Tag: finance

Submitted by Michael Snyder via The Economic Collapse blog,

Would you allow microchips to be surgically implanted in your children if that would keep them safer?  This is already being done to pets on a widespread basis, and a shocking local NBC News report is promoting the idea that if it is good for our pets, then we should be doing it to our children as well.  As you will see below, the report even puts a guilt trip on parents by asking them this question: “How far would you go to keep your children secure?” 

Of course most parents very much want to keep their children safe, and a microchip would enable authorities to track them down if they were lost or stolen.  But is this really a good idea?  And where is all of this technology eventually leading?  If you have not seen this very disturbing local NBC News report yet, you can view it right here…

 

In the video, the reporter says that our children could be implanted with microchips “the size of a grain of rice” and that there would be “little to no health risks” involved.

And near the end of the report, she insists that “we could see those microchips in everyone” eventually.

Wow.

I am speechless.

The report also quoted an electronics expert who claimed that testing of these microchips “is being done right now”…

The piece flips back to pushing the idea when it quotes electronics expert Stuart Lipoff, who asserts that microchipping children is safe and inevitable.

 

“People should be aware that testing is being done right now. The military is not only testing this out, but already utilizes its properties. It’s not a matter of if it will happen, but when,” states Lipoff.

Of course if widespread microchipping of the population does start happening, at first it will likely be purely voluntary.  But once enough of the population starts adopting the idea, it will be really easy for the government to make it mandatory.

Just imagine a world where physical cash was a thing of the past and you could not buy, sell, get a job or open a bank account without your government-issued microchip identification.

Will you allow yourself and your family to be chipped when that day arrives?

If not, how will you eat?

How will you survive?

What will you do when your children come crying to you for food?

I am certainly not saying that you should allow yourself to be chipped.  I know that nobody is ever chipping me.  But what I am saying is that people are going to be faced with some absolutely heart-breaking choices.

via http://ift.tt/1sbayPg Tyler Durden

Back in the middle of February – during the height of the financial-market turmoil, the market was pricing in a shockingly policy-error-ish 36.5% chance of a rate cut in 2016. Since then The Fed has done everything it can to try and regain credibility – attempting to be hawkish in the face of dismal data, baffling everone with bullshit, and droning on about data-dependence. Now, thanks to the FOMC Minutes released last week with officials suggesting investors may be underestimating the pace of tightening, the odds of a 2016 rate cut have collapsed to just 4.8% – its lowest since New Year's Eve.

As Bloomberg details in the chart below, the probability of the Federal Reserve cutting U.S. interest rates in 2016 has fallen below 5 percent for the first time since New Year’s Eve, according to options on eurodollar futures contracts.

 

The bottom line is: The Fed's jawboning has 'worked' at the shortest end of the curve with Janet and her friends seemingly dead set on at least one more hike this year.

However, as we have previously noted, while bets on lower rates (and in fact negative rates) have fallen modestly for 2016, they continue to rise for 2017…

 

[the chart shows the cumulative open interest in par calls on eurodollar futures contracts that expire in 2016 and 2017 – basically options on short-term interest rates with a strike price of zero, such that they pay out if the Fed takes rates negative]

So it appears the market is pricing in another rate hike in 2016, shortly followed by QE (stocks trade notably rich once again to The Fed balance sheet), with rate cuts to ZIRP or NIRP in 2017.

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Via Ann Corcoran of RefugeeSettlementWatch.com,

Yesterday we told you about the mess in Utica, New York, a city in refugee overload with increasing poverty and stressed-out schools.

We also told you about the Obama Labor Dept. (Tom Perez! Watch for him, bad news!) and the department’s special $2 million dollar grant to Utica to give summer jobs to a special subset of the impoverished—-refugees! (But wait! Haven’t we been hammered with the propaganda for years that refugees add to the local economy?)

This special treatment for a class of immigrant has Labor Secretary Tom Perez’s fingerprints all over it. If you don’t know that name, bone up because he is a man on the move. There have even been rumors that he could be a Hillary Veep pick.

Now the Daily Caller tells us those special teens will be learning to build drones. How many American young people, engineer wannabes, would die for a summer job like that!

Here is the Daily Caller (hat tip: Julia):

The Department of Labor has awarded Utica, New York, $2 million to teach young refugees how to build drones as part of a summer jobs program.

