Tag: news

Authored by Bruce Levine via Counterpunch.org,

Getting rid of Trump means taking seriously “shit-life syndrome” – and its resulting misery, which includes suicide, drug overdose death, and trauma for surviving communities.

My state of Ohio is home to many shit-life syndrome sufferers. In the 2016 presidential election, Hillary Clinton lost Ohio’s 18 electoral votes to Trump. She got clobbered by over 400,000 votes (more than 8%). She lost 80 of Ohio’s 88 counties. Trump won rural poorer counties, several by whopping margins. Trump got the shit-life syndrome vote.

Will Hutton in his 2018 Guardian piece, “The Bad News is We’re Dying Early in Britain – and It’s All Down to ‘Shit-Life Syndrome’” describes shit-life syndrome in both Britain and the United States: “Poor working-age Americans of all races are locked in a cycle of poverty and neglect, amid wider affluence. They are ill educated and ill trained. The jobs available are drudge work paying the minimum wage, with minimal or no job security.”

The Brookings Institution, in November 2019, reported:

“53 million Americans between the ages of 18 to 64—accounting for 44% of all workers—qualify as ‘low-wage.’ Their median hourly wages are $10.22, and median annual earnings are about $18,000.”

For most of these low-wage workers, Hutton notes:

“Finding meaning in life is close to impossible; the struggle to survive commands all intellectual and emotional resources. Yet turn on the TV or visit a middle-class shopping mall and a very different and unattainable world presents itself. Knowing that you are valueless, you resort to drugs, antidepressants and booze. You eat junk food and watch your ill-treated body balloon. It is not just poverty, but growing relative poverty in an era of rising inequality, with all its psychological side-effects, that is the killer.”

Shit-life syndrome is not another fictitious illness conjured up by the psychiatric-pharmaceutical industrial complex to sell psychotropic drugs. It is a reality created by corporatist rulers and their lackey politicians – pretending to care about their minimum-wage-slave constituents, who are trying to survive on 99¢ boxed macaroni and cheese prepared in carcinogenic water, courtesy of DuPont or some other such low-life leviathan.

The Cincinnati Enquirer, in November 2019, ran the story: “Suicide Rate Up 45% in Ohio in Last 11 Years, With a Sharper Spike among the Young.” In Ohio between 2007 and 2018, the rate of suicide among people 10 to 24 has risen by 56%. The Ohio Department of Health reported that suicide is the leading cause of death among Ohioans ages 10‐14 and the second leading cause of death among Ohioans ages 15‐34, with the suicide rate higher in poorer, rural counties.

Overall in the United States, “Suicides have increased most sharply in rural communities, where loss of farming and manufacturing jobs has led to economic declines over the past quarter century,” reports the American Psychological Association. The U.S. suicide rate has risen 33% from 1999 through 2017 (from 10.5 to 14 suicides per 100,000 people).

In addition to an increasing rate of suicide, drug overdose deaths rose in the United States from 16,849 in 1999 to 70,237 in 2017, more sharply increasing in recent years. The Centers for Disease Control and Prevention (CDC) recently reported that opioids—mainly synthetic opioids—were involved in 47,600 overdose deaths in 2017 (67.8% of all drug overdose deaths).

Among all states in 2017, Ohio had the second highest rate of drug overdose death (46.3 per 100,000). West Virginia had the highest rate (57.8 per 100,000).

“In 2016, Donald Trump captured 68 percent of the vote in West Virginia, a state hit hard by opioid overdoses,” begins the 2018 NPR story: “Analysis Finds Geographic Overlap In Opioid Use And Trump Support In 2016.”

The NPR story was about a study published in JAMA Network Open titled “Association of Chronic Opioid Use With Presidential Voting Patterns in US Counties in 2016,” lead authored by physician James Goodwin. In counties with high rates of opioid use, Trump received 60% of the vote; but Trump received only 39% of the vote in counties with low opioid use. Opioid use is prevalent in poor rural counties, as Goodwin reports in his study: “Approximately two-thirds of the association between opioid rates and presidential voting was explained by socioeconomic variables.”

Goodwin told NPR:

“It very well may be that if you’re in a county that is dissolving because of opioids, you’re looking around and you’re seeing ruin. That can lead to a sense of despair . . . . You want something different. You want radical change.”

Shit-life syndrome sufferers are looking for immediate change, and are receptive to unconventional politicians.

