What To Look For In Today’s FOMC Minutes

Last month, the Fed made dovish tweaks at its January meeting, and with the FOMC now firmly in “data-dependent” mode, discussion on the balance of risks will be key; additionally, markets will be keeping an eye out for any clues that there is a consensus on the FOMC to halt its balance sheet run-off this year.

Here is what traders will be looking for heading into today’s Fed minutes, courtesy of RanSquawk

MEETING RECAP: Heading into the FOMC’s rate decision and statement, the market was looking for an update on the balance sheet, whether the Fed would maintain a “gradual” pace of rate hikes, whether it judges the balance of risks as “roughly balanced” and whether it revises its assessment of the economy.

All of those factors saw dovish tweaks in the latest statement:

  • on the balance sheet, the FOMC indicated that it was prepared to adjust the pace of the balance sheet run-off, it dumped language on “gradual” rate hikes, adding in that the Committee will be “patient” on future hikes.
  • The language around “roughly balanced” risks was also dumped, and it downgraded its view of the economy slightly, now characterising it as “solid” from “strong”.
  • The Fed also changed its view on inflation, which it now sees as “muted”.

There were some fears among traders that the Fed might not be as dovish as hoped for; that fear was jettisoned with the release of the statement, and the dovish Fed saw risk assets bounce higher.

POWELL PRESS CONFERENCE: In the press conference, Chair Powell sounded upbeat on the economy, reiterating his now familiar message of data-dependence and patience. He did note cross-current headwinds from the slowdown in Chinese and European growth.

On rates, Powell said the case for raising rates has weakened somewhat. On the balance sheet, Powell said the policy will be driven by reserve demand, which he suggested was higher than it was a year ago. He also suggested that it was still not the Fed’s primary tool of normalization, that remains rates, though the balance sheet could be used if required (he later said that in a future downturn, the balance sheet would be used to stimulate the economy, but after using rates).

He was quizzed about the ideal size of the balance sheet, though he dismissed the question, suggesting the size will be whatever is most efficient to implement the Fed’s policy. Powell said rates were now in the range of estimates of neutral; previously he had seen them in the bottom end of the range of the estimates neutral. On the government shutdown, Powell said that it would leave an “imprint” on Q1 growth, though much of that would be made up in the Q2. On trade talks, Powell said that drawn out negotiations could weigh on business confidence.

WHAT TO LOOK FOR IN THE MINUTES: In 2019, Fed officials have pivoted away from seeing two hikes this year (in the December projections), to a patient, data-dependent approach. Currently, markets are pricing a flat rate hike trajectory, and sees a possibility of rate CUTS next year. Accordingly, traders will be attentive to commentary around the balance of risks, to see if FOMC members believe that risks have materially shifted to the downside. “Although Chair Powell in subsequent remarks continued to note that the economy entered the year on solid footing, several officials since have remarked that slowing global growth, tighter financial conditions, and the lagged effect of prior rate hikes could combine to slow growth by more than the Fed expected,” SocGen writes.

Naturally, comments around the balance sheet will also be eyed. There are risks that the minutes will not reveal anything materially new on the balance sheet, in terms of when the Fed plans to end the run-off policy, however, SocGen says that the minutes may give some clues on whether the central bank sees the run-off ending this year, as was suggested by Fed Governor Lael Brainard last week.

Additionally, even some of the more hawkish on the FOMC, like Loretta Mester (non-voter), have suggested that she’d be comfortable with slowing – or even halting – the pace of reinvestments of maturing securities in 2019. Mester added that if it were her choice alone, she’d favour slowing reinvestments of maturing securities, and suggested that her preference would be for the Fed to hold primarily Treasuries, with a bias towards shorter-dated securities.

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State Can’t Bulldoze Man’s Atlantic City Home for Undefined ‘Mixed Use Project,’ N.J. Court Rules

A New Jersey state agency can’t use eminent domain to seize an Atlantic City house that’s been in a man’s family for decades.