 

About 400 teenage refugee students living in the city will get part-time summer jobs through the program, as well as tutoring in English and Math. Those who demonstrate academic competence will then take part in a year-long drone building challenge during the school year, as the work and tutoring continues.

Sounds like discrimination to me! Discrimination against white and black American teens!

“It was just a population we chose to target,” Alice Savino, executive director of the area Workforce Development Board that applied for the grant, told The Daily Caller News Foundation, speaking to the decision to direct the funds specifically to refugees. “These kids are here, and they need help.”

 

[….]

 

“The prime focus will be refugee youth in the city,” the grant application abstract reads. “About 1 in 6 Uticans is a refugee from another nation. State data shows this group has the highest dropout rate, lowest college-ready rate in the city.”

One local commenter is reported by the Daily Caller making this remark:

“So legal Americans are not worthy of summer jobs? Can’t wait for November."

Now get this! So, remind me why we are bringing tens of thousands of refugees to America each year!

Savino, however, told TheDCNF she has not heard negative comments from the local community. “If we don’t help [the refugee kids] be productive now, we’re going to pay for it later,” she said. “The local community is extremely supportive.”

There is more, continue reading here.

Our Utica archive is here.

via http://ift.tt/20DDzy0 Tyler Durden

Over the past few months, the United States has had a sudden renewed interest in the details surrounding the 9/11 terror attacks, mainly due to the buzz that was created by a 60 Minutes special which told of a the last 28 pages of an investigative report being classified and not included in the final report handed over to the 9/11 commission. The pages allegedly have credible evidence that implicates the government of Saudi Arabia as being complicit in the attacks.

Former Senator Bob Graham, then Chairman of the Senate Select Committee on Intelligence had this exchange in the interview…

Interviewer: You believe that support came from Saudi Arabia
Graham: Substantially
Interviewer: When you say the Saudis you mean the government, rich people in the country, charities
Graham: All of the above

Ever since the airing of the special, the political posturing began in Washington as everyone in Congress pretended they had no idea about these pages but now that they do, they'll definitely do something about it. That something turned out to be rushing a bill through the Senate entitled "Justice Against Sponsors of Terrorism Act" (JASTA), which is created in order to allow survivors and victims' families to sue Saudi Arabia for its alleged involvement in 9/11 (although the narrative is that it's applicable to anyone, the reality is that it was created specifically to sue the Saudis).

Upon learning of the legislation (which is not in front of the House), Saudi Arabia immediately threatened to sell as much as $750 billion is US Treasurys and other assets in order to try and get America's attention and persuade everyone that it's not in their best interest to pursue the matter further. Since then, president Obama has promised to veto any such legislation that hits his desk, perhaps knowing full well that as a result, other nations will look to sue the United States for its perceived terrorism around the world, which wouldn't be a good look for the government.

While Saudi Arabia's response may or may not have helped add fuel to the fire of those who believe the country has something to hide, it has also tried to have a softer approach to the issue, one that perhaps works the most effectively in Washington: Lobbyists.

Saudi Arabia has eight different lobbying, legal and consulting firms under its employ in Washington, and has turned its attention to that channel in order to get further investigative steps nixed.

The Hill reports

Saudi Arabia is intensifying its outreach to Capitol Hill, fighting scrutiny on two fronts amid allegations that the kingdom has ties to the Sept. 11, 2001, attacks.

 

In recent days, Americans working for the Arab kingdom have scheduled meetings with congressional offices and circulated two documents praising the work Riyadh has done to fight terrorism.

 

The push is part of an effort to counteract what supporters of Saudi Arabia consider to be pervasive skepticism about its support for the U.S.’s fight against terrorism, due in part to the emotions surrounding 9/11 and mounting criticism from prominent members of Congress.

 

Saudi Arabia’s critics are “delving into conspiracy theory territory,” one consultant hired by the kingdom told The Hill.

 

“The effort here is to display how the Saudis are working lockstep with the U.S. on the financial, operational and ideological fronts in countering extremism and fighting terror,” the consultant said.

 

“It is to show to the broader public and to the pundits and to the media here in D.C. and the broader U.S. public that it is truly a joint effort between the Saudis and the Americans.”

The first test of whether or not the lobbyist blitz is working for Saudi Arabia will be seen in how a House subcommittee hearing that was scheduled to take place today plays out. Many in congress seem to have a renewed passion for the truth in this case, and wish to see it through. There are at least some indications that the lobbyist full-court press is working, as the name of the hearing was changed from "Terrorism and the Saudi Royal Family" to "The US-Saudi Arabia Counterterrorism Relationship."