In 2016, Trump understood that being unconventional, including unconventional obnoxiousness, can help ratings. So he began his campaign with unconventional serial humiliations of his fellow Republican candidates to get the nomination; and since then, his unconventionality has been limited only by his lack of creativity—relying mostly on the Roy Cohn modeled “Punch them harder than they punch you” for anyone who disagrees with him.

I talked to Trump voters in 2016, and many of them felt that Trump was not a nice person, even a jerk, but their fantasy was that he was one of those rich guys with a big ego who needed to be a hero. Progressives who merely mock this way of thinking rather than create a strategy to deal with it are going to get four more years of Trump.

The Dems’ problem in getting the shit-life syndrome vote in 2020 is that none of their potential nominees for president are unconventional. In 2016, Bernie Sanders achieved some degree of unconventionality. His young Sandernistas loved the idea of a curmudgeon grandfather/eccentric uncle who boldly proclaimed in Brooklynese that he was a “socialist,” and his fans marveled that he was no loser, having in fact charmed Vermonters into electing him to the U.S. Senate. Moreover, during the 2016 primaries, there were folks here in Ohio who ultimately voted for Trump but who told me that they liked Bernie—both Sanders and Trump appeared unconventional to them.

While Bernie still has fans in 2020, he has done major damage to his “unconventionality brand.” By backing Hillary Clinton in 2016, he resembled every other cowardly politician. I felt sorry for his Sandernistas, heartbroken after their hero Bernie—who for most of his political life had self-identified as an “independent” and a “socialist”—became a compliant team player for the corporatist Blue Team that he had spent a career claiming independence from. If Bernie was terrified in 2016 of risking Ralph Nader’s fate of ostracism for defying the corporatist Blue Team, would he really risk assassination for defying the rich bastards who own the United States?

So in 2020, this leaves realistic Dems with one strategy. While the Dems cannot provide a candidate who can viscerally connect with shit-life syndrome sufferers, the Dems can show these victims that they have been used and betrayed by Trump.

Here in Ohio in counties dominated by shit-life syndrome, the Dems would be wise not to focus on their candidate but instead pour money into negative advertising, shaming Trump for making promises that he knew he wouldn’t deliver on: Hillary has not been prosecuted; Mexico has paid for no wall; great manufacturing jobs are not going to Ohioans; and most importantly, in their communities, there are now even more suicides, drug overdose deaths, and grieving families.

You would think a Hollywood Dem could viscerally communicate in 30 seconds: “You fantasized that this braggart would be your hero, but you discovered he’s just another rich asshole politician out for himself.” This strategy will not necessarily get Dems the shit-life syndrome vote, but will increase the likelihood that these folks stay home on Election Day and not vote for Trump.

The question is just how clueless are the Dems? Will they convince themselves that shit-life syndrome sufferers give a shit about Trump’s impeachment? Will they convince themselves that Biden, Buttigieg, Bloomberg or Warren are so wonderful that shit-life syndrome sufferers will take them and their campaign promises seriously? Then Trump probably wins again, thanks to both shit-life syndrome and shit-Dems syndrome.

Multiple similar accounts have now come out over the inside the Situation Room decision-making process concerning the risky move to take out the IRGC’s Gen. Qasem Soleimani, as well as how the drone attack operation played out at the airport. 

By all accounts, as Soleimani traveled to and through Baghdad airport US intelligence seized upon the “target of opportunity” and moved fast to brief President Trump, who was at Mar-a-Lago. Defense sources explained to Bloomberg that Soleimani wasn’t being monitored before it was known he was coming through Baghdad’s international airport. 

Defense and intelligence officials believed the Revolutionary Guard Quds force leader was plotting attacks on Americans inside Iraq and the region — this based on an “intelligence assessment” — the contents of which haven’t been made public.

From the moment Trump was briefed on the matter it was only known to a tightly restricted group of aides within the cabinet, as even White House communications officials “were excluded from the planning,” notes Bloomberg. And further Bloomberg’s sources reveal that:

The White House opted against notifying Congress ahead of the attack out of concern for security, a person familiar with the matter said. The Department of Homeland Security, which is partially responsible for deterring potential Iranian retaliation on U.S. soil, was only notified of the Soleimani strike after the fact. 

However, select “friendly” Congressional leaders were let in on the discussions, most notably South Carolina Republican and outspoken Iran hawk Sen. Lindsey Graham. 

Bloomberg continues:

Inside ornate Mar-a-Lago suites commandeered as makeshift situation rooms, Trump hosted top advisers and certain friendly members of Congress on Tuesday to discuss a strike taking out the commander of Iran’s security and intelligence services.

