More Brilliance from Larry Summers

This post and full archives can be viewed at Trader Scott’s Market Blog.

The brilliant PHD economist Lawrence Henry “Larry” Summers has come out with a scathing criticism of Donald Trump’s economic policy:
 
“The Navarro-Ross paper is well beyond voodoo economics,” Summers said of the September report on Trump’s growth plans. “The logic of it, the arguments made, are so far out of the mainstream of any kind of responsible economic thinking that they are the economic equivalent of creationism.”

Summers dismissed the idea that any tax policy introduced to encourage U.S. companies to repatriate profits would boost investment and hiring.“The vast majority of the companies who have large overseas cash also have substantial amounts of domestic cash,” he said. “The reality is that cash that is brought home will be used to pay dividends, to buy back shares, to engage in mergers and acquisitions, to rearrange the financial chessboard, not to invest in large amounts of new capital. It is a chimera to suppose that there will be large increases in capital investment as a consequence of that repatriation.”

Lawrence Henry’s amazing analytical abilities regarding economic issues are beyond reproach, so we should all heed his brilliant pronouncements. And since he believes Trump’s economic ideas “are so far out of the mainstream of any kind of responsible economic thinking that they are the economic equivalent of creationism”, let’s take a look at what a “responsible” Harvard PHD economist believes.

Larry is one of the founding members of the Committee for the Advancement of Negative Interest Rates. Larry concocted, excuse me, developed this brilliant economic policy with his three brothers, Moe, Curly, and Schemp. And it has certainly been a roaring success worldwide, as can be evidenced by the booming growth in all of the countries which have unleashed, excuse me, enacted his crack economic team’s policy. Larry, Moe, Curly, and Schemp also have another foundation – The Society for the Complete Banning of Physical Cash, a.k.a., The War on Cash Society.

Henry’s magnificent abilities as a hedge fund manager allowed him to have great input into Harvard’s endowment fund. Professor Summer’s acumen led to a mere $1.8 billion loss in the financial crisis, but who’s counting.

And Lawrence loves the idea of big banks, and he trusts them to understand complex economic and market situations. In 1998 he testified before the Senate that derivatives regulation wasn’t necessary because Wall Street could be trusted to regulate itself – no prob. He also pushed to repeal the Glass-Steagall Act, because, well you know, we can trust Wall Street to regulate itself.

So these are the views, theories, and actions of another “responsible” PHD economist who has never accomplished a darn thing in his life.


via http://ift.tt/2iUyDpC Trader Scott

The U.S. Dropped More Than 26,000 Bombs Last Year

How many bombs did the U.S. military drop last year? It’s hard to get an exact count, but Micah Zenko and Jennifer Wilson have done the best tally they can:

In President Obama’s last year in office, the United States dropped 26,171 bombs in seven countries. This estimate is undoubtedly low, considering reliable data is only available for airstrikes in Pakistan, Yemen, Somalia, and Libya, and a single “strike,” according to the Pentagon’s definition, can involve multiple bombs or munitions. In 2016, the United States dropped 3,027 more bombs—and in one more country, Libya—than in 2015.

Most (24,287) were dropped in Iraq and Syria.

The full list:

To read their whole post, go here; to look at last year’s tally, go here. To remind yourself that we knew way back in 2008 that Barack Obama wasn’t the dove many of his supporters were expecting, go here. And since some people still seem convinced that Obama has been pulling the U.S. back from the world, you may also want to go here to see Daniel Larison doing battle with the idea that Obama has had a “commitment to retrenchment.” Writes Larison: “The U.S. is involved in more wars in more countries today than it was when Obama became president. By any reasonable definition, that can’t be what retrenchment looks like.”

from Hit & Run http://ift.tt/2hWS1nI
via IFTTT

Key Takeaways From Intelligence Community Testimony On Alleged “Russian Hacking”

For those disaffected Hillary snowflakes looking for some level of concrete, tangible evidence from today’s Senate testimony from the “intelligence community” that “Russian Hackers” purposefully colluded with President-elect Trump to steal the 2016 election from Clinton, we have some bad news: your desire for evidence required to start World War III over your candidate’s loss has still not been fulfilled.  Better luck next time.