It started back in 2012, when New Jersey’s Casino Reinvestment Development Authority (CRDA) decided it wanted to demolish Charlie Birnbaum’s longtime family home. The CRDA didn’t appear to have specific plans for the land, instead intending to find a private developer who would build something on it. We do know that it was part of something called the “South Inlet Mixed Use Project,” whose website provides very little descriptive information.

In June 2013, CRDA offered Birnbaum $238,500 for his house. He believed it was far too little, though it wasn’t really about the money. “We’re not here to quibble about getting him a few extra thousand dollars,” Robert McNamara, a senior attorney at the Institute for Justice (IJ), the nonprofit libertarian law firm representing Birnbaum, told NJ.com in October. “He doesn’t want to leave.”

And for good reason; the three-story home simply means too much to Birnbaum. His family, who came to the U.S. in 1952, bought the Atlantic City house in 1969, before the town became known for its casinos. It’s where he proposed to his wife Cindy, and it’s where he dealt with his brother’s suicide. It’s where his father would end up living the last year of his life following a short stint in a nursing home, and where his mother, a Holocaust survivor, was murdered in a 1998 home invasion. While it’s not his primary residence, Birnbaum runs a piano-tuning business out of the first floor and rents out the rest.

It made sense he wouldn’t want to say goodbye to the beloved family home so some private company could develop a “mixed use project.” So Birnbaum, with IJ’s help, filed suit against the CRDA. “I just wanted to let you know that I’m Charles Birnbaum, the owner of the property you’re trying to take. I’m the guy who’s tuned pianos for all your shows for all these years,” he told casino executives at a CRDA meeting meant to involve planning for the project, Birnbaum recalled to the Philly Voice in November. “You’re trying to take away my ability to do my job well. I love this building. What you’re doing is not right.”

As Reason’s Damon Root noted in 2016, officials claimed the South Inlet project was supposed to “complement” the newly opened Revel Casino. Even after the casino went bankrupt in 2014, the CRDA wouldn’t cease its efforts to take Birnbaum’s property. The casino, now called Ocean Resort, later reopened last June, though it’s “still plagued by financial problems,” according to The Philadelphia Inquirer. “Through all that turmoil, though, two things never changed,” IJ said in a press release last week. “CRDA never wavered from its desire to condemn the property, and CRDA never once articulated what (if anything) it would do with the land after it knocked down the Birnbaums’ longtime family home.”

New Jersey Superior Court Judge Julio Mendez ruled in Birnbaum’s favor in August 2016. “This Court concludes that the CRDA’s decision to condemn the Birnbaums’ property is a manifest abuse of the eminent domain power and in this Court’s opinion is not consistent with the statutory condemnation authority of the CRDA,” Mendez wrote at the time. “The CRDA’s condemnation is denied.”

But thanks to an appeal, the case would drag on for almost two more years. Then last week, the Superior Court of New Jersey Appellate Division upheld Mendez’s decision. The court did note that the CRDA has the power to seize private property if it’s for the “public use,” and that “the imposition of a strict timeline” regarding the plans for that property “would be inappropriate.” But in this case, partly due to the Revel’s bankruptcy as well as uncertainty regarding the CRDA’s “funding sources,” it wouldn’t be right for the agency to seize Birnbaum’s house. “Under these highly unusual circumstances, it was reasonable for [Mendez] to question whether the Project would proceed in the foreseeable future when determining whether the proposed condemnation constituted a manifest abuse of the CRDA’s condemnation authority,” the February 15 ruling read.

“Judge Mendez found that with the Revel Casino closed, Atlantic City experiencing an unprecedented financial downturn, the Birnbaums’ neighborhood being particularly hard hit, and the CRDA losing significant funding, the CRDA was attempting to ‘bank land in hopes that it will be used in a future undefined project,'” it added, citing Mendez.

The ruling was celebrated by Birnbaum. “There’s such a sense of relief, appreciation and understanding that you never hear about 99.9 percent of the people that go through losing property like this because they can’t afford to fight,” he told the Philly Voice.

At long last, it looks like his fight is finally over, with CRDA communications manager Karen Martin telling the outlet that “we respect the court’s decision.”

