Visualizing What The Big Tech Companies Know About You

The novelty of the internet platform boom has mostly worn off, and as Visual Capitalist’s Jeff Desjardins notes, now that companies like Facebook, Amazon, and Alphabet are among the world’s most valued companies, people are starting to hold them more accountable for the impact of their actions on the real world.

From the Cambridge Analytica scandal to the transparency of Apple’s supply chain, it’s clear that big tech companies are under higher scrutiny. Unsurprisingly, much of this concern stems around one key currency that tech companies leverage for their own profitability: personal data.

WHAT BIG TECH KNOWS

Today’s infographic comes to us from Security Baron, and it compares and contrasts the data that big tech companies admit to collecting in their privacy policies.

Courtesy of: Visual Capitalist

While the list of data collected by big tech is extensive in both length and breadth, it does take two to tango.

For many of these categories, users have to willingly supply their data in order for it to be collected. For example, you don’t have to fill out your relationship status on Facebook, but millions of users choose to do so.

DID I OPT INTO THIS?

The majority of the data categories on the list make sense – it’s a no-brainer that Amazon has your credit card information, or that Google knows what websites you visit. Even the least tech-savvy person would likely understand this.

However, there are definitely some categories of data that get collected and stored that may sound unnerving to some people:

  • Facebook knows your political views, religious views, and even your ethnicity

  • Xbox users will have their skeletal tracking data collected through the Kinect device

  • Facebook also knows your income level, which it finds out through partnerships with personal data brokers

  • Platforms collect your documents, email, and message data – though some of this is just metadata

  • Facebook and Microsoft store facial recognition data, based on the pictures you upload

Remember, this is just what companies admit to collecting in their privacy policies – what else do you think they know?

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“It’s Been A Pretty Miserable Year. 2019 Isn’t Looking Any Better Either”

Back on November 1, we reported  a “fascinating statistic” by Deutsche Bank – as of the end of October, 89% (a number that has since risen to at least 90%) of most major global assets had a negative total return year to date in dollar terms. This was the highest percentage on record based on data back to 1901, eclipsing the 84% hit in 1920. Putting this in context, in 2017 just 1% of asset classes delivered negative returns. The final straw was when the S&P 500 index, which had valiantly resisted a negative return for the year, finally succumbed to the gravitational pull of most other markets and turned red last week when it also suffered its second correction of 2018.

And while this statistic was quietly ignored for much of November, it eventually made its way to the front page of the WSJ today – just days after the S&P turned negative for 2018 and slumped into its second correction of the year – which reported what most traders had known already: “stocks, bonds and commodities from copper to crude oil to burlap are staging a rare simultaneous retreat, putting global markets on track for one of their worst years on record and deepening a sense of unease on Wall Street.”

For those investors who have somehow slept through the past two months, it has been a painful market ever since the S&P hit its all time high on September 20: major stock benchmarks in the U.S., Europe, China and South Korea have all slid 10% or more from recent highs. Crude oil lost a third of its value and slumped deep into bear market territory, emerging-market currencies have broadly fallen against the U.S. dollar, while bitcoin’s price crashed below $4,000 over the weekend amid what a broad risk capitulation.

While havens such as Treasury bonds and gold rallied this fall as riskier assets swooned, both are still down on a price basis for the year, reflecting trader concerns with solid economic growth and tighter Federal Reserve policy that have begun to push interest rates out of their post-financial crisis doldrums.

And, as we first discussed last week in why “Nothing is working“, the market’s sharp and broad pullback has left fund managers scrambling to find places to park their money. But with global growth showing signs of slowing even as monetary policy is expected to tighten further, few are eager to place large wagers and risk compounding earlier failures to generate expected gains.

The reason: as the WSJ notes, “the simultaneous failure of so many investment strategies is being by viewed by some as a warning of what could come following years of above-average returns.”

For professional asset managers there is a silver lining: virtually everyone else is also hurting.

“It’s been a difficult year,” said QMA chief investment strategist Ed Keon. “All investors have goals, and none of those can be fulfilled with negative returns.”

Paradoxically, while virtually nobody believes that a recession is imminent – with consensus expecting the US economy to shrink in 2020 at the earliest – the strength of the U.S. economy in the face of a global slowdown has prompted the Fed to keep rising rates, much to the chagrin of Donald Trump, and shifting ever further away from the regime of rock-bottom interest rates and bond-buying put in place after the financial crisis. As a result, rising short term rates, and the highest real 10Y rates since 2010, have diminished the premium investors get for taking on risky assets, pressuring virtually all markets.

The recent plunge in asset prices has been especially crushing to those who expected the upward momentum and asset levitation for much of the year to continue and doubled down on the recent swoon. One such example is commodity hedge-fund icon Pierre Andurand, who earlier in the year bet oil could soon hit $100 a barrel (and even said $300 oil is “not impossible“), but has since watched as his $1 billion Andurand Commodities Fund suffered its largest monthly loss ever in October, and November isn’t looking much better with the oil plunge accelerating.

Meanwhile, believers in “growth narratives” have been trampled by a furious rotation out of growth and into value as funds that had built up massive stakes in fast-growing technology companies were crushed by sharp reversals. Twenty-six funds dumped their entire stakes in Facebook Inc. in the third quarter, according to a Goldman Sachs Group analysis of 13F filings, including billionaire Daniel Loeb’s Third Point LLC, which offloaded 4 million shares, citing “a very disappointing quarter” for Facebook.

