Will she, or won’t she? That is the question everyone wants answered regarding whether Yellen will hike rates in two weeks time. To be sure, historical precedent is not on the side of the hawks: as Bloomberg’s Daniel Kruger reminds us, “Last September in ambiguous circumstances Yellen opted to stay on hold. Three years ago in September Ben Bernanke chose not to taper QE3 bond purchases.”
Still, while a September hike now looks implausible – in retrospect the perfect tell was Goldman’s conviction that the Fed will hike last Friday – Kruger also notes that over the next two weeks, markets enter one of those rare periods when traders can actually trade without constant jawboning from various important Fed members, or as he puts it, “the next two weeks present an opportunity to take a stand on interest rates without meaningful hand-holding from monetary officials. Between now and Sept. 21, when the central bank announces its decision, the calendar includes only regional Fed presidents. Members of Janet Yellen’s inner circle are absent. Data’s all that’s left.”
However, in a world of 17-year-old hedge fund managers and Pavlov dog investors, does anyone even remember how to trade based only on “data”? Maybe handholding by the Fed is precisely what we all need in perpetuity?
Full note from Bloomberg’s Daniel Kruger
Without the Fed Holding Your Hand, Little Is Left
For those who think markets have become too dependent on the Fed, the next two weeks present an opportunity to take a stand on interest rates without meaningful hand-holding from monetary officials. Between now and Sept. 21, when the central bank announces its decision, the calendar includes only regional Fed presidents. Members of Janet Yellen’s inner circle are absent. Data’s all that’s left.
Most of the upcoming speakers have biases predisposed in favor of Fed action. We’ve heard their arguments. Yellen, William Dudley and Stanley Fisher did what they could at Jackson Hole to convince investors that officials may raise rates this month. So with no major data left after weaker nonfarm payrolls and ISM numbers clouding prospects of a rate hike, there’s little in the way that could shift market expectations significantly.
The futures market trimmed its view on the probability of a September increase to 24% from 34% after the August reading of the ISM non-manufacturing index was the weakest since 2010. Reports on retail sales and consumer prices have the potential to shift expectations back and forth.
The stand-out Fed speakers before the meeting include John Williams of the San Francisco Fed, who speaks this morning in Asia hours. He’s argued there’s a need for higher rates sooner rather than later. Eric Rosengren of the Boston branch comments on Sept. 9. He views growth as strong enough to warrant an increase.
Dogma isn’t going to convince investors when data doesn’t cooperate. Last September in ambiguous circumstances Yellen opted to stay on hold. Three years ago in September Ben Bernanke chose not to taper QE3 bond purchases.
Without the Fed to guide you, look to the numbers. That’s what will guide the Fed.
Newly released emails from Citizens United suggest that Hillary's team attempted to rig the first Congressional hearing on Benghazi by feeding questions they wanted to answer to Democratic Senator Robert Menendez, who at the time was acting chairman of the Foreign Relations Committee. Per Fox News, Philippe Reines, founding member of the Clinton-aligned consulting group Beacon Global Strategies, wrote the following to Chelsea Clinton (aka "Diane Reynolds", aka "Energy") on the morning of the Benghazi hearings:
"We wired it that Menendez would provide an opportunity to address two topics we needed to debunk (her actions/whereabouts on 9/11, and these email from Chris Stevens about moving locations)."
And wouldn't you know it, the first two questions that Menendez asked Hillary at the January 23, 2013 hearing were the exact same questions that Reines suggested were planted with the Senator's office in his email above.
"Can you give us your insights on the decision-making process regarding the location of the Mission. And, as part of that, can you also in your response, you touched upon it in your opening statement, but what actions were you and your staff taking the night of September 11 and into September 12?"
The full Menendez Q&A session can be viewed below.
In 2013, the New Jersey senator was about to become chairman of the Senate Foreign Relations Committee, replacing John Kerry who was in line to replace Hillary Clinton as secretary of state. Of course, since then Menendez was indicted on bribery charges in March 2015 in what prosecutors said was a scheme to trade political favors for luxury vacations, golf outings, campaign donations and expensive flights. Per the New York Times, the indictment, the first federal bribery charges against a sitting senator in a generation, puts Menendez’s political future in jeopardy as he faces a possible sentence of 15 years in prison for each of the eight bribery counts.
Philippe Reines is a founding member of the Clinton-aligned consulting group Beacon Global Strategies. One of Beacon's senior counselors is former CIA Acting Director Mike Morell, who was responsible for heavily edited the controversial Benghazi talking points, which helped establish the administration’s initial flawed narrative about the attack.
How many plumes of smoke must be pointed out before an official fire is declared?
Since the early 2000s, I’ve been describing a coming economic depression that will dwarf the one that began in 1929. But this is by no means guesswork or crystal ball gazing. Whenever a country (or countries) creates debt that is beyond the level that they can ever repay, an economic collapse is a near-certainty. Today, many jurisdictions, particularly, the US, EU, UK, Canada, etc. have created debt that is far beyond anything the world has ever seen. This assures us that the corresponding collapse will be of epic proportions.