This is not the first time IJ has won an Atlantic City eminent domain-related case involving the CRDA. In 1994, Donald Trump and CRDA teamed up in an effort to kick an elderly widow out of her home so Trump could build a limousine parking lot on the land. Thanks to IJ’s efforts, the widow, Vera Coking, prevailed in the resulting legal fight.

It took a while, but the same thing appears to have happened in Birnbaum’s case. You can read the recent ruling here.

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Border Clash Imminent As Maduro Deploys Military To Borders To Block ‘Aid’

Venezuela has shut a key maritime border and grounded flights as the Washington-backed coup-leader Juan Guaido has said that foreign aid will enter Venezuela from neighboring countries by land and sea on Saturday.

CNN reports that a government representative confirmed Venezuela has closed its maritime border with Aruba, Curacao, and Bonaire and, in the Western state of Falcon, prevented flights leaving from or departing to those islands.

President Maduro has rejected offers of foreign food and medicine, denying there are widespread shortages and accusing Guaido of using aid to undermine his government in a U.S.-orchestrated bid to oust him.

In comments broadcast on state TV, Defense Minister Vladimir Padrino said the opposition would have to pass over “our dead bodies” to impose a new government. Guaido, who has invoked the constitution to assume an interim presidency, denounces Maduro as illegitimate and has received backing from some 50 countries.

Padrino said it was unacceptable for the military to receive threats from Trump, and said officers and soldiers remained “obedient and subordinate” to Maduro.

“They will never accept orders from any foreign government … they will remain deployed and alert along the borders, as our commander in chief has ordered, to avoid any violations of our territory’s integrity,” Padrino said.

“Those that attempt to be president here in Venezuela … will have to pass over our dead bodies,” he said, referring to what he called Guaido’s efforts to create a “puppet government.”

Additionally, Thomson reports that Cuba denied on Tuesday it has security forces in Venezuela (after the Trump administration made claims):

“Our government categorically and energetically rejects this slander,” Cuban Foreign Minister Bruno Rodriguez said at a Havana press conference, adding all of the some 20,000 Cubans in Venezuela were civilians, most health professionals.

Rodriguez called on the U.S. administration to produce proof.

“The accusation by the US President that Cuba maintains a private army in Venezuela is despicable. I demand that you present evidence.

“There is a big political and communications campaign underway which are usually the prelude to larger actions by this government,” Rodriguez said.

Rodriguez termed the political crisis in Venezuela “a failed imperialist coup … fabricated in Washington,” and warned plans to deliver humanitarian aid were a recipe for violence and intervention.

“We are all witnesses in the making of humanitarian pretexts. A deadline has been set for forcing the entry of humanitarian aid,” Rodriguez said.

U.S. President Donald Trump on Monday warned members of Venezuela’s military who remain loyal to Maduro that they would “find no safe harbor, no easy exit and no way out.”

“You’ll lose everything,” Trump told a crowd of Venezuelan and Cuban immigrants in Miami.

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Why Today’s Fed’s Minutes Release May Result In Brief Market Chaos

Traditionally, when the Fed releases the Minutes for its most recent FOMC meeting, the sequence of events is that Bloomberg, Reuters and a handful of other news service blast flashing red headlines with the key highlights and soundbites, which are delivered to markets precisely at 2:00pm which then sets the market mood for the rest of the day, allowing algos to trade in kneejerk response to the initial information disclosure, and forcing analysts and strategists to goalseek their narrative to the market’s reaction: if stocks spike, the minutes are more dovish than expect, conversely if stocks slide, the Fed snuck in a few extra hawkish points, and so on. In fact, by the time people actually finish reading the full minutes which takes, well, a few minutes (the December release was 28 pages, but of these only 3-4 truly matter), sentiment has already been set, ironically by just a couple of headlines and how the headline-scanning algos react to them.

Which means that initial handful of headlines is critical; and what is just as important, is that the initial narrative is compiled by several members of the financial press as the Fed provides members of accredited news organizations access to the minutes shortly ahead of the public release time at a central-bank facility, allowing the journalists time to prepare headlines and articles reporting the content also at 2 p.m. local time.

