Tag: news

Selling Drugs to Sex Workers Could Be Human Trafficking Under the Senate’s New ‘PROTECT Act’

Much of the U.S. government’s effort to “stop human trafficking” consists of defining a larger and larger subset of activity as trafficking, then cracking down on this ancillary activity. New legislation from Sen. Sherrod Brown (D–Ohio) would expand this territory even further. Under Brown’s bill, “using drugs or illegal substances to cause a person to engage in a commercial sex act” or in any kind of labor would be punishable under federal criminal laws related to human trafficking.

It’s certainly wrong (and should be criminal) to force drugs on someone in order to get them to do something they wouldn’t otherwise consent to, be that engaging in any sort of sex or performing any sort of work. That’s why doing so is already punishable under a range of criminal statutes.

But Brown’s bill (S. 2197) is vaguely worded enough to open up new possibilities, like charging anyone who sells drugs to a sex worker as a sex trafficker (or at least threatening them with this if they don’t cop to some lesser offense) and counting any informal trade of drugs for any sort of labor as a human trafficking offense.

Specifically, the bill amends federal criminal law to say that obtaining any work or services “by means of supplying, furnishing, or providing any drug or illegal substance to a person, including to exploit the addiction of the person or cause the person to become addicted to the drug or illegal substance,” counts as a forced labor offense. Likewise, it would be counted as sex trafficking to recruit, entice, harbor, transport, provide, obtain, advertise, patronize, or solicit someone for sex by means of “supplying, furnishing, or providing any drug or illegal substance to a person, including to exploit the addiction of the person or cause the person to become addicted to the drug or illegal substance.”

Notice that neither provision makes using exploitative or addictive means a necessary part of committing this crime; any supplying, furnishing, or providing of drugs will do.

The bill⁠—dubbed the “Protecting Rights Of Those Exploited by Coercive Trafficking (PROTECT) Act⁠—was introduced in late July and has already attracted some well-known sponsors, including Democratic Sens. Dianne Feinstein (Calif.), Amy Klobuchar (Minn.), and Richard Blumenthal (Conn.), as well as Republican Sens. John Cornyn (Texas), Rob Portman (Ohio), and Thom Tillis (N.C.).

Portman sponsored the Senate bill known as SESTA (with the others signing as co-sponsors), which would be rolled in with House bill FOSTA to make facilitating prostitution through the web a federal crime. Like the SESTA/FOSTA package, the new bill would further expand the reach of federal prosecutors—just in time for the new “human trafficking coordinators” that are being installed at U.S. attorney’s offices across the country. (That was also a Sen. Brown contribution. I guess now he has to give them something to do.)

In essence, the PROTECT Act would take two things that are already illegal on their own (selling illegal drugs and forcing people into sex or labor) and make them⁠—ostensibly⁠—more illegal together. This follows a trend seen with drug laws during times of panic. But what we’ve seen with the enhanced drug laws, and with laws criminalizing activity around sex work, is not police using them to bring to justice some previously untouchable or under-punished class of serious criminals. Rather, these laws work as threats in coercive plea deals and are often used against sex workers or drug users themselves.

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The Escalating Trade War Is Bad News for Pretty Much Everyone

Tensions rose and stocks fell on Monday as the trade war between the U.S. and China escalated to a dangerous new level.

There have been three major developments in the past week—all of which have moved the two sides farther apart, marking a clear end to what had been a months-long truce and stoking fears of a recession if two of the world’s largest markets can’t work out their problems. On Thursday, President Donald Trump announced a new round of tariffs hitting about $300 billion of un-tariffed imports from China. China responded on Sunday by announcing that it would cut off all purchases of agricultural goods from the United States. On Monday evening, the U.S. responded again by officially labeling China a “currency manipulator”—a move that expands the trade war into a new arena.

That series of events sent markets (and market-watchers) into red alert. The Dow Jones Industrial Average suffered its sixth-worst single-day points loss on Monday (though the Dow regained about 170 points within the first half hour of trading on Tuesday). The Dow is down 6 percent since July 15—and the market has now fallen below the level it was at when Trump launched his trade war in early 2018.

Another ominous indicator for a president who has tied his administration’s success to the stock market’s performance: The yield on 10-year bonds issued by the U.S. Treasury, a safe harbor for investors fleeing turbulent markets, has now fallen below its level on the day Trump was elected. (Unlike stocks, bond prices fall when they are in greater demand.)

Worse could be coming. In an economic analysis, investment bank Goldman Sachs said “we no longer expect a trade deal before the 2020 election” in light of recent developments, starting with Trump’s announcement of additional tariffs last week. Former Treasury Secretary Larry Summers said Monday’s developments put the U.S. in “the most dangerous financial moment since the 2009 Financial Crisis.” And analysts from Morgan Stanley, another investment bank, fretted that a global recession could be less than a year away.

While none of the actions taken in the past few days have been immediately damaging to either country—the threatened tariffs won’t hit until September, and the “currency manipulator” label is mostly a symbolic thing—the reaction is a good reminder that trade wars are psychological events as much as anything. Investors and markets are clearly rattled at the moment, as hope for a quick resolution of the fight between the world’s two biggest economies appears to be fading.