The messaging will be tested on Tuesday, when a House subcommittee has scheduled a hearing on the U.S. and Saudi efforts to combat terrorism.

 

“We will have a hearing and find out one way or the other if the Saudi government — members of the Saudi government — helped in any way in the 9/11 attack,” Rep. Ted Poe (R-Texas), the chairman of the Foreign Affairs subcommittee on terrorism, told the conservative Center for Security Policy in an interview published this weekend.

 

“I’m not saying they did, but we’re going to find out — and also whether the Saudi government has had any relationship with terrorist financing since then.”

Currently, Washington is being flooded with analysis stating that the 9/11 commission report found no evidence that the Saudi Government funded al Qaeda (which is strange, because former US Senator Bob Kerrey, a member of the 9/11 commission flat out denied that all of the leads were chased down prior to publishing the final report: "We certainly didn't pursue the entire line of inquiry in regards to Saudi Arabia") and a large volume of details outlining all of the things Saudi Arabia has done in order to help fight terrorism alongside the US.

Saudi Arabia’s allies are pushing back on both the release of the 28 pages and the terrorism bill with a pair of memos that have been circulated around Washington.

 

The first, a 34-page analysis of the 28 pages, acts as a prebuttal to the pages’ release, claiming any loose ends were subsequently chased down and came up empty. Indeed, the 9/11 Commission report — which came out two years after the separate congressional analysis containing the classified 28 pages — investigated the matter and “found no evidence that the Saudi government as an institution or senior Saudi officials individually funded” al Qaeda.

 

However, that assertion “does not exclude the likelihood that charities with significant Saudi government sponsorship diverted funds to al Qaeda,” the report added.

 

In addition, Saudi Arabia last week began circulating a hefty 104-page volume with color photos describing its efforts to defeat “the men, the money and the mindset” that supports terrorism. The white paper, which was published shortly after the Senate passed JASTA, devotes multiple pages to the kingdom’s efforts to halt the financing of terrorism, including through charity groups.

* * *

Where all of this leads is anyone's guess, but it seems that Saudi Arabia has finally figured out that the only way to get congress to act on anything is to send scores of lobbyists to Washington to "assist" with everyone's thinking.

via http://ift.tt/1XUIYSz Tyler Durden

Submitted by Lance Roberts via RealInvestmentAdvice.com,

“Wisely and slow; they stumble that run fast.” (Romeo and Juliet)

All throughout history we have heard of the triumph of the tortoise over the hare and the mantra that slow and steady wins the race. Shakespeare reminds us of this wisdom and we contend that this mantra is one of the most critical elements of successful investing. Executing a consistent investment plan and process over time is the key to wealth preservation and growth, and we believe that lower volatility strategies (avoiding the stumbles) will generate the highest long-term returns. Higher volatility investments (those that run fast) will have short bursts of outstanding performance, but tend to experience higher frequency and severity of downturns.

The mathematics of loss is not kind to the hares. If you lose (10%), you have to make 11% to get even; lose (20%), you have to make 25%; lose (50%) and you have to make 100% just to get your capital back. Investing in a low volatility strategy requires patience, and Shakespeare had some thoughts on that as well.

“What cannot be preserved when fortune takes, Patience her injury a mockery makes?” (Othello)

Great investors understand the value of patience and follow a disciplined approach. They stay the course, even when going through difficult periods (when fortune takes) and redouble their efforts to remain disciplined when the strategy is out of favor. Great investors know that good strategies (and good investments) will play out well. When the only thing that has changed is the price of an investment, it is time to increase the position, not sell it, and patience will be rewarded over time as the price comes back to reflect the true underlying value. Patience is also necessary in executing long-term focused investment approaches like the Endowment Model.

“Well, God give them wisdom that have it; and those that are fools, let them use their talents.” (Twelfth Night)

The gifts of wisdom, insight and perspective come from accumulated experience, diligence and plain old hard work. Those that chose the easy (foolish) path to riches, get what they deserve. This preference for the easy path is why the average investor under performs the averages (and the Endowments) by such a large margin. The real challenge is that long time horizon investment strategies are not exciting.

