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Authored by Carey Edler via TheAntiMedia.org,

Just days before the first Academy Awards ceremony since Hollywood was hit with allegations of rampant sexual harassment, assault, and pedophilia, a Los Angeles street artist made a bold statement just a few miles from the Dolby Theater where the Oscars will be held.

Sabo, a conservative-leaning artist who has previously tagged the city with art referencing former President Obama’s drones, purchased three billboards, echoing the sentiment of a Academy Award-nominated film, Three Billboards Outside Ebbing, Missouri, which tells the story of a mother who seeks accountability for her daughter’s rape and murder, which police in her small town have failed to solve.

In the film, the mother purchases three billboards that read:

“RAPED WHILE DYING”

“AND STILL NO ARRESTS?”

“HOW COME CHIEF WILLOUGHBY?”

In Sabo’s version, the billboards plastered in Hollywood read:

“AND THE OSCAR FOR BIGGEST PEDOPHILE GOES TO…”

“WE ALL KNEW AND STILL NO ARRESTS”

“NAME NAMES ON STAGE OR SHUT THE HELL UP!”

Kevin Spacey’s career went down in flames last year amid the fallout of widespread allegations of abuse by now-scorned producer Harvey Weinstein. Anthony Rapp accused the actor of making advances on him in 1986, when Rapp was only 14. Other accusations against Spacey followed, including some others that alleged Spacey attempted to take advantage of the victims when they were under the age of 18.

Further, Corey Feldman, who has long warned of predatory, pedophilic behavior in Hollywood, revealed several of his accused abusers last year, citing John Grissom, former talent manager Marty Weiss, and Alphy Hoffman, who was the son of a high-power producer and ran the trendy Soda Pop Club, where Feldman claims widespread harassment took place in the 1980s.

Feldman claimed there were six abusers total, saying one is an A-list actor who might kill him. He has previously said his fellow child star, Corey Haim, now deceased, received worse abuse than he did.

In a 2011 appearance on Nightline, Feldman said:

“[T]he No. 1 problem in Hollywood was and is and always will be pedophilia…that’s the biggest problem for children in this industry… It’s the big secret.”

Last year, Bryan Singer, a noted director, was accused of and sued over allegations he raped a 17-year-old boy in 2003. He has denied those claims.

Also last year, amid the systemic controversy, the creators of An Open Secret — a documentary about child abusers in the industry that failed to obtain distributors or wide release — posted the film online for free.

In light of the pedophilia allegations, along with general accusations of sexual harassment against women and other vulnerable people seeking success in the film industry, Sabo’s art seems timely.

Much like the title of the documentary, this abuse was reportedly widely known and swept under the rogue.

As Barbara Walters told Corey Feldman, rejecting his attempts to sound the alarm about pedophilia, “You’re damaging an entire industry.”

As it turns out, the industry’s unwillingness to acknowledge and address the problem has done arguably equal if not more damage than Feldman’s refusals to stay silent.

In another show of artistic commentary on the ongoing scandals, a statue of Harvey Weinstein wearing a bathrobe, holding an Oscar, and sitting on a “casting couch” has also appeared on the Hollywood Walk of Fame ahead of the ceremony.

via Zero Hedge http://ift.tt/2oFpUMv Tyler Durden

Welcome to economic ‘fantasy’ island.

Jim Grant, the world’s most famous interest rate observer, ventured on CNBC this week to expose and explain the utterly farcical world of financial markets (and in particular, risk assets) and how grotesquely distorted global bond markets have become.

He began with an example…

“As an example of where the world is mispricing interest rates… look to Italy, which is having a big [potentially disruptive] election on Sunday…

…there is a speculative grade Italian security, Telecom Italia, the 5 1/4’s of 2022 are trading at 0.61 percent, that is a junk bond with a zero handle.”

This bond traded with almost a 6 handle just 5 years ago…

Thank you Mr Draghi.

But it doesn’t stop there, Grant warns…

“…and since interest rates are critical in the pricing of financial instruments, these distortions preceded the uplift in all asset values.. and the manifestation of this manipulation is in many ways responsible for what we are now seeing in the markets.”

These distortions and the chaotic aftermath of their withdrawal are exactly what current Fed Chair Powell warned of in 2013…

[W]hen it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position.

…

I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.

Almost?

“And I think there is a pretty good chance that you could have quite a dynamic response in the market. “

While Powell is anxious, Grant reminds listeners that the ‘end of the bond bull market’ does not necessarily mean disruptive change…“it took ten years for the long-dated Treasury to move from its low in 1946 of 2.25% to 3.25% in 1956…” but, as Grant points out, it’s different now, “that was before risk parity and the leverage that is now in financial instruments surrounding the bond market.”

However, Grant warns that he “suspects the tempo of a bond bear market will indeed be faster now than it was in 1946-56.”

*  *  *

Once again Grant is correct in his diagnosis of the symptoms… and the prognosis – all of which reminds us of his rhetorical question – What will futurity make of the [so-called] Ph.D. standard [that runs our world]?