“It’s never been more clear that tariffs are a failing strategy,” says Jonathan Gold, spokesman for Tariffs Hurt The Heartland, a coalition of more than 150 trade associations that oppose the president’s trade policies. “Behind today’s market turmoil are real Americans who have been used as bargaining chips in this trade war.”

“Both sides need to return to the negotiating table immediately,” cautions Gold. “Nobody wins in a trade war, and right now, everyone is losing.”

Farmers, again, could be hit the hardest. China’s decision to cut off all agricultural purchases from the United States means the complete loss of a $20 billion export market. There is not enough welfare or bailouts that can make up for that.

The immediate loss of China as an export market is bad enough, but there’s also little prospect for restoration. As I’ve written before, one of the main casualties in a trade war is trust—something that is also essential for two economic rivals to reach a trade deal. Now? China “no longer expects goodwill from the United States,” tweeted Hu Xijin, editor-in-chief of the Global Times, a Chinese newspaper published by Chinese Communist Party. Does that sound like a government ready to make a deal?

It’s hard to imagine how any of this is good news for Trump. News coverage this week has focused on a mass shooting where the killer namechecked Trump in his “manifesto” and on a massive drop in the stock market brought on by the president’s trade war—a conflict Trump promised would be “good and easy to win” at its outset.

As the trade war escalates to a new level, that claim looks more ridiculous than ever before.

“We’re learning that maybe China has a higher pain threshold than we thought here,” Stephen Moore, Trump’s economic advisor during the 2016 election and a close (though unofficial) advisor to the president, told The Washington Post.  “It’s kind of a mutually assured destruction game right now.”

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Why this is one of my favorite cities in Europe

I feel like a complete broken man right now.

I’m exhausted. Sleep deprived. Malnourished. My muscles are sore. My back is killing me. I’m so hoarse I can barely speak.

Yet despite all that I couldn’t possibly be feeling more excited and exhilarated.

My 10th annual liberty and entrepreneurship workshop just ended yesterday here in Lithuania. And as you can tell, it’s a physically and mentally draining event.

The workshop is five full days (and nights) of training and mentorship that go practically round-the-clock. It’s common to go to bed at 3am and be up again just at few hours later at 6am.

My fellow instructors and I cram in as many sessions as we can and teach a wide range of topics– from big picture ideas like strategy and leadership, to specific skills like raising capital, pitching to investors, recruiting top employees, marketing on Instagram, negotiation tactics, in-person sales, tax planning, critical accounting concepts, time management, selling your business, etc.

It’s a ton of highly actionable material packed into a few short days.

And it’s an absolute blast. The team-building, camaraderie and relationships born there are probably the best part of the event.

We even hold morning yoga and afternoon workout sessions with group calisthenics– the final sprint competition nearly killed me.

This was the TENTH annual event, so the whole weekend was incredibly nostalgic.

One of our alumni– a former oil roughneck from Canada turned software entrepreneur– blew us all away by putting on an amazing 10th anniversary fireworks show that was reminiscent of the movie V for Vendetta, complete with a perfectly-timed cannon finale from Tchaikovsky’s 1812 Overture.

I’m really pleased with how the event turned out.

And I’m especially impressed with the amazing 64 students who came from 30 different countries– places as diverse as Greece, Russia, Hong Kong, Zimbabwe, Afghanistan, Peru, Australia, and the People’s Republic of California.

Now it’s time for a few days of rest in the Italian countryside. But before I sign off, I wanted to say a few words about Lithuania and why it should be on your radar.

Like I said, I’ve been coming here for a decade. And Lithuania’s capital city of Vilnius has really grown on me in that time; honestly it’s one of my top five favorite cities in the world, and definitely my top pick in Europe.

For starters the architecture is gorgeous; Vilnius boasts one of the best-preserved medieval city-centers on the continent, full of palaces, castles, and churches that go back to the 1300s.

There’s very little vehicular traffic with plenty of fantastic street-side restaurants, cafes, and ice cream shops. It’s also really clean– you can practically eat off the cobblestone.

But aside from the aesthetic pleasantries, Vilnius has a lot going for it.

The standard of living here is very high, yet this city is one of the cheapest in Europe in terms of cost of living.

According to an old colleague of mine who started the largest real estate brokerage in the country, apartment prices in Vilnius average around 1,500 euros per square meter– about $160 per square foot.

That’s a fraction of the price of nearly every major city in Europe like Lisbon or Brussels, and it’s cheaper than even its Baltic neighbors.

Lithuania is also a cheap place to do business. Wages here are low, yet the quality of the talent is exceptionally high.

We recently invested in a thriving AI business that employs a number of data scientists, programmers, and other technical professionals here in Lithuania. I visited their office last week and was thoroughly impressed with their skills and experience.

Similar jobs can easily command a six-figure income in the United States. But in Lithuania the market salary for a top programmer can be around 3,500 euros per month. And that’s considered a really great salary here.

Non-technical jobs, ranging from customer support to social media managers are often under 1,000 euros per month.