Today, however, there will be no headlines at 2pm.

The reason: as a result of today’s U.S. government closure due to a snowstorm, the central bank will not release the minutes of its Jan. 29-30 meeting to the media lockup ahead of their normal release, preventing news organizations from reviewing the document before it’s publicly available.

Instead, the Federal Reserve said the record of the meeting will be posted on its website at 2 p.m., as scheduled, meaning that the press will have to comb through the minutes along with the rest of the market and investing public, looking for key highlights and key words; more importantly it means that momentum-igniting, headline-scanning algos will have no basis on which to spark either buying or selling in the milliseconds following 2pm, and instead will drift higher or lower depending on which way the groupthink shifts in the initial seconds after 2pm as various hot takes and interpretations of the minutes hit the tape.

In short, prepare for some brief market chaos and/or confusion today, just after 2pm as the market scrambles to digest what the Fed said three weeks ago.

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Let’s Face It: The U.S. Constitution Has Failed

Authored by Charles Hugh Smith via OfTwoMinds blog,

Elections provide the bread-and-circuses staged-drama that is passed off as democracy.

Despite the anything-goes quality of American culture, one thing remains verboten to say publicly: the U.S. Constitution has failed. The reason why this painfully obvious fact cannot be discussed publicly is that it gives the lie to the legitimacy of the entire status quo.

The Constitution was intended to limit 1) the power of government over the citizenry 2) the power of each branch of government and 3) the power of political/financial elites over the government and the citizenry, as the Founders recognized the intrinsic risks of an all-powerful state, an all-powerful state dominated by one branch of government and the risks of a financial elite corrupting the state to serve their interests above those of the citizenry.

The Constitution has failed to place limits on the power of government, on the emergence of unaccountable states-within-a-state agencies and on the political power of financial elites.

How has the Constitution failed? It has failed in three ways:

1. Corporations and the super-wealthy elite control the machinery of governance. The public interest is not represented except as interpreted / filtered through corporate/elite interests.

2. The nation’s central bank, the Federal Reserve, has the power to debauch the nation’s currency and reward the wealthy via issuing new currency and buying Treasury bonds in whatever sums it deems necessary at the moment. The Fed is only nominally under the control of the elected government. It is in effect an independent state-within-a-state that dominates the financial well-being of the entire nation.

3. The National Security State–the alphabet agencies of the FBI, CIA, NSA et al.–are an independent state-within-a-state, answerable only to themselves, not to the public or their representatives. Congressional oversight is little more than feeble rubber-stamping of the Imperial Project and whatever the unelected National Security leadership deems worthy of pursuit.

The Constitution’s core regulatory element–the balancing of executive, legislative and judicial power–has broken down. The judiciary’s independence is as nominal as the legislative branch’s control of the central bank and National Security state: the gradual encroachment of corporate and state power is rubber-stamped and declared constitutional.

The secret power of the National Security agencies was declared constitutional early in the Cold war, when unleashing unaccountable and secret agencies was deemed necessary.

The bizarre public-private Federal Reserve was deemed constitutional at its founding in 1913, and the Supreme Court famously declared that corporations have the same rights to free speech (including loudspeakers that cost millions of dollars) as living citizens.

The powers of the Imperial Presidency also continue expanding, regardless of which party is in office or the supposed ideological tropisms of Supreme Court justices.

Every step of this erosion of public representation and the elected government’s power is declared fully constitutional, in classic boiled-frog fashion. The frog detects the rising temperature of the water but isn’t alarmed as the heat is increased so gradually.

Since the rise of unaccountable states-within-a-state are constitutional, as is the dominance of corporate / private-wealth elites, on what grounds can citizens protest their loss of representation?

Elections provide the bread-and-circuses staged drama that is passed off as democracy. The key goal of the corporate/state media coverage, of course, is to foster the illusion that elections really, really, really matter, when the reality is they don’t. The National Security State grinds on, the Federal Reserve grinds on and the dominance of corporate-wealth elites grinds on regardless of who’s in office.