As we suspected, today’s testimony offered up by James Clapper and others of the “intelligence community” to the Senate’s Armed Forces Committee has largely been nothing more than another smear campaign rife with political rhetoric but light on facts and tangible evidence.

With that, here are some of the notable one-liners from the day.

John McCain opened the hearing by noting that the goal of the day was not to “question the outcome of the presidential election” but to gather “facts” about what happened…even though no facts actually followed, but we digress.

“The goal…is not to question the outcome of the presidential election. Nor should it be. As both President Obama and President-elect Trump have said, our nation must move forward. But we must do so with full knowledge of the facts.”

Senator Jack Reed (D-Rhode Island) used his time to call for the creation of a “special select Senate committee” to look further into the “Russian Hacking” narrative since it spills across the jurisdictional divide.

 

Meanwhile, 30 minutes into the hearing, James Clapper told the Senate committee that he had no intention of providing any meaningful new details regarding the “Russian Hacking” narrative but instead intended to just repeat the same useless political rhetoric that has been slowly leaked to the mainstream media over the past several weeks.

“We plan to brief the Congress and release an unclassified version of this report to the public next week with due deference to highly sensitive sources and methods

 

“We’re not really prepared to discuss this beyond standing by our earlier statements.”

Asked whether Julian Assange was credible, Clapper, who ironically has lost all credibility throughout this process with his rapidly evolving story line, was quick to confirm in the negative.  Per The Hill:

When asked if Assange was credible, Clapper responded with a very noticeably annoyed look, “Not in my view.”

 

Navy Adm. Michael Rogers, commander of U.S. Cyber Command and director of National Security Agency responded, “I second those comments.”

Meanwhile, other comments aimed at Julian Assange drew some expected criticism from Wikileaks:

 

Clapper, apparently interviewing for a commentator spot at MSNBC, warned that hacking wasn’t the extent of the efforts by Russia to meddle in the 2016 election which also included coordinated efforts from RT, and other “fake news” outlets, to exploit any “fissure they could find in our tapestry.”

“RT was very active in promoting a particular point of view, disparaging our system, our alleged hypocrisy about human rights, etc. Whatever crack, fissure they could find in our tapestry, they would exploit it,”

 

In an obvious slip up, Clapper admitted that the “Russian Hackers” didn’t change the vote tallies…

“They didn’t change any vote tallies,” Clapper said, but “We have no way of gauging the impact that — certainly the Intelligence Community can’t — the choices that the electorate made. There’s no way for us to gauge.”

…and warned against retaliatory efforts saying that “we and other nations conduct similar acts of espionage.”

“As I say, people in glass houses need to think about throwing rocks. This was an act of espionage. And we and other nations conduct similar acts of espionage.”

Finally, we leave you with this parting clip from Senator Graham who vows to stop at nothing until he has his war with Russia.

 

 

* * *

For those who missed it, here is the intro the hearing that we wrote earlier this morning.

At 9:30 AM the “Russian hacking” narrative will take center stage before a hearing of the Senate’s Committee on Armed Services which is chaired by the maverick himself, John McCain.  The witnesses appearing before the committee will include James Clapper, the Director of National Intelligence, Marcel Lettre, Under Secretary of Defense for Intelligence, and Admiral Michael Rogers, Commander, United States Cyber Command.

Per a note earlier this morning from The Hill, there are five key things to watch for as the hearing progresses:

1. How many Republicans will criticize Trump’s stance? – Both John McCain, who chairs the committee, and Lindsey Graham of South Carolina, another member of the panel, have been vocal in their criticism of Trump’s unwillingness to blindly accept the rapidly evolving “facts” presented by the “intelligence community.”

2. How strong is the evidence that Russia hacked the DNC? – After Julian Assange again appeared on Fox News earlier this week to confirm that his source was not Russia, or any “state actor” for that matter, the “intelligence community” once again changed its narrative this morning to imply that Russia hacked the DNC and John Podesta then provided that information to Wikileaks via a third party.  Well, how convenient is that?  We look forward to receiving some concrete, tangible evidence from Mr. Clapper on this new assertion.

