Tag: news

Authored by Jonathan Turley,

Lisa Page, the former FBI lawyer who resigned in the midst of the Russian investigation scandal, has been hired a NBC and MSNBC as a legal analyst.  The move continues a trend started by CNN in hiring Trump critics, including officials terminated for misconduct, to offer legal analysis on the Trump Administration. We have previously discussed the use by CNN of figures like Andrew McCabe to give legal analysis despite his being referred for possible criminal charges by the Inspector General for repeatedly lying to federal investigators.  The media appears intent on fulfilling the narrative of President Trump that it is overly biased and hostile in its analysis. Indeed, it now appears a marketing plan that has subsumed the journalistic mission.

Page appeared with Rachel Maddow and began her work as the new legal analyst by discussing her own controversial work at the FBI. Page is still part of investigation by various committees and the investigation being conducted by U.S Attorney John Durham.

I have denounced President Trump for his repeated and often vicious references to Page’s affair with fired FBI Special Agent Peter Strzok. There is no excuse for such personal abuse. I also do not view her emails as proof of her involvement in a deep-state conspiracy as opposed to clearly inappropriate and partisan communications for someone involved in the investigation.  Indeed, Page did not appear a particularly significant figure in the investigation or even the FBI as a whole.  She was primarily dragged into the controversy due to her relationship with Strzok.

However, Trump has legitimate reason to object (as he has) to this hiring as do those who expect analysis from experts without a personal stake in the ongoing investigations.  It has long been an ethical rule in American journalism not to pay for interviews.  Either NBC is paying for exclusive rights to Page in interviews like the one on Maddow’s show or it is hiring an expert with a personal stake in these controversies to give legal analysis. Neither is a good option for a network that represented the gold standard in journalism with figures like John Chancellor, Edwin Newman, and Roger Mudd.

It is not that Page disagrees with the Administration on legal matters or these cases. It is the fact that she is personally involved in the ongoing stories and has shown intense and at times unhinged bias against Trump in communications with Strzok and others. She is the news story, or at least a significant part of it.

Andrew A. Weissmann has also been retained as a legal analyst by NBC and MSNBC. While Weissmann has been raised by Republicans as a lightening rod for his perceived partisan bias as a member of the Mueller team, he does not have the type of personal conflict or interest in these investigations. Weissmann is likely to be raised in the hearing over the next weeks into the Flynn case in terms of prosecutorial decisions. (It is worth noting that Fox hired Trey Gowdy at an analyst even though he would be commenting on matters that came before his committee in these investigations.) In terms of balance, however, the appearance of both Page and Weissmann giving analysis on the Administration’s response to the protests is a bit jarring for some.

Page was an unknown attorney in the FBI before she was forced into the public eye due to her emails with Strzok.  Her emails fueled the controversy over bias in the FBI.  They were undeniably biased and strident including the now famous reference to the FBI investigation as “insurance” in case Trump was elected. In the email in August 2016, here’s what Strzok wrote:

I want to believe the path you threw out for consideration in Andy’s office [Andrew McCabe is the FBI deputy director and married to a Democratic Virginia State Senate candidate] for that there’s no way he gets elected—but I’m afraid we can’t take that risk. It’s like an insurance policy in the unlikely event you die before you’re 40 …

What particularly concerns me is that Page has come up recently in new disclosures in the Flynn case. In newly released document is an email from former FBI lawyer Lisa Page to former FBI special agent Peter Strzok, who played the leadership role in targeting Flynn. In the email, Page suggests that Flynn could be set up by making a passing reference to a federal law that criminalizes lies to federal investigators. She suggested to Strzok that “it would be an easy way to just casually slip that in.” So this effort was not about protecting national security or learning critical intelligence. As I have noted, the email reinforces other evidence that it was about bagging Flynn for the case in the legal version of a canned trophy hunt.

It appears that, on January 4, 2017, the FBI’s Washington Field Office issued a “Closing Communication” indicating that the bureau was terminating “CROSSFIRE RAZOR” — the newly disclosed codename for the investigation of Flynn.  That is when Strzok intervened. The FBI had investigated Flynn and various databases and determined that “no derogatory information was identified in FBI holdings.” Due to this conclusion, the Washington Field Office concluded that Flynn “was no longer a viable candidate as part of the larger CROSSFIRE HURRICANE umbrella case.” On that same day, however, fired FBI Special Agent Peter Strzok instructed the FBI case manager handling CROSSFIRE RAZOR to keep the investigation open, telling him “Hey don’t close RAZOR.”  The FBI official replied, “Okay.” Strzok then confirmed again, “Still open right? And you’re the case agent? Going to send you [REDACTED] for the file.” The FBI official confirmed: “I have not closed it … Still open.” Strzok responded “Rgr. I couldn’t raise [REDACTED] earlier. Pls keep it open for now.”

Strzok also texted Page:

“Razor still open. :@ but serendipitously good, I guess. You want those chips and Oreos?” Page replied “Phew. But yeah that’s amazing that he is still open. Good, I guess.”

Strzok replied “Yeah, our utter incompetence actually helps us. 20% of the time, I’m guessing :)”

Page will be the focus of much of the upcoming inquiries both in Congress and the Justice Department as will CNN’s legal analyst Andrew McCabe.