Likely it will be even more baffled than we are. Imagine trying to explain the present-day arrangements to your 20-something grandchild a couple of decades hence – after the crash of, say, 2019, that wiped out the youngster’s inheritance and provoked a central bank response so heavy-handed as to shatter the confidence even of Wall Street in the Federal reserve’s methods…

I expect you’ll wind up saying something like this:

“My generation gave former tenured economics professors discretionary authority to fabricate money and to fix interest rates.

We put the cart of asset prices before the horse of enterprise.

We entertained the fantasy that high asset prices made for prosperity, rather than the other way around.

We actually worked to foster inflation, which we called ‘price stability’ (this was on the eve of the hyperinflation of 2017).

We seem to have miscalculated.“

Source: Jim Grant’s November 2014 speech at the Cato Institute

via Zero Hedge http://ift.tt/2F9z6z7 Tyler Durden

Authored James M Dorsey via ‘The Turbulent World of Mid-East Soccer’ blog,

The Middle East’s nuclear technology clock is ticking as nations pursue peaceful capabilities that potentially leave the door open to future military options.

Concern about a nuclear arms race is fuelled by uncertainty over the future of Iran’s 2015 nuclear agreement, a seeming US willingness to weaken its strict export safeguards in pursuit of economic advantage, and a willingness by suppliers such as Russia and China to ignore risks involved in weaker controls.

The Trump administration  was mulling loosening controls to facilitate a possible deal with Saudi Arabia as Israeli Prime Minister Benyamin Netanyahu prepared, in an address this week to a powerful Israeli lobby group in Washington, to urge US President Donald J. Trump to scrap the Iranian nuclear deal unless the Islamic republic agrees to further military restrictions and makes additional political concessions.

Israel has an undeclared nuclear arsenal of its own and fears that the technological clock is working against its long-standing military advantage.

The US has signalled that it may be willing to accede to Saudi demands in a bid to ensure that US companies with Westinghouse in the lead have a stake in the kingdom’s plan to build by 2032 16 reactors that would have 17.6 gigawatts (GW) of nuclear capacity.

In putting forward  demands for parity with Iran by getting the right to controlled enrichment of uranium and the reprocessing of spent fuel into plutonium, potential building blocks for nuclear weapons, Saudi Arabia was backing away from a 2009 memorandum of understanding with the United States in which it pledged to acquire nuclear fuel from international markets.

“The trouble with flexibility regarding these critical technologies is that it leaves the door open to production of nuclear explosives,” warned nuclear experts Victor Gilinsky and Henry Sokolski in an article Bulletin of the Atomic Scientists.

While Israeli opinion is divided on how the US should respond to Saudi demands, Messrs Trump and Netanyahu’s opposition to the Iranian nuclear accord has already produced results that would serve Saudi interests.

European signatories to the agreement are pressuring Iran to engage in negotiations to limit its ballistic missile program and drop its support for groups like Lebanon’s Shiite Hezbollah and Houthi rebels in Iran. Iran has rejected any renegotiation but has kept the door open to discussions about a supplementary agreement. Saudi Arabia has suggested it may accept tight US controls if Iran agreed to a toughening of its agreement with the international community.

The Trump administration recently allowed high-tech US exports to Iran that could boost international oversight of the nuclear deal. Deputy Secretary of State John Sullivan signed a waiver that allows a Maryland-based company to export broadband networks, satellite dishes and wireless equipment to Iran for stations that monitor nuclear explosions in real time.

Iranian resistance to a renegotiation is enhanced by the fact that Europe and even the Trump administration admit that Hezbollah despite having been designated a terrorist organization by the US is an undeniable political force in Lebanon. “We…have to recognize the reality that (Hezbollah) are also part of the political process in Lebanon,” Secretary of State Rex Tillerson said on the eve of a visit to Beirut.

A US willingness to go easy on demanding that Saudi Arabia adhere to tough safeguards enshrined in US export control laws, widely viewed as the gold standard, would open a Pandora’s box.

The United Arab Emirates, the Arab nation closest to inaugurating its first nuclear reactor, has already said that it would no longer be bound by the safeguards it agreed to a decade ago if others in the region were granted a more liberal regime. So would countries like Egypt and Jordan that are negotiating contracts with non-US companies for construction of nuclear reactors. A US backing away from its safeguards in the case of Saudi Arabia would potentially add a nuclear dimension to the already full-fledged arms in the Middle East.

The Washington-based Institute for Science and International Security (ISIS) cautioned last year in a report that the Iranian nuclear agreement had “not eliminated the kingdom’s desire for nuclear weapons capabilities and even nuclear weapons… There is little reason to doubt that Saudi Arabia will more actively seek nuclear weapons capabilities, motivated by its concerns about the ending of the (Iranian agreement’s) major nuclear limitations starting after year 10 of the deal or sooner if the deal fails.”

