader of the biggest obstacle to Browder winding up in a Russian court, Interpol, is suddenly recalled to China on unspecified corruption charges, paving the way for Russia to set Interpol’s priorities.

Explaining the backstory of the Magnitsky Act was the subject of the supposedly sinister Trump Tower meeting between Donald Trump Jr. and Russian lawyer Natalia Veselnitskaya, a meeting that was allowed to go forward as part of a plot to discredit Trump as a Russian agent.

Lee Stranahan has been banging his shoe on the table about this and his interview with Ukrainian whistleblower Andrii Telizhenko (follow the link to listen to a 20 minute excerpt) has the goods on the entire Russia-gate story being nothing more than an operation run by the Democrats to paint Donald Trump as a Russian agent.

To stop the U.S. cold in its weaponizing the dollar and the global financial system starts with discrediting the Magnitsky Act.  If every politician that voted for their local version of this thing is forced to confront how badly they’ve been lied to by seeing Browder proven to be Magnitsky’s killer rather than his champion then the knives will come out pretty quick.

Because the one thing you can count on from politicians is their narcissism.

The big questions at this point are, “What does Trump know?” and “Does he even care?”

Because if he was given even part of the story by Putin at Helsinki then there may be a lot more here than we think.  What I do know is that if Prokopchuk takes over Interpol, Browder should buddy up with Julian Assange because he won’t be leaving the U.K. anytime soon.

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