In her Maddow segment, Page attempts to defuse the “insurance policy” email as all part of her commitment to protecting the nation, not her repeatedly stated hatred for Trump.  In what is now a signature for MSNBC, Maddow did not ask a single probative question but actually helped her frame the response.  Even in echo journalistic circles, the echo between the two was deafening.

Page explained”

“It’s an analogy. First of all, it’s not my text, so I’m sort of interpreting what I believed he meant back three years ago, but we’re using an analogy. We’re talking about whether or not we should take certain investigative steps or not based on the likelihood that he’s going to be president or not.”

You have to keep in mind … if President Trump doesn’t become president, the national-security risk, if there is somebody in his campaign associated with Russia, plummets. You’re not so worried about what Russia’s doing vis-à-vis a member of his campaign if he’s not president because you’re not going to have access to classified information, you’re not going to have access to sources and methods in our national-security apparatus. So, the ‘insurance policy’ was an analogy. It’s like an insurance policy when you’re 40. You don’t expect to die when you’re 40, yet you still have an insurance policy.”

Maddow then decided to better frame the spin:

“So, don’t just hope that he’s not going to be elected and therefore not press forward with the investigation hoping, but rather press forward with the investigation just in case he does get in there.”

Page simply responds “Exactly.”

Well, not exactly.

Page is leaving out that, as new documents show, there never was credible evidence of any Russian collusion.  Recently, the Congress unsealed testimony from a long line of Obama officials who denied ever seeing such evidence, including some who publicly suggested that they had.  Indeed, Page testified that even by May 2017, they did not find such evidence that “it still existed in the scope of possibility that there would be literally nothing” to connect Trump and Russia.  There was little reason to believe in this “insurance policy” given the absence of evidence. Yet, Page still viewed the effort led by Strzok as an indemnity in case of election.

The Inspector General found that, soon after the first surveillance was ordered, FBI agents began to cast doubts on the veracity of the Steele document and suggested it might be disinformation from Russian intelligence. The IG said that, due to the relatively low standard required for a FISA application, he could not say that the original application was invalid but that it was quickly established that no credible evidence existed to support the continuance of the investigation — which Page called their “insurance policy.”

Page also left out her other emails including calling Trump foul names while praising Hillary Clinton and other opponents. Even if she were not involved in the ongoing controversy, her emails show her to be fervently opposed to both Trump and the Republicans.

Bias however has become the coin of the realm for some networks.  Why have echo journalism when you can have an analyst simply repeat her position directly? For viewers who become irate at the appearance of opposing views (as vividly demonstrated in the recent apology of the New York Times for publishing a conservative opinion column), having a vehemently biased and personally invested analyst is reassuring. It is not like Page will suddenly blurt out a defense of Flynn or Trump or others in the Administration.

With Page, NBC has crossed the Rubicon and left its objectivity scattered on the far bank.

Two Buffalo Police officers who injured a 75-year-old protester on Thursday, Aron Torgalski and Robert McCabe, were arraigned Saturday morning on charges of felony assault, according to The Buffalo News.

The protester, Martin Gugino, was seen on video approaching the officers who were in process of clearing Niagra Square as part of an 8 p.m. citywide curfiew, was shoved to the ground and could be seen bleeding from the head.

Officer Aaron Torgalski, who can be seen on the video pushing Gugino before he fell, was charged with felony second-degree assault, as was Robert McCabe, who can be seen about to kneel toward Gugino after the fall before being moved along by a supervisor.

Both officers pleaded not guilty to the charges as part of a procedure that took place online about 11 a.m. before City Judge Craig D. Hannah.

Hannah released the two men without bail and ordered them to reappear July 20 for their next court proceeding. –The Buffalo News

The officers were quickly suspended after the incident, causing the entire 57-member Emergency Response Team (ERT) to resign from their posts in solidarity. They remain on the force.

“After witnessing first hand how these 2 officers were treated. I can tell you, they tried to fuck over these guys like I have never seen in my 54 years. It is despicable to say the least the treatment they have received from this Administration as well as DA John Flynn and his ADA Gary Hackbush,” reads an email allegedly sent by the president of the Buffalo Police Union, John Evans.

Buffalo Mayor Byron Brown, meanwhile, called the elderly protester, Martin Gugino, an “agitator” and a “key and major instigator” of those looting the city in comments made during a Friday news conference reported by TMZ.

“He was in the area after the curfew. One of the things that happened before was conflict among protesters and there was a danger of fights breaking out, and police felt it was important to clear that scene for the safety of protesters,” said Brown.

Authored by Lance Roberts via RealInvestmentAdvice.com,

Rationalizing high valuations won’t improve future return outcomes. 

The reason I say this is because of a tweet from Tom McClellan recently:

Fundamentalists are worried about the SP500 at 21x earnings. But that is not the relevant price ratio. This is: pic.twitter.com/D0WZ3llZYF

— Tom McClellan (@McClellanOsc) June 2, 2020

While I have an immense amount of respect for Tom, the exercise of manipulating valuation measures can lead to false conclusions. Take the following chart.