Rather than embarking on a covert program, the report predicted that Saudi Arabia would, for now, focus on building up its civilian nuclear infrastructure as well as a robust nuclear engineering and scientific workforce. This would allow the kingdom to take command of all aspects of the nuclear fuel cycle at some point in the future. Saudi Arabia has in recent years significantly expanded graduate programs at its five nuclear research centres.

“The current situation suggests that Saudi Arabia now has both a high disincentive to pursue nuclear weapons in the short term and a high motivation to pursue them over the long term,” the report said.

Saudi officials have repeatedly insisted that the kingdom is developing nuclear capabilities for peaceful purposes such as medicine, electricity generation, and desalination of sea water. They said Saudi Arabia is committed to putting its future facilities under the supervision of the International Atomic Energy Agency (IAEA).

Vietnam constitutes a precedent for application of less stringent US safeguards. The US settled for a non-binding Vietnamese statement of intent in the preamble of its agreement that Vietnam had no intention to pursue fuel cycle capabilities.

Tailoring Saudi demands of parity with Iran could be addressed, according to former senior US non-proliferation official Robert Einhorn, by sequencing controls to match timelines in the Iranian nuclear agreement. This could involve:

— establishing a bilateral fuel cycle commission that, beginning in year 10, would jointly evaluate future Saudi reactor fuel requirements and consider alternative means of meeting those requirements, including indigenous enrichment;

— creating provisions for specific Saudi enrichment and reprocessing activities that would be allowed if approved on a case-by-case basis by mutual consent and would kick in in year 15;

— limiting the period after which Saudi Arabia, without invoking the agreement’s withdrawal provision, could end the accord and terminate its commitment to forgo fuel cycle capabilities if it believed the United States was exercising its consent rights in an unreasonably restrictive manner.

Saudi foreign minister Adel al-Jubeir recently raised the stakes by declaring that the kingdom was engaged in talks with ten nations about its nuclear program, including Russia and China, nations that impose less stringent safeguards but whose technology is viewed as inferior to that of the United States.

To strengthen its position, Saudi Arabia has added Pillsbury Winthrop Shaw Pittman, an international law firm specialized in energy regulation, to its army of lobbyists and public relations firms in Washington, in a bid to ensure it gets a favourable agreement with the United States.

“Allowing Moscow to gain a nuclear foothold in Saudi Arabia would deal a serious blow to U.S. regional influence and prestige,” warned the Washington-based Arabia Foundation’s Ali Shihabi.

via Zero Hedge http://ift.tt/2tcMQHP Tyler Durden

Since the wheels came off Venezuela’s economy back in 2013, the US financial press has displayed an at times unhealthy preoccupation with the fate of Latin America’s favorite “Socialist Paradise” – once the region’s wealthiest economy.

So it’s hardly surprising that Bloomberg, in an effort to unearth more gritty vignettes about the hardships endured by Venezuelans – particularly those who were once middle class who have now fallen into abject desperation in the streets of Caracas, or elsewhere – is publishing a series of first person essays called “Life in Caracas”.

And in its introductory installment, reporter Andrew Rosati points out one of the most dumbfounding ironies of hyperinflation: The need to pay insane mark-ups to obtain paper cash from grey-market dealers.

Rosati describes setting up a clandestine meeting with his “cash dealer” in language that could be used for a drug buy.

My most recent order arrived by motorcycle, a loaded, black trash bag tossed my way. “This is what’s available,” the courier said gruffly before zooming off. I nodded. There’s no begging in the bolivar business.

What he delivered was cash, 200,000 bolivars of it. I, in turn, wired 400,000 bolivars to his bank account. Why such a huge markup? Because in hyper-inflationary Venezuela, we’re all desperate for paper money, a ridiculously scarce commodity but a necessity, even for someone like me with plenty of credit cards. You need cash for gasoline, to use the metro or park your car in a garage, to buy fried fish on the beach or a cup of coffee on the street.

So this is the question that’s all over Caracas: “You got a guy?” I hear it, in dive bars and at posh dinner parties, and in line at the bank, which, invariably, is out of the desired product.

The guy, of course, is a cash dealer. My phone is filled with a half-dozen numbers. They’re cab drivers and restaurant owners and produce sellers, anyone with a bit of hustle. It’s a booming business. The 100 percent premium I paid that day isn’t unusual.

While conventional wisdom might lead one to believe that ordinary Venezuelans sought to settle transactions digitally, this couldn’t be further from the truth: While bitcoin, monero and other digital currencies have become crucial sources of badly needed foreign capital, most Venezuelan merchants prefer to accept cash for small goods. This is true for restaurants and most food vendors, also.

As Rosati explains, the difficulty of obtaining enough cash before the value of the bolivar further disintegrates isn’t just a headache – in the slums, it makes a desperate situation worse.