And in case you’re thinking, “Yeah but I don’t speak Lithuanian,” I’ll assure you their English is probably better than mine.

I’ve never met a Lithuanian who isn’t bilingual, and it’s not uncommon for them to speak 3-4 languages fluently.

Not only is the cost of doing business here cheap, but the EASE of doing business is quite strong.

Lithuania’s government is lean… with minimal bureaucracy. It’s easy (and cheap) to form a company, establish a bank account, and start doing business.

Taxes are low– most Lithuanian corporations are taxed at 15%, and small businesses can pay just 10% or even less.

Lithuania has capitalized on the Brexit uncertainty and positioned itself as a major hub for financial innovation.

It now takes just three months to obtain a banking license… something that has attracted more than 200 Fintech companies (including Revolut) to shift at least a portion of their operations from London to Vilnius.

(It also helps that Vilnius has lightening-fast Internet and ranks #1 in the world for public WiFi.)

A final point I’ll make about this place is that it’s small. The entire population of Lithuania is less than 3 million, and Vilnius only has about 600,000 people.

I love this. Small populations make it really easy to quickly build a great network.

Even when you’re not trying, in a capital city this small you can’t help but meet movers and shakers.

Just last week at the gym I bumped into an Olympic champion, a prominent TV hostess, and a government minister.

And all those factors together make this a really unique and extremely pleasant place. So if you’re a budding entrepreneur or digital nomad, definitely put Vilnius on your radar.

Source

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You Thought Monday Was Dramatic In Markets? Welcome To Tuesday!

Submitted by Michael Every of Rabobank

You thought Monday was dramatic in markets? Welcome to Tuesday!

Fortunately, last night Hong Kong did not see the PLA move in but still recorded widespread anarchy on its streets showing the government is clearly not in control: a fresh statement from Beijing is due today, and one wonders what it can add. Will it be as helpful as the statement from the PBOC yesterday that said they are not weakening their currency due to US trade measures, before qualifying that the weaker CNY–which has shocked markets–was “due to the effects of unilateralist and trade-protectionist measures and the expectations for tariffs against China.” (So, yes, they are weakening the currency due to US measures.)

On the back of that this morning we awake to find that US President Trump–after crying out to the Fed about weaker CNH and CNY–has officially labelled China “a currency manipulator”. Naturally this is already seeing already-reeling markets reel further.

The last time China was assessed by the US Treasury on those grounds was a few months ago, where it was found not to be a currency manipulator as it didn’t meet all three of the US’ own criteria (large bilateral trade surplus – tick; current account surplus as % GDP – no tick; persistent intervention to weaken the currency – no tick). Yet now the CNY is finally moving lower in line with its real fundamentals, it IS labelled a manipulator. The irony!

What this US labelling step means in practical terms is unclear as the Treasury’s guidelines state the US must now work with the IMF to address the problems causing the offending currency to be too weak. In this case, of course, the IMF will point out that while China WAS guilty of currency manipulation for years in the past, and the US said nothing “because free trade”, now that CNY is finding its own level, it clearly isn’t guilty – or at least not of that. Indeed, even if the IMF did put forward some policy suggestions, these would probably be listened to by Beijing as much as they are by Berlin,…which might still be next in line to be designated at the rate we are going.

So what will the US do? If you think the answer is nothing then I have a Chinese-funded bridge to sell you. Far more likely they will move forward with more tariffs or countervailing duties, which we discussed a few months ago as being in the works based on US estimates of what the Real Effective Exchange Rate of country should be. If one looks at the principles involved in the new Counter-Veiling Duties (CVD) policy being mooted by the US, all Washington has to do is say they think CNY should be at 6, or 5, and hey presto! They can slap a further crippling set of duties on China based on the difference between that level and where it is actually trading. Even if it doesn’t work quite like that, we are still going to see far greater protectionism via China.

And what will China do? Well, the CNY fix today makes that clear: at 6.9683 vs. 6.9225 (a 458 pip cut): it is going to push the currency even lower. That obviously opens the door to the nightmare scenario of a downwards spiral in Chinese FX and simultaneous upwards spiral in US tariffs – which I have long flagged as all too possible for under the Cold War scenario I believed was playing out between the US and China (rather than the “trade deal soon!” scenario so many neo-classical economists had been plugging, wrongly, on TV all year).

And what will markets do? Crash. Equities are slumping. They will slump more. Bond yields are tumbling. They will tumble far more. 10-year US Treasuries are at 1.67% at time of writing and are possibly going to test through their global financial crisis low as soon as this week: would you want to bet against a 20bp move over the next four sessions at this rate? At the same time, Aussie 10s are through 1% for the first time, putting pressure on the RBA today, who had only just started to feel smug that their blatant institutional spruiking has at least temporarily stabilised house prices. And that’s just one example.

Worry most about the Chinese property developers who have borrowed heavily in USD unhedged. Worry about other EM USD borrowers too, as EM FX tumbles vs the greenback. And worry about global trade flows, as a stronger USD rumbles through the real economy and US-China divorce smashes supply chains. Of course, JPY is up, and EUR too – which sends its own signal: Europe is indeed turning into Japan in more ways than one!