Adding insult to injury, the most shorted names across the hedge fund space have seen periodic squeezes that have forced dramatic short covering and led to even more losses.

The result has been one of the worst years for hedge funds since the financial crisis: the Goldman equity hedge fund index is down 4% YTD, underperforming the S&P by 6%, even as the basket of most shorted names – a testament to just how painful the short squeezes have been – has outperforming the broader market.

Underscoring the dreary environment for hedge fund managers, the Goldman Hedge Fund VIP basket of most popular hedge fund positions, has been in freefall ever since hitting a high earlier in the summer.

Still, some investors refuse to accept the creeping fear that the bull market is over (last week Morgan Stanley was quite clear on the matter, declaring that “We are in a bear market“) and contend the market’s 2018 stumbles are a good sign, and that the declines across across all asset classes that had finished last year in the green reflect a “healthy” correction if a painful readjustment of expectations.

“A year like this—it shakes out some of the situations that were out of kilter with the rest of the economy,” said Jason Pride, chief investment officer for private clients at The Glenmede Trust Co. After markets around the world soared to records last year, buoyed in part by synchronized global economic growth but also by a surge in investor optimism, “we actually needed to take some air out of the system,” Mr. Pride said.

Pride is unwilling to throw in the towel and like others, is betting the bull market in U.S. stocks still has longer to run before the economic expansion morphs into a downturn. While U.S. economic data have been bumpier as of late, with the housing and auto sectors in particular showing signs of strain, the overall picture still looks solid, Pride told the WSJ.

Even so, Glenmede concedes it had to turn down its recent euphoria, and last year the fund began paring its exposure to some of the fast-growing technology stocks that had run up sharply, betting their outperformance would fade. The decision was widely criticized at first, but has since seen the approval of investors:

The feedback loop felt horrible—absolutely horrible,” Pride said, recalling presentations he gave where some clients questioned why the firm had pulled out of stocks that had rallied more than 50% in the past year. That decision has seemed easier to justify more recently, with many former big hitters such as Facebook, Apple Inc. and Netflix Inc. tumbling, he said.

Other advisors have similarly urged their clients to stay invested but add to downside hedges. UBS Group’s wealth-management arm has urged its wealthy clients to keep their S&P 500 long, but to start using puts to protect against further pullbacks.

“We’re cautiously optimistic,” said Jerry Lucas, a senior strategist at UBS Global Wealth Management’s chief investment office. “It’s worthwhile to be a little more conservative and have some hedges on to reduce your risk.”

Whether this cautious optimism is justified will depend on just one person: Fed chair Powell, who is increasingly expected to relent in his hawkish pursuit of higher rates. If not, and there are few indications to suggest the Fed will concede and appear to fold to pressure from the US president who has been urging the Fed to end its tightening ways, what has been a dismal 2018 may mutate into a disastrous 2019.

Minneapolis Fed President Neel Kashkari, one of the Fed’s biggest doves who has frequently called for a stop to raising interest rates, repeated his warning and said further tightening could trigger a recession: “One of my concerns is that if we preemptively raise interest rates, and it’s not in fact necessary, we might be the cause of ending the expansion” and triggering the next recession, Kashkari said in a National Public Radio interview posted online last week.

Which, of course, will not come as a surprise to regular readers who know very well that every single Fed tightening – like the one right now – has resulted in a crisis.

Thomas Poullaouec, head of Asia Pac at T. Rowe Price in Hong Kong, summarizes the above perfectly with the following brief assessment: “It hasn’t felt like a bad year, but retrospectively, it’s been a pretty miserable year. 2019 isn’t looking to be any better either.”

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Forget Jim Acosta, Matt Taibbi Explains Why You Should Care About Julian Assange

Authored by Matt Taibbi via RollingStone.com,

Forget Jim Acosta. If you’re worried about Trump’s assault on the press, news of a Wikileaks indictment is the real scare story…

Wikileaks founder Julian Assange, who has been inside the Ecuadorian embassy in London since the summer of 2012, is back in the news. Last week, word of a sealed federal indictment involving him leaked out.

The news came out in a strange way, via an unrelated case in Virginia. In arguing to seal a federal child endangerment charge (against someone with no connection to Wikileaks), the government, ironically, mentioned Assange as an example of why sealing is the only surefire way to keep an indictment under wraps.

“Due to the sophistication of the defendant and the publicity surrounding the case,” prosecutors wrote, “no other procedure is likely to keep confidential the fact that Assange has been charged.”

Assange’s lawyer Barry Pollack told Rolling Stone he had “not been informed that Mr. Assange has been charged, or the nature of any charges.”

Pollock and other sources could not be sure, but within the Wikileaks camp it’s believed that this charge, if it exists, is not connected to the last election.

“I would think it is not related to the 2016 election since that would seem to fall within the purview of the Office of Special Counsel,” Pollack said.

If you hate Assange because of his role in the 2016 race, please take a deep breath and consider what a criminal charge that does not involve the 2016 election might mean. An Assange prosecution could give the Trump presidency broad new powers to put Trump’s media “enemies” in jail, instead of just yanking a credential or two. The Jim Acosta business is a minor flap in comparison.

Although Assange may not be a traditional journalist in terms of motive, what he does is essentially indistinguishable from what news agencies do, and what happens to him will profoundly impact journalism.