“Life is as tedious as a twice-told tale, vexing the dull ear of a drowsy man.” (King John)

Good investing is boring. Paul Samuelson said,

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

George Soros also has a view on the excitement of investing, saying

“If investing is entertaining, if you’re having fun, you’re probably not making any money.”

In the spirit of this letter, if you want entertainment, go to the theater.

“Things sweet to taste prove in digestion sour.” (Richard II)

It is a general rule (with some exceptions) that what is good for you tastes bad and what is bad for you tastes good. The same rule applies to investing. When you make an investment that makes you feel good (sweet to taste), you will likely lose money (sour in digestion). Conversely, when you make an investment and you feel badly (sour to taste), you will likely make money (sweet in digestion). I used to say that a great investment advisor’s job was to maximize the discomfort of the client/board by constantly making good but difficult decisions that make you sick to your stomach, but then I realized that if you maximize discomfort, they get rid of you because you are an irritant.

So the real trick is to optimize their discomfort, keep them uncomfortable enough to make good investments, but not so uncomfortable that they fire you. In other words, slip a little sugar in with the vegetables every now and again. Another area where comfort is a problem is fees.

“But the comfort is, you shall be called to no more payments, fear no more tavern-bills.” (Cymbeline)

The jailer says to the prisoner to look on the bright side that he no longer has to pay his bar tab, but we would say that is a bad trade. Applying the same logic to the markets, if a stock you own falls a lot, not having to pay taxes also seems like a bad trade. We believe that paying taxes (and incentive fees) is a good thing, because it means you have gains.

Contrary to the cult of Bogleization, you want to maximize fees in investing (not minimize them) so long as the bulk of them are incentive based. In what business does the best person charge the least?

“You pay a great deal too dear for what’s given freely.” (Winter’s Tale)

You always get what you pay for, free advice is usually very costly, and free money is more costly still. When all companies are propped up by abundant credit, value destructive behavior will occur and the price paid later will be much higher than anticipated. Never invest on a stock tip and be wary of investment opportunities where the fees are below average, as you must ask yourself why would someone charge below market rates for their expertise?

Groucho Marx famously quipped,

“I would never join a club that would take me.”

The best managers don’t need (or even want) your money and gaining access to them is priceless (like buying them when they have their second worst quarter ever in Q1). So on the subject of investing, a simple summation.

“No profit grows where is no pleasure ta’en.” (Taming of the Shrew)

Shakespeare is imploring us to always love what we do as there is little to be gained in partaking in things we have no interest in. What I love most about the investment business is that it is constantly changing, evolving and is something that can be engaged in for an entire lifetime. That said, the very best part is that you actually get better (contrary to many endeavors) as you get older and wiser (where wisdom is defined as learning from mistakes).

As my manager friend Bill Duhamel says,

“With every investment we get richer or wiser, never both.”

via http://ift.tt/20Dq69v Tyler Durden

Last night, anti-Trump protesters in New Mexico stormed a Trump rally, and got into a violent skirmish with local riot police breaking cars and throwing stones and bottles at the police. While not quite as violent (yet), with Trump currently conducting a rally in Anaheim, the anti-Trump protesters are back and are currently clashing outside the location of today’s Trump rally.

Protest clashes outside Trump rally @ #Anaheim Convention Center. Katella closed btw Harbor & West. @KNX1070 #traffic

— FondoKNXTraffic (@FondoKNXTraffic) May 25, 2016

Watch it live below.

via http://ift.tt/1qKeiG8 Tyler Durden

Less than a decade ago, the mere hint that the Fed was either propping up markets or actively pushing them higher was enough to get one branded a conspiracy theorist loon and never again invited to polite conversation. Since then first Bernanke, and then virtually all central bankers both domestic and foreign have admitted that the “wealth effect”, a polite way of saying pushing up asset prices, has been their primary goal and function.

And yet, despite this admission, the same central bankers would get strangely defensive any time it was suggested that it was they that also were the driving force for global inequality. That was understandable: if the broader public realized that the middle class was in jeopardy and living standards of the vast majority were collapsing as a result of a few career academics with their finger on the print button, those same academics would become an obvious – and very easy – target, when popular anger finally boiled over as it always has in history whenever the income inequality hit record levels.

Which is why we found it quite surprising to read a report by none other than the St. Louis Fed titled “Are Rising Stock Prices Related to Income Inequality?“, which if answered in the affirmative would be an accidental admission that the Fed itself has been instrumental in creating the widest wealth and income gap ever seen in US history (now even greater than the Great Depression).

