Peter Schiff: The Media Has Flipped The Narrative On Trump

Via SchiffGold.com,

Last week, the yield curve inverted, with the yield on the 10-year Treasury falling below the yield on the 2-year for the first time in 12 years. This has historically been a good predictor of recessions. US stock markets sold off on the news, with the Dow shedding 800 points. As Peter Schiff noted in his most recent podcast, the mainstream also suddenly started talking about the possibility of an economic downturn.

As Peter put it, the media has flipped the narrative on Trump.

All of a sudden, a media, which was pretty much buying the booming economy narrative, now is questioning whether the economy is actually strong.”

Peter said Trump is now accusing the media of being involved in some kind of conspiracy to make the economy look bad. He’s basically saying that all of the negative economic data we’ve seen coming out is nothing but “fake news.”

Trump has worked himself into a political corner. His claim to fame is that he’s created the greatest economy ever. He has a vested interest in ensuring that the narrative continues. He won’t likely win a second term if the economy is in recession, or if stocks appear to be in a bear market.

If stocks are going down, if we’re in a recession, well then by his own standard, he is a failure. And if his presidency failed, then why should the public reelect him?”

When Trump was running for office, he said the numbers were fake – that the economy was worse than the data indicated. Now he’s saying the numbers are fake and the economy is much better than the data indicates.

Peter said that ironically, some of the best evidence that the economy is in trouble comes directly from the policies that Trump is demanding – particularly a 100 basis-point cut in the interest rate. As Peter pointed out, that would take the interest rate down to 1%. That was the level Alan Greenspan took interest rates down to during the recession after the dot-com bubble burst.

Donald Trump wants rates to be at 1% again. Well, if the economy is so great, why do we need to return interest rates to the level that we had during a recession following the bursting of a stock market bubble and the 9/11 terrorist attacks?”

In fact, we already have monetary stimulus with the recent Fed rate cut and the end of quantitative tightening. And as Peter noted, we also have massive fiscal stimulus. The US budget deficit for FY2019 has already eclipsed last year’s shortfall.

But that’s not enough for Trump. Now there’s all these rumors, and I’m sure they’re true, that the Trump administration is thinking of cutting capital gains taxes, having an emergency temporary payroll tax cut … that is a stimulus. That is a pure Keynesian stimulus. Why do we need more stimulus when we’ve got so much stimulus?”

Trump wants all of this stimulus and yet says we aren’t close to recession.

Well, this is a bunch of BS! Obviously, if we weren’t close to recession, the president wouldn’t be looking for monetary and fiscal stimulus to prop up the economy. Strong economies don’t need to be artificially propped up. It’s weak economies that need to be artificially propped up. I mean, you can’t have your cake and eat it too. You can’t claim that the economy doesn’t need a stimulus, but then advocate for a stimulus.”

The media is having a field day with this. It’s finally questioning the narrative.

It should be noted that Peter has been talking about a looming recession for months. Back in January, Peter was already saying “the recession is a done deal.”

Peter goes on to analyze the economics behind the looming recession and the political ramifications. Peter said that analysts and pundits who are now suddenly predicting a recession are right, but they still don’t realize just how bad it’s going to be.

via ZeroHedge News https://ift.tt/2Ud506l Tyler Durden

Homicides Of Young Brazilian Males Higher Than Syria And Iraq, Report Says

According to a recent UNICEF report, examined by The Hindu, the number of homicides of young males in Brazil is higher than warzones in Syria and Iraq.

“Homicide victims are mostly black boys who live on the outskirts of the major cities. They are out of school and come from low-income families,” said the report.

Brazil is a culturally diverse country, with about 50% of the population defined as mixed. The racial divide is vast, and government officials mostly avoid the debate on racial inequality. But several studies in recent years have started looking at the role of race in murders — both criminal as well as by government forces.

One report, titled “Atlas of Violence,” was recently published by the Institute of Applied Economic Research in Brazil shows that in the Rio Grande do Su, Brazil’s southernmost state, bordering Argentina and Uruguay, has a population of 82% white population, but the number of black youth murdered nearly doubled between 2007 and 2017.

With limited economic opportunity, young black males in the country resort to gangs for stability. This has led to a surge in black killings by police, which has spiked in recent years, mostly in the name of “fighting crime.”

Earlier this year, we reported how a rash of gang violence across the country forced President Jair Bolsonaro to crackdown on crime — which includes military takeovers of Brazilian cities and shoot-to-kill orders carried out by teams of sharpshooters.

According to the State Institute of Public Security (ISP), Brazil’s military police killed 1,544 people last year in Rio de Janeiro state.

“Summary executions are being carried out in favelas and other peripheral areas,” said Renata Souza, a local politician. “It is a barbaric state policy that amounts to genocide.”