For me, it’s just another of the frustrations of living in an imploding economy. Low-denomination bills—anything below 100 bolivars ($0.0005 at the black-market rate)—are often used nowadays for such things as confetti at baseball games. And the government is so broke, it can’t afford to print bigger bills fast enough. It’s a curiosity, this whole mess, almost bordering on a Yogi-ism: Hyperinflation’s rendered paper money so worthless that it’s become incredibly valuable.

The paper chase is most intense in the slums, where many people have no other means of payment. Fixers are everywhere in these neighborhoods, eager to get their hands on all the cash swirling around.

One flipper, Orlando Villarroel, told me he positions himself at a bakery check-out. One by one, he pays for customers’ items with his credit card, giving them a markdown and collecting their banknotes until he’s chased out of the place.

Venezuela, which struggles with the world’s worst hyperinflation, saw annualized inflation accelerate to 4,651%. As Rosati points out, the struggle to obtain enough cash is becoming increasingly more difficult to win. And it’s unlikely the money raised by President Nicolas Maduro’s petro will do anything to soften the blow.

via Zero Hedge http://ift.tt/2FT4aV6 Tyler Durden

Authored by Lawrence Sellin, op-ed via The Daily Caller,

On January 1, 2018, The Daily Caller published information – later confirmed in two separate reports, here and here – about a plan for a Chinese military base on the Jiwani peninsula in Pakistan, near Gwadar, a sea port critical to the success of the China-Pakistan Economic Corridor (CPEC).

According to noted national security correspondent Bill Gertz:

“Plans for the base were advanced during a visit to Jiwani on Dec. 18 by a group of 16 Chinese People’s Liberation Army officers who met with about 10 Pakistani military officers.”

“The Chinese also asked the Pakistanis to undertake a major upgrade of Jiwani airport so the facility will be able to handle large Chinese military aircraft. Work on the airport improvements is expected to begin in July.”

Sources now say the plan has been accelerated. Upgrade of the Jiwani airport is already underway. In addition, procedures are being formulated for the relocation of the local population to make way for Chinese military and other support personnel. The sensitivity and importance of this issue to China and Pakistan cannot be overstated. After the disclosures and the expected denials from both Islamabad and Beijing, Pakistani officials, as early as January 5, 2018, launched a leak investigation and it was jointly decided to advance the schedule for the Jiwani base.

Strategically, China’s Belt and Road Initiative (BRI) is their roadmap to geopolitical dominance. It is soft power with an underlying hard power, military component, the so-called “String of Pearls” bases and facilities.

A Chinese military base on the Jiwani peninsula will complement the Chinese base in Djibouti, which became operational in 2017. Both are located at strategic choke points. The Djibouti base is near the entrance to the Red Sea and the Suez Canal, while the Jiwani base will be within easy reach of the Strait of Hormuz, a combination, not only capable of dominating vital sea lanes in the Arabian Sea, but boxing-in U.S bases in the Persian Gulf and outflanking the U.S. naval facility on Diego Garcia.

There is concern that the Chinese will transform its 99-year lease of the Sri Lankan port of Hambantota into another naval base, the exact “debt-trap” method the Chinese used in Djibouti and after its acquisition of a 40-year lease of the Pakistani port of Gwadar. There are also continuing Chinese diplomatic efforts to gain access to the Maldives.

All of the above represent elements of China’s “String of Pearls” bases to secure military dominance of the maritime component of BRI.

In addition to explicit economic and military moves, China is planning a fiber optic network to control the flow of information and is mapping the northern Indian Ocean seabed, potentially for a SOSUS-like system to monitor maritime traffic and control a fleet of subsurface drones.

While the United States is tinkering with counterinsurgency policy and nation building in Afghanistan, there are seismic strategic changes taking place in South Asia and the Indian Ocean region.

It is senseless to continue an unsuccessful, costly and exhaustive approach in Afghanistan, which not only places our forces at an equivalent tactical level to the Taliban, but allows Pakistan to regulate the operational tempo and the supply of our troops.

Instead, the U.S. should be moving toward a policy that shifts the burden of Afghanistan stability to the regional players who have thwarted our efforts there and adopt a strategy that exploits our technological advantages to counter growing Chinese sophistication and ambition through augmented U.S. naval and air power projection and the selective use of covert, special operations and cyber warfare operations.

The foremost regional problem is to have a workable plan to secure Pakistan’s nuclear arsenal, which is growing more dangerous because of its expanding tactical nuclear weapons program.

The United States is not without strategic options to disrupt Chinese hegemony. The linchpin of BRI is CPEC. Pakistan’s main vulnerability remains ethnic separatism, which was largely the reason Pakistan adopted a program of Islamization in the late 1970s. Pakistan is the Yugoslavia of South Asia with the Pakistani province of Punjab as the equivalent of Serbia, when that country pursued an expansionist policy in the 1990s.

For example, BRI cannot succeed without CPEC and CPEC cannot succeed without a subservient Balochistan, a province with a festering insurgency that was once independent and secular before it was forcibly incorporated into Pakistan. Balochistan is also where Pakistan maintains a significant Taliban infrastructure and provides safe haven to its Quetta Shura leaders.