Of course, I’m frequently asked, “When will it happen?” This is all but impossible to predict, but to be perfectly honest, back around 2006, I was guessing, “probably by 2012.” Although I predicted the minor crash of 2008, I felt that the bigger jolt that’s still coming would have been on our doorstep by now. Again, it’s not all that hard to predict the events if you do your homework, but predicting the timing is another matter.
However, I've continued to repeat my general principle thatwhen an economic unraveling of major proportions is coming, significant events increase in frequency and severity.
I’ve never bothered to explain why I established this principle as a barometer, and maybe this bears explanation.
The principle is based on human nature. Most people, in any country, tend to assume that they have plenty of time to prepare for eventualities. As they get closer, however, they realise that they’re lagging behind and need to speed up the preparations. This is especially true if they happen to be arrogant, which is commonly the case with governments. They underestimate the timeframe necessary. They also fail to plan for delays along the way. For these reasons, as they get closer to the event, they almost always find that they have to speed up the process or they won’t be ready in time. By the time the actual event is about to take place, they tend to be falling over themselves, in a panic to get all their ducks in a row.
This means that as the lesser events leading up to the main event occur, they do so with greater frequency. Also, they increase in magnitude, as the biggest, least palatable steps are put off as long as possible.
But there’s one more factor that exacerbates this pattern even more. As long as everything seems to be working well, most everyone in the system remains complacent. But, as the events increase in both frequency and severity, each cog in the wheel gets increasingly nervous, and the closer we get, the more each cog is likely to become unglued and do things that are not in keeping with the overall plan. As a result, the situation becomes increasingly chaotic and unpredictable, as each middle manager, each civil servant, each politician, each banker, makes his own sudden moves to protect himself.
As a result, just prior to the main event (the crash), we can expect to be seeing big surprises on an almost daily basis – more bankers being charged with impropriety, more political leaders being ousted, more infighting amongst politicians and more members of the general public scrambling to safeguard their wealth.
Each of these individuals may have a plan as to what he is going to do and when, but his plan may get derailed as others make sudden dramatic moves, changing the field of play with ever-increasing frequency.
When this stage is reached, we should personally have already hunkered down for the storm. We should, in effect, be picturing the tornado on the horizon. We should have pulled in the laundry from the line, shuttered up the house, moved food and water into the root cellar, and now be waiting on the porch to see if we’re likely to be hit. At this point, we should only need to grab the kids and head for the cellar.
In investment terms, this means that if we live in one of the jurisdictions listed above, we should already have gotten out of the markets, emptied our local bank accounts – except for three months of operating expenses, liquidated our local assets as much as possible, moved the proceeds to a jurisdiction that’s likely to weather the storm better, and invested in overseas real estate and precious metals. Further, it would be wise, if possible, to have prepared a bolt hole overseas, should we need to suddenly get on a plane due to riots, food and fuel shortages, government imposition of martial law, etc.
And we’re approaching that final stage at present. Dramatic events are now occurring weekly, and when they reach the daily level, we’ll see the same expression on our neighbours’ faces that we might have been seen on the faces of the Titanic passengers after the ship hit the iceberg. Each individual, each bank, each government will be out to save their own skin. Contracts, laws and treaties will suddenly be abandoned. There will be no coordination at this point. The collapse will be random, and it will be every man for himself.
What we shall witness will be the equivalent of watching a well-trained racehorse running down the track and suddenly, each of his legs panics and decides to do something different. The lack of coordination with this sudden development assures one thing only – that Crazylegs is going to go down hard.
You won’t want to be riding this horse when the time comes; you’ll want to already be out of the racing business.
In the last weeks and months prior to a crash, many people simply bury their heads in the sand and are not at all prepared. Many others get the gut feeling that something is radically wrong but can’t figure out what to do about it. This results in a loss of confidence in the system. People suddenly stop trusting their banking institutions, their governments and their currency. We’re now at that point. Each day, people trust the system less, and even if they don’t understand the severity of the outcome, their anger is rising steadily.
Historically, governments like to drag out the inevitable as long as they can. In particular, they like to get elections out of the way and get the new gang of pretenders in their chairs before a major conflagration is sparked off.
The UK will be looking at elections in October, the US in November. After January, all the flag-waving will be over, and the new gangs will be in their chairs. At any time after this, it would not be surprising to wake up one morning and discover that the odiferous effluvium has, in fact, hit the fan whilst we slept.
So, that’s it, then? We can place “Massive Economic Collapse” in our diaries to occur in February?
Unfortunately, identifying a date for such an event has always proven elusive, even for those who have been studying the situation closely for decades. We can do a fairly good job of describing the dominoes and even predicting a rough order in which they will fall, but an actual date is impossible to predict.
All that we can be certain of is that, when significant events begin to happen on a daily basis and are also increasing in magnitude (increased alleged terror attacks, fracturing financial institutions, increasingly draconian governmental edicts, etc.), we may well have run out of time to prepare. Whatever moves we need to make should already be in place at this point. When the fateful day does come, those who have not prepared will be scrambling for the exit doors, and we will not wish to be crushed in the panic. We’ll want to have already made our own exit quietly.