President Bolsonaro has even threatened to make new laws that will enable police and civilians to “shoot suspected offenders” without concern of prosecution.

“These guys are going to die in the streets like cockroaches — and that’s how it should be,” he said in a recent interview. He told Brazil’s police should be decorated for using rifles, not taken to courts.

In an interview, broadcasted on YouTube on August 05, Bolsonaro said if congress passed his changes to the criminal code, it would see criminals gunned down in droves.

The only way to reduce Brazil’s violent crime is to provide “legal cover” to police officers so they can kill suspects, he added.

With murders surging across 14 states, and high rates of young blacks murdered, The Hindu warned: “the last thing Brazil needs is an out-of-control police force. But that may just become legal.”

And if you didn’t think The Purge, a movie where murder is legal for 12 hours, could’ve come true, well, think again in Brazil.

via ZeroHedge News https://ift.tt/2U1BbW4 Tyler Durden

Luongo: Trump’s Not A 4-D Chess-Player, He’s A Very Simple Creature

Authored by Tom Luongo,

Friday night used to be the ‘best night on television.’ But today Friday afternoon is becoming the best soap opera we could hope for as President Trump pulls out all the stops to keep us both horrified and entertained.

It’s better than reruns of Dallas, for sure, though the hair is just as ludicrous.

Trump laid into FOMC Chairman Jerome Powell again musing aloud on Twitter as to who the bigger enemy of the U.S. was, The Fed or China.

Now, far be it for me to get upset with anyone criticizing the Federal Reserve. The FOMC, is really just a Politburo of Ivory Tower intellectuals with neither the practical experience nor the specific knowledge needed to ‘run the economy.

But, news tip for you, neither does Donald Trump.

If you listen to Trump carefully, seeing him for what he is not what you think he is, what you want him to be or, most importantly, what he wants you to see, you hear a man who fully believes the Fed controls the economy.

You hear a man that firmly believes in the power of the government to remake the world in whatever image it wants, whenever it wants.

You hear a man so solipsistic he can only see the world in terms he defined more than thirty years ago.

You hear a man who fundamentally doesn’t believe trade results in both sides winning but that everyone either wins a deal or loses. If he didn’t extract maximum pain from the other side he ‘lost.’

It’s the source of Trump’s inherent mercantilism.

And that fault in Donald Trump’s character is leading him to ever more extreme behavior as he refuses to reconcile the world we have versus the world he wants.

So he keeps pressuring, embarrassing and humiliating people he wants to make deals with. And when they refuse to do so, he explodes and, like a child who didn’t get his cookie, uses the power of the Presidency to still try to get what he wants.

Treating his opposition like the Democrats and the Media this way is fine. They treat him far worse than he does them; giving back in kind what he gets.

But his stance on the Fed, who are actually helping him in the long run, is insane. And it proves the point that no matter how smart you are, if you are mis-educated and have spent a life building wealth based on that mis-education, you will not be able to see the other side of the problem.

The strong dollar he is so angry about isn’t a function of the Fed’s raising interest rates. It’s not about policy bifurcation between the Fed and the ECB and the Bank of Japan.

It’s come about because of the continued application of the same mis-education Trump received about the role of interest rates that the Fed consistently (and wrongly) applies.

The world is just short dollars Don. And lowering borrowing costs won’t help the situation. It’s what created it in the first place.

Trump’s not a multi-dimensional analyst. He isn’t a 4-d chess player. He’s actually a very simple creature. He believes the crap spewed by CNBC. He’s hired advisers who worked there for pity’s sake.

The Fed is now in fear for its independence and Trump, again very child-like, wants the world remade in his image yesterday and on his time table not the world’s.

So, all of the radical changes he has pushed to the flow of global capital through his near daily abuse of sanctions and tariffs have created immense uncertainty in dollar funding markets around the world.

And with a $60 trillion synthetic short position against the dollar extent thanks to a decade of zero-bound interest rates courtesy of the Fed, dollar hoarding is a very real thing.

Martin Armstrong blogged the other day remarking that there are more $100 bills in existence today than $1 bills. Why? Overseas mattress stuffing.

More recently, the amount of US currency in circulation outside the United States has now exceeded 70%. The world is hoarding dollars for they fear the cancellation of their own currencies as talk of eliminating cash in Europe has escalated with the prospect of Christine Lagarde replacing Draghi.

As Americans have moved increasingly toward debit and credit cards, the rest of the world has been sucking-up US dollars beyond belief. Anyone who questions whether the US dollar is the reserve currency, well the cash is not being held by governments or central banks. The people are now hoarding US dollars at record levels.

Every day that Trump complains about the Fed or China or Europe or Iran is another day in which he himself helps force more dollars into those mattresses overseas. Some of those hundreds of billions get converted into gold and bitcoin.

Further, the Fed lowering rates will only signal to those people that they have the right idea because the Fed wouldn’t be doing that if the global economy was in such good shape.