Reporters regularly publish stolen, hacked and illegally-obtained material. A case that defined such behavior as criminal conspiracy would be devastating. It would have every reporter in the country ripping national security sources out of their rolodexes and tossing them in the trash.

A lot of anti-Trump reporting has involved high-level leaks. Investigation of such leaks has reportedly tripled under Trump even compared to the administration of Barack Obama, who himself prosecuted a record number of leakers. Although this may seem light years from the behavior of Wikileaks, the legal issues are similar.

Although it’s technically true that an Assange indictment could be about anything, we do have some hints about its likely direction. Back in 2014, search warrants were served to Google in connection with Wikileaks that listed causes of criminal action then being considered. Google informed Wikileaks of the warrants. You can see all of this correspondence here.

The government back then – again, this pre-dated 2016, Roger Stone, Guccifer 2.0, etc. – was looking at espionage, conspiracy to commit espionage, theft or conversion of property belonging to the United States government, violation of the Computer Fraud and Abuse Act and conspiracy.

The investigation probably goes as far back as 2010, in connection with the release of ex-army private Chelsea Manning’s “Collateral Murder” video. That footage showed American forces in Iraq firing on a Reuters journalist and laughing about civilian casualties.

While much of the progressive media world applauded this exposure of George W. Bush’s Iraq war, the government immediately began looking for ways to prosecute. The Sydney Herald reported that the FBI opened its investigation of Assange “after Private Manning’s arrest in May of 2010.”

Ironically, one of the first public figures to call for Assange to be punished was Donald Trump, who in 2010 suggested the “death penalty” on Fox Radio’s Kilmeade and Friends.

While Trump complained, Wikileaks became an international sensation and a darling of the progressive set. It won a host of journalism prizes, including the Amnesty International New Media Award for 2009.

But a lot of press people seemed to approve of Wikileaks only insofar as its “radical transparency” ideas coincided with traditional standards of newsworthiness.

The “Collateral Murder” video, for instance, was celebrated as a modern take on Sy Hersh’s My Lai Massacre revelations, or the Pentagon Papers.

From there, the relationship between Assange and the press deteriorated quickly. A lot of this clearly had to do with Assange’s personality. Repeat attempts by (ostensibly sympathetic) reporters to work with Assange ended in fiascoes, with the infamous “Unauthorized Autobiography” — in which Assange abandoned the anticipated Canongate books project mid-stream, saying “all memoir is prostitution” — being one of many projects to gain him a reputation for egomania and grandiosity.

Partners like the Committee to Protect Journalists, who had been sifting through Wikileaks material to prevent truly harmful information from getting out, began to be frustrated by what they described as a frantic pace of releases.

In one episode, an Ethiopian journalist was questioned by authorities after a Wikileaks cable revealed he had a source in government; the CPJ wanted to redact the name. “We’ve been struggling to get through” the material, the CPJ wrote.

Eventually, for a variety of reasons, the partnerships with media organizations like the New York Times and The Guardian collapsed. Add to this the strange and ugly affair involving now-dismissed rape inquiry in Sweden, and Assange’s name almost overnight became radioactive with the same people who had feted him initially.

It seemed to me from the start the “reputable” press misunderstood Wikileaks. Newspapers always seemed to want the site’s scoops, without having to deal with the larger implications of its leaks.

It’s easy to forget that Wikileaks arrived in the post-9/11 era, just as vast areas of public policy were being nudged under the umbrella of classification and secrecy, often pointlessly so.

Ronald Reagan’s executive secretary for the National Security Council, Rodney McDaniel, estimated that 90 percent of what was classified didn’t need to be. The head of the 9/11 commission put the number at 75 percent.

This created a huge amount of tension between so-called “real secrets” — things that really should never be made public, like military positions and the designs of mass-destruction weapons — and things that are merely extremely embarrassing to people in power and should come out. The bombing of civilian targets in Iraq was one example. The mistreatment of prisoners in Guantanamo Bay was another.

A lack of any kind of real oversight system on this score is what led to situations like the Edward Snowden case. In 2013, Americans learned the NSA launched a vast extralegal data-collection program not just targeting its own people, but foreign leaders like Angela Merkel.

Snowden ended up in exile for exposing this program. Meanwhile, the government official who under oath denied its existence to congress, former Director Of National Intelligence James Clapper, remains free and is a regular TV contributor, despite numerous Senators having called for his prosecution. This says a lot about the deep-seated, institutional nature of secrecy in this country.

It always seemed that Assange viewed his primary role as being a pain in the ass to this increasingly illegitimate system of secrets, a pure iconoclast who took satisfaction in sticking it to the very powerful. I didn’t always agree with its decisions, but Wikileaks was an understandable human response to an increasingly arbitrary, intractable, bureaucratic political system.

That it even had to exist spoke to a fundamental flaw in modern Western democracies — i.e. that our world is now so complex and choked with secrets that even releasing hundreds of thousands of documents at a time, we can never be truly informed about the nature of our own societies.

Moreover, as the Snowden episode showed, it isn’t clear that knowing unpleasant secrets is the same as being able to change them.

In any case, the institutions Wikileaks perhaps naively took on once upon a time are getting ready to hit back. Frankly it’s surprising it’s taken this long. I’m surprised Assange is still alive, to be honest.