3. What evidence does the intelligence community have that Putin wanted to assist Trump? – The CIA, without supplying any evidence, reportedly believes that Russia was explicitly trying to help Trump — raising politically explosive questions about the degree to which it succeeded.  Meanwhile, the White House has stopped short if that conclusion telling CNN that “President Obama and this administration is 100 percent certain in the role that Russia played in trying to sow discord and confusion and getting involved, through the cyber domain, in our electoral process.”  Will any actual evidence of collusion between Trump and Russian officials be presented?

4. How much will the public get to see — and when? – Will this whole charade just be more political rhetoric, which is the only thing the “intelligence community” has provided to date, or will actual tangible evidence finally be presented to support the “Russian hacking” narrative.

5. How much will either committee be able to do? – With a new administration taking over in 15 days will any of this actually matter or is it just a last-ditch effort to delegitimize the incoming administration?

Of course, Trump has maintained a healthy dose of skepticism of the intelligence community’s “facts.”  In a series of tweets earlier this week, Trump accused intelligence officials of delaying his briefing until Friday in order to build a case against Russia. He also noted comments from Wikileaks founder Julian Assange who has repeatedly said that his leaked material was not provided by the Russian government.

 

With that intro, a live stream of the hearing can be viewed here:

via http://ift.tt/2ifN86W Tyler Durden

Americans Prefer Cats To Kids After The Great Recession

Submitted by John Mauldin via MauldinEconomics.com,

More and more Americans seem to prefer pets to children… and the resulting demographic trend has massive economic and investment implications.

The numbers are startling and affect everyone—whether you’re a parent, a pet owner, neither, or both. It’s also an investment opportunity you might try in 2017.

4 million missing babies

While the memories of the Great Recession may be fading, the effects are still very much with us. Among other places, the impact shows up in demographic data.

Last summer, I ran across some fascinating analysis by University of New Hampshire sociologist Kenneth M. Johnson. He found that US fertility levels dropped sharply beginning in 2008 and have yet to recover.

All those babies we didn’t have add up to a big number.

Professor Johnson calculated that if births had continued at the pre-recession rate, Americans would have had 3.4 million additional babies in 2008–2015.

He found no evidence to suggest that this trend changed in 2016, so the total is likely near 4 million by now.

This happened even though the number of women of childbearing age actually increased during this period.

It’s no mystery why

People who are experiencing economic and financial difficulty are less likely to have children.

The missing babies have a macroeconomic effect. All those jobs that would have been created in hospital maternity wards and eventually day care centers, kindergartens, and public schools aren’t materializing.

And then there’s the billions of dollars that aren’t spent on baby food, diapers, and clothes. Plus, sometime around 2025, we may start noticing fewer new workers entering the labor force.

This plunge of birthrates is not a new phenomenon, by the way. Contrary to what many people believe, the developed world has been on the fast track to population decline since at least the 1970s—a trend visible in many countries, from Germany to Japan.

 

However, even without children, the primal human urge to care and nurture has to find an outlet. Which is where our furry friends come in.

A recession-proof industry

For many people, pets serve as a less expensive and less burdensome substitute for children. You get an idea just how much Americans adore their pets when you walk into PetSmart and see how much people spend on animal food, beds, and toys.

Pets make our life better… but they definitely aren’t free.

According to the American Pet Products Association (APPA), US consumers will spend $62.75 billion on pet food, supplies, and services this year.

Even more interesting is the growth curve in pet spending. It’s been rising at the same time as human birth rates have been falling.

The APPA data shows that pet spending in 2007, before the Great Recession, was $41.2 billion. That means the market has grown over 50% since then, far faster than most other sectors of our sluggish economy.

Furthermore, pet spending has grown steadily every year for more than two decades.