The dark blue line is Shiller’s CAPE measure as compared to Tom’s M2 measure and our CT measure. Clearly, both measures show the market is substantially cheaper than Shiller’s smoothed price to earnings model. Moreover, both the M2 and CT measures have a very high correlation of nearly 90%.

Therefore, investors can rationalize that by using either M2 or CT, stocks should have higher return rates in the future.

The problem is that the CT model has nothing to do with asset markets. It’s a measure of “College Tuition” expenditures. So, while there is a spurious correlation to both Shiller’s CAPE and M2, the measure has little to do with forward return expectations or current valuations.

Why is this important?

While valuations can seem passive over short periods of time, and they are indeed horrible market timing measures, they have everything to do with future outcomes.

“Price is what you pay, value is what you get.” – Warren Buffett.

Measuring Valuations The Correct Way

When discussing valuations it is important to maintain a proper perspective. Valuations are NOT a market timing device to tell you to buy or sell stocks. What valuations do provide is a framework for understanding forward returns over long periods of time.

Despite the markets outperformance over the last 10-years, such was due to the unprecedented monetary interventions by the Federal Reserve. Regardless, markets have a strong tendency to revert to their average performance over time, which is not nearly as much fun as it sounds.

As investors, our job is not only to invest for today but to understand the potential of long-term impacts.

When considering stock valuations, one should only use the past 12-months of reported earnings, known as GAAP earnings, which includes “all of the bad stuff.” The reason is that all analysis uses trailing GAAP earnings as the denominator. These are “known” earnings and makes valuation analysis more reliable.

Conversely, Wall Street analysts use operating earnings, or “earnings without all that bad stuff,” to deflate multiples using forward “guesses.” This method provides the rationalization for overpaying for assets during periods of excess valuations. 

Importantly, using operating earnings also provides a faulty comparison between valuation models which are largely based on “known” trailing earnings.

However, this is where we must make an important distinction.

Starting Valuations Matter Most

When discussing valuations, the starting level when you begin your investment journey is the most critical. Such was a point discussed previously:

“The chart below shows the history of secular bull market periods going back to 1871 using data from Dr. Robert Shiller. You will notice that secular bull markets tend to begin with CAPE 10 valuations around 10x earnings or even less. They tend to end around 23-25x earnings or higher. (Over the long-term valuations do matter.) “

The two previous 20-year secular bull markets begin with valuations in single digits. At the end of the first decade of those secular advances, valuations were still trading below 20x. Currently, valuations are still hovering near 30x.

But that is just today. Over the next couple of quarters, the “E” is will drop markedly as the impact of the economic shutdown settles in. While it is hoped there will only be a mild-reduction in earnings, historically, they have reverted past the long-term exponential trend.

Given 13% unemployment rates and a recession of nearly 20%, earnings will likely revert toward $60/share. Such a decline will push current valuations to historically high levels assuming prices remain elevated.

The 1920-1929 secular advance most closely mimics the current 2010 cycle. While valuations started below 5x earnings in 1919, they eclipsed 30x earnings ten-years later in 1929. The rest, as they say, is history. Or rather, maybe “past is prologue” is more fitting.

High Valuations & Low Returns

Another confusion when discussing future low rates of returns is misunderstanding each year will be a low return. That assumption is incorrect. What high valuations tend to dictate is the return for the entire period will be low.

The chart below shows 10-year rolling REAL, inflation-adjusted returns in the markets. (Note: Spikes in 10-year returns, which occurred because the 50% decline in 2008 dropped out of the equation, has previously denoted peaks in forward annual returns.)

(Important note: Many advisers/analysts often pen that the market has never had a 10 or 20-year negative return. That is only on a nominal basis. Inflation must be included in the debate.)

Even on a 30-year rolling return basis, high “starting valuations” suggest lower than expected rates of returns in the future.

There are two crucial points to take away from the data.

1. There are several periods throughout history where market returns were not only low but negative. (Given that most people only have 20-30 functional years to save for retirement, a 20-year low return period can devastate those plans.)

2. Periods of low returns follow periods of excessive market valuations and encompass the majority of negative return years. (Read more about this chart here)

“Importantly, it is worth noting that negative returns tend to cluster during periods of declining valuations. These ‘clusters’ of negative returns are what define ‘secular bear markets.’”

The Mistake Investors Make

The mistake investors repeatedly make is dismissing the data in the short-term because there is no immediate impact on price returns. As noted above, valuations by their very nature are HORRIBLE predictors of 12-month returns. Investors avoid any investment strategy which has such a focus. In the longer term, however, valuations are strong predictors of expected returns.

It isn’t just trailing valuations suggesting markets are overpriced and expensive. The chart below shows Dr. Robert Shiller’s cyclically adjusted P/E ratio compared with Tobin’s Q-ratio. The Q-ratio measures the “replacement cost” for the firms assets in the broad Wilshire 5000 index. (This measure has nothing to do with earnings.)

Unsurprisingly, Tobin’s Q is also at historically expensive valuations hitting the highest level since the peak in 2000. Furthermore, note forward 10-year returns do NOT improve from historically expensive levels, but decline sharply.