They would be raising rates.

And it’s a point Trump refuses to understand. Lowering rates here will not free up capital at home to be lent. Banks are already as loathe to lend as I am to write anything on a Thursday lest I misread the upcoming episode of Trump’s version of Freaky Friday in Fedlandia.

If banks were confident of the returns on their loan prospects they wouldn’t still be hoarding excess reserves at the Fed like everyone else.

They’ve disgorged more than $1 trillion over the past year as the Fed has wound down its balance sheet. This is the Fed, in its own ham-fisted way trying to free up dollars for circulation. Because when you create a backwards market you have to do things backwards to unwind them.

The Fed never intended for the trillions it printed bailing out the world in 2008-09 to circulate. If it did it would have never paid interest on excess reserves (IOER) in the first place.

This is also why the recovery has been a long, slow water-torture affair only kept alive by China blowing a massive credit bubble which Trump wants to prick but without it he would have never gotten the opportunity to MAGA.

The truth is, Powell’s helping with that, Don. Higher rates are what China can’t handle. Part of what’s worked for them is keeping rates above 3% while the Fed was zero-bound.

Raising rates has capital pouring into the U.S. and out of China, searching for yield as the yuan falls. But he, like all children, like the infantilized Baby Boomer he is, wants it all and he wants it now, before re-election.

This is ultimately what all of this whining is about, Trump’s re-election.

What this means, of course, is that we have at least another year of the best soap opera fake money can buy. I’m just waiting for someone to take on the role of Kramer banging open the door to Don’s apartment randomly and saying, “Hello! Deflation is Here…. or is that Inflation?”

Powell’s hair isn’t crazy enough for it.

*  *  *

Join my Patreon if you want to know how to navigate the crazy and Install Brave if you don’t want Google to track you doing it.

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1.5 Million Vacant US Homes: These Cities Have The Most “Zombie” Foreclosures

Attom Data Solutions has published its Vacant Property and Zombie Foreclosure Report that shows over 1.5 million (1,530,563) homes and condos vacant in 3Q19, which represents about 1.6% of the national housing stock. Attom  examined county tax assessor data of 98 million single-family homes and condos for vacancies, foreclosure status, and owner-occupancy status.

During the quarter there were 304,000 homes in the process of foreclosure, with 3.2% “zombie” foreclosures, a situation that occurs when homeowners abandon a home after receiving a foreclosure notice.

The report showed a total of 9,612 zombie foreclosures nationwide.

New York had the most zombie properties (2,428), followed by Florida (1,634), Illinois (985), Ohio (891) and New Jersey (463).

The top 10 metropolitan areas with zombie properties are New York-Newark-Jersey City, NY-NJ-PA (1,566); Chicago-Naperville-Elgin, IL-IN-WI (534); Miami-Fort Lauderdale-West Palm Beach, FL (506); Cleveland-Elyria, OH (431); Tampa-St. Petersburg-Clearwater, FL (351); Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (281); Albany-Schenectady-Troy, NY (174); Rochester, NY (172); Baltimore-Columbia-Towson, MD (171); and Jacksonville, FL (155).

The counties with the most zombie properties are Suffolk, NY (475); Cuyahoga, OH (392); Nassau, NY (322); Cook, IL (316); Broward, FL (181); Pinellas, FL (174); Palm Beach, FL (172); Miami-Dade, FL (153); Monroe, FL (143); and Duval, FL (131).

Zipcodes with the most zombie properties are 44105 in Cleveland, OH (57); 44108 in Cleveland, OH (54); 61605 in Peoria, IL (53); 44112 in Cleveland, OH (37); 14701 in Jamestown, NY (30); 11967 in New York, NY (28); 11520 in New York, NY (27); 11717 in New York, NY (27); 34668 in Tampa, FL (26); and 12078 in Gloversville, NY (26).

ATTOM’s 3Q19 report also found the highest levels of vacant investor-owned properties were in Indiana (8.8%), Kansas (6.7%), Minnesota (6.0%), Ohio, (5.9%) and Rhode Island (5.8%).

The zipcodes with the highest number of vacant investor-owned properties were in 29928 in Hilton Head Island, SC (4,941); 48505 in Flint, MI (2,828); 29582 in Myrtle Beach, SC (2,728); 29572 in Myrtle Beach (2,325); 48504 in Flint, MI (1,774); 48227 in Detroit, MI (1,733); 92262 in Riverside, CA (1,727); 48228 in Detroit, MI (1,670); 19132 in Philadelphia, PA (1,648); and 48224 in Detroit, MI (1.627).

“The blight of vacant, decaying properties facing foreclosure has declined dramatically across the United States – another good-news offshoot of the housing boom that’s gone on for eight years,” said Todd Teta, chief product officer with ATTOM Data Solutions.