You would think people cut back on pet expenses in recessions, but amazingly, that’s not the case. It’s that caring instinct again. Just as parents put their children’s needs ahead of their own, many pet owners will tighten their own budget in order to provide for their animals.

*  *  *

We live in an era of rapid change… and only those who see and understand the shifting market, economic, and political trends can make wise investment decisions. Macroeconomic forecaster Patrick Watson spots the trends and spells what they mean every week in the free e-letter, Connecting the Dots. Subscribe now for his seasoned insight into the surprising forces driving global markets.

via http://ift.tt/2hWPnhA Tyler Durden

Crude Jumps On Report Saudis Fully Implemented OPEC Output Cut

Despite earlier comments that the Saudis did not appear to have implemented their output cut (as per OPEC agreement), WSJ reports that Saudi Arabia cut oil output – fully implementing OPEC cut pledge. Oil is bouncing on the news.

From this morning – no cut!:

 Saudi Arabia crude supplies have been abundant and doesn’t look to be cutting, Takashi Hirose, Executive Vice President at TonenGeneral, says in Tokyo on Thursday.

And now – Fully cut…

which has provided a modest bid to crude prices…

 

via http://ift.tt/2iMAiAp Tyler Durden

Why The Mexican Currency Intervention Failed: Goldman Explains

Following the MXN rough start of the year, which saw the Mexican currency tumble to its lowest level ever, the central bank stepped into the FX market this morning by selling about $1 billion USD spot, hoping to break the destabilizing MXN relentless depreciation trend. According to the central bank market operations manager, the authorities are not just seeking to stabilize but to “strengthen the Peso”.

Putting the recent move in the peso in context, the MXN’s Real Effective Exchange Rate (REER) has depreciated 41% since mid-2013 and is now at its weakest level in more than 20 years. In fact, the only time the REER was weaker than it is currently was in the aftermath of the ravaging 1994-1995 “Tequila” economic and banking crisis. That is, the current MXN weakness is unprecedented outside the grip of a major crisis and is also visibly weaker than the level reached during the 2008-09 GFC.

There is just one problem: so far they have failed dramatically, with the peso sliding ever since the intervention, and moments ago almost filling the entire gap.

To be sure, one can’t really blame Banxico for intervening: with the local population, of which over half lives in poverty, angry and protesting the recent “Gasolinazo”, or 20% increase in the price of gas, the crashing currency is sure to send many other prices, especially of imported goods, through the roof while sending much of the population over the edge. Which is why Goldman’s Alberto Ramos agrees that the central bank had to do something:

“In our assessment, some FX market intervention at this juncture is justified since market liquidity conditions became somewhat tighter, the MXN entered overshooting territory (excessively undervalued) and from current levels, significant additional exchange rate weakness, while making exporters even more competitive, can threaten two valuable public goods: price and local financial market stability. A very weak currency can have significant medium-term costs for the broader economy as it is likely to add pressure on inflation and wages (which would over time reduce the cost-competitiveness of the Mexican exporters) and prompt to a tighter monetary stance. Overall, higher inflation/wages and higher rates would be a clear negative shock to the non-tradable sectors of the Mexican economy, for they would not enjoy the exporters (tradable sectors) benefit of a weak currency.

So much for a “brave new world” in which global trade imbalances can be resolved without central bank intervention. If anything, the events from the first 4 days of 2017, in which we first saw a dramatic indirect intervention by the PBOC which sent the overnight CNH deposit rate to the highest ever in a desperate attempt to crush shorts, and then the Mexican direct intervention, have confirmed that 2017 will be very much like 2016 when it comes to central bank intervention, if not more so.

However, as Goldman admits, Banxico made one mistake which explains why virtually the entire post-intervention move has been faded:

In our assessment, if the MXN remains under pressure the authorities should entertain the possibility of using different intervention instruments, such as USD Dollar swaps, for they are not a direct claim on reserves and offer valuable FX hedging protection to the market in a period of significant uncertainty but no large spot market outflows.