Warren Buffett’s favorite valuation measure also supports current valuation concerns (which may explain why he is sitting on $137 billion in cash.). The following measure is the price of the Wilshire 5000 market capitalization level divided by GDP. Given the stock market is not the economy, asset prices should reflect underlying economic growth rather than the “irrational exuberance” of investors. 

(The analysis below includes the latest Atlanta Fed estimate for Q2-2020 GDP) 

Lastly, one figure that is hard to fudge or manipulate is sales. Such is where corporations derive earnings and profitability. Given the coming drop in sales over the two quarters, the price-to-sales ratio will surge to historic heights. Like valuations, overpaying for revenue tends to have less desirable outcomes.

No matter how you analyze the data, the potential future outcomes for investors is likely to be less desirable than many hope.

Bull Now, Pay Later

In the short-term, the bull market continues as the flood of liquidity, and accommodative actions, from global Central Banks, has lulled investors into a state of complacency rarely seen historically. As Richard Thaler, the famous University of Chicago professor who won the Nobel Prize in economics once stated:

“We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping. I admit to not understanding it. Nothing seems to spook the market.”

While market analysts continue to come up with a variety of rationalizations to justify high valuations, none of them hold up under real scrutiny. The problem is while Central Bank interventions boost asset prices in the short-term, over the long-term there is an inherently negative impact on economic growth. As such, it leads to the repetitive cycle of monetary policy.

1. Monetary policy drags forward future consumption leaving a void in the future.

2. Since monetary policy does not create self-sustaining economic growth, ever-larger amounts of liquidity are needed to maintain the same level of activity.

3. The filling of the “gap” between fundamentals and reality leads to economic contraction.

4. Job losses rise, wealth effect diminishes, and real wealth reduces. 

5. The middle class shrinks further.

6. Central banks act to provide more liquidity to offset recessionary drag and restart economic growth by dragging forward future consumption. 

7. Wash, Rinse, Repeat.

If you don’t believe me, here is the evidence.

“Through the end of the Q1-2020, the stock market has returned almost 127.79% from the 2007 peak using quarterly data. Such is more than 3x the growth in GDP and 6.5x the increase in corporate revenue. (I have used SALES growth in the chart below as it is what happens at the top line of income statements and is not AS subject to manipulation.) “

Unfortunately, the “wealth effect” impact has only benefited a relatively small percentage of the overall economy.

The Risk Of Overpaying

While it is “bullish” to come up with reasons to justify overpaying for assets in the short-term, outcomes are quite different long-term.

If this wasn’t the case, then “riddle me this.”

If investing works like the media suggests, then why are 80% of Americans living paycheck-to-paycheck? Why is it just the top 10% of income earners own 88% of the stock market?

The reality is that investing long-term is hard. Short-term exuberance tends to lead to poor long-term returns.

Let me conclude with this key quote from Vitaliy Katsenelson, which sums up our investing view:

“Our goal is to win a war, and we may need to lose a few battles in the interim.

Yes, we want to make money, but it is even more important not to lose it. If the market continues to mount even higher, we will likely lag. The stocks we own will become fully valued, and we’ll sell them. If our cash balances continue to rise, then they will. We are not going to sacrifice our standards and thus let our portfolio be a byproduct of forced or irrational decisions.

We are willing to lose a few battles, but those losses will be necessary to win the war. Timing the market is an impossible endeavor. We don’t know anyone who has done it successfully on a consistent and repeated basis. In the short run, stock market movements are completely random – as random as you’re trying to guess the next card at the blackjack table.”

Rationalizing high valuations today will likely lead to ultimately “losing the war.” 

Across the US and Western Europe, the coronavirus appears to be retreating as Italy regularly reports fewer than 100 deaths per day (a trend it continued on Saturday) regions and the US is reporting nowhere close to the 3,000 new cases per day that the New York Times had characterized as a virtual certainty when it leaked a set of dire CDC projections last month.

While the child mob now in charge at the NYT destroys what little remains of the former “Paper of Record”‘s credibility, the reality is much less dire, with the US now reporting fewer than 1,000 deaths a day, while surging deaths in Brazil, Mexico and Russia make up for the decline in fatalities reported in the US and Europe.

Signs of a second wave in Asia continue to crop up, but it appears that even Japan, which was widely criticized for its lax approach to the virus, has managed to get through the outbreak with relatively few fatalities.

Still, there are still some places in the US where the virus persists, and some where it has continued to spread aggressively. According to the Washington Post, many of these latter-day hotspots can be found in parts of the South, Midwest and the Mountain West. Furthermore, data compiled by WaPo show that 23 states, as well as Washington DC and Puerto Rico, have seen an increase in the rolling seven-day average of coronavirus cases compared with the previous week. For most, that jump has been 10% or more.

Globally, the total number of confirmed cases stands just shy of 6.9 million, while confirmed deaths are nearing 400k, with ~396K. We should pass the 400k deaths mark by the end of the weekend.

What’s more: 13 states, including Arizona, California, Idaho, Kentucky, Mississippi, Nebraska, Oregon, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin, haven’t shown a sustained daily decrease as of Tuesday, according to the document, a copy of which was obtained by The Post.