“A handful of areas still face notable problems with homes abandoned by owners after they get hit with foreclosure claims.”

Maybe the chart below – which can only go up now – explains why President Trump is demanding the Federal Reserve cut 100bps and launch quantitative easing, and as of this week, trial ballooned several headlines of emergency payroll tax cuts. The administration has figured out that another housing bust is coming and will do anything to delay it. 

via ZeroHedge News https://ift.tt/2L8Uo4c Tyler Durden

A Critical Threshold Has Just Been Crossed, And Things Will Never Be The Same Again…

Authored by Michael Snyder via The Economic Collapse blog,

Just when things seemed to be settling down a little bit, our conflict with China has suddenly escalated to a dangerous new phase. 

This is not simply just a “trade war” any longer, and our relationship with China will never be the same again.  As you will see below, President Trump just referred to Chinese President Xi Jinping as our “enemy”, and this is something that the Chinese are going to take extremely seriously.  In China, the national leader is a representation of the government as a whole, and the government as a whole is a representation of the entire county.  So to the Chinese people, what Trump just said will be interpreted as “the United States and China are now enemies”. 

Of course for Trump everything would be forgiven tomorrow if the Chinese totally caved in to his demands and started saying all sorts of nice things about him, but for the Chinese what has transpired in recent months will be remembered for generations.  President Trump has insulted their national honor over and over again, and that sort of thing may not mean much to us here in the western world anymore, but over in China their sense of honor is central to who they are as a people.  After everything that has already been said and done, there will be no going back, and we are now facing a future in which the United States and China will be very bitter enemies.

In response to previously announced U.S. tariffs, China stunned global markets when it announced a new wave of tariffs on U.S. goods early on Friday

The trade war between the U.S. and China escalated further Friday as Beijing announced a new set of tariffs on American products, sending the stock market plunging.

The China State Council announced it would impose tariffs ranging from 5% to 10% on an additional $75 billion in U.S. goods, according to state media outlet Global Times.

After Trump learned of this, he hit the ceiling, and he immediately went on a Twitter rant in which he pledged to hit Chinese goods with even higher tariffs

For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more.

Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight.

Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer.

As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship.

China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!).

Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%.

Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!

In addition, Trump “hereby ordered” U.S. corporations “to immediately start looking for an alternative to China”

Trump then tweeted that American companies “are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” He did not immediately detail the authority he thought he could use to compel firms to leave China.

When I first saw that I could hardly believe what I was seeing, and you may have had the same reaction.

Can Trump actually do that?

Well, no, the truth is that he can’t.

He can certainly encourage U.S. businesses to leave China, but as CNN has pointed out, he doesn’t have the authority to unilaterally order all of our companies to leave an entire country…

Here’s the thing: Donald Trump can’t order American business to do anything. There’s a reason the business world is known as the “private sector” — because it’s not owned or controlled by the government (aka the “public sector.”) We don’t have state-run industry (or media). The President of the United States can’t “order” privately held business to do, well, much of anything.

And on top of everything else, President Trump posted another tweet in which he called Chinese President Xi Jinping our “enemy”.  The following comes directly from Trump’s Twitter account

As usual, the Fed did NOTHING! It is incredible that they can “speak” without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the U.S. will do great…

….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?

Any hopes for a trade deal with China during the Trump administration were already dead, but this has put even more nails in the coffin.

When the outlook for the U.S. economy was brighter, getting a trade deal with China done was not so critical for Trump, but now things have dramatically changed.

At this point, even the White House’s own internal forecasts are showing “that the economy could slow markedly over the next year”

Top White House advisers notified President Trump earlier this month that some internal forecasts showed that the economy could slow markedly over the next year, stopping short of a recession but complicating his path to reelection in 2020.

The private forecast, one of several delivered to Trump and described by three people familiar with the briefing, contrasts sharply with the triumphant rhetoric the president and his surrogates have repeatedly used to describe the economy.

Things just continue to get even bleaker.  U.S. manufacturing just contracted for the very first time since 2009, and the financial markets are starting to figure out that there aren’t any promising solutions on the horizon.

On Friday, the trade war turmoil greatly spooked investors and the Dow ended the day down more than 600 points

The Dow Jones Industrial Average closed 623.34 points lower, or 2.4% at 25,628.90. The S&P 500 slid 2.6% to close at 2,847.11. The Nasdaq Composite dropped 3% to end the day at 7,751.77. The losses brought the Dow’s decline for August to more than 4%.

The major indexes also posted weekly losses for the fourth straight time. The Dow dropped about 1% this week while the S&P 500 pulled back 1.4%. The Nasdaq lost 1.8%.

As I noted at the end of last month, the stock market started to decline in July, and now it has fallen every single week here in August.  Just like in “The Beginning Of The End”, we are potentially facing a scenario in which we experience great economic and financial turmoil during the second half of the year.