There is a problem with using reserves to fight a currency war, one which China is very familiar with:

On the other hand, using USD swaps is precisely what the PBOC shifted to late in 2015 (perhaps as advised by Goldman then too) when it too realized that using reserves was a very rudimentary (if effective) attempt at intervention. The only problem is that it eventually catched up to the central bank, and just like in the case of China which used swaps for about 3-4 months even as the capital outflows persisted, it ultimately had to return to draining reserves for a full blown intervention.

Ironically, even that has failed, and as we have documented extensively in the past 2 months, the PBOC is now scrambling with intraday gimmicks like crushing shorts using deposit rates. That too only works for a while.

Meanwhile, Mexico is caught between a rock and a hard place, because while the currency is depreciating, and the “MXN is now visibly undervalued versus theoretical fundamental fair-value under any of the three model metrics we use” Goldman warns that any further depreciation can undermine the inflation backdrop and/or risk unleashing destabilizing financial forces.

Which is all Trump needs: a several economic crisis just south of the border.

Actually, there is another thing Trump “needs”: Mexico launching an all out currency war against the US, whether through reserve draining (which would hit US assets) or USD swaps. Should the central bank intervene on a few more occasions to offset today’s failed revaluation attempt, which the market is now openly mocking, we eagerly await the barrage of tweets that will be launched by the Trump account as the president-elect, having slammed the occasional stock, shifts to FX.

Trump aside, what happens next? Once today’s intervention fails, the Peso is looking at a lot more downside, and as Rabobank’s Christina Lawrence writes,the MXN could fall as far as 23, as there “is little room for MXN relief as Banxico is highly unlikely to provide any lasting support for peso as market is too liquid and Mexico’s reserves will start to evaporate very quickly.” Putting trading volumes in context, MXN is the 10th most liquid currency globally with an average daily volume in the spot market of $43b and $112b when including options.

Rabo says that it “expects volatility to rise further and for the skew to continue moving to the right as market participants move to protect themselves from further USD/MXN upside”

Finally, the real message here is that the Banxico’s intervention “may also be seen as sign of greater underlying problems.” Bingo.

via http://ift.tt/2ifIRjG Tyler Durden

60 Minutes Conveniently Leaves One Crucial Fact Out Of Its Report On Chicago Violence

Via Free Market Shooter,

On Sunday, CBS’s 60 Minutes aired a report on the surge of murders and violence in Chicago.  When describing the increase in violence as a “surge”, 60 Minutes is certainly not exaggerating; this year’s homicide total in Chicago is up by 56% from last year, and up almost 75% from 2013.

However, CBS is certainly exaggerating when it compares Chicago to a “war zone” – in Afghanistan, for example, US forces have averaged 300+ murders per 100,000 since the 2001 invasion.  With a 2016 homicide rate of ~29 per 100,000, Chicago’s homicide rate hasn’t reached the 1992 peak of ~32 per 100,000.  Can anyone recall CBS comparing Chicago to a “war zone” in the 1990s?

60 Minutes centered its coverage on a drop in stops and arrests by police, with a focus on blaming the police for creating a crime-filled environment, with scarce mention of the perpetrators behind the increase in violent crime.  They also mentioned low police morale, new policies on racial profiling and police reporting, gang members posting video of confrontations with police, and “fear of becoming the next viral video” in their piece.  What was conveniently left out of the entire report?

Any mention whatsoever of Black Lives Matter, or any of the other nationwide protests against police that are primarily driven by race.  Of course, these protests almost always occur when the “victim” is black, regardless of whether or not the perpetrator in question was wrongfully shot or not.

Its not as though 60 Minutes didn’t have ample opportunity to mention BLM in their report.  Featured in the piece was an interview with former Chicago Police Superintendent Garry McCarthy.  60 Minutes made sure to discuss how McCarthy was dismissed following the release of the Laquan McDonald shooting video and the subsequent protests.  However, the same day that CBS aired its report, McCarthy blamed nationwide protests for creating a “political atmosphere of anti-police sentiment.”

“So what’s happening, and this is ironic, is that a movement with the goal of saving black lives at this point is getting black lives taken, because 80 percent of our murder victims here in Chicago are male blacks,” McCarthy said. “Less than half of 1 percent of all the shootings in this city involve police officers shooting civilians.”