The map below illustrates just how complex the situation can be. In some counties that have reopened, new cases have tripled. Meanwhile, new cases in the surrounding area have continued to decline.

Sources: WaPo

Italy reported 270 new cases of coronavirus and 72 new deaths for a total of 234,801 cases and 33,846 deaths. At last count, Brazil counted 650,504 cases, and more than 35,000 deaths, making it the second largest outbreak in the world after the US, while Brazil has the third-largest death toll behind only the US and the UK.

Though the virus is mostly easily passed in enclosed spaces with poor ventilation, Dr. Fauci warned during an interview on CNBC this week that the racial justice gatherings could easily spark a second wave, though he added that a second wave isn’t “inevitable”. Gov Cuomo has said protesters have a “civic duty” to go get tested now.

Though the average rate of spread – often represented by the variable “R”, indicating the number of people infected by each new carrier – is typically between one and 2 people, some of those infected – so-called “Super Spreaders” – can infect dozens, possibly hundreds, of people.

“One person can infect hundreds. If you were at a protest, go get a test, please,” Cuomo has said.

Though the curve has started to bend in the UK, the number of new cases and deaths have continued to climb at an alarming rate, even as the country adopted some of the most restrictive quarantine policies in Europe; PM Boris Johnson is facing criticism from all sides as he tries to guide the country through the first tentative steps of reopening.

As of 9am 6 June, there have been 5,438,712 tests, with 218,187 tests on 5 June.

284,868 people have tested positive.

As of 5pm on 5 June, of those tested positive for coronavirus, across all settings, 40,465 have sadly died.

More info:
▶️ https://t.co/xXnL3FU15k pic.twitter.com/nlgNheKeZ7

— Department of Health and Social Care (@DHSCgovuk) June 6, 2020

The UK death toll climbed by 204 to 40,465 on Saturday morning (remember, these data are reported with a 24-hour delay). The country’s total deaths passed 50k recently, a grim milestone that put Britain second only to the US in total deaths, and the undisputed deadliest outbreak in Europe.

National Guardsmen deployed to Washington D.C. have been ordered not to use firearms or ammunition by Defense Secretary Mark Esper – who also ordered home active-duty troops that the Trump administration requested in recent days, according to The Washington Post.

Esper made the decision to disarm without first consulting the White House, which was not involved in the decision to disarm the Guard, according to two senior officials who spoke on condition of anonymity.

The move comes as activists gear up for a massive demonstration in the nation’s capitol on Saturday in the ongoing protests over the death of George Floyd – a black man who died after a white police officer in Minneapolis knelt on his neck for over eight minutes. An estimated 100,000 – 200,000 protesters are expected on Washington on Saturday.

Members of the National Guard arrive on the ellipse near the White House ahead of today’s Black Lives Matter protest. pic.twitter.com/tKGWaFgBNs

— Doug Mills (@dougmillsnyt) June 6, 2020

According to Fox News’ Lucas Tomlinson, 43,000 National Guard troops have been deployed across 34 states and Washington D.C. to assist police with protests – a doubling in just four days.

The number of National Guard troops mobilized across the country has doubled in the past 4 days

— Lucas Tomlinson (@LucasFoxNews) June 6, 2020

And if violent elements within the protests begin shooting at National Guardsmen, they will be unable to shoot back.

Initially, a small group of guardsmen deployed in the city had been carrying guns while standing outside monuments, but the bulk of the forces, such as those working with federal park police at Lafayette Square in front of the White House, didn’t carry firearms out of caution. Now, all of the roughly 5,000 guardsmen deployed to Washington from the District of Columbia and 11 states have been told not to use weaponry or ammunition.

At a news conference Friday, Army Secretary Ryan McCarthy said that some guardsmen in the District had been carrying arms on Monday, but noted that they did not have magazines of ammunition in their firearms. Beginning Tuesday, the Trump administration de-escalated further, he said, by removing firearms from the equation altogether. –The Washington Post

“It was clear that there were enough federal law enforcement that had descended on the city, and that would be their principal responsibility,” said McCarthy.

As the Post notes, the D.C. National Guard is under the president’s control, who delegated control to McCarthy. Mayor Muriel Bowser (D) requested that the Trump administration dploy the guard – initially for the response to the coronavirus pandemic, however she has since criticized Trump’s response in the city which critics have called an overreaction – after he called guardsmen from other states and active-duty forces to sites outside the capital for other operations. The enhanced security will include undercover street patrols by federal law enforcement officials from the Bureau of Prisons and Customs and Border Protection.

The situation grew particularly tense after two helicopters from the D.C. Guard began hovering over protesters in the streets, blasting them with gusty rotor wash from the aircraft. All helicopter flight operations in the D.C. Guard have been suspended until an investigation into the incident ordered by Esper is complete, said D.C. Guard spokeswoman Air Force Lt. Col. Brooke Davis.