Many thought that having been squeezed between the terrible performance of his Valeant long and his Herbalife short, that Bill Ackman would quietly fade into the sunset. No such luck, and as he revealed moments ago in a 13D filing, the Pershing Square founder has just gone activist on Chipotle, revealing a 9.9% stake, announcing he is “intend to engage in discussions” with management and the board. with the Issuer and Issuer’s management and board of directors, other stockholders of the Issuer and other interested parties that may relate to the governance and board composition, business, operations, cost structure, management, assets, capitalization, financial condition, strategic plans, and the future of the Issuer.
From the report:
The Pershing Square Funds purchased 554,213 shares of Common Stock for aggregate consideration (including brokerage commissions) of $224,491,131.
The Pershing Square Funds entered into over-the-counter forward purchase contracts providing for the purchase of 2,328,250 shares of Common Stock for a net purchase price of $974,342,953 (less rebate amounts for early settlement, if applicable).
The kneejerk response in the heavily shorted stock is, naturally, to soar some 7% in the afterhours session.
The Issuer is a leading fast casual restaurant company that the Reporting Persons believe has a strong brand, differentiated offering, enormous growth opportunity, and visionary leadership. The Reporting Persons believe that the Issuer’s Common Stock is undervalued and is an attractive investment.
The Reporting Persons intend to engage in discussions with the Issuer and Issuer’s management and board of directors, other stockholders of the Issuer and other interested parties that may relate to the governance and board composition, business, operations, cost structure, management, assets, capitalization, financial condition, strategic plans, and the future of the Issuer.
The Reporting Persons may also propose or take one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D, including but not limited to, solicitation of proxies, and may discuss such actions with the Issuer and Issuer’s management and the board of directors, other stockholders of the Issuer and other interested parties.
The Reporting Persons intend to review their investments in the Issuer on a continuing basis. Depending on various factors and subject to the obligations described herein, including, without limitation, the Issuer’s financial position and strategic direction, actions taken by the board of directors, price levels of shares of Common Stock, other investment opportunities available to the Reporting Persons, concentration of positions in the portfolios managed by the Reporting Persons, tax considerations for investors in the Pershing Square Funds, market conditions and general economic and industry conditions, the Reporting Persons may take such actions with respect to their investments in the Issuer as they deem appropriate, including, without limitation, purchasing additional shares of Common Stock or other financial instruments related to the Issuer or selling some or all of their beneficial or economic holdings, engaging in hedging or similar transactions.
Ireland remains especially exposed to another financial shock because of the extremely high levels of public and private debt, the open nature of the economy, and Brexit, Irish Central Bank Governor Philip Lane has warned in a pre-budget letter to Minister for Finance, Michael Noonan.
“Ireland is especially exposed due to the legacy of high public and private debt levels, the sensitivity of small, highly-open economies to international shocks and Brexit-related vulnerabilities,” Ireland’s Central Bank Governor said.
There are many potential international financial and geopolitical shocks today which have the potential to derail the very fragile economic recovery or indeed contribute to a new global debt crisis.
Geopolitical risk remains very high. ‘Brexit’ has created a whole new set of risks to Ireland, the UK and the Eurozone itself. The Middle East remains a powder keg and tensions with Russia remain very real. There is the real risk of conflict and the consequent effect on oil prices, global markets and the global economy.
The governor’s warnings come in the wake of similar warnings from the former deputy governor of the Central Bank who warned in an op-ed in a leading international financial publication, Project Syndicate, that Ireland is at risk of another housing market crash.
There have also been warnings regarding deposit bail-in risks from the CEO of FDB, one of Ireland’s largest insurance companies. The insurance company has been moving cash out of Irish bank deposits and into bonds. In order to read more about Stefan Gerlach’s warning and Fiona Muldoon’s concerns – read Deposit Bail-in and Property Crash Warnings In Ireland here.
These risks are set to impact savers and investors in the coming years. Ignoring them and pretending they have no financial implications for people’s personal finances is imprudent.
Today Dr Constantin Gurdgiev, Dr Brian Lucey, Eddie Hobbs, Jim Power, Cormac Lucy, Jill Kerby and others are all advocating diversification into gold again. Diversification remains important and an allocation to physical gold will again protect in the coming crisis.
While it's unknown how many cops did choose to stay home and ignore overtime requests, there was a clear spike in violence over the long holiday weekend with a total of 65 people shot and 13 of them killed. Chicago recorded a total of 481 shootings and 91 homicides in August which tied for the most the city had seen in a single month in 20 years. In fact, according to the Chicago Tribune, the Labor Day weekend was the deadliest of the three holiday weekends of the summer with 13 killed versus 6 over the Memorial Day weekend 5 over the Fourth of July weekend.
Data from HeyJackass! shows a huge spike in violent crime on Labor Day with over 30 shootings and 10 homicides.