In between rounds of golf and dinners with his family over the next 48 hours, he was updated on specific intelligence showing multiple threats to Americans from Iran in the region — and on the expected movement of Qasem Soleimani to Baghdad, where he was taken out by an American drone on Thursday.

Top advisers and military brass also sought to offer Trump a view of what the kill might mean for the region, for the United States and for his presidency.

Secretary of State Mike Pompeo, Defense Secretary Mark Esper and Gen. Mark Milley, the chairman of the Joint Chiefs of Staff, had been urgently flown in from Washington to advise the president based on the new intelligence. 

The ensuing debate over whether to act centered on the endless unforeseen consequences and “escalation risk” that assassinating Iran’s most influential military leader and close friend to the Ayatollah and Iranian president might entail. 

“The morning after the strike, Trump abandoned plans to play a round of golf and instead spent time surveying his orbit of advisers on the kill order. He was defiant, according to some of the people he spoke with, and defensive,” Bloomberg reports. “But he also appeared to be freshly aware of the gravity of his role and the power he wields, unsure of how Iran would respond.”

During the whole affair, others who had attended holiday and New Year’s events with the president described him as “calm, cool and collected.” According to Politico, conservative radio host Howie Carr, who’d been among the first to speak to Trump at Mar-a-Lago moments after the news first broke, said “I had no idea there was anything out of the ordinary going on until I got home.”

Concerning initial questions of how Soleimani could have been traveling so visibly and “out in the open” through Baghdad’s large international hub, one Republican foreign policy analyst had this to say: “We’ve known every minute of every day where Soleimani is for years—there’s no moment of any given day where five or six intelligence agencies can’t tell you where he is,” according to Politico. “It’s been one of his talking points: The Americans can find me any time, they just don’t dare hit me.”

This despite Israeli officials and media for the past two years touting that Tel Aviv has given a ‘green light’ for his assassination should the opportunity present itself. 

As Politico aptly summarizes: “That calculation proved misguided in the wee hours of January 3 in Iraq, where Soleimani landed amid spiraling tensions between U.S.- and Iranian-allied factions.”

A senior defense official concluded, “He arrived at the airport and we had a target of opportunity, and based on the president’s direction, we took it.”

Authored by Simon Black via SovereignMan.com,

Are you ready for this week’s absurdity? Here’s our weekend roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity.

Professor Blames Private Property for California Wildfires

A public takeover of utility companies is not enough, according to Kian Goh, Professor of Urban Development at UCLA.

In order to combat California wildfires, we need to abandon “aspirations of home ownership, and belief in the importance of private property.”

Fueled by cheap energy– and of course the ever-present racism of the white middle-class– people expanded beyond cities, building little tinder-box neighborhoods into the forests.

Goh says that, “Expansionist, individualist, and exclusionary patterns of housing became synonymous with freedom and self-sufficiency.”

Ah yes, it’s not so hard to link the desire for freedom and self-sufficiency with every known evil on earth. You’re even responsible for burning down California.

But Urban Planners like Kian Goh would be happy to step in, and tell us how our lives should be designed.

For the greater good, we must collectivize and live on communal (i.e. government controlled) land.

Just a reminder– parents across the country pay top dollar each year so people like Professor Goh can teach their children.

Click here to read the original article.

*  *  *

Update: New York Man finally has his hemp back

In Early November, Oren Levy had his shipment of legal hemp confiscated by the New York Police. They even bragged about the “drug bust” on social media.

Too bad it was perfectly legal. Levy even had the documentation to prove it, included in every box of the shipment.

But police still lured Levy’s brother to the department under the guise that he could pick up the shipment, and arrested him.

After almost two months, and nearly destroying Levy’s perfectly legal CBD oil business, charges were dropped. The shipment was returned– though in a dry and deteriorated condition.

Levy is now suing the NYPD, the City of New York, and possibly FedEx for alerting the authorities in the first place.

Levy broke the good news in a Tweet and Instagram post.

*  *  *

Congress has a New Year’s Resolution: Destroy Facebook’s Libra Token

Two bills that the US Congress will consider this year seem aimed specifically at preventing Facebook from rolling out it’s digital token Libra.

One is called the “Keep Big Tech Out Of Finance Act.” It would ban “large platform utilities” from being, or being affiliated with, a financial institution.

It would also not allow large platforms to create or “operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function.”

Violators would be fined $1 million per day.

The other bill is called the “Managed Stable Coins are Securities Act.”