And worry about whether China can stay in control of this process or not. Yes, it “gains” from a weaker Renminbi. For example, you can argue that with USD500bn of exports to the US, putting a 10% tariff on USD300bn of new Chinese exports, meaning a USD30bn “loss”, can be offset by a 6% depreciation in CNH as 6% of USD500bn is USD30bn: we are already over half way there given CNH is trading at 7.13 today vs. 6.88 a few weeks ago. (Of course, it doesn’t work quite as smoothly as that in reality.)

Yet China can lose a lot here, and more quickly than people think. After all, it has a USD2.2 trillion FX debt pile, half of which is short term; a current-account bill of around USD3 trillion annually (on the total outflow side); far less than USD3.1 trillion in liquid FX reserves to access; and a banking system with USD40 trillion in largely CNY-denominated assets that can technically be switched into USD by all involved (capped at USD50,000 per person per year). They already have draconian capital controls in place, but things could get far, far worse ahead. How long until we see FX rationing, both for individuals and firms? Who would be a priority and who wouldn’t, hypothetically?

That China would take such a risk at the same time as there is pushback against Huawei, against the Belt and Road, and against its claims to the South China Sea, to say nothing of Hong Kong, points to the stress it is under and the cul-de-sac it finds itself in. Yet how a “can’t lose face, won’t lose face” China would react to its own EM FX crisis that humbles it leads us on to other, darker scenarios. And none of them say higher bond yields or higher equities.

And it’s still only Tuesday

via ZeroHedge News https://ift.tt/2M3DsPc Tyler Durden

The Escalating Trade War Is Bad News for Pretty Much Everyone

Tensions rose and stocks fell on Monday as the trade war between the U.S. and China escalated to a dangerous new level.

There have been three major developments in the past week—all of which have moved the two sides farther apart, marking a clear end to what had been a months-long truce and stoking fears of a recession if two of the world’s largest markets can’t work out their problems. On Thursday, President Donald Trump announced a new round of tariffs hitting about $300 billion of un-tariffed imports from China. China responded on Sunday by announcing that it would cut off all purchases of agricultural goods from the United States. On Monday evening, the U.S. responded again by officially labeling China a “currency manipulator”—a move that expands the trade war into a new arena.

That series of events sent markets (and market-watchers) into red alert. The Dow Jones Industrial Average suffered its sixth-worst single-day points loss on Monday (though the Dow regained about 170 points within the first half hour of trading on Tuesday). The Dow is down 6 percent since July 15—and the market has now fallen below the level it was at when Trump launched his trade war in early 2018.

Another ominous indicator for a president who has tied his administration’s success to the stock market’s performance: The yield on 10-year bonds issued by the U.S. Treasury, a safe harbor for investors fleeing turbulent markets, has now fallen below its level on the day Trump was elected. (Unlike stocks, bond prices fall when they are in greater demand.)

Worse could be coming. In an economic analysis, investment bank Goldman Sachs said “we no longer expect a trade deal before the 2020 election” in light of recent developments, starting with Trump’s announcement of additional tariffs last week. Former Treasury Secretary Larry Summers said Monday’s developments put the U.S. in “the most dangerous financial moment since the 2009 Financial Crisis.” And analysts from Morgan Stanley, another investment bank, fretted that a global recession could be less than a year away.

While none of the actions taken in the past few days have been immediately damaging to either country—the threatened tariffs won’t hit until September, and the “currency manipulator” label is mostly a symbolic thing—the reaction is a good reminder that trade wars are psychological events as much as anything. Investors and markets are clearly rattled at the moment, as hope for a quick resolution of the fight between the world’s two biggest economies appears to be fading.

“It’s never been more clear that tariffs are a failing strategy,” says Jonathan Gold, spokesman for Tariffs Hurt The Heartland, a coalition of more than 150 trade associations that oppose the president’s trade policies. “Behind today’s market turmoil are real Americans who have been used as bargaining chips in this trade war.”

“Both sides need to return to the negotiating table immediately,” cautions Gold. “Nobody wins in a trade war, and right now, everyone is losing.”

Farmers, again, could be hit the hardest. China’s decision to cut off all agricultural purchases from the United States means the complete loss of a $20 billion export market. There is not enough welfare or bailouts that can make up for that.

The immediate loss of China as an export market is bad enough, but there’s also little prospect for restoration. As I’ve written before, one of the main casualties in a trade war is trust—something that is also essential for two economic rivals to reach a trade deal. Now? China “no longer expects goodwill from the United States,” tweeted Hu Xijin, editor-in-chief of the Global Times, a Chinese newspaper published by Chinese Communist Party. Does that sound like a government ready to make a deal?

It’s hard to imagine how any of this is good news for Trump. News coverage this week has focused on a mass shooting where the killer namechecked Trump in his “manifesto” and on a massive drop in the stock market brought on by the president’s trade war—a conflict Trump promised would be “good and easy to win” at its outset.

As the trade war escalates to a new level, that claim looks more ridiculous than ever before.