Trump’s insistence on a militarized response in the nation’s capital has led to strains with Esper, a West Point graduate and former Army officer who took over as defense secretary last year. Esper announced publicly Wednesday that he wasn’t in favor of using the Insurrection Act to deploy active-duty troops, even as the president threatened to invoke it. –The Washington Post

Esper’s decision to send home some of the 1,600 active-duty troops amassed in DC was overruled by Trump following a contentious meeting – however the administration announced that some of the troops would indeed be leaving.

On Friday, McCarthy announced at the Pentagon that all active-duty soldiers would return to their bases – the last of which being the 3rd US Infantry Regiment – known as the “Old Guard” based out of Fort Myer, VA.

Read the rest of the report here.

Authored by Charles Hugh Smith via OfTwoMinds blog,

The bill for extreme wealth/income inequality is now overdue, and the penalties for ignoring the bill will be as extreme as the inequality.

Our socio-economic-political system–let’s call it the status quo–has been hollowed out by extremes of wealth/power inequality driven by financialization and globalization, which have enriched the top 5% and left everyone else behind.

As a result, the status quo has become increasingly fragile and brittle even as cheerleaders claim everything’s never been better–witness today’s massive rally in stocks on a jobs report which suggests the V-shaped recovery is already well underway.

The fly in the ointment is even a V-shaped recovery won’t repair the structural distortions which have generated levels of social stratification that are inherently destabilizing.

One way to understand this is: the bill for extreme wealth/income inequality is now overdue, and the penalties for ignoring the bill will be as extreme as the inequality.

An uneasy set of orthodoxies has masked the financial and social stratification that has widened as the wealthy have pulled away from the bottom 95% and hardened as the ladders of social mobility have decayed.

One orthodoxy is that multiple university degrees are a surefire ticket to secure, well-paying careers. Outside of a few specialties, this orthodoxy has foundered on a global over-supply of university credentials and a scarcity of secure, well-paying jobs.

Whatever jobs do pay well trace back to financialization, globalization or moated bastions of privilege and power that protect insiders from competition, accountability and transparency.

Another orthodoxy is that “anyone can get rich in America,” a.k.a. we’re all just one YouTube channel / influencer contract away from becoming rich. That such ephemeral success is now the bright beacon (apparently replacing flipping houses as real estate has stagnated) speaks to just how rickety the social mobility ladder has become: most of the rungs have rotted away.

The ultimate orthodoxy is that growth is infinite with the implication being the tide of expansion is lifting all boats, and so the system is working for everyone.

Now that the tide is ebbing, that mask has been ripped away. A great many people feel that they did all the right (i.e. mainstream) things and are working hard but their financial and social status remains precariously dependent not just on the expansion continuing forver but on their ability to borrow more money increasing as well.

An unstated corollary of infinite growth is that the wealth effect will also expand forever, too, so all you need to do to get rich is buy a house or two and buy stocks and then sit back and watch them increase in value.

A V-shaped recovery doesn’t change the financial-social stratification. Rather, the stratification will increase and harden, leaving fewer options to move up the ladder and greasing the slide down to lower levels of security, safety, wealth and income.

Even the wealthy class (top 5%) will further stratify as those with high employment and capital mobility can move their households and capital to safer, lower-tax regions.

The immobile top 5% will be corralled by cash-starved municipalities as the tax donkeys who must pony up higher taxes for the privilege of living in cities and suburbs which will become less secure and less entertaining even if the much-anticipated V-shaped recovery occurs.

The top 5% tax donkeys will be expected to pay much higher taxes even as the wealth effect that generated the 30-year boom since 1990 flips into the reverse wealth effect as extremes of over-valuation revert to the mean.

The bottom 95% will also stratify into the mobile few and the immobile many. By mobile I don’t just mean the freedom to move to another locale (because you work remotely) or move your capital around–I mean the mobility to move into a new field of endeavor, or move up into a a higher level of financial and physical security.

Those with fewer options to change their circumstances are increasingly frustrated, as the status quo grinds on, further enriching the few while the social-mobility ladders for everyone left behind continue crumbling.

This frustration manifests in a number of ways, from public protests and riots to under-the-radar opting out, an option I discussed in Opting Out, American Style (May 22, 2020).

As my colleague Jesse explains in our latest Axis of Easy Salon podcast, Nevermind the influencers, here come the revolts, broad-based revolts include a plurality of participants, some organized, some not, some public, some private.

As I’ve often noted here, the gap between high expectations and reality is a reliable source of social and political disorder. If everyone with low social and financial mobility is resigned to their poor prospects even as the wealthy class revels in its “natural” superiority, society can remain stable despite the widening gap between the few and the many.

But if the multitudes with poor prospects harbor high expectations, being stuck in a highly stratified economy and society will eventually ignite a revolt and systemic disorder as the elites defend their position and demand the multitudes accept their low mobility and status as “the natural order” that should not be disrupted.

As the orthodoxies of social mobility fail and stratifications harden, the high expectations built into America’s social-mobility orthodoxies erupt as revolt and disorder. As noted above, the bill for extreme wealth/income inequality has now come due, and the price for ignoring the social stratifications created by inequality will be as high as the inequality itself.

 

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My recent books:

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)

(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

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Via AlMasdarNews.com,

The U.S. Africa Command (AFRICOM) released a new video this week that shows an alleged Russian MiG-29 jet on its way to Libya.