Every emergency is met by the ceding of more power to unelected elites in positions to serve their own interests. The Cold War, financial panics, Cold War Redux–every crisis is an excuse to expand the powers of the unaccountable, opaque states-within-a-state.

The media is already gearing up with 24/7 coverage of the 2020 elections. The constant churn of drama-trauma serves to mask the impotence and powerlessness of the citizenry and the unaccountability of the states-within-a-state that rule the nation.

*  *  *

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China Warns New US Tariffs Will Be “Catastrophic” For Global Stocks

Chinese state-run newspaper the Global Times warned – or perhaps threatened – late Tuesday that failed trade negotiations would have dire consequences for global stocks. 

The threat of a market catastrophe has pigeonholed the US into striking a deal with Beijing, the report suggests although many are confident that the situation is flipped. 

“[Trump’s] words further stoked the stock markets of the US, which reached the highest in two months and so increased pressure on the Trump administration to close the deal with China,” said the Global Times in an Op-Ed, adding that if the Trump team “imposes more tariffs on Chinese products while China responds with fiercer countermeasures,” it would “be a catastrophic strike to global stock markets.”

“In terms of avoiding such blows, the Trump administration is probably the most pressured,” the Op-Ed continues. “Thus in general, by the end of the trade negotiations, China and the US have become more psychologically equal” (according to the state-run outlet). As a result, “both sides would eventually lose,” the Times warned. 

Why China’s implicit threat? Perhaps because, as Shard’s Bill Blain noted earlier today, at least in the context of its economy, China is already losing the trade war, and therefore has little to lose by escalating the war of words. This is what Blain said overnight:

The recent data highlights the Chinese economy may be slowing faster than XI can maintain his grip – he’s weaker than ever before. (Raising one scenario threat of a long-drawn out period of uncertainty if he is marginalised/deposed and a power struggle follows. That could be very destabilising and disruptive for the Occidental economies desperate to sell the China!)

We reckon XI knows he’s out of time and has to settle – handing Trump a critical victory. Long-term the US-China tech-war is difficult to call. Trump is determined to garner payback for China IP theft, and its difficult to imagine the rest of Asia adopting Chinese tech systems if they lose the current trade war to the US. However, you can’t just undo years of China tech development. My techy contacts tell me Huawai’s boasts about the US’ inability to close them is partial bluff and bluster – it’s not as advanced or robust as it claims, plus the US is going to insist on wrecking it – which could prove another long-term friction point.

The next question is how much of a favorable outcome the market has already priced in. Yesterday the S&P 500 rose modestly after President Trump suggested that the two largest economies might have more time to hammer out a deal without raising tariffs by the March 1 deadline, however it gave up much of the gains into the close suggesting that all good news may now be priced in..

Meanwhile, a Chinese trade delegation is currently in Washington D.C. this week for the latest round of trade negotiations, however with the March 1 deadline a little more than a week away, signs of any tangible progress are sorely lacking. 

And speaking of China’s economic context, the world’s most populous economy is facing an accelerating slowdown in export growth in coming months according to Nomura chief China economist Ting Lu, who notes that the rush to buy up goods in advance of possible tariff increases is now over. 

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As Stocks Approach A Critical Level The Fed Better Deliver

Submitted by Mark Orsley of PrismFP

Equities continue to trade “well” but the all-important test of 2798 is growing closer by the day.  2798 is important because the trend line connecting that point failed three times in Oct, Nov, and Dec.  It would also coincide nicely with my Elliott Wave “5 count” that would speak of an “ABC” correction.  Those are minor “cool offs” not substantial sell offs. 

However, also recall from my note last week that in the past 20 years, the S&P future has only been this extended to its 50-day moving average two times.  Both times saw significant corrections of ~10%. 

So if you flew down from the dark side of the moon, ignored fundamentals/positioning, looked at the chart of S&P mini’s, saw RSI’s overbought, and momentum indicators starting to roll over; you would expect some sort of correction near that 2798 level.  The only question would be how deep.  