Chicago recorded a total of 481 shootings in August 2016 making it the most violent month in the city in 20 years.
Total homicides for the year are up 44% YoY putting Chicago on track for over 750 homicides in 2016 which would be the most violent year in the city since the early 90s.
Meanwhile, violence continues to be concentrated in the south and westside neighborhoods.
One of the more disturbing revelations from this year’s U.S. presidential election, has been Hillary Clinton’s compulsive propensity to hide all sorts of things from the American public. While I appreciate one’s right to privacy as much as the next person, if you want to run for President of these United States, transparency and engagement with the public should be a top priority and requirement.
In this post, I want to highlight three troubling ways in which Hillary Clinton has been shamelessly and inexplicably hiding things from the public throughout her presidential run.
The first instance is one that came up frequently during the Democratic primary. That is, transcripts of the extraordinarily high priced speeches she gave to numerous corporations, including multiple Wall Street banks that were at the center of the 2008/09 financial crisis.
In a very popular post published back in May, I highlighted all her speeches from 2013-15, including the specific amounts earned. The total came to $21.7 million, but that’s just the tip of the iceberg when it comes to the Clintons leveraging public office to enrich themselves to oligarchic levels. For example, as CNN reported back in February:
Hillary Clinton and her husband, former President Bill Clinton, combined to earn more than $153 million in paid speeches from 2001 until Hillary Clinton launched her presidential campaign last spring, a CNN analysis shows.
In total, the two gave 729 speeches from February 2001 until May, receiving an average payday of $210,795 for each address. The two also reported at least $7.7 million for at least 39 speeches to big banks, including Goldman Sachs and UBS, with Hillary Clinton, the Democratic 2016 front-runner, collecting at least $1.8 million for at least eight speeches to big banks.
Given the extraordinary amount of money the couple earned over the past decade and a half, you’d think the public would have a right to hear what she actually said to many of these entities, especially the chronically corrupt TBTF Wall Street banks. Nevertheless, she refuses to release the transcripts.
For an idea as to why she might be hiding the content of these speeches, see:
Hiding Wall Street speech transcripts is just one example of Hillary Clinton’s extreme secretiveness and shadiness when it comes to her lack of accountability to the American public.
Example number two relates to the extremes she went to hide her communications while Secretary of State. By now, everyone knows about her private email server and the FBI investigation that solidified what many of us already knew — she is above the law.
1. Clinton had 13 mobile devices during her four years at the State Department and five iPads.
2. Clinton never sought approval to conduct state business on her own private email server despite “an obligation to do so.”
3. Former secretary of state Colin L. Powell advised Clinton to keep it secret that she was using a BlackBerry to conduct official business.
4. A note sent to all State Department employees on Clinton’s behalf warned them against the risks of using personal email addresses for official business.
Yet she did it anyway.
5. The State Department, regularly during Clinton’s tenure, sent out notes warning of the dangers of using mobile devices not up to agency security standards.
Yet she did it anyway.
6. Clinton neither participated in conversations with her lawyers about how to determine which emails were professional and which were personal, nor did she provide them any guidance as to the locations of those emails.
7. Clinton told the FBI the decision to delete her personal emails was because she didn’t need them anymore, not because she was trying to avoid State Department, FBI or Freedom of Information Act requests.
12. Clinton was concerned that her email had been hacked.
But that’s not all. We also learned the following from The Boston Globe:
Clinton has repeatedly said her use of private email was allowed. But over a 3 ½ hour interview in July, she told investigators she ‘‘did not explicitly request permission to use a private server or email address,’’ the FBI wrote. They said no one at the State Department raised concerns during her tenure, and that Clinton said everyone with whom she exchanged emails knew she was using a private email address.
Clinton and her legal team deleted thousands more emails she claimed were personal and private. The FBI report details steps taken by Clinton’s staff that appear intended to hamper the recovery of deleted data, including smashing her old Blackberry smartphones with a hammer and using special software to wipe the hard drive of a server she had used.
As you can see, the American public views Hillary Clinton as dishonest and untrustworthy not because of sexism, but because she is an extraordinarily shady person.
These first two examples of Hillary hiding something we just reviewed relate to her going to great lengths to hide or obscure her communications. With respect to the first case, she continues to hide the comments she made in private speeches to the corporate titans who fund her campaign. In the second case, she has made it impossible for the American public to know precisely what she was up to as Secretary of State due to her brazen and unapproved decision to use a private email server.
While all of that is bad enough, Hillary continues to showcase her compulsive tendency to hide up to the current moment. What I’m referring to is that despite her being two months away from asking the American public to vote for her to be President, she continues to hide from the press and citizenry as a whole, while jet-setting from one of the nation’s most elite enclaves to another, pleading for additional oligarchs money in private fundraisers.
Let’s begin with her absurd and arrogant stance of refusing to hold press conferences. She hasn’t held one in 274, and if you’d like to keep track at home, click on the screen shot below for a live tracker.