According to AFRICOM, they obtained video footage of a Russian aircraft moving towards Libya in May, but they did not specify where it came from.

“It is important to expose activity that is preventing Africans from achieving a stable and more secure future,” said Colonel Christopher Karns.

“Adding Russian fighter aircraft into a very complex and challenging situation in Libya, adds chaos, heightens tension, and deserves spotlighted attention. Russian officials continue to deny their involvement despite very tangible evidence,” he continued.

In the video they released, it is apparent that the aircraft is a MiG-29 jet, which is what the U.S. accused Russia of providing the Libyan National Army (LNA) recently.

NEWS: New AFRICOM website launches, more evidence of #Russian interference
—–
Site supports multiple languages to address threats to African/U.S. interests, to include video captured by our pilots of Russian aircraft en route to #Libya in May.
Release: https://t.co/6IU6bwXB3Q pic.twitter.com/wUOwWBPDj3

— US AFRICOM (@USAfricaCommand) June 5, 2020

The MiG-29 jet was reportedly transferred from Syria to Libya last month, as the Russian Ministry of Defense sent a more advanced version of the aircraft to the Arab Republic after the delivery.

* * * 

Two weeks ago AFRICOM commander Army Gen. Stephen Townsend said: “Russia is clearly trying to tip the scales in its favor in Libya. Just like I saw them doing in Syria, they are expanding their military footprint in Africa using government-supported mercenary groups like Wagner.”

“Neither the LNA nor private military companies can arm, operate and sustain these fighters without state support — support they are getting from Russia.”

“Russia has employed state-sponsored Wagner in Libya to conceal its direct role and to afford Moscow plausible deniability of its malign actions,” the AFRICOM statement said.

MiG-29 on the ground at al-Jufrah, 19 May 20. Grid: 29.1916, 16.0112 https://t.co/62By0rSZMC pic.twitter.com/k1Fw7HePOA

— Brian Castner (@Brian_Castner) May 21, 2020

However, the Kremlin has long denied its military intervention in Libya, instead accusing Washington of destabilizing the region, especially given its direct role in toppling Gaddafi in the 2011 war. 

Authored by Ryan McMaken via The Mises Institute,

Six weeks ago, when thousands around the nation took to state capitols to protest the human rights abuses inflicted by coerced “stay-at-home orders,” lockdown supporters reacted with sanctimonious outrage.

Declaring the protestors to be “covidiots” who failed to appreciate the virtue and necessity of police-enforced lockdowns, news outlets and lockdown advocates on social media declared that the protests would cause outbreaks of disease, and nurses declared that the protests were “a slap in the face” to those trying to treat the disease. One political cartoon featured an image of an emergency room nurse saying “see you soon” to antilockdown protestors.

Now, with far larger numbers of protestors amassing in larger groups, we hear none of the lofty moralism coming from the media or lockdown enthusiasts on social media. Yes, there are still some token attempts to express worry over how the riots and protests of recent days might spread the disease. But the tone is quite different. Concerns over COVID-19 are now phrased along the blueprint of “if you protest—and we would never dream of telling you not to protest—please take these measures to minimize risk.” It’s all very polite and deferential to the protestors. Politicians like Kamala Harris have even joined the protestors in the streets, doing what she demanded others avoid just a few weeks earlier. Where are the nurses denouncing these protests as a “slap in the face”? Where are the social media COVID warriors telling us that standing next to a person without a mask is tantamount to homicide? They’re very hard to find, nowadays.

Of course, those who support the current protests, but oppose last month’s protests, claim that there is no equivalence. Many would likely say, “We’re now protesting against people being killed in the streets!” followed by “Those other protestors just wanted haircuts.

The reality, of course, was far different.

Most of those who oppose the COVID lockdowns are well aware that the lockdowns kill. They lead to severe child abuse, to more suicide, and to more drug overdoses. They lead to denial of medical care, because lockdown edicts have ridiculously labeled many necessary medical procedures as “elective.” Lockdowns have rendered tens of millions of Americans unemployed while robbing people of their social support from family and community groups. Lockdowns increased police abuse and harassment of innocent people who were guilty of no crime but leaving their homes or trying to earn a living.

Lockdown advocates, however, declared all of this to be “worth it” and demanded that their ideological opponents just shut up and “#stayhome.”

Lockdowns for Thee, but Not for Me

But now the current spate of protests and riots have made it clear that lockdowns and social distancing are all very optional so long as the protestors are favored by a left-wing narrative.

While the prolockdown-antilockdown conflict can’t be defined by any neat left-right divide, it is nonetheless largely true that the most enthusiastic advocates of COVID lockdowns are found on the left side of the spectrum.

And that’s why things have now gotten so interesting. It was easy for the prolockdown left to oppose protests when those protests were seen as a right-wing phenomenon. But now that the protests are favored by the Left, then it’s all perfectly fine beyond a handful of politely expressed “concerns” that protests might spread disease.

The Left’s about-face on the sacredness of social distancing will have significant effects on the future enforcement of stay-at-home orders and social distancing laws.