“We’re learning that maybe China has a higher pain threshold than we thought here,” Stephen Moore, Trump’s economic advisor during the 2016 election and a close (though unofficial) advisor to the president, told The Washington Post.  “It’s kind of a mutually assured destruction game right now.”

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“We Are Watching Google Very Closely”: Trump Slams Search Giant For ‘Making Sure He Loses In 2020’ 

President Trump slammed Google on Tuesday morning in a three-part tweetstorm over allegations by a former engineer that the company will do everything they can to make sure he doesn’t win again in 2020.

Trump explained how CEO Sundar Pichai “was in the Oval Office working very hard to explain how much he liked me, what a great job the Administration is doing, that Google was not involved with China’s military, that they didn’t help Crooked Hillary over me in the 2016 Election, and that they are NOT planning to illegally subvert the 2020 Election despite all that has been said to the contrary.”

“It all sounded good until I watched Kevin Cernekee, a Google engineer, say terrible things about what they did in 2016 and that they want to “Make sure that Trump losses [sic] in 2020,” Trump continued.

“Lou Dobbs stated that this is a fraud on the American public, Trump continued. @peterschweizer stated with certainty that they suppressed negative stories on Hillary Clinton, and boosted negative stories on Donald Ttump [sic]. All very illegal. We are watching Google very closely!“

On Monday night, Trump tweeted a clip of former Google engineer Kevin Cernekee explaining how the company was distrought after Trump won in 2016 – “Google executives went up on a stage right away and cried – tears literally streaming right down their faces over the fact that President Trump won. They vowed that it would never happen again, and they want to use all the power and all the resources they have to control the flow of information to the public and make sure that Trump loses in 2020. 

Trump then tweeted an interview with investigative journalist Peter Schweizer, who explained that Google suppressed negative stories about Hillary Clinton and boosted negative stories about Trump. He added that in 2016, Google thought Trump would lose and didn’t need to tip the scales as much. In 2020, they’ll “go all in,” according to Schweizer. 

In June, Google’s head of “Responsible Innovation,” Jen Gennai, was caught on an undercover video (which Google’s YouTube has deleted) admitting that the company is programming its machine learning algorithms in order to avoid the “next Trump situation.” 

“We all got screwed over in 2016, again it wasn’t just us, it was, the people got screwed over, the news media got screwed over, like, everybody got screwed over so we’re rapidly been like, what happened there and how do we prevent it from happening again,” said Gennai. 

Gennai responded, saying in a Medium post that she had been taken out of context. 

That said, a Google insider came forward to Veritas, confirming what they filmed Gennai admitting; that the company is using “Machine Learning Fairness” as just one of several political tools used to promote their political agenda by combating “algorithmic unfairness.” 

Sundar Pichai says told Trump that none of this is happening, however – so it must be true! 

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

Trump Says Mental Illness ‘Pulls the Trigger’ in Mass Shootings

We’ve moved on to the phase of a post-shooting news cycle where folks come together to agree that mental illness is the real problem. “Mental illness and hatred pulls the trigger, not the gun,” said President Donald Trump on Monday. Meanwhile, Democratic Sen. Richard Blumenthal (Conn.) and Republican Sen. Lindsey Graham (S.C.) set to work on re-introducing a bill concerning mental illness and law enforcement.

On one level, addressing mental health in the wake of mass shootings is better than blaming video games, internet forums, or immigration policy for violence. But because this is government we’re talking about, the idea that random people can snap and do crazy, terrible things isn’t enough. If mental illness is the problem, we need to do! something! big! about mental illness.

Of course, what we do is never remove the regulatory barriers to better, more widespread mental health care. Instead, we subject any and all people with “mental illness”—a category that can range from complete psychosis and other extreme conditions to conditions like depression and anxiety that are shared by tons of Americans—to increased monitoring, restrictions, and stigmatizing presumptions. Frequently, it also involves subjecting everyone to increased surveillance in order to allegedly spot signs of dangerous mental illness.

AdAge notes that “President Donald Trump said he ordered federal officials to work with the companies to try and identify people whose social-media postings indicate they may commit mass murder before they act. While Trump did not call for any specific regulations, the companies have been facing increasing scrutiny over how they police the content users post online and their power to influence public discourse.”

When Trump was talking about recent mass shootings, he kept coming back to mental illness, noted Jonathan Chait, suggesting that “mental illness is the concept Republicans have grasped onto to absolve Trump and his allies of any ideological kinship with white nationalist terrorists. ‘Crazy’ is a kind of metaphysical demarcation between conservatism and terrorism.”

Graham and Blumenthal’s bill would give more money to police departments to “hire and consult with mental health professionals,” Graham said in a statement. It would also strengthen red flag laws, which allow police and courts to temporarily suspend people’s ability to purchase guns. Graham and Blumenthal previously introduced a similar bill in March 2018.