If Assange ends up on trial, he’ll be villainized by most of the press, which stopped seeing the “lulz” in his behavior for good once Donald Trump was elected. The perception that Assange worked with Vladimir Putin to achieve his ends has further hardened responses among his former media allies.

As to the latter, Assange denies cooperating with the Russians, insisting his source for the DNC leak was not a “state actor.” It doesn’t matter. That PR battle has already been decided.

Frankly, none of that entire story matters, in terms of what an Assange prosecution would mean for journalism in general. Hate him or not, the potential legal consequences are the same.

Courts have held reporters cannot be held liable for illegal behavior of sources. The 2001 Supreme Court case Bartnicki v. Vopper involved an illegal wiretap of Pennsylvania teachers’ union officials, who were having an unsavory conversation about collective bargaining tactics. The tape was passed to a local radio jock, Frederick Vopper, who put it on the air.

The Court ruled Vopper couldn’t be liable for the behavior of the wiretapper.

It’s always been the source’s responsibility to deal with that civil or criminal risk. The press traditionally had to decide whether or not leaked material was newsworthy, and make sure it was true.

The government has been searching for a way to change that equation. The Holy Grail would be a precedent that forces reporters to share risk of jail with sources.

Separate from Assange, prosecutions of leakers have sharply escalated in the last decade. The government has steadily tiptoed toward describing publishers as criminal conspirators.

Through the end of the Obama years, presidents had only prosecuted leakers twelve times. Nine of those came under Obama’s tenure. Many of those cases involved the Espionage Act.

In one case, a Fox reporter was an unindicted co-conspirator in a leak case involving a story about North Korea planning a nuclear test in response to sanctions.

In another incident, then-New York Times reporter James Risen spent seven years fighting an attempt by the Obama government to force him to compel his sources in a story about Iran’s nuke program.

A more recent case, from the Trump years, involved NSA leaker Reality Winner, who was given a draconian five-year prison sentence for leaking to The Intercept.

Despite Trump’s more recent cheery campaign-year comments about Wikileaks, and his son’s now-infamous email correspondence with Assange, Trump’s career-government appointees have not deviated much from the old party line on Wikileaks.

Trump’s security chiefs repeatedly called for a prosecution of Assange, with then-Justice head Jeff Sessions saying it was a “priority.”

Current Secretary of State and then-CIA director Mike Pompeo called Wikileaks a “non-state hostile intelligence service” and added, “Julian Assange has no First Amendment freedoms… He is not a U.S. citizen.”

It’s impossible to know exactly what recent news about an indictment means until we see it (the Reporters’ Committee for the Freedom of the Press has already filed a motion to unseal the charges). If there is a case, it could be anything in the federal criminal code, perhaps even unrelated to leaks. Who knows?

But the more likely eventuality is a prosecution that uses the unpopularity of Assange to shut one of the last loopholes in our expanding secrecy bureaucracy. Americans seem not to grasp what might be at stake. Wikileaks briefly opened a window into the uglier side of our society, and if publication of such leaks is criminalized, it probably won’t open again.

There’s already a lot we don’t know about our government’s unsavory clandestine activities on fronts like surveillance and assassination, and such a case would guarantee we’d know even less going forward. Long-term questions are hard to focus on in the age of Trump. But we may look back years from now and realize what a crucial moment this was.

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Millennials Are Quickly Ditching City Life For Suburbs 

A new report from Ernst & Young LLP., Research Now surveyed 1,202 adults aged 20 to 36 shows that millennials are fleeing big cities for suburban life.

When determining where to live, many millennials are now following the footsteps of their parents. In total, rent or own, 38% of millennials live in the suburbs, compared to 37% in the city.

Cathy Koch, EY’s Americas Tax Policy Leader, told CNBC that millennials are choosing suburbs over cities.

“It’s not just that they’re settling down as they get older, either,” Koch said.

“When looking at the very same age group today compared to two years ago, there’s an increase in the share of millennials living in the suburbs.”

“It was a surprise to me to see this generation increasingly choosing suburban locations to buy homes,” Koch said, but the trend at play makes sense: “The ‘suburbs’ may very well be smaller cities close to larger urban areas – these still afford the richness of city living (including employment opportunities) at maybe lower home prices.”

According to a recent report from Zillow, millennial home buyers can expect to pay 26.5% of their income to purchase a median-value home in a city, but only 20.2% of their income for a similar home in the suburbs.

Personal finances and student debt is likely the factor driving millennials out of big cities for regions that have a much lower cost of living.

More than 50% of millennials are currently paying off student debt (on average, Americans have $30,000 of student loan debt).

Millennials who majored in business have the least amount of student loans, but a large share of them have worthless humanities majors with low-paying gig-economy jobs.

Ernst & Young finds more millennials are buying homes in the last several years, but shows how student debt has delayed homebuying for many. This fragile generation is buying homes at a much lower rate than Gen Xers and Baby Boomers.

Student debt has not just delayed home buying, but also marriage and children for many.

Koch said the housing affordability crisis and rising interest rates would continue the trend of millennials exiting large cities into suburbs because of housing prices and the cost of living is just too expensive.

Into 2020, the acceleration of millennials leaving cities could jump, due to existing home sales topping out and inventory across the country coming online, forcing home prices much lower, which would entice 20 to 36-year-olds to gravitate to regions that housing prices are at bargain prices.  

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Corporate Share Buybacks Looking Dumber By The Day

Authored by John Rubino via DollarCollapse.com,

A recent MarketWatch article notes that:

GE was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin.