So we know who she’s not meeting with. Let’s now turn to Politico to find out who she is meeting with (privately of course):
When she’s speaking at a fundraiser, reporters camped outside can sometimes hear a muffled voice but can rarely make out her actual words. When she’s greeting voters at a coffee shop or on a rope line after a rally, the former secretary of state often looks right through the reporters hovering around her, like they don’t exist. And when she does acknowledge their physical presence, she smiles through the questions barked at her and encourages reporters to sample a coffee, or a chocolate, instead.
There are full days when the rotating pool of traveling press does not even set eyes on Clinton. In one instance last month, Clinton slipped out to Martha’s Vineyard from New York, ditching the pool of reporters assigned to cover her altogether.
Certainly, the past month has been somewhat out of the ordinary for the campaign — Clinton has been on a cash dash, spending the bulk of the end of summer at private, closed-press fundraisers rather than public events. (Twice, she popped up to call in to cable television programs.) But there has hardly been a halcyon period of accessibility since she launched her campaign 18 months ago.
The article’s author goes on to provide a few lowlights from the press’ recent experience attempting to cover an impossible to cover campaign.
They Paved Paradise and Put up a Parking Lot, Aug. 30: Clinton hit up three big fundraisers in the Hamptons. While she raked in the cash, the pool didn’t have much to report on. “Pool was unable to hear a word of HRC’s remarks at first cocktail party. She also took questions, which pool was also prohibited from hearing.”
At an evening fundraiser hosted by Jimmy Buffett, Clinton was inside dancing with Paul McCartney, according to attendees. Pool reporters were stationed about 400 yards away from the house, “among the parked cars.”
Basement Blues, Aug. 29: While Clinton entertained donors who coughed up $33,400 a head to attend a Hamptons fundraiser at the home of Jay Snyder, there was “no chance of your pool hearing Clinton here. We are being held in a quaint, but lovely guest house, while Clinton is in the main house.” Earlier in the day, there was a brief window at a fundraiser when the pool could hear Clinton’s remarks. That was quickly remedied. “Staff shooed us into a hidden room farther in the basement out of earshot.”
Exclusive Interview with a Caretaker, Aug. 28: Clinton attended four fundraisers in the Hamptons. In Bridgehampton, pool“had a funny exchange with the man who described himself as the caretaker of the house where we waited. He asked when we were leaving to go into the fundraiser and see her. We told him no, we aren’t allowed to do that. He seemed incredulous.” Pool reported no sighting of Clinton the entire day.
Chocolates, Questions, Aug. 25: Clinton popped into Hub Coffee Roasters after a rally in Reno, Nevada. There, she ignored questions about Donald Trump lobbed at herfrom the reporters in the coffee shop. Instead, she encouraged them to sample Dorinda’s Chocolates. “It’s really good!” she said.
Muffled Mumblings, Aug. 24: Clinton attended a full day of fundraisers in California, but at the end of a long day that ended at 10 p.m., “pool lost sight of the motorcade as it pulled into the hotel garage, marking a full day without a glimpse of Clinton.” While Clinton raised money at the estate of Laurene Powell Jobs, the widow of Steve Jobs, the pool didn’t even catch a glimpse of the house, instead “we have to hold at a nearby restaurant.” At a fundraiser earlier in the day, “pool could hear Clinton’s voice, but could not make out any exact words.”
The Wave, Aug. 23: In Burbank, California, as Clinton entered Justin Timberlake’s mansion for a fundraiser, pool reported that Clinton “waved to us.” Also, a Jennifer Aniston sighting.
Ignoring Questions, Aug. 17: Clinton ignored questions shouted at her about Trump’s campaign shakeup, while she took a tour of John Marshall High School in Cleveland, ahead of a rally there, one of her two public events of the past two weeks.
Indeed, Hillary Clinton’s obvious disdain for the American public as she panders incessantly to oligarchs has reached a level of such shamelessness, even the New York Times couldn’t ignore it. As the paper noted in its article, Where Has Hillary Clinton Been? Ask the Ultrarich:
At a private fund-raiser Tuesday night at a waterfront Hamptons estate, Hillary Clinton danced alongside Jimmy Buffett, Jon Bon Jovi and Paul McCartney, and joined in a singalong finale to “Hey Jude.”
“I stand between you and the apocalypse,” a confident Mrs. Clinton declared to laughs, exhibiting a flash of self-awareness and humor to a crowd that included Calvin Klein and Harvey Weinstein and for whom the prospect of a Donald J. Trump presidency is dire.
The above quote by Hillary, which the smug attendees found so humorous, is quite telling in a very troubling manner. For example, it reminds me a lot of what Obama reportedly said to a group of bank executives in early 2009:
“My administration,” the president added, “is the only thing between you and the pitchforks.”
Interesting, because as it turned out, Obama did indeed coddle, protect and further enrich financial oligarchs to previously unimaginable levels. All at the expense of the middle class. Indeed, Obama and Hillary’s comments both betray a particularly frank and shameless admission. That the role of a U.S. President is, in their eyes at least, to protect the financial, corporate and political elite from the people, and not the other way around.