FREE MINDS

Flights in and out of Hong Kong are being stalled and canceled as protests continue to roil the city. How are things going? A short selection of recent headlines should give you the picture:

  • “Hong Kong Strike Sinks City Into Chaos, and Government Has Little Reply” (The New York Times)
  • “China’s Xi Has Few Good Options to End the Chaos in Hong Kong” (Bloomberg)
  • “‘Prepared to Die’: Hong Kong Protesters Embrace Hard-Core Tactics, Challenge Beijing” (The Wall Street Journal)
  • “In Hong Kong, It’s Now a Revolution” (The National Interest)

FREE MARKETS

Monday market swings spark freakout. In the past week, President Trump announced more major tariffs on Chinese goods, the Chinese government elected to let its currency value relative to the dollar drop, and the U.S. responded by officially designating China as a currency manipulator. And just like that, stock and bond markets both dropped enough to cause alarm.

“The swings in financial markets Monday are hard to justify in narrow terms,” writes Neil Irwin at The New York Times. “A slightly cheaper Chinese currency shouldn’t have huge consequences for the global economy. Rather, investors are coming to grips with the reality that the trade war is escalating and spreading into the global currency market.” Irwin suggests that this may be the start of a feared point of no return in the U.S.-China trade war that could “create dangerous ripple effects for the world economy.”

Meanwhile, in Trumpland:

QUICK HITS

  • Rethinking paper straws? McDonald’s in the U.K. shifted to paper straws as part of the popular tilt away from their plastic counterparts. The company called it part of its plans to help “protect the environment.” The plastic straws were recyclable. The paper ones are not.
  • Awkward…

  • A San Diego police sergeant facing arrest for soliciting sex from a minor has apparently committed suicide.
  • Singer R. Kelly, who was recently arrested on federal criminal charges, was also just charged in Minnesota with soliciting sex from a minor.
  • Who could have predicted?

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Trump Says Mental Illness ‘Pulls the Trigger’ in Mass Shootings

We’ve moved on to the phase of a post-shooting news cycle where folks come together to agree that mental illness is the real problem. “Mental illness and hatred pulls the trigger, not the gun,” said President Donald Trump on Monday. Meanwhile, Democratic Sen. Richard Blumenthal (Conn.) and Republican Sen. Lindsey Graham (S.C.) set to work on re-introducing a bill concerning mental illness and law enforcement.

On one level, addressing mental health in the wake of mass shootings is better than blaming video games, internet forums, or immigration policy for violence. But because this is government we’re talking about, the idea that random people can snap and do crazy, terrible things isn’t enough. If mental illness is the problem, we need to do! something! big! about mental illness.

Of course, what we do is never remove the regulatory barriers to better, more widespread mental health care. Instead, we subject any and all people with “mental illness”—a category that can range from complete psychosis and other extreme conditions to conditions like depression and anxiety that are shared by tons of Americans—to increased monitoring, restrictions, and stigmatizing presumptions. Frequently, it also involves subjecting everyone to increased surveillance in order to allegedly spot signs of dangerous mental illness.

AdAge notes that “President Donald Trump said he ordered federal officials to work with the companies to try and identify people whose social-media postings indicate they may commit mass murder before they act. While Trump did not call for any specific regulations, the companies have been facing increasing scrutiny over how they police the content users post online and their power to influence public discourse.”

When Trump was talking about recent mass shootings, he kept coming back to mental illness, noted Jonathan Chait, suggesting that “mental illness is the concept Republicans have grasped onto to absolve Trump and his allies of any ideological kinship with white nationalist terrorists. ‘Crazy’ is a kind of metaphysical demarcation between conservatism and terrorism.”

Graham and Blumenthal’s bill would give more money to police departments to “hire and consult with mental health professionals,” Graham said in a statement. It would also strengthen red flag laws, which allow police and courts to temporarily suspend people’s ability to purchase guns. Graham and Blumenthal previously introduced a similar bill in March 2018.

FREE MINDS

Flights in and out of Hong Kong are being stalled and canceled as protests continue to roil the city. How are things going? A short selection of recent headlines should give you the picture:

  • “Hong Kong Strike Sinks City Into Chaos, and Government Has Little Reply” (The New York Times)
  • “China’s Xi Has Few Good Options to End the Chaos in Hong Kong” (Bloomberg)
  • “‘Prepared to Die’: Hong Kong Protesters Embrace Hard-Core Tactics, Challenge Beijing” (The Wall Street Journal)
  • “In Hong Kong, It’s Now a Revolution” (The National Interest)

FREE MARKETS

Monday market swings spark freakout. In the past week, President Trump announced more major tariffs on Chinese goods, the Chinese government elected to let its currency value relative to the dollar drop, and the U.S. responded by officially designating China as a currency manipulator. And just like that, stock and bond markets both dropped enough to cause alarm.

“The swings in financial markets Monday are hard to justify in narrow terms,” writes Neil Irwin at The New York Times. “A slightly cheaper Chinese currency shouldn’t have huge consequences for the global economy. Rather, investors are coming to grips with the reality that the trade war is escalating and spreading into the global currency market.” Irwin suggests that this may be the start of a feared point of no return in the U.S.-China trade war that could “create dangerous ripple effects for the world economy.”