Even more important, GE has now left itself with minus $48 billion in tangible net worth at Sept. 30, with actual genuine tangible debt of close to $100 billion. As the new CEO Larry Culp told CNBC last Monday: “We have no higher priority right now than bringing those leverage levels down.” The following day, GE announced the sale of 15% of its oil services arm Baker Hughes, for a round $4 billion.

Of course, since that sale values Baker Hughes at $26 billion, and GE paid $32 billion for 62% of Baker Hughes as recently as last year, which looks to me like a valuation for the whole company of $52 billion, GE shareholders appears to have lost half the value of their investment in Baker Hughes in about 18 months.

But GE is just one of several hundred big companies with CEOs who now have to justify a massive, in some cases catastrophic waste of shareholder cash.

This most recent share buyback binge was dumb money on steroids, with artificially low interest rates leading corporations to borrow big and buy back their stock on the twin assumptions that:

1) since the cost to borrow was less than their stock dividend, they were generating “free cash flow” and

2) buying their own stock forced up the price, which would make the CEO look smart.

Both assumptions were only valid while the market was rising. And since most of the buying took place late in a bull market, with share prices at or near record highs, it was only a matter of time before a correction or (more recently) an actual bear market turned that free cash flow into a monumental capital loss and made that smart CEO look not just dumb but criminally negligent.

The examples of corporate dumb money in action are many and varied, but a few are up there with GE in terms of egg-on-the CEO’s face, chaos at the annual shareholders meeting entertainment value. Big Tech icons Apple, Alphabet, Cisco, Microsoft and Oracle, for instance, repurchased $115 billion of stock in the first three quarters of 2018, while devoting only $42 billion to capital spending.

IBM is an even better story. It bought back $50 billion of its stock between 2011 and 2016, cutting its shares outstanding by, well, here’s the chart:

Then, with its stock up (because the falling share total turned declining earnings into growing earnings per share), it just kept on buying. Here’s how the company phrased it in its Q2 earnings press release:

IBM’s free cash flow was $1.9 billion. IBM returned $2.4 billion to shareholders through $1.4 billion in dividends and $1.0 billion in gross share repurchases. At the end of June 2018, IBM had $2.0 billion remaining in the current share repurchase authorization.

IBM ended the second quarter with $11.9 billion of cash on hand. Debt totaled $45.5 billion, including Global Financing debt of $31.1 billion. The balance sheet remains strong and is well positioned for the long term. [Emphasis added]

Then this happened (did I mention that this late in the cycle a bear market is inevitable?):

Now much of the cash that the company “returned” to shareholders has become money that the company lost for shareholders. And – here’s where the macro part of the dumb money story begins – the fact that corporate America has leveraged itself to the hilt to buy back stock leaves hundreds of companies in varying degrees of dire financial straits. In other words, with sales growth slowing and free cash flow evaporating, these over-leveraged companies will have to raise capital to shore up their balance sheets. But interest rates are up, which makes new borrowing a massively cash flow negative proposition. Asset sales, meanwhile, become “fire sales” in a downturn (note the above GE example), so that’s a painful and embarrassing option. What’s left? Why, equity sales, of course.

So – as usually happens at the end of long credit parties – the same companies that bought back their shares so aggressively at ever-higher prices now have to pull those same shares out of storage and sell them at ever-lower prices, creating a mini death spiral in which a rising share count pushes down the share price, necessitating more equity sales, and so on.

Each annual proxy vote becomes a referendum on the once-brilliant CEO’s intelligence, and numerous formerly “well-run” companies end up failing. General Motors, you might recall, declared bankruptcy in 2009. And there is actual speculation that GE might be heading that way this time.

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Illinois Obamacare Signups Down 26% Amid Nationwide Drop

Despite lower prices for health insurance this year, a staggering 26% of Illinois residents have chosen not to enroll in plans through the Obamacare exchange so far this year, according to numbers released last week by the Trump administration.

The Chicago Tribune reports that three weeks into open enrollment, Illinois residents had only purchased 57,819 heal insurance plans on the exchange, vs. the 77,960 chosen this time last year, according to the Centers for Medicare & Medicaid services

It isn’t just Illinois either – as just 1.9 million people in the US have selected plans in the first three weeks vs. 2.3 million last year – a drop of 21%

It wasn’t immediately clear Wednesday why enrollments were down, though a number of factors have changed since last year.

For one, unlike in previous years, people who choose not to buy health insurance for next year won’t have to pay penalties for being uninsured. Also, Illinois got 78 percent less federal money to hire workers, known as navigators, to help people enroll in health insurance plans this year. –Chicago Tribune

“People could be choosing to sit out this year,” according to Stephani Becker – associate director of health care justice at the Chicago-based Sargent Shriver National Center on Poverty Law, adding, “We won’t really know the effect until the final numbers,” which will come in after December 15 when open enrollment ends. 

Meanwhile, Illinois’ uninsured rate has risen slightly from 6.5% to 6.8% the previous year, according to the US Census Bureau. 

The Tribune suggests that perhaps consumers are simply looking to take advantage of new insurance options, such as extended short-term plans. 