There clearly needs to be a sense of urgency applied to this challenge because current U.S. policy in Afghanistan is about to be overtaken by events.

An American withdrawal from Afghanistan will only be a humiliating defeat if the United States is forced into strategic retreat because we do not have a plan in place to address the changing regional conditions.

via Zero Hedge http://ift.tt/2oN7rNr Tyler Durden

Authored by Darius Shahtahmasebi via TheAntiMedia.org,

Last week, Saudi Arabia and the United Arab Emirates announced a grant of $160 million for “development projects” in the Maldives, a country located in the Indian ocean that is currently battling an economic and political crisis.

“As part of the support of the Kingdom of Saudi Arabia and the United Arab Emirates, the Saudi Fund for Development and the Abu Dhabi Fund for Development has pledged $160 million in support of the Maldives and its brotherly people for the development projects including the airport development and fisheries sector of the Maldives,” a statement on the Maldives presidency website said on February 18.

Foreign debt is viewed with great enthusiasm by the current governments in the Asia-Pacific region, but not so much by the rest of the population. Former Maldivian President Mohamed Nasheed recently warned that its monumental debt to China has put the country at risk of a “land grab.”

“We can’t pay the $1.5-2 billion debt to China,” Nasheed told the Nikkei Asian Review in an interview.

If the Maldives falls behind on its payments, China will “ask for equity” from the owners of various islands and infrastructure operators, and Beijing will then “get free hold of that land,” he also reportedly said.

Just days ago, the current President, Abdulla Yameen, extended the state of emergency that was implemented in early February. Fortunately for China, the focus has quickly shifted from China’s influence in the country to the Gulf’s growing involvement, particularly Saudi Arabia’s.

“It is unfortunate that certain countries are assisting the deep state,” Mohamed Aslam, Maldivian Democratic Party (MDP) legislator and member of the House Economic Committee, told Al Jazeera. He also said:

“The Maldives, at present, is in a state of flux politically and socially. It is also under siege by an organised and systematic strategy developed and implemented by radical Islamists with the intention of infiltration and subsequent total control of key departments of the state.”

In 2015, the Maldives approved a law to allow foreigners who invest more than $1 billion to own land in perpetuity. While this may not seem like that big of a deal, having a five-minute conversation with anyone in the Asia-Pacific region will immediately tell you otherwise because land is everything to local inhabitants of the Asia-Pacific. As the New York Times articulated last year:

“But Mr. Ahmed [a local resident] and others here are bracing for a life change they fear could be catastrophic, after the Maldivian president’s announcement in January that leaders of Saudi Arabia were planning a $10 billion investment in the group of islands where Mr. Ahmed lives, known as Faafu Atoll.

“Most alarming to the residents were reports that the government was breaking with a longstanding policy of leasing the islands that are home to some of the world’s premier resorts and selling the atoll outright to the Saudis. The inhabitants fear they might be moved off the islands.”

However, despite the potential loss of land ownership, Saudi funding for any country comes with some more disturbing strings attached. As Fareed Zakaria has explained:

“In Southeast Asia, almost all observers whom I have spoken with believe that there is another crucial cause [behind the ‘cancer’ of Islamic extremism] – exported money and ideology from the Middle East, chiefly Saudi Arabia. A Singaporean official told me, ‘Travel around Asia and you will see so many new mosques and madrassas built in the last 30 years that have had funding from the Gulf. They are modern, clean, air-conditioned, well-equipped – and Wahhabi [Saudi Arabia’s puritanical version of Islam].’ Recently, it was reported that Saudi Arabia plans to contribute almost $1 billion to build 560 mosques in Bangladesh. The Saudi government has denied this, but sources in Bangladesh tell me there’s some truth to the report.”

As The Week also explained in 2015, Saudi Arabia has spent billions of dollars “investing heavily in building mosques, madrasas, schools, and Sunni cultural centers across the Muslim world. Indian intelligence says that in India alone, from 2011 to 2013, some 25,000 Saudi clerics arrived bearing more than $250 million to build mosques and universities and hold seminars.”

According to the New York Times, Saudi Arabia has “for decades spread its conservative strand of Islam in the Maldives by sending religious leaders, building mosques and giving scholarships to students to attend universities.”

It should therefore come as no surprise to anyone that the South China Morning Post reported that Indian intelligence sources are claiming hundreds of Maldivians have joined ISIS in Syria. ISIS essentially holds the world ransom with Saudi Arabia’s strict strain of Islam, a mere coincidence one can be sure.

India, for its part, also has a deep interest in claiming the Maldives for itself, though it was noticeably left out when President Yameen sent envoys to Saudi Arabia, China, and Pakistan to request help in its current political crisis.