Over and over again, I have kept warning my readers that our relations with China were going to get progressively worse.  We have been expecting this for a long time, but most Americans still do not grasp the implications of this crisis.

This conflict between the United States and China is going to change everything.  An extraordinary amount of pain is heading our way, and our society is completely and utterly unprepared to handle it.

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

Trump Suggested Using Nukes To Stop Hurricanes From Hitting The US: Report

When it comes to unconventional proposal to control the weather, NBC News probably holds the prize with this gem, which we discussed back in January: “A last-ditch global warming fix? A man-made ‘volcanic’ eruption” to cool the planet. Scientists and some environmentalists believe nations might have to mimic volcanic gases as a last-ditch effort to protect Earth from extreme warming.”

Another just as ridiculous proposal to “control” atmospheric events emerged during the Eisenhower era, when a government scientist proposed detonating a nuclear bomb over the eye of a hurricane to counteract convection currents.

Why do we bring it up? Because according to an Axios report late on Sunday (which if capital markets weren’t collapsing and China wasn’t on the edge of invading Hong Kong would have been the top watercooler discussing point tomorrow, but as it stands will hardly make the top 10 most shocking weekend developments) President Trump “suggested multiple times to senior Homeland Security and national security officials that they explore using nuclear bombs to stop hurricanes from hitting the United States.”

Is Axios just making stuff up to paint Trump in a crazy light? Perhaps: the publication cotes “sources who have heard the president’s private remarks and been briefed on a National Security Council memorandum that recorded those comments”, so yes, the left-leaning outlet may have simply brought us another example of “fake news.” On the other hand, if true it would be, as Mark Carney would call it “awesome” – after all what better way to lose the reserve currency status of the dollar than its sovereign nation randomly lobbing nukes across the globe… and why not its own territory.”

So what do Axios claim happened?

During one hurricane briefing at the White House, Trump said, “I got it. I got it. Why don’t we nuke them?” according to one source who was there. “They start forming off the coast of Africa, as they’re moving across the Atlantic, we drop a bomb inside the eye of the hurricane and it disrupts it. Why can’t we do that?”

Other (once again anonymous) sources told Axios that Trump has suggested multiple times to senior Homeland Security and national security officials that they explore using nuclear bombs to stop hurricanes from hitting the United States, according to sources who have heard the president’s private remarks and been briefed on a National Security Council memorandum that recorded those comments.

Asked how the briefer reacted, the source recalled he said something to the effect of, “Sir, we’ll look into that.”

Trump replied by asking incredulously how many hurricanes the U.S. could handle and reiterating his suggestion that the government intervene before they make landfall.

The briefer “was knocked back on his heels,” the source in the room added. “You could hear a gnat fart in that meeting. People were astonished. After the meeting ended, we thought, ‘What the f—? What do we do with this?'”

One reason: because this is an idea that’s been around for decades, and frequently floated seriously. That said, while Axios clearly is intent on making Trump look (even more) insane, there is no indication that the president is actually pushing ahead with the proposal to start nuking air masses. 

Meanwhile, even Axios admits that “the idea keeps resurfacing in the public even though scientists agree it won’t work.  The myth has been so persistent that the National Oceanic and Atmospheric Administration, the U.S. government agency that predicts changes in weather and the oceans, published an online fact sheet for the public under the heading Tropical Cyclone Myths Page, titled “Why don’t we try to destroy tropical cyclones by nuking them?”

The page states: “Apart from the fact that this might not even alter the storm, this approach neglects the problem that the released radioactive fallout would fairly quickly move with the tradewinds to affect land areas and cause devastating environmental problems. Needless to say, this is not a good idea.”

Responding to the article, a senior administration official said, “we don’t comment on private discussions that the president may or may not have had with his national security team.” A different senior administration official, who has been briefed on the president’s hurricane bombing suggestion, defended Trump’s idea and said it was no cause for alarm. “His goal — to keep a catastrophic hurricane from hitting the mainland — is not bad,” the official said. “His objective is not bad.”

“What people near the president do is they say ‘I love a president who asks questions like that, who’s willing to ask tough questions.’ … It takes strong people to respond to him in the right way when stuff like this comes up. For me, alarm bells weren’t going off when I heard about it, but I did think somebody is going to use this to feed into ‘the president is crazy’ narrative.”

Axios also notes that 3 weeks after Trump’s 2016 election, National Geographic published an article titled, “Nuking Hurricanes: The Surprising History of a Really Bad Idea.” It found, among other problems, that:

Dropping a nuclear bomb into a hurricane would be banned under the terms of the Peaceful Nuclear Explosions Treaty between the U.S. and the former Soviet Union. So that could stave off any experiments, as long as the U.S. observes the terms of the treaty.