Libra is intended to be a “stable coin” which is a digital currency tied to the value of existing currencies.

This bill would make it law that Libra would be considered a security, like a stock or bond, as opposed to a currency, like the dollar or Swiss franc.

Sounds like the US government doesn’t want any competition with their Federal Reserve Notes.

Click here and here to see the bills.

*  *  *

Gig workers’ big win in California? Being fired.

In September 2019, the media company Vox ran the headline, Gig workers’ win in California is a victory for workers everywhere.

They were referring to a new law in California which classified gig workers and contractors as employees.

The story was that by classifying workers as contractors instead of employees, companies like Uber and Lyft got away with not providing employee benefits required under California law.

Then, just before Christmas, Vox showed us what the law really meant when it fired 200 California-based freelance writers.

Vox helped sell the public the lie that laws like these force companies to absorb freelancers as employees. But in reality, it means they get fired.

Click here to read the full story.

Top Iranian commander Qassem Soleimani was plotting to attack American military, diplomatic and financial targets in Syria and Lebanon, and comprised the imminent threat used to justify Soleimani’s killing, according to NBC News, citing multiple US officials.

“When we start seeing extensive and very solid intelligence that [Soleimani] is plotting imminent attacks against the United States, the president as commander in chief has a duty to take decisive action,” said a senior State Department official, adding “If we had not taken this action, and hundreds of Americans were dead, you would be asking me why didn’t you take out Soleimani when you have the chance.”

Gen. Mark Milley, chairman of the Joint Chiefs, said he is confident Soleimani was actively planning attacks against the U.S. in the Middle East and those attacks were imminent.

“We had clear, compelling, unambiguous intelligence to indicate Qassem Soleimani was planning, coordinating, and directing a significant campaign of violence against the United States in the coming days,” said Gen. Milley. –NBC News

Soleimani’s targets are said to include US military outposts in eastern Syria, and diplomatic and financial targets in Lebanon. According to Gen. Milley, the US is confident that the “size, scale and scope” of the planned attacks constituted an imminent threat.

“By the way, it still might happen,” he added.

Should Lebanon come under attack, the 173rd Airborne Brigade Combat team is on alert and prepared to deploy, should they come under attack. The deployment would consist of somewhere between 130 and 750 total troops.

A senior U.S. official said Soleimani had traveled to Syria, Lebanon and then to Iraq Thursday, and U.S. intelligence officials believe he was approving final plans for attacks in each location.

Milley said Soleimani had been directing attacks against the U.S. inside Iraq, including a Dec. 27 attack near Kirtkuk that killed an American contractor and wounded four U.S. service members.

“He approved it,” said Milley. “I know that. One hundred percent.” –NBC News

According to a senior Congressional aide briefed on the intelligence, however, lawmakers saw nothing linking Soleimani to an imminent attack – rather, what they saw was “exactly the sort of planning and coordination he has been doing for years,” according to NBC. The aide added that while nobody doubts Soleimani was a threat to the United States, the case for acting on an imminent threat was not made.

Sen. Mark Warner (D-VA), ranking member of the Senate Intelligence Committe, said “I have real questions and want to get a full briefing from the intelligence community about the decision on this time and place.”

Authored by Economic Prism’s MN Gordon, annotated by Acting-Man’s Pater Tenebrarum,

Fiat Currency Rankings – From Bad to Worse

Today, as we step into the New Year, we reach down to turn over a new leaf.  We want to make a fresh start.  We want to leave 2019’s bugaboos behind. But, alas, lying beneath the fallen leaf, like rotting food waste, is last year’s fake money.  We can’t escape it.  But we refuse to believe in its permanence.

This is what “monetary stability in the Fed-administered fiat money regime looks like: in the year the Fed was established it took $3.80 to buy what $100 buy today – provided the government’s CPI data are actually a valid gauge of the dollar’s purchasing power. [PT]

Victorian economist William Stanley Jevons, in his 1875 work, Money and the Mechanism of Exchange, stated that money has four functions.  It is a medium of exchange, a common measure of value, a standard of value, and a store of value.

No doubt, today’s fake money, including the U.S. dollar, falls well short of Jevons’ four functions of money.  Certainly, it comes up short in its function as a store of value.

Hence, today’s money is not real money.  Rather, it is fake money. And this fake money has heinous implications on how people earn, save, invest, and pay their way in the world we live in. Practically all aspects of everything have been distorted and disfigured by it.