McCarthy directly cited BLM as responsible for creating an atmosphere of fear in police departments the same day this report was released, yet none of this was in the report on 60 Minutes.  Since McCarthy has been singing the same tune since he was dismissed, it is reasonable to believe that CBS deliberately edited any mention of nationwide protests or BLM from the portions of their interview with McCarthy that they chose to air.

The closest CBS came to mentioning BLM was their commentary regarding Officer Veronica Murillo.  Remember that bit about becoming the “next viral video”?  Below is the 60 Minutes commentary on Murillo:

Officer Veronica Murillo says it was the fear of becoming the next viral video that kept her from pulling her gun as she struggled with this suspect. He knocked her down and bashed her head into the pavement. She suffered neurological damage that has endangered her career.

Absent from this was any mention of nationwide news coverage or protests, which was what drove Murillo to fear use of deadly force.  Months ago, ZeroHedge filled in their readers to the actual reaction to the incident:

Many people have attributed the rise in Chicago violence to the co-called “Ferguson Effect” in which criminals lash out against what they view as a “de-legitamized” police force while the police retreat from actually enforcing the law out of fear of inciting the next major riot.  In fact, below is the perfect example of a female police officer in Chicago that was recently hospitalized after being “severely beaten” by a violent criminal.  In subsequent interviews, the female cop said she was afraid to use lethal force primarily because of the national backlash she may have faced as a result.  The encounter happened on Chicago’s violent West Side when cops responded to a car accident.  The attacker, apparently under the influence of drugs, launched a brutal attack against responding officers that resulted in three cops being hospitalized.  Per ABC:

 

“She thought she was going to die. She knew that she should shoot this guy, but she chose not to, because she didn’t want her family or the department to have to go through the scrutiny the next day on national news,” Supt. Johnson said.

 

“It is terrible. It is total disregard for law enforcement. They put their lives forward every day for us and to see somebody do this, to pummel the police officer is terrible. It is a terrible thing,” business owner Louie Rainone said.

60 Minutes included commentary from Flora White, mother of a Chicago murder victim.  She blamed the police for pulling back patrols, stating that they weren’t doing their job.  They also interviewed pastor Michael Pfleger, who participated in a protest wearing a Colin Kaepernick jersey.  Of course, Kaepernick is an NFL quarterback who supports BLM, which inspired his national anthem protest.  It is also worth noting that Kaepernick waited until a backup quarterback took his job to begin his national anthem protest.  It should come as no surprise that Pfleger implied that police were failing to do their job, though he not seem to understand why:

Michael Pfleger: I’ve never seen there to be a combination of anger, distrust, and a feeling like communities have been abandoned.

 

Shame on us that our children are afraid to go out of their house of being shot and killed. When is the tipping point, do we all say, enough?

Even current Chicago Police Superintendent Eddie Johnson, also featured in the 60 Minutes report, has begun following in predecessor McCarthy’s footsteps, and now ascribes part of the blame of officers’ unwillingness to engage on the streets to anti-police sentiment.

At a press conference on Sunday, Superintendent Eddie Johnson said “anti-police sentiment” and a negligent criminal justice system were in part to blame. “In many instances, the individuals who chose to pull the trigger are repeat gun offenders emboldened by the national climate against law enforcement and willing to test the limits of our criminal justice system,” Johnson said…

Obviously there was no mention of Johnson’s blame of anti-police sentiment deriving from nationwide protests.  Yet another chance to mention BLM and national protests that 60 Minutes chose to omit.  More convenient editing?

The majority of the 60 Minutes report focuses on police and how they have changed doing their job, without any mention of the primary reason why: a national anti-police atmosphere which has hamstrung police and led them to fear doing their job to the best of their ability.  Nowhere is this more pertinent than Chicago, a large city with a massive gang and criminal element centered in a few bad neighborhoods.