To our great surprise the answer was “yes.“

The full note is below. To members of Congress questioning Janet Yellen the next time she is in the house – please ask her how she would rebut research from her own employees that confirms it is the result of the Fed’s policies why America has never had a greater chasm between rich and poor.

Are Rising Stock Prices Related to Income Inequality

 

Income inequality in the U.S. started to increase in the 1970s, and stock market gains accompanied this increase, according to a recent Economic Synopses essay.

 

Assistant Vice President and Economist Michael Owyang and Senior Research Associate Hannah Shell noted that increases in stock prices and capital returns may benefit the wealthy more than others, as they have better access to markets. They wrote: “Thus, as stock prices and capital returns increase, the wealthy might benefit more than other individuals earning income from labor.”

 

The figure below shows stock prices (as measured by the S&P 500 Index) along with the Gini coefficient, which represents a measure of income inequality. (A Gini coefficient of 0 means incomes are perfectly equal, and a coefficient of 1 means incomes are perfectly unequal.)

 

 

The authors pointed out that inequality began to rise in the 1970s. The Congressional Budget Office estimated that between 1979 and 2011:

• Market income grew an average of 16 percent in the bottom four quintiles.
• It grew 56 percent for the 81st through 99th percentiles.
• However, it grew 174 percent for the top 1 percent.1

Regarding stock returns, the S&P 500 Index grew from 92 in 1977 to over 1,476 in 2007. By comparison, it grew only 50 percent in the 30 years prior. The authors noted: “As stock prices rise, the gains are disproportionately distributed to the wealthy. Lower- and middle-income families who are also wealth-poor are less likely to expose their savings to the higher risks of equity markets.”

 

Owyang and Shell concluded: “The increase in income inequality in the 1970s was accompanied, in part, by gains in the stock market. Comovement between stock prices and income inequality results from the fact that gains in the stock market tend to benefit those in the wealthiest portion of the income distribution, who have better access to and higher participation in these asset markets.”

Thank you Fed for making yet another conspiracy theory into unconspiratorial fact.

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Submitted by Mike Krieger via Liberty Blitzkrieg blog,

With all the U.S.-trained fighters dead, captured or missing and their leader in the hands of Al Qaeda, top U.S. commanders are scrambling this week to determine how to revive the half-billion dollar program to create a moderate Syrian army to fight the Islamic State.

 

The outgoing chairman of the Joint Chiefs of Staff, General Martin Dempsey, who viewed the force as a critical element of the military strategy in both Syria and Iraq, is conferring with top Pentagon officials behind closed doors to figure out what options are left for what is widely considered a policy and military failure, according to senior defense officials.

 

Sen. Chris Murphy, the Connecticut Democrat who sits on the Appropriations Committee, returned from a trip to the region last week where he was briefed on the effort. His assessment of the program: “a bigger disaster than I could have ever imagined.”

 

– From the post: Further Details Emerge on the Epic U.S. Foreign Policy Disaster that is Syria

U.S. foreign policy is such a disastrous joke, trying to keep up with it is essentially a full time job.

In case you still had any doubt as to why ISIS and other assorted terrorists seemed virtually unstoppable in Syria until Russia became involved, the following piece should clear things up.

From McClatchy DC:

A senior figure from a Syrian rebel group with links to al Qaida was allowed into the United States for a brief visit, raising questions about how much the Obama administration will compromise in the search for partners in the conflict.

 

Labib al Nahhas, foreign affairs director for the Islamist fighting group Ahrar al Sham, spent a few days in Washington in December, according to four people with direct knowledge of the trip and who spoke on condition of anonymity because of the sensitivity of U.S. relations with Syrian rebels.

 

His previously undisclosed visit is a delicate matter for both sides – the conservative Salafist insurgents risk their credibility with even perceived ties to the United States, and the U.S. government risks looking soft on screenings by allowing entry to a member of an Islamist paramilitary force.

 

National security analysts say U.S. authorities likely knew of Nahhas’ arrival – intelligence agencies for years have watched his group’s interactions with al Qaida’s Syrian branch, the Nusra Front.

Well sure, the U.S. government conned the American public into relinquishing its civil liberties and bombing Iraq into oblivion in the name of defeating al-Qaeda, but suddenly they’re no big deal. Got it.