Take the dollar, for instance.  Over the last 100 years, it has lost over 96 percent of its value.  Yet, even with this poor performance, the dollar has one of the better track records going.  In fact, many currencies that were around just a short century ago have vanished from the face of the earth. They have been debased to bird cage liner.

This graphic is slightly dated by now (we downloaded it almost 20 years ago), i.e., a few more fiat currencies have joined the expired contingent by now. It also excludes a number of historical paper currency experiments in China, which failed without exception. Still, it can be estimated that no more than 20% of the paper currencies created so far still exist – and the strongest one of them has lost “only” 96% of its value! [PT]

Who Will Buy All this Debt?

The failings of today’s dollar are complex and multifaceted.  But they generally stem from the unsatisfactory fact that the dollar is debt based fiat that is issued at will by the Federal Reserve. How can money function as a store of value when a committee of unelected bureaucrats can conjure it from thin air?

After President Nixon “temporarily” suspended the Bretton Woods Agreement in 1971, the future was written. The money supply has expanded without technical limitations.  This includes expanding the Fed’s balance sheet to buy Treasury debt. In a practical sense, Fed purchases of U.S. Treasury notes are now needed to fund government spending above and beyond tax receipts (i.e., fiscal deficits).

As an aside, the Fed’s charter prohibits it from directly purchasing bills issued by the U.S. Treasury.  So to bypass this restriction, dealers – i.e. preferred big banks – purchase Treasury bills upon issuance and then several days later these same Dealers sell them to the Fed.  What’s more, for providing this laundering service the Dealers pocket an unspecified markup. These indirect money printing operations have been going on for well over a decade, and last occurred about a week before Christmas – to the tune of nearly $23.7 billion.

Unbridled monetary inflation: TMS-2 (US broad true money supply), Fed assets and bank reserves. [PT]

According to the Congressional Budget Office, the federal budget deficit for the first two months of fiscal year 2020 is $342 billion. At this rate, Washington is going to add over $2 trillion to the national debt in FY 2020. Who will buy all this debt?

Not China. Not Japan. Not Saudi Arabia. Not American citizens. Instead, the Fed will buy it via balance sheet expansion. Of course, there are natural consequences for these underhanded practices – and you will pay for them, you already are…

Thank God we have this bearded Nobel Prize winner to remind us we are completely wrong about fiscal deficits…[PT]

Subjective Evaluation

About a decade before Jevons outlined the four functions of money, he elaborated the idea of marginal utility.  That the utility – the satisfaction or benefit – derived by consuming a good or service changes from an increase in the consumption of that good or service.  This change in utility influences how goods and services are priced within the economy.

Stanley Jevons, Carl Menger and Leon Walras worked out the law of marginal utility independently from each other at roughly the same time. It revolutionized price and value theory, but evidently many people fail to grasp it to this day. For instance, the Wikipedia article on marginal utility is chock-full of arrant nonsense and has proved utterly resilient to correction since we first laid eyes on it ten years ago (here is an example illustrating that the author of the article simply does not know what he or she is talking about. Listing alleged “exceptions” to the law of diminishing marginal utility they write: “[…]marginal utility of a good or service might be increasing as well. For example: bed sheets, which up to some number may only provide warmth, but after that point may be useful to allow one to effect an escape by being tied together into a rope.”  This is incorrect, for the simple reason that “bed sheets tied together into a rope” are a different good than bed sheets. As soon as they are tied together into a rope, they are no longer bed sheets, but a rope. The concept of marginal utility then applies to similar ropes. The rope’s previous incarnation as bed sheets is irrelevant. One would think this is obvious, but apparently it isn’t on Wikipedia, which one should definitely not rely on as a source for anything). [PT]

Yet Jevons went down the rabbit hole of simultaneous determination, which included modeling complex relationships as systems of simultaneous equations in which no variable “causes” another.  The flaw in Jevons’ approach is that it relied on creating artificial, modeled representations of reality.  Unfortunately, much of popular economics followed him down the rabbit hole where they still reside to this day… enamored with technical nonsense.

However, at the same time as Jevons, Austrian economist Carl Menger, from the University of Vienna, independently developed the concept of marginal utility.  Menger, in contrast to Jevons, applied these principles through deduction and logic to explain the real world actions of real people. For Menger, the role of subjective evaluation was critical to the principle of marginal utility.