China sees the Maldives as a key part of its One Belt, One Road initiative, and Beijing does not necessarily view Saudi Arabia’s desire to inject itself in the region as a bad thing. In fact, the South China Morning Post lamented that Saudi Arabia is doing so in its bid to assert itself as a more viable partner in China’s rapidly expanding economic projects as opposed to its major arch-rival, Iran, with which China also has a cooperative relationship.

via Zero Hedge http://ift.tt/2F81523 Tyler Durden

By now it has become common knowledge that in the ongoing war of attrition between expensive – but very much underperforming under central planning – active investing and cheap and efficient passive, ETFs, the former are winning and the latter will likely concede majority control in just over a year.

Furthermore, as BofA notes, US trading volume (as of late summer 2016) was 24% exchange traded funds (ETFs) and 76% single stocks versus 20% ETFs and 80% single stocks three years ago. By now ETFs are likely responsible for 30% of trading volume or much more.

However, it is far less known that as “active” loses market share, “passive” has become a giant force in the overall market, and as of 2016, the percentage of S&P 500 market cap held by Vanguard alone has doubled since 2010. At this rate, ETF-giant Vanguard alone will own 10% of the entire market by the end of the decade.

Unfortunately, this unprecedented dominance by investment vehicles that merely reflect flows and not fundamentals, means that the market is becoming increasingly fragile, inefficient and broken, something which can be seen in the excess volatility (measured by both standard deviation & price declines) of stocks with a larger proportion of shares held by passive investors.

Yet while in the US ETFs are yet to dominate the market, resulting in even greater systemic fragility and irrationality, this is already the case in Japan, which like with QE and NIRP, has been the guinea pig for countless monetary and market experiments.

Just like in the US, there is a tangible reason why the flows into Japan passive investing have been massive: active managers suffered outperformance rates 12ppt lower between 2014-2016, a period in which passive inflows were accelerating vs. over the prior decade (34% of funds outperforming the TOPIX between 2014-2016 vs. 46% outperforming between 2002-2013).

As a result, in Japan passive funds are now two-thirds of total….

… with the flow differential between active and passive absolutely staggering.

It is unclear how much of this has been the result of BOJ intervention, but what we do know is that over the past 5 years the Japanese central bank has been purchasing massive amounts of equity ETFs in its attempt to control the stock market, and at last check the BOJ owned 75% of total Japanese ETFs.

 

If Japan is indeed the harbinger of what is coming, then over the next 3-5 years, the Fed will become the biggest investor in the ETF market as the US central bank does everything in its power to avoid a terminal stock market collapse after the next depression.

Meanwhile, the trend in the US is clear: investors increasingly are giving up on single stocks, and thus fundamentals, and embracing the collective hive mind of ETFs…

… resulting in “less stock selection, more sector selection”, and an ominous increase in “long-term market inefficiencies” according to Bank of America…

 

via Zero Hedge http://ift.tt/2CVVHNG Tyler Durden

Before he was pushed out of the West Wing, former White House Chief Strategist Steve Bannon said in a purportedly unauthorized interview that what President Trump recently referred to as “phase two” – the dreaded “military option” for confronting North Korea – would inevitably lead to millions of casualties on the South Korean side of the DMZ. And that would be from conventional weapons alone.

And, as noted earlier, after a brief detente that saw the US and North Korea purportedly move closer to dialogue courtesy of the South Korea Olympics, the bellicose rhetoric that had become a near-daily presence in US media headlines is set to make a comeback. And who better to kick things off than Lindsey Graham, the South Carolina senator, former Trump antagonist, and perennial cheerleader for US military intervention virtually everywhere.

Lindsey Graham

Graham told CNN during a brief interview that the devastating collateral damage caused by a US military strike against North Korea would be “worth it.”

“All the damage that would come from a war would be worth it in terms of long-term stability and national security,” the Republican senator from South Carolina told CNN. “I’m completely convinced that President Trump and his team reject the policy of containment… They’ve drawn a red line here and it is to never let North Korea build a nuclear-tipped missile to hit America.”

In another absurd claim, Graham claims that Americans shouldn’t worry about the deadly consequences of a targeted strike in North Korea, because all of the violence and killing will be unfolding over there.

And with that, Graham exposes the hypocrisy at the core of the aggressive foreign policy posturing that has dominated American politics since the days of Henry Kissinger: as long as there are minimal American casualties, the US shouldn’t hesitate to intervene in foreign affairs even if (or perhaps especially) it means millions of casualties.

“If there’s going to be a war to stop [Kim Jong-un], it will be over there. If thousands die, they’re going to die over there. They’re not going to die here,” he added. “And [Trump] told me that to my face.”

“That may be provocative, but not really. When you’re president of the United States, where does your allegiance lie? To the people of the United States.”

As we reported earlier, the KCNA referred to the drills that are set to resume next month as bringing “dark clouds of a war to hang over the Korean Peninsula.” It also called for the international community to denounce Washington’s push to “aggravate the situation on the Korean peninsula at any cost.”

