Tag: news

Authored by Andrea Germanos via CommonDreams.org,

The National Security Agency (NSA) collected over 530 million phone records of Americans in 2017 – that’s three times the amount the spy agency sucked up in 2016.

The figures were released Friday in an annual report from the Office of the Director of National Intelligence (ODNI).

It shows that the number of “call detail records” the agency collected from telecommunications providers during Trump’s first year in office was 534 million, compared to 151 million the year prior.

“The intelligence community’s transparency has yet to extend to explaining dramatic increases in their collection,” said Robyn Greene, policy counsel at the Open Technology Institute.

The content of the calls itself is not collected but so-called “metadata,” which, as Gizmodo notes, “is supposedly anonymous, but it can easily be used to identify an individual. The information can also be paired with other publicly available information from social media and other sources to paint a surprisingly detailed picture of a person’s life.”

The report also revealed that the agency, using its controversial Section 702 authority, increased the number of foreign targets of warrantless surveillance. It was 129,080 in 2017 compared to 106,469 in 2016.

As digital rights group EFF noted earlier this year,

Under Section 702, the NSA collects billions of communications, including those belonging to innocent Americans who are not actually targeted. These communications are then placed in databases that other intelligence and law enforcement agencies can access—for purposes unrelated to national security—without a warrant or any judicial review.

“Overall,” Jake Laperruque, senior counsel at the Project On Government Oversight, said to ZDNet, “the numbers show that the scale of warrantless surveillance is growing at a significant rate, but ODNI still won’t tell Americans how much it affects them.”

via RSS https://ift.tt/2JWAUNP Tyler Durden

After first erupting on Thursday, Hawaii’s Kilauea volcano has continued to send molten magma up through the eight fissures that have now opened up in the ground in a part of Hawaii that is home to several ritzy neighborhoods, including the tony Leilani Estates, where residents have been forced to flee as the eruptions, as well as several powerful earthquakes, have destroyed power lines and disrupted and left parts of the surrounding area without water.

One area resident summed up the neighborhood’s plight in a statement to the Los Angeles Times.

“This is as bad as it gets,” said John Bennett, 61, a resident of the Leilani Estates neighborhood forced to evacuate. “We can’t go back in yet. I feel lost. I don’t know what to think. I’ve never been in this situation before.”

The estimated 1,800 people who live in the affected area have sought temporary respite in government shelters. Others have moved in friends on other islands. 

At least nine house have been destroyed in Leilani Estates a the fissures have continued to spew lava through the lower Puna subdivision, according to the Honolulu Star Advertiser.

Some have said they don’t know whether the pets that they left behind will survive the natural disaster, according to the Washington Post.

Bennett, the man quoted above, said the eruption took him by surprise. He first learned what was happening when he came home Thursday and noticed that a fissure had opened up in his front yard.

Bennett’s wife Roberta, an assistant librarian at Kamehameha Schools on the island of Hawaii, was away on Oahu when the magma started flowing, but she quickly flew back with their son Keoni, 29. The family stayed in the house until Friday, when they were forced to leave because of the magma flows.

“Thursday night we saw the glow of lava about a half-mile away from our house,” Bennett said. “The next day we packed and left with our three dogs.The reason we left was the air quality was so bad, with a strong sulfuric smell coming out of the ground.”

Bennett, who works as a company that transports gas, diesel and jet fuel around the island, told the LA Times they have been staying with friends in Hilo on the Big Island.

“We’re strong. I’ve got my wife, my son is back in Honolulu. I think my house is still standing. I heard that four homes have been destroyed.”

Two new cracks in the ground began spewing lava from the volcano Saturday, emitting a toxic gas that further compounded the danger to residents, according to USGS.

Active eruption of lava and gas continues along Kīlauea Volcano’s lower East Rift Zone within the Leilani Estates subdivision. Additional fissure vents producing spatter and small lava flows developed early this morning, and additional outbreaks in the area are likely. Deflationary tilt at the summit of the volcano continues and the lava lake level continues to drop. There is no active lava in the Puʻu ʻŌʻō area. Aftershocks from yesterday’s M6.9 earthquake continue and more should be expected, with larger aftershocks potentially producing rockfalls and associated ash clouds above Puʻu ʻŌʻō and Halemaʻumaʻu Crater.

By late Saturday afternoon local time, magma was only flowing through fissure No. 7 – but that fissure alone was producing enough lava to continue threatening the surrounding area, said USGS volcano scientist Wendy Stovall.

Since the eruption Thursday, quakes have been shaking the island at regular intervals. The island has also endured two particularly large quakes: A 5.6-magnitude quake hit south of the volcano, which was followed by a 6.9 magnitude quake.