Menger, in Principles of Economics, published in 1871, explained prices as the outcome of the purposeful, voluntary  interactions  of  buyers  and  sellers,  each  guided  by  their  own  subjective evaluations of the usefulness of various goods and services. Menger elaborated that the exact quantities of goods exchanged, and their prices, are determined by the values individuals attach to marginal units of these goods.

Menger also recognized that the first unit of consumption of a good or service yields more utility than the second and subsequent units, with a continuing reduction for greater amounts.  Hence, the fall in marginal utility as consumption increases is known as diminishing marginal utility, and is commonly expressed as the law of diminishing marginal utility.

Money, like any other good, is subject to the law of diminishing marginal utility.  Specifically, an increase in the quantity of money by an additional unit leads to a reduction in purchasing power per monetary unit.  As people exchange the increased money against other goods, prices rise.  Or, more aptly, the purchasing power of money falls.

How the Fed Robs You of Your Life

The inflation of the money supply, in effect, distorts the prices of goods and services.  Subsequent units of a good or service may have a reduced utility, though, over time, their nominal cost increases. This also undermines individual savings… and robs savers – that is you – of their lives…

Highway robbers not only lurk at Epsom… these days they lurk in the Eccles building too. [PT]

When the Fed introduces new money to the economy to finance deficits it debases the dollar. Similarly, when the Fed provokes the over-issuance of credit by artificially suppressing interest rates, it further inflates the money supply and debases the dollar.  This has the effect of reducing the dollar’s purchasing power. What does all this have to do with you?

Think of all the days you would have rather stayed home with your family than schlepping and slogging the day away for money.  Think of all the time you spent on the road getting dumped on by clients while your kids were growing up. Think of all the sunny days you missed because you were at the office all day estimating and bidding on ridiculous jobs.

For what?  So that after paying taxes on it all, what is left over is inflated away from your bank account? Remember, money, in addition to being property, also represents time and the sacrifices made to earn it. 

When the Fed inflates your money away it not only robs you of your money.  It robs you of your life.

As 1000s march in the streets of Baghdad to moutn the death of Soleimani, Al-Arabiya (and other local news sources) report rockets have landed in the heavily fortified Green Zone in Baghdad, where the US Embassy (among other things) is located.

Witnesses told Reuters that an explosion was heard in the Iraqi capital, Baghdad

شهود لرويترز: سماع دوي انفجار في العاصمة العراقية بغداد

— سكاي نيوز عربية-عاجل (@SkyNewsArabia_B) January 4, 2020

Sky News Arabia reports that the missile landed in the Green Zone in Baghdad and closed the entrance to the road leading to the American embassy.

مراسلنا: سقوط صاروخ على المنطقة الخضراء في بغداد وإغلاق مدخل الطريق المؤدي إلى السفارة الأميركية

— سكاي نيوز عربية-عاجل (@SkyNewsArabia_B) January 4, 2020

Dozens of US Apache helicopters are now seen overhead…

#BREAKING
Numerous U.S. helicopters in the air over #Baghdad, #Iraq.
After Rocket hits Baghdad’s Green Zone. Entrance to the U.S. Embassy remains closed. pic.twitter.com/uEjA5irrve

— News flash (@BRNewsFlash) January 4, 2020

Developing…

Several days after Iranian militia attacked the US embassy in Baghdad and about 12 hours after US airstrikes killed a top Iranian general near Baghdad International Airport, the US Air Force released a video of the Northrop Grumman B-2 Spirit bomber in action.

The video, according to Defense Blog, displays the aircraft’s mission at Whiteman Air Force Base.

Video by Senior Airman Thomas Barley pic.twitter.com/PmDDIAtl3w

— Dylan Malyasov (@DylanMalyasov) January 3, 2020

About a year ago, we detailed how the 509th Bomb Wing, assigned to the Eighth Air Force of the Air Force Global Strike Command, operates a fleet of Northrop Grumman B-2 Spirit stealth bombers out of Whiteman AFB, released a video showing one of its planes dropping two 14 ton GBU-57 Massive Ordnance Penetrators (MOP) in a test flight.

The short video, uploaded to YouTube by The Aviationist blog, shows the stealth bomber with the tail number 82-1066. The video first starts with the plane in a hanger, being prepped for flight, then takes off from Whiteman AFB under cover of night. About a third into the clip, the bomber is over an unidentifiable mountain range receiving fuel from an aerial refueling tanker. Moments later, the plane releases two MOPS. Land-based cameras capture the incredible moment when the bombs slam into an unidentifiable missile test range producing a massive explosion.