If there is ever to be any meaningful police reform, race should not be the focus.  Reforming our for-profit criminal justice system is a great place to start instead.  The majority of police activity is profit-based, not crime-based – just think about the number of cops writing speeding tickets who could instead be solving crimes.  Making profound changes to an overmilitarized police force is necessary, as countless people of all races are illegally surveilled, wrongfully arrested, have their personal property seized, sometimes in unnecessary SWAT raids, and all of this police conduct is totally tolerated by the MSM.  Real reform in the war on drugs, which is driving a large amount of this activity, needs to be done for any other reforms to be effective.  Holding police accountable for their mistakes is but one piece of a much larger puzzle to solve regarding police reform. 

At least 60 Minutes finally got something correct this time around in their reporting.  They did not blame gun laws as the problem for Chicago’s violence.  That is quite a turnabout, given the program’s history in blaming gun laws for all gun violence in the USA.  I’d say its a positive development, but I won’t hold my breath expecting CBS to all of a sudden turn away from its MSM narratives and the “news” they peddle to the masses.

via http://ift.tt/2iMsgHW Tyler Durden

Why One Trader Believes The Dollar Rally Is Over

The dollar's slump this morning may be the start of a much larger correction, according to Bloomberg's Mark Cudmore.

It's worth paying attention to the inability of both the dollar and U.S. yields to make the most of strong U.S. data this week.

And also to the strong euro-zone PMIs and higher-than- estimated inflation prints that have boosted the euro.

The main takeaway from the Fed minutes was that many of the policy makers’ forecasts for rate hikes are dependent on fiscal stimulus. That introduces some dovish-surprise risk.

Suddenly it seems more relevant that plenty of FX technicals were warning of the potential for a dollar-correction. On Tuesday, Cable made a double-low at the 61.8% Fibo- retracement from the flash-crash low. 21-DMAs were breaking in many dollar crosses. And then the post-election USD/JPY upward trendline was shattered this morning.

Now the PBOC is successfully squeezing yuan-shorts, which will further hit the broad dollar index.

My colleague Vincent Cignarella outlined five ways the dollar rally may end if Trump policy fails….

  1. The repatriation of $2.5t. This is meant to spur corporate investment at home, but in 2004 a similar tax holiday on overseas profits saw companies mostly pay dividends, repurchase shares and cut jobs to trim costs.
  2. Tariffs or destination taxes. These could raise the cost of imported goods and potentially slow the economy and derail the dollar unless Congress in tandem cuts personal taxes to increase disposable income.
  3. Trade pact renegotiation. This could push inflation closer to or above the Federal Reserve’s target, prompting the central bank to bring forward rate hikes. That monetary tightening without concurrent fiscal stimulus might drag on growth and the dollar.
  4. Infrastructure spending. Total U.S. debt is approaching $20t and Congressional leaders may fight widening the budget deficit. Senate Majority Leader Mitch McConnell has called the level of U.S. debt “dangerous.”
  5. Household income. U.S. real average earnings had been on a slide since the end of 2015 and linked to the decline of the dollar up until the election, when the correlation broke down on hopes of Trump’s fiscal stimulus.

My suspicion is that it may already be finished…

via http://ift.tt/2iIgX0M Tyler Durden

Wow. 60 Minutes was totally wrong about second passports

Steve Kroft has a problem with second passports.

Specifically, the reporter and his team of producers slammed “citizenship by investment” programs in an editorial piece that aired on 60 Minutes this past Sunday night.

As we’ve discussed before, many countries around the world, including Malta, Dominica, St. Kitts, and Antigua, have Citizenship-by-Investment (CIP) programs.

The programs differ between countries, but they all provide an opportunity for foreigners to receive citizenship in exchange for making a donation or investment in the country.

In Dominica, for example, a foreign investor can qualify to apply for citizenship by making a $100,000 contribution to a fund run by the local government (it’s literally called “The Government Fund”).

Presuming the investor meets the other due diligence requirements, he or she can become a citizen and receive a passport from Dominica within a few months.

These programs are all completely legal and run by the governments’ official agencies.

In fact, in most countries it’s legal for the government to award citizenship to foreigners, typically to people who are high achievers in science, arts, or sports.