Mr. Trump has pointed to Mrs. Clinton’s noticeably scant schedule of campaign events this summer to suggest she has been hiding from the public. But Mrs. Clinton has been more than accessible to those who reside in some of the country’s most moneyed enclaves and are willing to spend hundreds of thousands of dollars to see her. In the last two weeks of August, Mrs. Clinton raked in roughly $50 million at 22 fund-raising events, averaging around $150,000 an hour, according to a New York Times tally.
And while Mrs. Clinton has faced criticism for her failure to hold a news conference for months, she has fielded hundreds of questions from the ultrarich in places like the Hamptons, Martha’s Vineyard, Beverly Hills and Silicon Valley.
If Mr. Trump appears to be waging his campaign in rallies and network interviews, Mrs. Clinton’s second presidential bid seems to amount to a series of high-dollar fund-raisers with public appearances added to the schedule when they can be fit in. Last week, for example, she diverged just once from her packed fund-raising schedule to deliver a speech.
Mr. Berger, who joined Mrs. Clinton last month at a donor event in Miami Beach, said many of the individual conversations before and after she speaks at the gatherings are centered more on grandchildren than weighty policy matters. But when she has had a give-and-take this summer about issues, Mrs. Clinton, who has promised to “reshuffle the deck” in favor of the middle class and portrayed Mr. Trump as an out-of-touch billionaire, has almost exclusively been fielding the concerns of the wealthiest Americans.
This whole “we just talked about grandchildren” seems to be a calculated talking point. Recall, Loretta Lynch said she merely discussed grandchildren with Bill Clinton during their secret tarmac meeting days before the FBI cleared her in the email investigation.
To businessmen who complain to Mrs. Clinton that President Obama has been unfriendly to their interests, she says she would approach business leaders more like Mr. Clinton did during his administration, which was widely considered amicable to the private sector.
The campaign’s finance team is led by Dennis Cheng, previously the chief fund-raiser for the Clinton Foundation, and it employs a couple dozen staff members. Mr. Cheng, who attends the events with Mrs. Clinton, offers donors a number of contribution options that provide them and their families varying levels of access to Mrs. Clinton. John Morgan, a Florida lawyer and donor, described Mr. Cheng as “the master concierge.”
For a donation of $2,700, the children (under 16) of donors at an event last month at the Sag Harbor, N.Y., estate of the hedge fund magnate Adam Sender could ask Mrs. Clinton a question. A family photo with Mrs. Clinton cost $10,000, according to attendees.
Lady Lynn Forester de Rothschild, a backer of Democrats and a friend of the Clintons’, made sure attendees did not grill Mrs. Clinton at the $100,000-per-couple lamb dinner Mrs. Forester de Rothschild hosted under a tent on the lawn of her oceanfront Martha’s Vineyard mansion.
“I said, ‘Let’s make it a nice night for her and show her our love,’” Mrs. Forester de Rothschild said.
Finally, just yesterday Hillary begrudgingly decided to emerge from behind the comfortable confines of billionaires and their gated mansions to engage with some ordinary plebs in Ohio.
Here’s what happened.
But yeah, it’s all just conspiracy theory to ask any questions about her health.
The newly released financial files on Bill and Hillary Rodham Clinton’s growing fortune omit a company with no apparent employees or assets that the former president has legally used to provide consulting and other services, but which demonstrates the complexity of the family’s finances.
Because the company, WJC, LLC, has no financial assets, Hillary Clinton’s campaign was not obligated to report its existence in her recent financial disclosure report, officials with Bill Clinton’s private office and the Clinton campaign said. They were responding to questions by The Associated Press, which reviewed corporate documents.
The officials, who spoke on condition of anonymity because they were not authorized to provide private details of the former president’s finances on the record, said the entity was a “pass-through” company designed to channel payments to the former president.
Under federal disclosure rules for spouses’ earned income, Hillary Clinton was only obligated to identify the source of her spouse’s income and confirm that he received more than $1,000. As a result, the precise amounts of Bill Clinton’s earned income from consulting have not been disclosed, and it’s not known how much was routed through WJC, LLC.
Wade Wilson: I had another Liam Neeson nightmare. I kidnapped his daughter and he just wasn't having it. They made three of those movies. At some point you have to wonder if he's just a bad parent.
What is your goal as a parent? That’s a trick question because I didn’t give you a time horizon. “What is your long-term goal?” is more precise. An answer might be “provide guidance and life lessons so that your children become good people.” That seems like a good goal. What if I asked what are your near-term goals for your children? Then your answer might be for them to be safe, or healthy, or happy. Also a good goal.
But you probably wouldn’t answer “My goal is for my children to always be happy, to never experience pain, or sadness, or disappointment. To always get what they want, and to never have to hear the word ‘No.’” That sounds like a recipe for disaster, right? It would mean giving them unlimited ice cream, access to Netflix, and no boundaries. What would you think of that parent? Clearly, you would say that they were spoiling their kids and that they are probably going to turn out badly. Like a Hilton or Kardashian-kid-badly.