Short-term plans are generally cheaper than traditional plans but cover fewer services. The Trump administration recently decided to allow short-term plans to be used for a year — instead of just three months — and be renewed for as long as three years. –Chicago Tribune

Outgoing Governor Bruce Rauner used his veto power to strike down a bill that would limit the use of short-term plans to six months at a time, however Illinois lawmakers have already voted in the Senate to override those changes, while the House is expected to take up the issue shortly. 

Another thought Becker had was that the midterm elections distracted people from enrolling in healthcare. 

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Bear Trap?

Authored by Sven Henrich via NorthmanTrader.com,

Are markets setting up for a major bear trap? Let’s explore the question. Look, I could show you a 100 charts that say the same thing that everybody already knows: Things are terrible. From crude crashing 7 weeks in a row, $FAANGS dropping a trillion bucks in market cap and individual stocks getting taken out back and shot. Crypto is a wasteland. Global growth is continuing to slow down hard (Germany just printed its lowest GDP growth in nearly 4 years) and US growth is heading back to a 2% regime. Bulls that were aggressively pushing for ever higher targets are sheepishly reducing them fast. One analyst dropped his 3,200 year end target on $SPX to 2,900, another dropped his 2018 Bitcoin target from $25K to $15K (it’s trading at $3,700 this weekend) and downgrades are permeating the daily news cycle. Long gone is the talk of global synchronized growth that dominated the headlines earlier in the year.

And currently the year is shaping up to be the worst ever in terms of total asset classes in negative territory, 90%:

In short: Bears have taken over everything and are dancing on the corpses of bulls that have mocked them for so long.

Heck they have even taken over the malls

Last week’s price action was the most miserable Thanksgiving week in recent memory.

In lieu of that I have a question:

Why haven’t we taken out the lows? I mean, given all this backdrop of global misery and wipe outs in asset classes, why is the $SPX still in range?

Indeed at this very moment that chart says higher lows. Now of course that can change in a hurry next week and we may enter that next risk zone we’ve been discussing in previous Weekly Market Briefs:

But why haven’t we seen new lows yet? What else do bears need?

I tell you what they need: A failure for the US and China to come to a trade war resolution, the Fed to remain hawkish into 2019, the Brexit deal to fail in the UK parliament (it was just approved by the EU) and the ECB to follow through on ending QE.

And here in lies the potential bear trap on triggers that could kick in the technical signals that are increasingly abundant suggesting a major rally may be in the works.

“We agree to” are the 3 magic words that would cause a buying bonanza if they are uttered in some form during the G20 meeting between President Xi and President Trump next weekend. Never mind the details, any real sign of progress (not the fake teaser headlines that markets no longer take seriously) and it’s off to the races.

A no Brexit deal would be bad for the UK. Arguably worse than the deal they have on the table right now. Will the UK reject a deal with no alternative in sight? An agreed deal would likely produce a relief rally in the UK and in Europe. Certainty is preferred over uncertainty.

And Draghi has to make a decision. Can he really afford to end QE if markets and growth keeps falling all around him?

Just looks at that $DAX, it’s horrible:

No, Draghi is staring at a major policy failure just a few months ahead of his retirement:

In lieu of a major global market rally emerging soon the Fed is increasingly penciled in for a dovish rate hike in December, meaning they raise rates, but then signal a slowdown or pause in rate hikes for 2019. What? You really think the Fed wants to be responsible for a stock market crash into Christmas? Hardly. Lest not forget Janet Yellen famously caved on her 4 rate hike schedule penciled in for 2016 when global markets got hammered in early 2016. That market action produced $5 trillion+ in global central bank intervention after all.

Which brings me to the mystery chart I’ve been teasing a bit on twitter. In the larger geopolitical and macro context I outlined above this chart may be the most important chart on the planet right now.

Here it is, the Global Dow Jones, an index that track 95% of global markets:

It’s an incredible chart actually. You can see how precise the price action has tracked the 2 rising wedges. In 2007 the global bull market ended when the wedge was broken to the downside. Since the 2009 lows a new, larger wedge has formed and it’s just as precise.

Fact is the world is again at key risk breaking its bull market trend. And we see it in charts everywhere. Right in front of all the potential triggers I mentioned above.

See a sustained break of the trend line and the global bull market is over. The stakes couldn’t be higher.

The current support trend line was formed right at the moment when global central banks embarked on their $5 trillion buying sprees between 2016 and 2017. The resulting asset inflation resulted in over 16 months of uninterrupted global market gains with the final blow-off top occurring on the heels of the liquidity bomb that US tax cuts represented. Note global markets temporarily tried to pierce the upper trend line on historic overbought readings but then failed to hold the trend line with the February correction.

And now we’re back to the lower trend line.

So where’s the bear trap? The bear trap would be a failure by bears to create a sustained break of the trend line.

Indeed, one can see a potential bullish pattern emerging here, that of a bull flag, a bullish pattern not unlike what we also saw in 2016 which was a bullish wedge then:

Get some or all of those triggers I mentioned above resolved and one can imagine all kinds of rally scenarios. Even new highs perhaps? Another run at the upper trend line? Or lower highs? Either way a positive resolution to some of the triggers outlined above and one can envision a larger rally emerging into year end and perhaps into Q1 2019.

And there are very specific technical signs that would support such a rally.

Let me show you a few to consider.

Equal weight, $XVG:

$XVG printed a new low last week and retested its 2007 and 2014/2015 highs. But something notable has happened. We can see a positive RSI divergence on these new lows. As you can see in the chart positive RSI divergences in $XVG have coincided with major lows including 2009 and the above mentioned 2016 lows. Coincidence?