And what’s worse for the US, North Korea isn’t the only foreign adversary engaging in menacing rhetoric. In a surprisingly bellicose speech made yesterday, Russian President Vladimir Putin unveiled a new long-range ballistic missile that he says is capable of circumventing US anti-ballistic missile protections, a reference to the US-funded missile shield installed by NATO in Eastern Europe.

While we doubt that that Graham’s opinion would be changed if faced with the specter of potential Russian involvement as part of a North Korean operation, the fact that US neocons are perfectly willing to risk a nuclear war just to promote the interests of the US military-industrial complex is very concerning, especially now that with the Olympics over, there is little stopping the North Korean conflict from escalating to its next, and much deadlier, phase.

via Zero Hedge http://ift.tt/2H3BlEN Tyler Durden

Every once in a while, Bill Maher reminds us that he’s the only liberal pundit on TV who will call “the tolerant” left on its BS. In his latest weekly show, Maher released a helpful summary of “rules for identifying fake news” – which everybody who posts on social media about the campaign-era predations of shadowy Russian trolls and the mechanics of “internalized misogyny” would do well to watch: “Fake News” isn’t some made-up phenomenon concocted by pro-Trump bloggers. It’s a very real and disturbing trend that goes much further in tearing at the social fabric of American society than $100,000 of spending on Facebook ads ever could.

In his monologue “explainer” on how to spot fake news, Maher admits that Trump voters have good reasons to be suspicious of the mainstream media and its tendency toward hyperbole and exaggeration that often leads CNN, the Huffington Post, Slate and their peers to manufacture controversies out of thing air. Or, as he puts it, just because a few people on Twitter with no followers and no real-life influence are angry, doesn’t mean the rest of America feels that way…

“Since so much of what passes for today’s journalism is anything but…how about some rules for identifying actual news.

“If anybody is demanding an apology…unless they have hostages, that’s not news.

“And when the offended group are identified as the internet, twitter or people – it’s nobody. I guarantee when you click on the story the internet is three losers with a combined twitter following of their mom.”

“I used to think something was news if a journalist reported it. But really I live in a world where its news if Mariah Carey’s tit flops out because Twitter will respond and then a journalist reports on the controversy. If a boob flops in the forest and nothing is heard about it doesn’t make a sound. But if three jackasses tweet about it, it’s news.”

Maher gives several examples of what passes as news, including the “controversy surrounding Jennifer Lawrence’s performance in the movie “Red Sparrow”. The mainstream press reported that a shot of Lawrence with a group of men was unforgivably sexist…because Lawrence wasn’t wearing a coat (while the men in the shot were).

Wonder why Fake News resonates so much with Trump fans – because so much of it is fake. Just nonsense made to keep you perpetually offended with an endless stream of ‘controversies’ that aren’t controversial. pic.twitter.com/pog5OO4ttL

— Bill Maher (@billmaher) March 3, 2018

Maher threw up all over the “story” which just happened to be reported in dozens of “serious” media outlets, despite having zero social import or even any grounding in reality.

Here’s the headline from Elle online and a hundred other sites: ‘Jennifer Lawrence’s latest red sparrow protocol has twitter calling out gender inequality. See because the men are wearing coats but she’s not. And even though that was her choice, somebody with 11 followers didn’t like it so the the story was reported in the New York Times, the Washington Post, the New York Post, Fox News…”

“Now all these esteemed news organizations aren’t saying they think it’s a big deal because they’re serious journalists. They’d rather be writing about Syria or the oceans dying but oh the humanity, Jennifer Lawrence didn’t have a coat. Wrap her up, wrap her up!”

Such “clickbait” stories like this aren’t rare, in fact as Maher admits they have become the norm, to an extent that most consumers of news hardly recognize how ridiculous they sound.

“This is not an outlier, this is a constant and prominent part of today’s journalism. Creating some bullshit non-issue that a few trolls will go apeshit over, then reporting on those tweets like all of America’s talking about nothing else.”

Justin Timberlake used a protection of Prince for his Superbowl halftime show and people are furious…nope nobody cared.

People are really mad that Sean White dragged the American flag after he won the gold…nope not even a little you fucking liars.””Weight Watchers is targeting teens and twitter is outraged. No it isn’t, it’s the same three people. And it’s not hard to find three people who are mad at anything. I could say good morning and three people on twitter would object: ‘Good in your privileged world, Bill Maher’.”

Yet considering the mainstream media’s obsession with these types of stories, it is no surprise that a sizable chunk of the US population has lost its faith in the validity and and motivations of news organizations like CNN. What is surprising is that people like Maher are finally admitting what is really going on…

“No wonder fake news resonates so much with Trump fans – because so much of it is fake! Just nonsense made to keep you perpetually offended with an endless stream of controversy that aren’t controversial. And outrages that aren’t outrageous.

And what is really going on is that as Maher admits, what the US media is doing is no different than the alleged “discord-sowing” misinformation campaign that Mueller recently accused 13 Russians and 3 Russian companies of perpetrating on the US population?