Whether this story is true or not, we doubt that hurricanes have much to worry about. Now, if we were Fed Chair Powell, we would be far more concerned.

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

US Army Tries To Calm Residents About Upcoming Wave Of Military Drills In North Carolina

Authored by Nicholas West via ActivistPost.com,

Nothing calms the public quite like gunfire in heavily populated areas. Nevertheless, the U.S. Army has plans to do just that starting August 30th and continuing to September 12th in 21 select counties in North Carolina.

While exact locations are not being released, according to The Charlotte Observer residents in the following counties should not be alarmed by gunfire, flares and helicopter activity that might be witnessed, as seen in the video below:

The 21 counties include Alamance, Anson, Cabarrus, Chatham, Cumberland, Davidson, Davie, Guilford, Harnett, Hoke, Lee, Montgomery, Moore, Randolph, Richmond, Robeson, Rowan, Scotland, Stanly, Union and Wake counties, officials said.

Efforts to calm the public ahead of time come after some past tragic incidents where at least one soldier died and mass panic ensued after a similar exercise was thought to be a real event.

This latest group of drills is part of “Robin Sage” which is a series of ongoing training exercises conducted out of the Fort Bragg military base.  According to The Charlotte Observer, this year’s emphasis is being placed on unconventional warfare where “students will match wits with more seasoned soldiers, who will ‘act as realistic opposing forces and guerrilla freedom fighters,’officials said in a release.”

It’s not clear in the Observer‘s report if this series of drills has anything to do with a larger U.S. Army mission of preparing for close-combat warfare in megacities, but it does appear to have some of those elements.

As I reported in 2017, the Pentagon gave a very clear image of where they believe warfare is headed in the future as the world’s cities continue to swell and become pressure cookers for potential insurrection.  It’s part of a program called “Thunderstorm Spiral.”

Drills such as “Unified Quest” run yearly by the U.S. Army also took a sharper turn in 2014 toward addressing the problem of combat in megacities – defined as cities with more than 10 million people, of which there already are nearly 25 and projected to total near 40 by the year 2025.

Solicitations for “meagcities combat units” have been issued by people as prominent as West Point scholar and former Ranger Instructor, John Spencer. His article on the topic is a must-read.

While military combat training is of course a necessity, it does seem to be a trend that these drills are moving closer and closer to heavily populated areas of the United States. That should be alarming enough.

H/T: MassPrivateI

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“We Are Not Mid-Cycle, Or Even Late Cycle, But Rather End Of Cycle”

As Morgan Stanley’s bearish US equity strategist, Michael Wilson writes, at this point, the argument  between bulls and bears really comes down to one question–are we mid cycle or not, a question which Jerome Powell answered three weeks ago in a way that was not satisfactory to the market?

As Wilson notes, 4 months ago, the bulls were arguing that the Fed’s dovish pivot was all we needed because the underlying US economy was in very good shape, with some still suggesting the Fed could raise rates again later this year. When the global economy showed signs of weakness in April and May, the bullish narrative changed to Fed cuts offsetting concerns about trade tensions and spillover to the US economy and markets. There was little mention of any endogenous risk to the US economy at the time and so it was couched as an “insurance cut.” This led many to call for a meltup, and for a few weeks that call seemed correct, however that’s when the trade war with China escalated sharply, just as many had expected would happen.

Which brings us to today: with the Fed having cut 25bps last month and ending QT 2 months earlier than planned, the bulls are saying the Fed did not do enough and they are now behind the curve. They suggest that the Fed will quickly catch up and economy will be fine because we are still mid cycle and the consumer remains so strong. This, as Wilson sarcastically notes, “is what we call thesis creep in the investment world.”

Unlike such “thesis creepers”, Morgan Stanley’s view on the fundamental picture has been consistent all year. Consistently bearish that is. Here is Wilson again:

We’ve argued all along that the economy would continue to slow and that the second half recovery most were expecting would fail to materialize for a multitude of reasons. The most differentiated part of our view has centered around the US corporate profits recession that is now happening. If we are going to slip into an economic recession we believe it will be because this profits recession worsens to the point where companies will decide it is time to reduce head count. Part of our call this year was that companies would cut capex and inventory from bloated levels reached last year and that labor looked vulnerable at some point due to the rapidly deteriorating margins we expected. This call was not predicated on the trade situation getting worse although we never expected any grand bargain as some were forecasting.

As Wilson also cautions, at this point the evidence is clear that significant number of companies are now at a critical juncture where they need to make a decision on head count:

While we can’t say with any certainty whether companies will pull that lever or not, the probability of such an outcome has risen considerably and we have written about this extensively in prior notes. Perhaps the most compelling argument that companies are moving in this direction is the fact that hours worked have declined materially which is what typically happens before head count reductions occur in large numbers

This is shown in the chart below:

The bottom line, at least to Morgan Stanley, is that “it is very hard to argue mid cycle from the real data we are seeing, the fact that the unemployment rate is well below NAIRU, and profit margins and growth are outright declining on a y/y basis for the majority of companies, both public and private.