However, we know that the market is in a much different place than Oct/Nov/Dec when the Fed unwisely had its foot on the hiking pedal and the equity market was undoubtedly positioned bullish.  The data has now softened but the Fed has responded with a pause in its hiking cycle with the market largely de-risked.  Voilà, 2800 approaching.   

Easily the most misunderstood theme in the market right now is the Fed’s “dovish pivot” narrative.  There was a “neutral pivot” and that’s it. If we dissect the Fed speak in the last 24 hours, it’s full of evidence.

Let’s first look at what the Fed’s Mester (leans hawk, 2020 voter) said yesterday:

  • Fed has wait and see approach to future moves

    • There you go Loretta. That is the company line right there = neutral
  • Rates may need to go a bit higher if outlook met
    • Hmmm well that is not very dovish.  Ok so what’s the outlook?
  • Sees economy in a very good spot with inflation near 2%, and does not see a recession in 2019 or 2020

So we can see that Mester, recognizing she leans hawkish, is playing the company line of a neutral stance but with a bias towards more hikes.  No dovish pivot there.  

Next we got some sound bites from the Fed’s Williams who is moderate and more important than Mester as he is obviously a voter every year.

  • Monetary policy was where it ought to be with rates around neutral

    • There we go, the typical Fed line these days.  Nicely done John.
  • The new patient-minded Fed stance did not mean not hiking rates or that policy was set for all time
    • Whoa easy John, market thinks you are in a “dovish pivot”
  • Expects to be drawing down the balance sheet for some time (noted a move from $1.6t to 1.0t)

Like Mester, Williams delivers the neutral stance but with a clear bias towards more tightening via hikes AND continued balance sheet unwind.  So where is the dovish pivot everyone is talking about?  

This is important because we get the FOMC minutes today from the “dovish pivot” January meeting.  A simple thought is the market is priced for the dovish pivot, so anything less is a disappointment.  


  • If the Fed can convey a more dovish message than all these “neutral” comments Fed speakers have been delivering, then 2798 gets taken out and my Elliott Wave “5 count” will have to move up to 2900.  
  • If its neutral and the market finally realizes there is no dovish pivot; then you will likely get the correction the charts are forewarning.  Again, the only question would be how severe.  A simple ABC correction to say 2700/2650 (2-4%), or a deep 10% correction to blast out the FOMO buyers.    
  • No chance of a hawkish message so let’s not bother.

* * *

A couple quick hits from around the world….

One central bank that has clearly gone full dovish is the ECB.  Chief Economist Praet floated the TLTRO discussion but more importantly also said that the business climate in the Euro area “seems to be changing in a more fundamental way”, and adding that “we are not in a vicious circle, but we are close to that.”   

We can add in ECB members like de Guindos saying that policy will “stay accommodative for a long while.”  

Now that my friends is a dovish pivot.  

Thus Euribor spreads are topping out and at risk to going completely flat.  You should sell ERZ9/ERZ0 at trend resistance.

Does it make sense that US Eurodollar spreads are mostly negative and European Euribor spreads are mostly positive?  That means the ECB will be hiking when the Fed is cutting, at a time when the EZ economic data is in a “vicious circle,” and with the ECB utterly dovish/sounding the alarm bells.  Something is wrong there.  Either ED spreads need to steepen or ER spreads need to flatten, or both.    

More of the same in Australia with wages coming in slightly soft last night.  There were also reports that home loan delinquencies rose in December and that 90-day arrears are hitting record highs.   We have talked about this theme enough but note that Aussie 3yr futures hit trend support and held so you are getting another buying opportunity to play the Aussie housing debacle that will force an RBA dovish pivot.  

Lastly, with regards to trade wars, the street chatter has become that there will be either a partial deal with the agreement to continue to negotiate, or a pure “kick the can” style deal (i.e.: 60-day tariff extension).  

On the one hand it is another vol killer along with the Fed’s neutral stance.  On the other hand, it will allow the global economic data bleed that I have been noting to continue unabated.  Additionally, as I have been warning, there are signs already that TW’s have persisted too long.  So any extension to draw it out further will only see the data hemorrhage even more as global businesses tighten up with uncertainty.          