After all, on what grounds will governors, mayors, and law enforcement officers justify continued attacks on religious groups who seek to assemble in the usual fashion? If one group of people is allowed to gather by the hundreds to express one set of beliefs, why are other groups not allowed the same basic human right?

Politicians will no doubt soon invent new rationales for this inconsistency. Indeed, we already have one case. New York mayor Bill DeBlasio has come right out and said that people who protest racism are allowed to assemble. DeBlasio likes them. But how about religious gatherings? DeBlasio doesn’t like those, so they’re still prohibited.

The Moral Authority of the Lockdown Advocates Is Gone

The current riots and protests have accelerated this sort of disregard for coerced social distancing, although things were already headed in this direction anyway.

The lockdowns initially were imposed with so little resistance, because the legacy media and government bureaucrats managed to convince a sizable portion of the public that virtually everyone was in grave danger of death or serious disability from COVID-19. Many people believe these experts.

By May, however, it had become clear that the doomsday scenarios predicted by the official technocrats had greatly overstated the reality. Certainly there were many vulnerable groups, and many died of complications from disease, just as many died during the pandemics of 1958 and 1969. But there’s a difference between a spike in total deaths and a civilization-stopping plague. The experts promised the latter. We got the former. And we would have gotten the former even without lockdowns. Those jurisdictions that imposed no general lockdowns—such as Sweden—never experienced the sort of apocalyptic death predicted by lockdown advocates. Yes, they had excess deaths, but Sweden’s hospitals never even went into “emergency mode.” In the US, those states that imposed limited lockdowns for only a short period never experienced overloaded hospitals and overflowing morgues as was claimed would happen.

Could this yet happen in the future from some other disease or from a different wave of this one? It’s certainly possible, but there’s no reason to assume the CDC and its defenders will have any idea what’s going on ahead of time. The lockdown advocates have already been so wrong about masks, about fatality rates, about the models, and about so much more that we have no way of knowing if we should believe them the next time they show up and swear that “this time, the situation is truly dire!”

But we’re not out of the lockdown woods yet. This fall, politicians and other lockdown advocates are likely to start up again with demands that new laws be passed requiring people to stay home, shut down their businesses, and otherwise put life on hold in the name of stopping COVID-19.

But it’s unlikely that the public will fall for the same routine twice in a row. At least not to the same extent. The reaction of many will likely be “we’ve heard this song and dance before. Besides, social distancing didn’t matter to these experts back during the riots. Why should we believe them now?”

It’s a good question.

“BTFD,” read Citi’s latest note to its wealthy clients. Alright, it wasn’t that egregious, but it wasn’t far off.

Citi has been telling its clients they are holding “way too much cash” and the bank’s chief investment officer David Bailin has said he has “big plans to help put an end to that”, according to Bloomberg. 

The bank released its mid-year outlook, “From Fear to Prosperity: Investing in a New Economic Cycle,” on Thursday which recommends major changes to client portfolios.

Perhaps they weighed the serious consequences of record unemployment? Urged caution based on the many unknowns that remain with the virus? Noted rising tensions with China? Nope. They told clients to buy the f*cking dip, which is especially hilarious since the S&P is nearly flat for the year and the NASDAQ is at all time highs. There is no dip.

But that didn’t stop Citi from recommending clients buy. Ballin said: “There are plenty of things to buy. The more study that we did for the report, the more excited we got. The data is compelling.”

This, of course, famously contradicts Warren Buffett, who came out with the market about 10% lower from current levels and said that there was nothing to buy and that the Fed acted too quickly. 

The report predicts a “brief, extremely deep, rolling global recession” and then a “sharp snapback in global economic activity and a partial, uneven recovery.” They cite record low interest rates as a catalyst for stocks and say fixed income is “no longer a natural hedge” for equities. Citi estimates a 10 year annual return for global small and mid-cap equities of 11.6%. 

Per Bloomberg, here are four other key points in Citi’s note:

• Some of the best returns for private equity, real estate and hedge fund managers have come after crisis periods. “In 2001 and 2008, for example, average private equity vintage returns increased by 800 and 710 basis points, respectively, over the prior year’s level,” according to the report. The private bank expects that “the best distressed opportunities will become available later this year and during 2021.”
• Sustainable dividends remain attractive, particularly tech companies that “have been less impacted by the economic effects of social distancing.” Some health-care stocks could also benefit as cash flow that once went to fund share buybacks and M&A activity could be reduced to support dividend payouts.
• Some private bank clients hold as much as 35% of their core portfolio in cash. Fixed-income assets that top the negligible return of cash include U.S. investment grade corporate bonds maturing in three to five years. Those bonds yield almost 2%, or 50 basis points above similar debt maturing in one to three years.
• Areas where Citigroup continues to see “unstoppable trends” are global health care, because of greater longevity; digital disruption (including digital media content, e-commerce and cybersecurity providers) and the rise of Asia.

This outlook from Citi shows we have officially reached peak lopsidedness, where saving cash is now treated and looked upon as though it is accruing debt. You can’t save it, you’re not allow to just hold it and the more of it you accrue, the worse off you are. 

And if you think banks are in a rush to get cash out the door now, wait until they find out that fiat isn’t really even money…