“Because places like the Huffington Post and Buzzfeed and Salon – they make their money based on how many clicks they get. Yes, the people who see themselves as morally superior are actually ignoring their sacred job of informing citizens of what’s important and instead creating divisions to pursue their own selfish ends. Wait isn’t that what Russia was doing to us? Yes it is.

And we need to stop both of them from using us as the cocks in their cock fights. And so I saw to the people who were unable to go on after seeing Kendal Jenner tweet the wrong colored emoji A bit of advice: If you didn’t like what Kendal did with a brown fist…then don’t watch her sister’s sex tape.”

So, next time you’re reading about the epidemic of teenagers eating Tide Pods, or rushing to be the first to know all about the latest Kardashian clickbait du jour, don’t: not only will it stop rewarding hollow headlines designed for clicks, it will force the US media to once again focus on news that truly matters. The real news.

And no, it’s not easy: in fact, as the media’s current business model shows, clickbait works, which is why it is easier to just blame someone else for creating it and “sowing discord”, when the real culprit is America’s endless superficial, scandal-seeking obsession, always eager to to click on the next catchy, if idiotic news story, and then cover up its guilt by blaming, why who else, Russia.

via Zero Hedge http://ift.tt/2I0oO6f Tyler Durden

When it comes to the US economy, there is overall consumer spending, and then there is spending on vices – a true leading indicator of overall consumer confidence and discretionary spending as Americans generally won’t splurge on hookers, blackjack and blow until they are absolutely positive they won’t need the cash for something else. Conveniently SouthBay Research  has a “Vice Index” that that tracks spending on gambling, alcohol, drugs, and prostitution. And as of February, the vice index just tumbled, suggesting that after a brief burst in late 2017 and 2018, the consumer-driven economy is again in trouble.

Or, as SouthBay’s Andrew Zatlin writes, the “Vice Index Points to Tax Cut Hangover: Slower Pace of Consumer Spending for 1Q“

Shown below is SouthBay’s proprietary Vice Index (lagged by 6 months) which tumbled in February to -2%, its worst print since 2012.

 

Here is the same Vice Index shown unlagged: it shows that the impact of the Trump tax Cut was “Short but Sweet”, and ominous warning for the broader economy.

As Southbay notes, unlagged the Vice Index reflects two recent major swings:

1. The 2016 Reflation: The US and global economies rebounded in late 2016 with a firming up of oil and materials prices, as well as the Trump election.  As a function of its leading indicator qualities, the Vice Index began surging July 2016. 
2. Trump tax Cut: The Trump tax overhaul was approved in December 2017 but consumers began spending before then.  Meanwhile the Vice Index began to surge October.

The point being that the Vice Index is a very reliable gauge of shifts in the economy as they impact consumer spending. And, as Zatlin writes, “it is pointing to a sharp down turn in consumer spending.  As if the Tax cut never happened.” It’s very possible that the pace of spending will pick up over the year.  But first some household financial healing needs to take place.

Some further observations from SouthBay Research on the state of the US consumer:

Personal Consumption Shows Household Financial Stress

Why would the Vice Index point to a looming pullback in the pace of consumer spending? Here’s a snapshot of Household finances

Coming into January

• Spending outpaced incomes by $133B
• Savings had dropped (-$148B)

But January saw a $106B one-month jump in disposable income thanks to

• a 2% jump in cost of living adjustments to Government benefits (Medicare, Medicaid, Social Security)
• a drop in taxes (taxes fell -3.3% from December to January)

That’s a ‘permanent’ 5.3% jump in disposable income.

Financial healing first, spending next

• Consumers pre-spent a lot of the Trump tax cut: In anticipation of the tax cut, Households went on a spending spree.  You can see that in the pace and timing of the drop in savings: a little drop in September (when the tax cut seemed likely) and a bigger drop in November when the cut was agreed.  Consumers were spending ahead of the expected savings.
• Spending actually slowed in January: In the 2H 2017, PCE averaged $60B+ per month.  In January it was half or $31B.  In fact, of the January $106B gain, all but $5B went to savings.
• Watch the cost of debt: Since September, more debt and higher rates has driven interest rate payments up $22B (a 7% growth)

* * *

Here’s what to expect according to Zatlin:

• 1Q: Relatively slow pace of retail spending.  There’s a consumer hangover as savings get repaired and the big holiday bills get paid.
• 2Q: Spending resumes.  By April, US households will be enjoying tax rebates and also factoring in the additional $100B per month from lower taxes and COLA.  Higher interest rates and inflation will nibble away at some of this will boost spending.  Spending to pick up in 2Q.  It’s a consumer hangover following the First the savings hole must be re-filled.  Then the holiday spending bills must be re-paid.

Perhaps the spending rebound will take place as expected… but first have a chat with your friendly, neighborhood drug dealer: when it comes to spending trends and inflection points in the US, he just may have the most valuable information.

via Zero Hedge http://ift.tt/2I3NUkD Tyler Durden