I believe that to be an out of consensus thought given conversations with clients.

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Russia Will Target US With New Hypersonic Weapons If It Deploys Missiles To Europe

In his first major public address since the US formally pulled out of the INF arms-control treaty, Russian President Vladimir Putin warned on Wednesday that Russia would point its new arsenal of hypersonic missiles – which can purportedly bypass NATO’s ABM systems – directly at the US if it dares to reintroduce ground-based intermediate-range missiles to Europe.

According to Fox, Putin threatened to deploy Russia’s new Zircon missiles, which Putin said can fly at nine times the speed of sound and carry a range of 620 miles and are part of the country’s drive to upgrade its defensive capabilities against an increasingly aggressive US and NATO.


Putin also took a few moments to praise Russia’s weapons program, comparing the new Avangard hypersonic missile – which Russia infamously tested on the day after Christmas, sending a shiver of alarm through Western intelligence and defense analysts – to the 1957 launch of Sputnik-1, the world’s first artificial satellite, which was built by the Soviet Union. The weapon has demonstrated that Russia has the technological capabilities to surpass the US, according to RT.

And in another warning that, if true, will likely aggravate the US defense community, Putin revealed that Russia has been carrying out successful tests of its  Burevestnik cruise missile and the Poseidon nuclear-powered underwater drone.

“It seemed until recently that Russia can’t make a breakthrough in defense technologies, but we made it,” Putin said.

Though Russia won’t deploy weapons preemptively, Putin said that if the US does place weapons in Europe, Russia will deliver an “asymmetric” response and target not only the host countries of those weapons, but “decision-making center” in the US (presumably Washington).

Still, Putin said he’s hoping the US and Russia can work out their differences.

“We don’t want confrontation, particularly with such a global power as the US.”

With the US and Europe reportedly close to agreeing on a fresh raft of sanctions against Russia (just in time for the Mueller report), Putin also criticized what he described as a “destructive” US policy of targeting Russia.

Moving on from national security-related issues, Putin also spoke about plans to increase welfare spending and embark on public works projects. As reports have shown that his popularity in the Russian hinterlands has taken a hit in response to a controversial plan to ship Moscow’s garbage to Siberia, Putin promised improved healthcare and education spending, while promising to upgrade 60 airports during the coming year.

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Is Marijuana Making You a Heroin Addict?: Reason Roundup

“Gateway drug” nonsense returns. In the U.S., California has been ahead of the curve on legalizing marijuana. It’s also been hit significantly less hard by a wave of opioid deaths than eastern states and much of the Midwest.

Most Americans these days have at least tried pot, with a full 52 percent now reporting that they’ve smoked or otherwise consumed marijuana at least once. When it comes to heroin, however, that number drops to about 1.8 percent.

A national survey in 2015 found that 22.2 million people had used marijuana in the past month. Meanwhile, the Centers for Disease Control and Prevention reported that in 2017 (the last year for which there is data), just 494,000 people had used heroin in the entire previous year.

I could go on. There’s a huge array of data showing that people can try marijuana or even consume it regularly without ever becoming a heroin addict. Most people can look at folks around them and see this for themselves, too.

Nonetheless, politicians and pot prohibitionists are trying to use the recent rise in opioid-related deaths as an argument against decriminalizing or legalizing marijuana. They’ve been trotting out Reefer Madness-era tropes, like pot being a “gateway drug.”

There’s never been anything to the gateway drug claim. What we have seen recently is that some cities where marijuana has not been legalized are dealing with a spike in use of legal synthetic “weed” (a.k.a. Spice or K2)–generally mystery substances that can cause a lot more health harms than real cannabis can.

There’s also some evidence that marijuana use can help those recovering from opioid addiction to stay clean. “What we’ve come to understand is that marijuana in many instances is an exit drug, not a gateway drug,” said New Hampshire state Representative Renny Cushing (D), who is sponsoring a bill to legalize marijauna sales in his state.