Meanwhile, in Trumpland:

QUICK HITS

  • Rethinking paper straws? McDonald’s in the U.K. shifted to paper straws as part of the popular tilt away from their plastic counterparts. The company called it part of its plans to help “protect the environment.” The plastic straws were recyclable. The paper ones are not.
  • Awkward…

  • A San Diego police sergeant facing arrest for soliciting sex from a minor has apparently committed suicide.
  • Singer R. Kelly, who was recently arrested on federal criminal charges, was also just charged in Minnesota with soliciting sex from a minor.
  • Who could have predicted?

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Looking For A Sellable Rally

Authored by Lance Roberts via RealInvestmentAdvice.com,

On Monday, stocks took a beating from rising trade tensions as China put the brakes on imports of agricultural products following Trumps latest tariff threat. As noted by the WSJ:

“So much for a trade deal any time soon.

Monday’s pain for U.S. investors was foretold late Sunday evening. The Chinese yuan sank below 7 per dollar and hit an all-time low in offshore trading Monday with local officials blaming the depreciation on President Trump’s decision last week to extend tariffs to almost all Chinese imports. Mr. Trump responded on Twitter, accusing China of engaging in currency manipulation.

The result was a mess across global markets. The Dow Jones Industrial Average fell 766 points while the S&P 500 and Nasdaq Composite fell about 3% and 3.5%, respectively.”

Before we get into the charts, let me just remind you what we have been saying about Trump’s “trade war” for more than year now:

May 24, 2018:

“China has a long history of repeatedly reneging on promises it has made to past administrations.

By agreeing to a reduction of the “deficit” in exchange for “no tariffs,” China removed the most important threat to their economy as it will take 18-24 months before the current Administration realizes the problem.”

June 19, 2018:

“The U.S.- China confrontation will be a war of attrition: while China has shown a willingness to make a deal on shrinking its trade surplus with the U.S., it has made clear it won’t bow to demands to abandon its industrial policy aimed at dominating the technology of the future.”

May 7th, 2019

  1. China is playing a very long game. Short-term economic pain can be met with ever-increasing levels of government stimulus. The U.S. has no such mechanism currently, but explains why both Trump and Vice-President Pence have been suggesting the Fed restarts QE and cuts rates by 1%.

  2. The pressure is on the Trump Administration to conclude a “deal,” not on China. Trump needs a deal done before the 2020 election cycle AND he needs the markets and economy to be strong. If the markets and economy weaken because of tariffs, which are a tax on domestic consumers and corporate profits, as they did in 2018, the risk off electoral losses rise. China knows this and are willing to “wait it out” to get a better deal.

  3. China is not going to jeopardize its 50 to 100-year economic growth plan on a current President who will be out of office within the next 5-years at most. It is unlikely as the next President will take the same hard-line approach on China that President Trump has, so agreeing to something that won’t be supported in the future is doubtful.”

June 29th, 2018

“China has been attacking the “rust-belt” states, which are crucial to Trump’s 2020 re-election, states with specifically targeted tariffs. (Now accelerated with the decision to stop imports altogether.)

While Trump is operating from a view that was a ghost-written, former best-seller, in the U.S. popular press, XI is operating from a centuries-old blueprint for victory in battle.”

There were many more articles in between, but you get the idea.

This has always been a war Trump can’t win. China’s ability to take a tremendous amount of short-term pain for a long-term gain will be more than President Trump counted on when he thought “trade wars are easy to win.” They aren’t, and the economic pain will likely be more than he bargained for.

The markets are beginning to sense this as well, particularly as the White House escalates the situation by labeling China a “currency manipulator.” 

In the short-term, traders are now turning their focus back to the Federal Reserve for help. More rate cuts, however, are not likely going to be enough to solve the pressure to corporate profits, which will accelerate as the trade war escalates.

Technical Update

Over the past couple of week’s, we have been talking about a potential correction. While the media was quick to jump on Trump’s “China threats” as the reason for the selloff, those actions were just the “catalyst that lit the fuse.”

As I this past weekend:

“[Over the last two weeks] the market is rallying in anticipation of more Central Bank easing. The markets are momentarily detached from weaker earnings growth, weaker economic growth, and a variety of other market-related risks. 

In the very short-term, the market is grossly extended and in need of some correction action to return the market to a more normal state. As shown below, while the market is on a near-term “buy signal” (lower panel) the overbought condition, and near 9% extension above the 200-dma, suggests a pullback is in order.”

Chart Updated Through Monday

We had also warned previously the current extension of the market, combined with overbought conditions, was due for a reversal.

On a very short-term basis the market has reversed the previously overbought condition to oversold. This could very well provide a short-term “sellable bounce” in the market back to the 50-dma. As shown in the chart below, any rally should be used to reduce portfolio risk in the short-term as the test of the 200-dma is highly probable.

(We are not ruling out the possibility the market could decline directly to the 200-dma. However, the spike in volatility and surge in negative sentiment suggests a bounce is likely first.)

As I noted in this past weekend’s newsletter, we have been taking actions within our portfolios to prepare for this correction and sharing those actions with our RIAPRO subscribers (30-Day Free Trial).