But the trend is broken for $XVG and that is a concern for any notion of future new highs, but for now it suggests potential firepower for a sizable rally. Also note the RSP:$SPY ratio has ticked up last week.

Why? Because there are positive divergences in the internals.

Example: $USHL:

As miserable as last week was high/lows printed much better readings than during the October lows. That script looks similar to the 2015 and 2016 retest lows.

What about the carnage in tech? Check this out, here’s the $NDX monthly futures chart:

It has not broken its 2009 trend line. And even if it were to on a spike down basis note the rather pronounced support line that is lurking just underneath. Connecting 2007 to 2014/2015 highs & offering support in 2017 during Brexit. We’re a stone throw away from that trend line and hence any break of the 2009 trend line may prove to be temporary.

So you see nothing has broken yet and major support is just below.

And here’s another interesting chart pertaining to the Nasdaq, its internals are also showing a massive positive divergence as $NDX is printing a potential bullish wedge:

Very clean all this. Just saying. Bears watch out.

And speaking of tech, just how oversold is the sector? Here’s a little perspective that should raise some eyebrows:

$NDX MACD histogram is more oversold than even during 2009, it’s now at levels not seen since 2000. And even then these type of readings ended up producing massive counter rallies.

And look closely at the broader US market context. Here’s the $VTI, the all market ETF:

Also scraping along its 2009 trend line, but perhaps just as notable, we’re sitting right at the monthly 18MA. Don’t ask me why, but the monthly 18MA has self evidently been a major market pivot for years. Yes it has fallen below it several times, but many more times it has been key support.

What about the horrid breakdown action in individual stocks? Take $AAPL for example, totally broke its recent trend:

Ugly no doubt. But also note its weekly RSI, the last time it was this low was at the 2015 lows. Potential firepower for a counter rally. Think a positive China/US trade resolution would have an impact on the stock? Better believe it.

$AMZN? Curiously once again saved its trend line last week:

The Goldman Sachs horror show? It too looks to be very close to major fib support while being massively oversold:

These are mere examples, but they highlight an important point: Many of these stocks are vastly oversold and are, as markets, sitting near key support levels.

Which brings me back to the global picture. As miserable as the $DAX chart looks (as I mentioned at the outset), even here one has to acknowledge positive divergences and a potentially bullish structure emerging:

While crude has also entered a zone of key support from which a sizable rally could emerge:

Add sentiment to the equation…

…and a potential positive resolution to any of the triggers I mentioned above and you have the ingredients of a major bear trap.

Next week:

As in October markets are once again hanging by a thread just prior to month end. In late October we saw a massive rally emerging from key support to save the monthly trend lines. Will we see a repeat?

Now that buyers have lost 2700 last week hence immediate downside risk is a retest of October lows and a break into 2585-2595. In context of global markets this is a support zone that probably needs to be defended with vigor to avoid a major bull market trend break.

Remember the risk zone:

Is a dirty intra week drop to February lows possible? Absolutely. Would it mean the end of the 2009 trends? Depends where we close at month end. As we saw in October quick and fast bounce backs are clearly possible.

However also note the technical backdrop I outlined on twitter:

Bottomline: From my perch there is a solid case to be made for a bear trap in the works. The technicals are lining up for it, but it also requires the positive resolution of some macro triggers in the days ahead. Brexit, Fed, ECB and trade war. I can’t predict what the G20 meeting between the US and China will produce other than a major gap event in either direction on Monday December 3rd. I will suggest however that both sides have a vested interest in markets not collapsing further into December. Bears, as successful as they have been, have so far failed to produce new lows. And perhaps that should be a reason for them to not get too cocky at this precise moment in time, especially considering one additional factor:

Bonds have so far averted the feared breakdown and the yield scare has for now disappeared from the headlines.

And maybe, just maybe, the bond market is signaling something other than an economic slowdown, perhaps is it signaling a dovish rate hike to come. Bear trap?

If it is to be the technicals show signs for its potential.

*  *  *

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San Ysidro Port Locked Down As Hundreds Of Migrants Rush US Border; Tear Gas Deployed

Officials closed the largest land crossing in North America on Sunday at San Ysidro as hundreds of migrants rushed the US border in an attempt to cross into the United States. 

US Customs and Border Protection closed all north and southbound vehicle traffic, along with pedestrian crossings at the port of entry. 

Developing… 

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“Largest-Ever Overseas Real-Estate Investment Scam” Fleeced Investors For $100 Million 

The Federal Trade Commission (FTC) under the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), has recently announced that it seeks law-enforcement action against a residential resort development in Belize, calling it “the largest-ever overseas real-estate investment scam” the agency has ever seen.

At a recent press conference in Washington, D.C., the agency said the development known by names that include Sanctuary Bay, Sanctuary Belize, Buy Belize, Buy International, and Buy Paradise, fleeced 1,000 American investors, out of more than $100 million.

Scheme Video: Belize Real Estate – Belize Property – Belize Homes – Buy Belize 

According to court documents filed by the FTC in the US District Court of Maryland, 24 individuals and shell companies falsely claimed to be constructing a luxurious resort community that would feature a hospital, hotels, a golf course, a spa, a casino, high-end boutiques, cafes, restaurants, and an “American-style” supermarket.