It’s high time we stopped thinking of illegal drugs as some magic category that confers danger, rather than simply things that gained illicit status through quirks of history. (In terms of actual harm potential, it would make much more sense to ban alcohol or worry about its “gateway” potential than to do so with marijuana.) Only by taking individual substances for what they are–not the big scary category we’ve randomly put them in–can we craft policies that preserve freedom and address health risks.

Anything else is just asking for more people in prison plus more opioid deaths.


The second episode of Eugene Volokh’s free-speech series is here.


  • It’s Ariana Grande’s world, we’re just living in it:
  • These numbers come from the U.K. but line up with what American surveys tend to find, too:

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The Lost War – Market Strength Is A Chance To Sell

Authored by Sven Henrich via NorthmanTrader.com,

At the time of this writing US markets are up 9 weeks in a row following the December lows making for risk free markets since Jay Powell famously caved on January 4th signaling flexibility on the balance sheet run off. Every tiny dip is bought and bears increasingly look the ones trapped,not bulls.

And the parade of central bank jawboning has been as spectacular as it has been global. Consider what signals have been sent to markets by central banks in just the past few weeks: The US Fed: No more rate hikes, flexible on balance sheet reduction, even open to stopping it altogether and discussing making bond purchases a regular tool, not just an emergency measure. I thought we were done with those? QE4 coming? The ECB: Discussing bringing LTRO (long term financing operation) back which would constitute another liquidity infusion. Didn’t they just end QE six weeks ago? BOJ: Ready to ease more. More? They never stopped and the BOJ famously owns more than 75% of the Japanese ETF market already. And China has added record liquidity infusions in 2019 desperate to provide liquidity to its lending market.

There is no doubt that this renewed global central bank capitulation has succeeded in levitating asset prices from the abyss in December. Greed is back, daily headlines hinting at a successful China trade deal to come and POTUS tweeting “up, up, up” all add up to a buying panic atmosphere.

Global growth slowing? Who cares. Buy stocks vertically up:

A couple comments of principle on this linear $DJIA chart: 1. This is not a chart of a stable, normal bull market, it’s a highly erratic chart. 2. Vertical, extreme tight channel ramps don’t have happy endings and this is most extreme tight channel ramp in many years. These ramps can extend no doubt, but they eventually end in tears as we saw in February 2018, except this ramp is even steeper 3. Central bank capitulation amid slowing macro data have proven bears right as I outlined the other day. Central banks panicked and once again participants are witness to the awesome hold central banks have on equity prices.

But while central banks appear to have won the battle there is one chart that strongly suggests they’ve already lost the war.

There’s a chart I’ve been watching for years and it’s not an index chart, rather it is a ratio driven chart that divides the S&P 500 into $CPI (consumer inflation) and it produces a fascinating picture:

For decades this ratio has followed a very repetitive pattern: During bull markets the ratio rises and then forms lows coinciding with market corrections and these lows form along a very precise trend line. When markets enter a topping process the ratio wobbles, becomes unstable in its ascent until the ratio breaks below the trend line coinciding with a bull market top. And each time the ratio breaks the break coincides with a break in the S&P 500 bull market trend. At the same time, as we’ve seen with index chart tops, the relative strength index (RSI) prints a negative divergence (a lower high) while the ratio prints a new high. All of these things have now again come to fruition.

Coincidence? Judge for yourself looking at the chart above.

What is clear is that the ratio broke its trend line in December for the first time since 2009. The 2 previous breaks marked the end of bull markets and brought about sizable bear markets. But note also that these bear markets experienced sizable bear market rallies first and I’ll use a chart of the Industrials ($XLI) here to illustrate the point:

It sends the same message as the CPI ratio chart: The war is already lost, no matter how desperate central banks are in attempting to re-inflate asset prices. The larger message I take away from this: Market strength is an opportunity to sell, especially considering that this rally remains untested, technically uncorrected and dovish central banks have now been fully priced in. But hey, perhaps it’s different this time. It has to be, otherwise the CPI ratio chart suggests new lows are coming.

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via ZeroHedge News https://ift.tt/2SLrqhn Tyler Durden