If Usain Bolt decided that he wants to move to Poland to run for their Olympic Team, the Polish government would award him citizenship in about two seconds.

Governments want to attract talented people who can make valuable contributions or bring recognition to their countries.

So what’s the difference if a Polish investor moves to Jamaica and builds a brand-new school in an impoverished area?

Or if a Canadian invests hundreds of thousands of dollars in a local charity in Antigua?

These seem like equally valuable contributions to reward foreigners with citizenship, especially in poverty-stricken countries.

In Dominica, for example, the funding provided by the CIP program was a major factor aiding the country’s recovery from the devastation of 2015’s Tropical Storm Erika.

The CIP program also helped the economy stay afloat during the worst of the Global Financial Crisis nearly a decade ago.

But Kroft doesn’t like the idea at all and apparently thinks that he should be able to decide what a foreign country is able to do with its own sovereignty.

Naturally, Kroft’s aversion against these programs is fear-based, revolving around concerns over terrorism and security.

His report goes on to showcase an Iranian attorney who obtained a passport from St. Kitts, another Caribbean island with a CIP program.

It was a no-brainer investment for the gentleman; as a global professional, he has to travel frequently to meet clients.

This is extremely difficult to do with an Iranian passport as visa requirements are quite stiff.

With a St. Kitts passport, he can travel visa-free (or obtain visa on arrival) to over 130 countries, including almost all of Latin America, Europe, and much of Asia.

Kroft thinks that Iranians should stay in Iran… and he appeared completely flummoxed upon meeting the man in Dubai, stating tersely “So you’re an Iranian living in Dubai with St. Kitts citizenship.”

“Yes.”

“That’s complicated.”

This Iranian is a man who was born in an oppressive country devoid of economic freedom; yet he worked hard and took active steps to improve his situation by moving to a better place and obtaining a less-restrictive passport.

But Kroft, who by mere accident of birth happens to have a US passport entitling him to travel around the world without a visa, finds this “complicated”.

What small-minded, 19th century thinking.

In Kroft’s worldview, you live in the country where you were born, and you travel with its passport, and that’s that.

If you happen to be, by accident of birth, from another country with less opportunity or more restrictions, then tough shit.

But perhaps the most ridiculous part of the broadcast was that Kroft completely missed the point of a second passport altogether.

Kroft believes that second passports are only for criminals and terrorists.

In fact he lists the names of 10 suspected criminals who obtained CIP passports, conveniently skipping over the thousands upon thousands of law-abiding investors who have gone through the same programs.

In reality a second passport is an ideal part of any rational individual’s Plan B.

A second passport means that if your home country ever deteriorates to the point that you need to leave, you’ll always have a place to go… a safe place where you and your family are welcome to live, work, invest, and do business.

That, of course, is a worst-case scenario.

Yet even if nothing like that ever happens, you’ll still be able to enjoy benefits, like additional visa-free travel options which, in many cases, your children and grandchildren may be able to inherit.

Candidly, citizenship-by-investment isn’t right for most people simply because of the price tag.

I’m sure most of us can find better uses for $100,000 to $1 million, especially when there are MUCH easier ways to obtain a second passport.

For example, you can obtain citizenship in a number of places like Ireland or Italy if you have documented ancestry.

You can also obtain citizenship in countries like Panama, Chile, or Argentina after a few years of legal residency (which you don’t necessarily have to spend in-country).

But the bottom line is that a second passport is a fantastic insurance policy. And this is something that makes sense for anyone.

What’s funny is that the 60 Minutes broadcast on Sunday showcased two other reports.

The first was about the extraordinary murder crisis in Chicago, where casualties have “surged to a level more in line with a war zone than one of America’s great cities.”

The second story was about a company in Cuba that was taken over by the communist government in 1959, and its owners were left with absolutely nothing but the clothes on their backs.

Ironically, both of these stories highlight the importance of having a second passport… of having a Plan B.

What’s yours?

from Sovereign Man http://ift.tt/2ifCgpo
via IFTTT