The clip is short, so prepare yourself for an exhilarating 55 seconds of American firepower, weapon bays open at 00:37:

America could be nearing a period of wartime considering last week’s developments in the Middle East. The Air Force’s video of the stealth bomber should be seen as wartime propaganda. 

Authored by Lance Roberts via RealInvestmentAdvice.com,

“Don’t fight the Fed”

That is the current mantra of the market as we begin 2020, and it certainly seems to be the right call. Over the last few months, the Federal Reserve has continued its “QE-Not QE” operations, which has dramatically expanded its balance sheet. Many argue, rightly, the current monetary interventions by the Fed are technically “Not QE” because they are purchasing Treasury Bills rather than longer-term Treasury Notes.

However, “Mr. Market” doesn’t see it that way. As the old saying goes, “if it looks, walks, and quacks like a duck…it’s a duck.” 

Those liquidity flows most notably have been chasing the largest of large caps – namely Apple (AAPL) and Microsoft (MSFT). As Ed Dowd noted, there are many similarities between now and the last time the Fed was fighting a perceived liquidity shortage before the “turn of the century” over concerns of “Y2K.”

But here is what jumped out at me.

Going back to 2016, as the world faced a “Brexit” crisis, the Fed, ECB, and the BOE all joined forces to provide liquidity to the markets. Then, just before the 2016 election, as the world was concerned a “Trump Election” would crash the market, the Fed provided a huge boost of liquidity. All along the way, each dip in the market was met by liquidity support.

Currently, we are being told there is “nothing to worry about” with respect to the financial system. Maybe, but the amount of liquidity being injected dwarfs all previous injections by massive proportions.

You can see the issue more clearly looking at a rolling 4-week change to the Federal Reserve’s balance sheet.

So, despite commentary to the contrary, there are only two conclusions to draw from the data:

1. There is something functionally “broken” in the financial system which is requiring massive injections of liquidity to try and rectify, and;

2. The surge in liquidity, whether you want to call it a “duck,” or not, is finding its way into the equity markets.

January 2018 Redux

“The exuberance that surrounded the markets going into the end of last year, as fund managers ramped up allocations for end of the year reporting, spilled over into the start of the new with S&P hitting new record highs.

Of course, this is just a continuation of the advance that has been ongoing since the Trump election. The difference this time is the extreme push into 3-standard deviation territory above the moving average which is concerning.” – Real Investment Report Jan, 5th 2018

At the beginning of 2018, following the passage of “tax reform,” the market was pushing 3-standard deviations of the 50-dma. It eventually pushed 3-standard deviations above the 200-dma before it came crashing back to earth. The second time it pushed the same deviation was in October of 2018, which was again followed by a marked decline.

Currently, that push into a 3-standard deviation extreme is once again present. Does that mean a sharp correction is coming? Not necessarily. However, it does suggest gains are likely limited in the short-term.

As I stated in 2018:

“That extension, combined with extreme overbought conditions multiple levels, has historically not been met with the most optimistic of outcomes. But, as I will discuss next, “exuberance” of this type is not uncommon during a market ‘melt-up’ phase.”

Currently, “exuberance” has returned with a vengeance, as noted by my friend and colleague Doug Kass:

“2019 ended in an entirely dissimilar manner compared to the way that 2018 ended. (As an example the CNN Fear & Greed Index was under 10 a year ago, its at 90 this week).

Despite a continued manufacturing recession, ongoing weakness in many global economies, political discord (and a Presidential impeachment), little resolution of the U.S./China trade differences and a flat year for S&P profits – valuations exploded (from 14.5x to nearly 19x) as confidence in an extended domestic economic recovery was heightened.”

But it isn’t just sentiment which has gotten extraordinarily extended, but also investor positioning on many levels both individual and professional.

Lastly, our composite technical overbought/oversold gauge has also hit extremes.

In other words, “everyone is in the pool,” including the “life guards.”

While the levels of exuberance are quite astonishing, it certainly isn’t surprising. This is what has been witnessed during previous market “melt-ups” throughout history. Jeremy Grantham of GMO previously wrote an excellent piece on market “melt-ups” and potential outcomes. To wit:

“As a historian of the great equity bubbles, I also recognize that we are currently showing signs of entering the blow-off or melt-up phase of this very long bull market. 

The classic examples are not just characterized by higher-than-average prices. Price alone seems to me now to be by no means a sufficient sign of an impending bubble break. Among other factors, indicators of extremes of euphoria seem much more important than price.