July 22nd Portfolio Update: This morning action was taken and we took profits on 10% of 11 of our equity holdings. All of these positions had gains in excess of 20% since January 1st.

Here is the unlocked report  

Those actions played well with the S&P declining by roughly -3.00% on Monday as our Equity and ETF portfolios only declined by –0.93% and –1.04% respectively.

Monthly Signals Remain Bearish

Given that monthly data is very slow-moving, longer-term signals can uncover changes to the trend which short-term market rallies tend to obfuscate.

Interestingly, despite recent “all-time” highs in the S&P 500, the monthly signal have all aligned to “confirm” a “sell signal.” Since 1950, such an alignment has been somewhat of a rarity. The risk of ignoring the longer-term signal currently is that it may be signaling a more important topping process remains intact.

The technical signals, which do indeed lag short-term turns in the market, have not confirmed the bullish attitude. Rather, and as shown in the chart above, the negative divergence of the indicators from the market should actually raise some concerns over longer-term capital preservation.

What This Means And Doesn’t Mean

What this analysis DOES NOT mean is that you should “sell everything” and “hide in cash.”

As always, long-term portfolio management is about “tweaking” things over time.

At a poker table, if you have a “so so” hand, you bet less or fold. It doesn’t mean you get up and leave the table altogether.

What this analysis DOES MEAN is that we need to use any short-term rally over the next few days to take some actions to rebalance “risks.”

1) Trim Winning Positions back to their original portfolio weightings. (ie. Take profits)

2) Sell Those Positions That Aren’t Working. If they don’t rally with the market during a bounce, they are going to decline more when the market sells off again.

3) Move Trailing Stop Losses Up to new levels.

4) Review Your Portfolio Allocation Relative To Your Risk Tolerance. If you are aggressively weighted in equities at this point of the market cycle, you may want to try and recall how you felt during 2008. Raise cash levels and increase fixed income accordingly to reduce relative market exposure.

While I certainly expect the White House to “tweet” out a statement confirming “trade talks are still ongoing,” or comments from Fed Reserve officials that “more rate cuts are likely,” the damage to the economy from tariffs are already in the works. With both earnings and corporate profits under pressure, this may be the start of a bigger corrective process like we witnessed in 2018.

But, there is always the possibility that I am wrong and the markets turn around and rally back to all-time highs.

If that happens, and the bullish trend resumes, then we will adjust our allocation models up and take on more equity risk.

But as I have asked before, what is more important to you as an individual?

  1. Missing out temporarily on the initial stages of a longer-term advance, or;

  2. Spending time getting back to even, which is not the same as making money.

For the majority of investors, the recent rally has simply been just recovery of previous losses from 2018.

Currently, there is not a great deal of evidence supportive of a longer-term bull market cycle. The Fed cutting rates is “NOT” bullish, it actually correlates to much more negative long-term outcomes in the market.

If I am right, however, the preservation of capital during an ensuing market decline will provide a permanent portfolio advantage going forward. The true power of compounding is not found in “the winning,” but in the “not losing.”

This is a good time to review those trading rules:

“Opportunities are made up far easier than lost capital.” – Todd Harrison

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

Trump Imposes Total Economic Embargo On Venezuela

Late Monday President Trump signed an executive order imposing a full economic embargo against Venezuela after a week ago the White House began signaling it could seek to “quarantine” and fully “blockade” the Maduro regime if the president doesn’t immediately hand over power of his own accord. 

The executive order freezes all government assets in the United States and prohibits all transactions by any Venezuelan officials, in what constitutes the first major expansion of sanctions targeting a nation in the western hemisphere in over three decades. 

File image via Time

The order focuses on human rights abuses and Maduro’s continued “usurpation” of power as necessary to enact the full embargo, and places the Latin American country on par with Cuba, Syria, Iran and North Korea. Though Trump recently signaled he was “bored” with meddling in Venezuela after a failed military coup earlier this year, the executive order is the latest in a string of measures intent on regime change. 

“All property and interests in property of the Government of Venezuela that are in the United States … are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in,” the executive order says. Americans are further prevented from doing business with Venezuela’s government or officials, effective immediately.

Though it falls short of an outright trade embargo, it does dramatically escalate US efforts to force a Maduro exit in favor of US-backed opposition leader and self-proclaimed “interim president” Juan Guaido. 

Via The Wall Street Journal

A recent Bloomberg report also indicated Trump admin discussions have involved the possibility of imposing a complete blockade on the country by sea, enforced by US Navy ships. 

President Maduro slammed on the comments last Friday, and directed his ambassador to lodge a formal complaint with the UN Security Council, saying any attempt to block the Venezuelan coastline is “clearly illegal” according to international law and norms. He said in a televised broadcast on Friday: Venezuela’s seas would remain “free and independent.”

“All of Venezuela, in a civic-military union, repudiates and rejects the statements of Donald Trump about a supposed quarantine, of a supposed blockade,” Maduro said in the speech. “A blockade, why would he announce that? It is clearly illegal.”

via ZeroHedge News https://ift.tt/2MH4USr Tyler Durden