It is not just the bank’s bearish assessment that leads it to conclude that Powell’s “mid-cycle” assessment is wrong: the market evidence is also compelling that “we are not mid cycle, or even late cycle, but rather, end of cycle”, according to Wilson, who notes that over the past year, markets have essentially traded as if we are heading into a recession. Exhibit A: Bond yield have fallen at a rate rarely seen outside of a recessionary outcome while the yield curve has been inverted for over 3 months continuously. Here, Wilson focuses on the Fed Fund-10 year curve as the most accurate reflection of what the bond market thinks about Fed Policy, something Chair Powell has cited himself. “On this score, the message is quite clear–Fed policy is too tight for the economy.”

Meanwhile, in the clearest indication that something is very wrong, the most interest rate sensitive parts of the economy have failed to rebound even though rates have fallen sharply over the past year suggesting this is not a cost issue for consumers, but an issue of weak demand. Of particular note is housing – the fact that housing related stocks have not been able to outperform since April as rates collapsed is once again indicative of the market’s view on whether we are mid cycle or not.

Another clear market signal that we are end cycle is the relative underperformance of cyclical stocks at this point in the cycle, while last week’s accelerated move lower in the performance of cyclicals/defensives was as striking as the blow off move in bonds, suggesting the market is likely getting more convinced of the recession outcome.

This can be seen in the next chart, the accelerative move lower by the ratio of cyclical/defensive stocks and 10 year Treasury yields is completely in lock step at this point and arguably even more than in early 2016, the last true recession scare. Here, Wilson reminds readers that back then he held the opposite view, claiming that we were actually mid cycle… and that turned out to be the case. However, as he cautions, it is different this time for numerous reasons, including the the output gap, unemployment gap, consumer confidence, capex cycle, inventory cycle, Fed cycle all of which are in a much different place than in early 2016.

So… what then?

Given that the markets and the general public are clearly well aware of the rising risk of recession…

… the natural question is what should an investor do at this point? Isn’t is too late to buy bond proxies or sell cyclical stocks? The answer to that question, according to Morgan Stanley, is probably, “yes”. However, in what is likely a mean reversion trade, at this stage it is likely that Defensives will outperform the other part of the safety barbell–Growth.

To this point, Morgan Stanley published a chart last week showing how growth stocks underperform defensives at the very end if a recession is going to get fully priced. In other words, while it may seem obvious that Defensive bond proxies and Growth stocks are where valuations remain egregious, Defensives tend to hold onto those valuations longer than Growth stocks as the growth / recession scare gets priced. As a result, Wilson’s advise to investors is to reduce their risk in the Growth bucket if they have outsized exposure there, in particular the expensive secular growth stocks.

via ZeroHedge News https://ift.tt/2zp7mVK Tyler Durden

The Hidden Costs Behind Every Government Program

Authored by Gor Mkrtchian via The Mises Institute,

When the state constructs a new bike lane, school, or begins a new space mission, the natural inclination of the majority is to cheer this new endeavor as progressive. We possess one new structure or have accomplished one new task than before; society has moved forward, the thinking goes.

The state is responsible for truly technically impressive or beautiful accomplishments like the Apollo missions, the Moscow Metro, the Palace of Versailles, etc. that most would agree clearly produce benefits for society.

Confronted with these concrete and widely celebrated examples of government accomplishments, how can libertarians deny that state action is sometimes a benevolent force in society?

Opportunity Cost

Leaving aside moral considerations and focusing on utilitarian considerations, the answer revolves around opportunity cost and demonstrated preference.

Opportunity cost is the benefits that could have been obtained through the best forgone alternative to an actual employment of resources. If a slice of pizza costs two dollars, and a hamburger costs two dollars, then the opportunity cost of a slice of pizza is a hamburger, and visa-versa.

The resources of any given country are scarce, and the “economic question” that must be solved is, how should the limited resources available be applied to best satisfy people’s subjective preferences?

Even if, for example, the state builds a library that is beautiful, the books are neatly organized, the librarian is competent and cordial, the temperature is well-regulated, and the computers are state of the art, we still need to hold our applause.

In order to be able to celebrate the employment of resources by the state in a particular application, it’s necessary to consider the alternative uses that could have been possible with those resources. If there exists an alternative option that could have better satisfied subjective preferences, then the actual employment, even if it produced benefits, was a relative failure.

Voluntary Exchange and Demonstrated Preference

Now the question is: by what standard can it be determined which employment of resources is best, relative to the subjective preferences of consumers, in any given case?