And yet…central bankers around the world are those parents. The bad ones. The one’s you don’t let your kids play with. Because eventually, bad things happen there. Those spoiled kids take greater and greater risks, do dumber and dumber things, because there are never any consequences for their actions. Our Federal Reserve is encouraging people to do riskier and riskier things because they fear upsetting them with a few rate hikes and a fall in asset prices. They want markets to always be happy. They want markets to never go down, to have no volatility. They never want to tell the markets “No.” And like Wade Wilson, at some point you have to wonder if they’re just bad parents.
We all know what risky behavior looks like in children, but for some reason, when it comes to financial markets, lots of investors act like risk is something you can’t control, so why bother trying. That’s like saying a kid is just going to do whatever they want even if I say no, so I’m not even going to try to set boundaries. Investors in bonds with a negative yield are engaging in risky behavior because their bad central bank parents aren’t home. They’ve lost all sense of right and wrong, because they’ve never experienced the consequences of their actions. Is it the Fed’s fault? It is for bond investors. But there are lots of bad parents out there.
Deadpool: Did I say this was a love story? It's a horror movie.
Maybe I’m just a mean dad, but I think kids benefit from knowing that someone is setting limits, providing guidance on right and wrong behavior, and trying to inculcate a sense of responsibility in them. What is risk in investing? Missing out on a potential return, or losing money – maybe for decades or even permanently? How long is permanently for a saver? For a retiree?
Millions of investors have been seduced by a famous mutual fund company founder, who shall remain nameless to protect the guilty, into thinking that managing risk is pointless, that markets are inherently unpredictable, and that everything will always be fine “in the end” so long as you remain fully invested. (Ok, its Jack Bogle of Vanguard.) But when is “the end.” What if it is soon, or now, because you are already in retirement?
People like Bogle say that even when markets break, they eventually recover, so there is no need to worry about market crashes. Just ride them out and everything will be ok. Except this ignores the fact that many times in history, markets have crashed and taken much longer than a decade to recover. Especially when “safety stocks” are trading at 25 times earnings. Got a spare decade or two? Ok then, you can ignore the current risks. The rest of you need to think about a backup plan.
Time horizon and need should drive risk/reward choices. Currently monetary policies around the world have converted savings into non-assets. They are effectively worth nothing. In Europe and Japan, they are worth less than nothing. As Bill Gross wrote recently, negative yielding debt is not an asset, it’s a liability. There literally is a line you can cross to convert an asset into a liability. It’s zero. Multiply your asset by a negative number. Your positive income becomes a negative. You owe someone money. Negative rates work like that. It’s middle school math. Zero is the line. Except no one at the ECB apparently remembers their middle school math.
This is why so many smart investors seem so angry with central bankers both in the U.S. and abroad. They have callously eviscerated the value of retirees’ savings. Remember when CDs paid interest you could live on? The old paradigm of work hard, save a lot, buy safe bank CDs and have enough money to pay your mortgage, food, and transportation expenses is gone. But the bad parents at the Fed don’t realize that if they take away someone’s “safe” income, they aren’t going to have any money to spend, or that forcing them to buy dividend stocks, or MLPs, or some other yield producing but-not-100% safe asset, is not going to make them comfortable enough to spend, and that really, those are the only two outcomes that a rational person will come up with. Reducing the security of someone’s income stream will make them want to protect what remaining income and assets they have, and save more, because they will probably have to live off of more principal and less income. It’s just math. That’s it. And like in middle school, when you multiply by a negative number, you get a negative. That’s all you need to know.
Recruiter: You're looking very alive.
Deadpool: Ha! Only on the outside!
Recruiter: This is not going to end well for me, is it?
Deadpool: This is not gonna end well for you, no.
Stock markets are also engaging in some risky behaviors. There are many ways to measure riskiness in stocks, but Steve Blumenthal does an excellent job in covering most of the good ones, and he does it every week for free. Go and read his latest “On My Radar” here. But the cliff notes: stocks are really expensive based on actual earnings when compared to history. Like 28.7% above median fair value if you go back to 1964. Or using another metric, the Shiller P/E ratio, stocks have only been more expensive in the late 1920s (just before the crash) and in the very late 1990s (just before the crash). From this level, the subsequent 10-year annualized real return has averaged about 3%. Better than 10-year treasuries at 1.6%, but probably not what most people are expecting. And in the past, when stocks are this expensive, the subsequent 10-year return has been as low as negative 6% per year when starting at these valuations. Not exactly risk-less.
Colossus: [Deadpool is about to shoot Ajax.] Wade! Four or five moments.
Colossus: Four or five moments – that's all it takes to become a hero. Everyone thinks it's a full-time job. Wake up a hero. Brush your teeth a hero. Go to work a hero. Not true. Over a lifetime there are only four or five moments that really matter. Moments when you're offered a choice to make a sacrifice, conquer a flaw, save a friend – spare an enemy. In these moments everything else falls away… [Deadpool gets bored and shoots Ajax in the head, killing him.]
Colossus: Really? Was that necessary?