Video: American National Sues Over “Sanctuary Belize” Multimillion-Dollar Scam

The agency said investors were fooled into believing the lots, which sold for between $150,000 and $500,000 each, would dramatically increase in value.

Scheme Video: Sanctuary Belize Real Estate

On page three of the court document, it said defendants sold “lots primarily to Americans looking to retire abroad or seeking investment opportunities. They target small business owners and couples nearing retirement. Among other things, they claim the lots are low-risk investments that consumers can resell easily and enjoy 200%-300% appreciation.

The Wall Street Journal has been following the developments of the scheme for more than a year.

More than ten years after sales started, the FTC said most of the Manhattan-sized development is still unfinished. Only twelve homes and part of the marina have been completed, many of which are occupied by people with close ties to the development 

The FTC said investors were supposed to hire a builder to construct their Central American home, but many did not, because they saw the overall property was not fully developed and there was no real estate market for the lots. 

As a decade went by, investors started to panic and sold their lots back to the developers at a giant loss, while many stopped making payments.

Some investors even tried to unload the lots themselves but found a developer-tied brokerage did not operate in “good faith,” and local real estate agents refused to touch any lots in the development.

The FTC has frozen the assets of the defendants and will seek to recoup money lost in the real estate scheme. James Kohm, associate director of the agency’s enforcement division, declined to say whether the case would be referred to law enforcement so that criminal charges can be pursued, but said that is the usual process in “cases of hardcore fraud,” said The Wall Street Journal.

As the global credit cycle rolls over, more and more fraudulent schemes will come out of the woodwork.

Just last month, the Securities and Exchange Commission and the Department of Justice uncovered the largest-ever Ponzi scheme in Baltimore-Washington metropolitan area, totaling $345 million. 

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Ukraine Accuses Russia Of Opening Fire On Its Warship After Russian Blockade Of Kerch Strait

The Ukrainian navy has accused Russia of opening fire on some of its ships in the Black Sea, striking one vessel and wounding a crew member.

In a statement on its Facebook page, the Ukrainian navy said the Russian military vessels opened fire on Ukrainian warships after they had left the 12-mile zone near the Kerch Strait, leaving one man wounded, and one Ukrainian vessel damaged and immobilized, adding that Russian warships “shoot to kill.”

The alleged attack comes as tensions have been running high around the Kerch Strait, which separates Crimea from mainland Russia after Ukrainian vessels allegedly violated the Russian border. The passage was blocked by a cargo ship and fighter jets were scrambled. 

According to RT, Russia has stopped all navigation through the waterway using the cargo ship shown above. Videos from the scene released by the Russian media show a large bulk freighter accompanied by two Russian military boats standing under the arch of the Crimea Bridge and blocking the only passage through the strait.

“The [Kerch] strait is closed for security reasons,” the Director-General of the Crimean sea ports, Aleksey Volkov, told TASS, confirming earlier media reports.

Russian Air Force Su-25 strike fighters were also scrambled to provide additional security for the strait as the situation remains tense. The move came as five Ukrainian Navy ships had been approaching the strait from two different sides.

According to RT, two Ukrainian artillery boats and a tugboat initially approached the strait from the Black Sea while “undertaking dangerous maneuvers” and “defying the lawful orders of the Russian border guards.” Later, they were joined by two more military vessels that departed from a Ukrainian Azov Sea port of Berdyansk sailing to the strait from the other side.

The Russian federal security agency FSB, which is responsible for maintaining the country’s borders, denounced the actions of the Ukrainian ships as a provocation, adding that they could create a “conflict situation” in the region. According to the Russian media reports, the Ukrainian vessels are still sailing towards the strait, ignoring the warnings of the Russian border guards.

According to Reuters, a bilateral treaty gives both countries the right to use the sea, which lies between them and is linked by the narrow Kerch Strait to the Black Sea. Moscow is able to control access between the Sea of Azov and the Black Sea after it built a bridge that straddles the Kerch Strait between Crimea and southern Russia.

Reuters adds that tensions surfaced on Sunday after Russia tried to intercept three Ukrainian ships — two small armored artillery vessels and a tug boat — in the Black Sea, accusing them of illegally entering Russian territorial waters.

The Ukrainian navy said a Russian border guard vessel had rammed the tug boat, damaging it in an incident it said showed Russia was behaving aggressively and illegally. It said its vessels had every right to be where they were and that the ships had been en route from the Black Sea port of Odessa to Mariupol, a journey that requires them to go through the Kerch Strait.

Meanwhile, Russia’s border guard service accused Ukraine of not informing it in advance of the journey, something Kiev denied, and said the Ukrainian ships had been maneuvering dangerously and ignoring its instructions with the aim of stirring up tensions.

It pledged to end to what it described as Ukraine’s “provocative actions”, while Russian politicians lined up to denounce Kiev, saying the incident looked like a calculated attempt by President Petro Poroshenko to increase his popularity ahead of an election next year. Ukraine’s foreign ministry said in a statement it wanted a clear response to the incident from the international community.

“Russia’s provocative actions in the Black Sea and the Sea of Azov have crossed the line and become aggressive,” it said. “Russian ships have violated our freedom of maritime navigation and unlawfully used force against Ukrainian naval ships.”

Both countries have accused each other of harassing each other’s shipping in Sea of Azov in the past and the U.S. State Department in August said Russia’s actions looked designed to destabilize Ukraine, which has two major industrial ports there.

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