That suggests that authorities granted him entry at a time when U.S. immigration authorities face political pressure to block visitors with even tenuous ties to extremist groups. Four months after Nahhas entered the United States on a European passport, U.S. authorities denied entry to a well-known Syrian humanitarian leader who had been approved to visit Washington to receive an award from international aid groups.

You just can’t make this stuff up.

A Syrian opposition official with knowledge of the matter said it shouldn’t have been surprising that he was allowed entry because Ahrar al Sham is not among U.S.-designated terrorist groups. He said Nahhas hadn’t planned meetings with any U.S. officials but wanted to speak with “third parties” who might be able to influence policymakers. He declined to elaborate on the “third parties;” others said the plan was to meet with lobbyists and Middle East researchers.

 

The State Department declined to answer whether any U.S. officials knew in advance or expressed reservations about Nahhas’s presence in Washington, or whether State Department officials had assisted his entry.

 

U.S. officials have long struggled with how to deal with Ahrar al Sham, one of the largest insurgent armies in Syria.

 

The group’s ultimate vision is Islamist rule for Syria and its old links to al Qaida are no secret: One of the group’s founders, Abu Khalid al Suri, was memorialized by al Qaida leader Ayman al Zawahiri after his death in a bombing.

 

Ahrar continues to frustrate the United States and its allies with its operational coordination with al Qaida’s Nusra Front, including a joint attack this month in the Syrian village of Zara that resulted in what human rights group called the massacre of at least 19 civilians from the Alawite minority. An Ahrar official told McClatchy the operation was defensive and not sectarian in nature; he said fighters perceived foreign powers weren’t stopping regime advances in the area.

 

Even with circumstances of the killings in dispute, the participation of Ahrar al Sham in the operation – alongside al Qaida loyalists and while a truce was in effect – makes it all the more difficult for Nahhas to convince the world of his group’s commitment to working in the mainstream.

 

Ahrar’s militiamen – estimates of its strength range from 7,000 to the 27,000 the group itself claims – are considered skilled, disciplined and well equipped. In several strategic locations, they are the force preventing a rout of the U.S.-backed rebels by Nusra Front or the Islamic State. They also have boosters in U.S.-friendly Qatar and Turkey, a NATO ally.

Wait a minute. Qatar and Turkey are “U.S. friendly?” Could’ve fooled me.

Let’s discuss Qatar first, from the post, America’s Disastrous Foreign Policy – My Thoughts on Iraq:

But in the years they were getting started, a key component of ISIS’s support came from wealthy individuals in the Arab Gulf States of Kuwait, Qatar and Saudi Arabia. Sometimes the support came with the tacit nod of approval from those regimes; often, it took advantage of poor money laundering protections in those states, according to officials, experts, and leaders of the Syrian opposition, which is fighting ISIS as well as the regime.

 

“Everybody knows the money is going through Kuwait and that it’s coming from the Arab Gulf,” said Andrew Tabler, senior fellow at the Washington Institute for Near East Studies. “Kuwait’s banking system and its money changers have long been a huge problem because they are a major conduit for money to extremist groups in Syria and now Iraq.”

 

Iraqi Prime Minister Nouri al-Maliki has been publicly accusing Saudi Arabia and Qatar of funding ISIS for months. Several reports have detailed how private Gulf funding to various Syrian rebel groups has splintered the Syrian opposition and paved the way for the rise of groups like ISIS and others.

Of course, Turkey’s support for ISIS is well known. See:

So Who’s Really Sponsoring ISIS? Turkey, Saudi Arabia, and Other U.S. “Allies”

Turkey Bombs Kurds Fighting ISIS, Then Hires Same Lobbying Firm Supporting U.S. Presidential Candidates

Was the Turkish Government Caught Sending Weapons to ISIS in Syria?

While we’re on the topic of clownish U.S. foreign policy, let’s examine some new revelations from the never-ending disaster that keeps on giving: Afghanistan.

From The Wall Street Journal article, Afghan Government Secretly Fosters Taliban Splinter Groups:

SHINDAND, Afghanistan—The Afghan government is giving financial and military support to a breakaway Taliban faction, according to some Afghan and U.S. coalition officials, in an effort to sow rifts within the insurgency and nudge some of its leaders toward peace talks.