In instances of voluntary exchange, every exchange is not only ex-ante mutually beneficial, it’s ex-ante the bestemployment of the resources being exchanged, from the perspectives of the respective property owners. This is called demonstrated preference, which Rothbard explains to mean, “simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action.”

For example, if Smith sells Jones a lamp for twenty dollars, we can know that of all of the alternative uses of the lamp Smith had available to him, such as using it to read, using it as a decoration, keeping it in storage, etc., selling it to Jones for twenty dollars was his most highly preferred option, because that is the option that he freely chose.

Likewise, Jones thought buying Smith’s lamp was the best of all possible uses available to him of his twenty dollars. Otherwise, he wouldn’t have executed that option.

Involuntary Exchange

On the other hand, sometimes exchange, production, and consumption are not conducted as a result of the voluntary decisions of all of the owners of the property involved, but rather under compulsion of physical force. Then, in the absence of demonstrated preference, it can never be known whether the act benefited any of the involved parties or caused them harm, let alone that it was the most beneficial employment of resources for every party involved.

Given that usually countless options are available to actors at any given time, if would be an astronomically unlikely coincidence for the state to happen to dictate what consumers would have voluntarily chosen to do at a particular moment in time anyway. In this way, it’s metaphysically possible for state action to be equally ex-ante beneficial to all parties involved as voluntary exchange, but never more.

Fundamentally, acts of taxation and regulation, due to their involuntary nature, sever the link between consumers’ subjective preferences and the way in which their resources are deployed.

The Seen and the Unseen

Behind every million dollar tax-funded high school, for example, there hides a million dollars’ worth of other goods and services that these taxpayers never got to purchase, but would have preferred over the high school. Perhaps these goods would have been a million dollars’ worth of flowers, food, board games, medical services, books, cutlery, home renovations, farming equipment, computer software, and math tutor services.

There’s nothing stopping taxpayers from funding a high school on their own and sparing themselves the deadweight loss of bureaucracy. It really is simply the case that if consumers want a high school, they can pay for one, and as private high schools demonstrate, they often do.

However, the state using taxation to build a particular high school can only divert funds from more highly valued opportunity costs to the lower ranked high school. Otherwise, no compulsion would have been necessary. Despite this undeniable and simple logic, in the U.S., tax-funded expansions of the government K-12 education system, among other interventions, are widely celebrated.

In terms of public opinion, part of the explanation is that the high school can be seen and cheered because it actually exists, whereas the lost opportunity costs, by their very nature as forgone alternatives, never occurred, as so mourning their loss requires abstract reasoning and imagination on the part of the public.

Frédéric Bastiat described this phenomenon in his classic work “That Which is Seen, and That Which is Not Seen.” Conspicuous state projects win the public relations war over quietly letting people spend their money as they actually wish to.

The interstate highway system, the Louvre, and the Sixth Fleet may be impressive, but they’re not cause for applause. Relative to the preferences of the taxpayer, no matter how grand and awe-inspiring a project the state completes, it will always and everywhere ex-ante fall short of voluntary exchange.

via ZeroHedge News https://ift.tt/2zqzec5 Tyler Durden

Appeals Judge Found Shot Dead In Wooded Area Behind Home

A Georgia appeals judge was found shot dead on Saturday in a wooded area behind his Albany home, however officials do not believe it was a homicide, according to the Associated Press (via the Washington Times)

60-year-old Judge Stephen Goss served as a Superior Court judge in Albany for approximately 20 years, after which then-Gov. Nathan Deal appointed him to serve as a judge on the Georgia Court of Appeals in August 2018. 

Goss brought “dignity and compassion to the delivery of justice all across this great state,” said Chief Justice Harold D. Melton, who noted that he was known nationally for his work on substance abuse and mental health treatment programs. 

“His legacy is as great as our sense of loss,” added Melton. “Our court and this state’s judiciary express our profound condolences to the Goss family.”

Gov. Brian Kemp offered his support to the Goss family.

“A native Georgian, trusted counsel, and man of integrity, Court of Appeals Judge Stephen Goss will be sorely missed by countless people across our state and nation,” Kemp said in a tweet. “The Kemp family asks God to give comfort to his loved ones, friends, and colleagues in this difficult time.”

In 2002, Goss founded Georgia’s first felony mental health court and substance abuse treatment program in Dougherty County. It was one of the early programs of its kind in the country, according to his online bio. The program assists those with felony probation or pending felony charges, many of whom have a long history with substance abuse or diagnosed mental illness. For the past decade, the Dougherty County program has been a designated learning site for mental health courts, one of only four in the nation. –Washington Times

Goss was previously chairman of the Council of Accountability Court Judges of Georgia, serving on multiple state and national committees focusing on criminal justice. He is survived by his wife Dee – a middle school humanities teacher, and their three children. 

At this time no foul play is suspected. 

via ZeroHedge News https://ift.tt/3240zgM Tyler Durden