Deadpool: You were droning on.
Janet Yellen gave a speech recently at the big Federal Reserve boondoggle in Jackson Hole. From Yellen’s speech:
As noted in the minutes of last month's Federal Open Market Committee (FOMC) meeting, we are studying many issues related to policy implementation, research which ultimately will inform the FOMC's views on how to most effectively conduct monetary policy in the years ahead. I expect that the work discussed at this conference will make valuable contributions to the understanding of many of these important issues.
This is not science. You don’t do research in a “lab”, apply some formulas, do some math, and then play god with the largest financial markets in the world. Unless you’re the Fed. Then you do just that. Even when your own charts show just how wildly you are guessing in your predictions. From her speech:
Like Colossus, I feel like I’ve been droning on about this issue forever. A year ago I was pounding the table and telling anyone who would listen (since I work with just one other person, it wasn’t a big audience) that the Fed should be raising rates because we had a small window to get them in before things went bad, because eventually, things always go bad. And once they do, you really don’t want to be raising rates. Markets will go nuts if you do. But…here we are. They didn’t do it, the economy is at stall speed, and the Fed is out of options. Maybe we can get some fiscal deficit spending going that will give a boost to the economy, but think through the timing. Nothing will happen until we have a new president, because this one is brain-dead when it comes to economics. So we’re into early 2017. Say whoever it is makes a massive infrastructure bill a part of their first 100 days agenda. Further say it actually makes it through Congress. How long for the rules of implementation to be written, then for contracts to be awarded, funds dispersed, workers hired, and so on. My point is, it’s not happening soon. The Fed missed their moment to be a hero, as did Congress and the President. Everyone just stood around doing nothing. And our economy, like Ajax, is about to get shot.
Don’t believe me? Hanjin of South Korea filed for bankruptcy this past week. It didn’t even make the front page of the WSJ. Which I find odd, because when one of the world’s largest shipping companies goes belly up, it’s something you should notice. Apparently, they handle about 7.8% of the total volume of goods shipped across the Pacific to the U.S. West Coast. As Joanie McCullough used to say, “that’s a numba.” Things break. They just do. Prepare for it.
Deadpool: Don't worry. I'm totally on top of this.
In case you’re wondering why I keep picking on the Fed, well, it’s because it’s so easy to do. The following is taken directly from the Wall Street Journal’s transcript of an interview between WSJ reporters Jon Hilsenrath and Harriet Tory, and James Bullard, president of the St. Louis Federal Reserve Bank. The whole thing is worth reading to understand how we got here.
MR. HILSENRATH: What kind of compromise would it take to get the FOMC to move in September? I mean, so the tradition is there’s some kind of – like you say, some kind of agreement. What would it take to get them there?
MR. BULLARD: Well, I have no idea, so – and it’s really – it’s really the chair’s job to fashion that. But I will say that – I’ll talk historically about the FOMC, the kinds of things that the FOMC would do. You would trade off. You would say, OK, we could hike today, but then we’ll not plan to do anything in the future. That would be one way to – one way to go about a consensus. So that often happens on the FOMC. Or vice versa. If you read the Greenspan-era transcripts, he’ll do things like, OK, we won’t go today, but we’ll kind of hint that we’re pretty sure we’re going to go next time.
MR. HILSENRATH: Right.
MR. BULLARD: And so you get this inter-tempo kind of trade-off, and that often – that often is enough to get people to sign up.
MR. HILSENRATH: So, hike today and then delay.
MR. BULLARD: Yeah. (Laughs.)
MR. HILSENRATH: Or, no hike today and then no more delay.
MR. BULLARD: Yeah, yeah.
MR. HILSENRATH: Something like that.
MR. BULLARD: Yeah, those kinds of trade-offs are, historically speaking – I’m not saying I know what Janet’s doing, because I don’t. But, historically speaking, those are the kinds of things that the FOMC has done.
MR. HILSENRATH: I came up with my catchphrase for the – for the month. (Laughter.)
MR. BULLARD: Those are great. That’s worthy of a T-shirt. (Laughs, laughter.) You could have one on the front and one on the back.
MS. TORRY: Or a headline.
MR. HILSENRATH: Well, that’s the St. Louis framework now, right?
MR. BULLARD: Yeah.
MR. HILSENRATH: Hike today and then delay.
MR. BULLARD: Yeah. That’s what it would be, yeah.
I’m still being cautious here. Maybe I’m just risk-averse.
Weasel: I would go with you, but… I don't want to.
But continuing the parenting analogy, think back to a big college homecoming party. At some point most people realize they should leave a party. Some have been ingrained with enough common sense and self-worth to leave early – like when people start to get drunk and obnoxious. Some leave only when they are drunk and obnoxious, and their friends have to take them home. Others don’t leave until the cops show up. And then there are those folks who just hide and hope the cops don’t find them. Those idiots are the ones that get arrested. Don’t be an idiot. Protect your portfolio. I don’t want to go to this party anymore.
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This week’s Trading Rules:
Everyone always thinks they can leave the party before the cops show up.