Let’s look at what is missing in the way of psychological and technical signs of a late-stage bubble and what is beginning to fall into place. On the topic of classic bubbles, I have long shown Exhibits 1 and 2. They recognize the importance of a true psychological event of momentum increasing to a frenzy. That is to say, acceleration of price.”

Grantham is certainly very correct in his analysis. As shown in the chart below, the reversion of oversold, to extreme overbought (top panel in blue) has been extremely rapid. Historically speaking, such extreme overbought, overconfident, and extended markets tend not to stay that way for long.

From S&P 3300 to 3500, & Back Again

While we penned our initial target for the bull cycle at 3300 in July, given the extreme level of Federal Reserve monetary interventions, I certainly WOULD NOT rule out the possibility of a further melt up to 3500.

It is a possibility which must be considered. However, you must also balance that possibility with the probability of an eventual reversion. As noted by George Soros’ “Theory of Reflexivity:”

Typically bubbles have an asymmetric shape. The boom is long and slow to start. It accelerates gradually until it flattens out again during the twilight period. The bust is short and steep because it involves the forced liquidation of unsound positions.”

In the latter stages of the advance, money simply chases price. This is the point in the cycle where everything rises regardless of fundamental underpinnings or value.

2019 was such a year.

“According to Jeffrey Kleintop (Charles Schwab), “in 2019, all major asset classes produced above-average returns. That’s never happened before.” – WSJ
…
This needs no comment. pic.twitter.com/H0jtZQ7Bou

— Lance Roberts (@LanceRoberts) January 3, 2020

Eric Parnell recently noted the same:

“It’s a marshmallow world for capital markets as we enter 2020. Name the asset class, and it had a stellar year in 2019. U.S. stocks? Up over +30%. Stocks across the rest of the world? Higher by more than +20%. Investment grade corporate bonds? Up nearly +20%. High yield bonds? +14%. Long-Term US Treasuries? +15%. Gold and silver? +16% each. Even long struggling commodities posted high single-digit returns this year. If you were allocated to risk assets in 2019, you likely enjoyed a good year.”

However, as Eric notes, when everything is “as good as it can get,” that only leaves one other option.

“Past performance can present future challenges. Most significantly, such universally good returns are difficult to maintain. Typically, capital markets assign winners and losers even when the % stimulus is pumping full throttle as it is today. So whether such good times can continue in 2020 across all asset classes remains to be seen, but investors are well served to consider what categories may be best positioned to continue to climb and those that may be set to take a breather in the year ahead.”

In particular, stocks are facing increasingly challenging headwinds from sluggish economic growth, to weaker earnings growth. Currently, economists are predicting economic growth below 2% in 2020, as noted by FactSet:

“While the odds of a near-term recession appear to have diminished, growth is projected to slow in the coming quarters due to a weaker global outlook and reduced global trade flows. U.S. economic growth is expected to continue to slow into 2020, with analysts surveyed by FactSet projecting 2.3% annual growth in 2019 followed by 1.8% in 2020.”

Despite the S&P 500 being up 353% (total return since January 1st, 2009), economic growth has been the weakest in history.

This is why the differential between GAAP earnings and corporate profits is going to be a major challenge for investors going forward.

This was a point Eric noted:

“Stocks are facing a slowing corporate earnings problem in 2020. Quarterly GAAP earnings on the S&P 500 declined by more than -6% on a year-over-year basis in 2019 Q3. This marked the first quarterly year-over-year decline since 2015 Q4 and 2016 Q1 when oil prices were cascading to the downside and the U.S. economy appeared headed toward recession were it not for a major monetary policy intervention stick save.

Thus, corporate earnings growth is not only slowing, but it may be set up to disappoint in the coming quarters.”

As such, stocks will likely once again be reliant on both multiple expansion and share buybacks for further gains in 2020. However, there are limits to just how many shares a company can repurchase given balance sheet constraints of both liquid cash and debt levels.

The bullish case does remain as both fiscal and monetary stimulus remains excessively abundant. Given the recent passage of another $1.4 trillion continue resolution to increase spending without the constraint of a “debt ceiling,” and the Fed continuing with monetary interventions, the amount of money sloshing around the system has to go somewhere.

This is why, despite excessive technical deviations, extraordinary complacency, and extreme bullishness, we remain allocated toward equity risk in portfolios currently.

But, these words were the same as 2018 opened for trading. Just a few weeks later, as Trump launched the “trade war,” exuberance was replaced with pessimism as stocks wiped out all the gains for the month.

What could trip up the markets this January?

In a word, “much.”