 

The effort comes as the U.S. military conducted an airstrike inside Pakistan that American officials said likely killed Taliban leader Mullah Akhtar Mansour, potentially setting the stage for another leadership struggle that could fragment the group further in the coming days. The Taliban, which usually respond promptly to requests for comment, hadn’t issued a statement by late Sunday.

 

Senior Afghan and U.S. diplomatic, military and intelligence officials, including several who had roles in creating the program, described its details and said that resources provided by the U.S. were used to support it.

 

The Afghan intelligence agency is leading the drive to recruit new Taliban assets, Afghan and U.S. officials said. The agency relies on the U.S. for most of its funding and is still mentored by the Central Intelligence Agency. The CIA declined to comment for this article.

Wherever there’s mischief, the CIA is never far away.

The program carries significant risks. Recruited Taliban commanders, who have yet to commit to peace talks with the government, may turn against Afghan and foreign forces in the country with the ammunition supplied to them, Afghan and U.S. security officials said.

 

But Afghan officials familiar with the program said they are willing to run such risks if the potential outcome is a weakened Taliban.

Thanks for clearing that up.

via http://ift.tt/1Ue8grA Tyler Durden

Now that all eyes have turned on China eager to find how it will react to a potential Fed rate hike in June or July, the question is whether the sharp Chinese devaluation unveiled overnight, which sent the Yuan to fresh 5 year lows, will be a one-off event, and whether the PBOC will intervene far more aggressively in the offshore CNY market to keep FX market turmoil to a minimum.

 

According to at least one person, the answer is no.

As Kevin Lai, HK-based chief economist of Asia ex-Japan at Daiwa Capital Markets writes in note released overnight, round two of China capital outflows is about to begin, if second half last year was considered the first round.

This is what he believes will happen next:

• China’s FX reserves may fall below $2t in about a year
• Downward pressure on FX reserves is most likely to be underestimated as short-term speculative flows are far more ready to leave than real flows
• Based on estimates, about 49% of PBOC’s FX reserves are made up of flows which are speculative and short-term in nature
• Expects decline in FX reserves to be more rapid in next 24 months at least
• Look for further $500b decline to $2.7t by end-2016 and a further $900b decline to $1.7t by end-2017
• If companies, especially SOEs, face trouble paying back creditors, central government would bail them out
• Massive bailouts would require government’s monetary policy to turn a lot more aggressive, putting more pressure on yuan
• Policymakers would have to seriously think about letting CNY slide gradually to a better equilibrium level

His conclusion: the USD/CNY will hit 7.50 by end-2016, some 15% higher than where it is now.

* * *

Others currency strategists were somewhat more sanguine on what happens in China next. Here are several sellside opinions, via Bloomberg:

HSBC (Wang Ju, senior FX strategist)

• PBOC has found a “good time window” to weaken yuan, with risk appetite supportive, volatility low and credit spread tight
• Momentum on EM is boosted by gains in equity markets in U.S. and Europe
• PBOC will stop CNY falling if see pressure spread across Asian assets
• Narrower CNH-CNY spread is policy-makers’ target; NOTE: Gap now only around 50 pips
• USD/CNY may rally near term, reaching 6.6 vs dollar end-2Q

Rabobank (Michael Every, head of financial markets research)

• Weaker fixing is a delayed catch-up by PBOC as other Asian currencies have dropped in recent days on increasingly hawkish Fed
• China pegging yuan to USD can’t last
• FX intervention may be going on to “convince” market not to worry despite weaker fixing
• Forecasts USD/CNY at 7.10 by yr-end

Mizuho Bank (Ken Cheung, Asian FX strategist)

• Weaker yuan fixing today shows PBOC is allowing currency to decline at gradual pace vs USD
• Fixing largely in line with expectations

Standard Chartered (Eddie Cheung, Asia FX strategist)

• CNY fixing is a natural reaction to dollar strength overnight
• Buoyant global equity markets indicate risk-on attitude
• Yuan reference rate could have been weakened even further

Saxo Capital Markets (Kay Van-Petersen, global macro strategist)

• Markets are calm now but there is serious risk of selloff with Fed rate hikes potentially on horizon
• Better for PBOC to be proactive in devaluing yuan now rather than being forced by market to do so later
• If China opens bond market and improves transparency and rule of law, could attract a lot of capital, offsetting outflows

One thing is clear as DB confirmed earlier today: the fate of the June rate hike is now in the hands of China.

via http://ift.tt/1ONT4x0 Tyler Durden