The latter quake was felt as far away as Oahu, and it also struck in nearly the exact same place as a deadly 7.4-magnitude earthquake in 1975.

What’s worse, the gas flowing up through the fissures is making the area even more hazardous to people living in the area.

“The sulfur dioxide gas is very intense” and a “dangerous hazard in the area,” Stovall said. “This is a continually evolving situation.”

Videos posted on social media showed plates crashing the ground as the floor.

#earthquake #hawaii video my boyfriend took in our house in Papaikou during the 6.9 earthquake 😳 pic.twitter.com/xAAjeN1zFO

— Allison (@Allieb1792) May 5, 2018

The quakes also forced the closure of Hawaii Volcanoes National Park after some of the trails were damaged. The first quake triggered a cliff to collapse into the ocean near the Jaggar Museum.

Park officials said they canceled all tours Friday afternoon and evacuated about 2,600 tourists from the area.

“Safety is our main priority at Hawai’i Volcanoes National Park, and it is currently not safe to be here,” park superintendent Cindy Orlando said in a statement. “We will monitor the situation closely, and reopen when it is safe to do so.”

Geologists from the USGS said the quakes around Puna most closely resemble the events that precipitated a 1955 eruption. That eruption lasted about three months and left almost 4,000 acres of land covered in lava.

via RSS https://ift.tt/2rnIBFR Tyler Durden

Authored by Lance Roberts via RealInvestmentAdvice.com,

This Is Why We Use Weekly Data

On Thursday morning, as the market dropped below its 200-dma, I got numerous emails asking about the break. I wrote the following in response:

“I have often discussed that as a portfolio manager I am not too concerned with what happens during the middle of the trading week. The reason is daily price volatility can lead to many false indications about the direction of the market. These false indications are why so many investors suggest that technical analysis is nothing more than ‘voodoo.’

For me, price analysis is more about understanding the ‘trend’ of the market and the path of least resistance for prices in the short and intermediate-term. This analysis allows for portfolio positioning to manage risk.

Over the last several weeks, I have been mapping out the ongoing correction in the market and have noted the important support that has been provided by the running 200-day moving average. The chart below is updated through this morning.”

“The break of the 200-dma today is not a good sign. Consolidation processes are much akin to the “coiling of a spring.”  As prices become compressed, when those prices break out there is a “release of energy” from that compression which tends to lead to rather sharp moves in the direction of the breakout.

Importantly, the break of support today is NOT a signal to run out and sell everything.  It is, however, a worrisome warning that should not be entirely dismissed.

As stated, nothing matters for me until we see where the market closes on Friday.”

Of course, almost immediately after posting that article, the market began to rally back and closed in the green, and above the 200-dma, thereby negating the break.

In other words, despite all the volatility, nothing changed (for better or worse) which would affect our current portfolio allocations.

So, with that said, let’s update the progress on our potential pathways from last week.

As stated, the market did defend its 200-dma and is very close to reversing its short-term “sell signal.”

That’s the good news.

The not so good news is that while the market did muster a rally on Friday, it still remains well-entrenched within the ongoing consolidation/correction process.

Interestingly, as I stated on Thursday’s radio broadcast:

“A bad employment number may actually be ‘good’ for the market. If the number comes in weaker than expected this will likely ease concerns about more aggressive Fed rates hikes which could buoy stocks.”

Not surprisingly, that is exactly what happened.

The problem is that with all the economic data coming in weaker than expected, this may well be a very short-lived rally.

In reviewing our three primary pathways above, pathway #3a and #3b remain the most viable currently. From last week’s missive:

• Pathway #1 is the most bullish of potential outcomes. With earnings continuing next week, and short-term conditions mildly oversold, the market is able to push through resistance and rally back towards old highs. (Probability = 20%)

• Pathway #2 is the most bearish with the market failing at the cluster of overhead resistance once again but this time violating the 200-dma. This decline begins a process of a deeper correction as we head into the summer months. (Probability = 30%)

• Pathway #3a and #3b suggest a further rally to the 100-dma, a pullback to the previous downtrend and then either an advance that breaks above the 100-dma and begins a more bullish rise, OR a failure and another test of the 200-dma. (Probability =50%)

Simply, we can not predict the future, we can only react to it. These pathways are educated “guesses” of where the market may trade. However, without analysis of what “might” happen, the process of portfolio management becomes nothing more than a dart throwing contest. Such tends to not work out well.

This is why we have raised cash over the last couple of months on rallies. Currently, given the backdrop of the intermediate-term outlook, updated below, there isn’t much we need to do at the moment.

However, the weakness in the market, combined with longer-term sell signals as discussed on Tuesday, still suggests the market has likely put in its top for the year.

We remain cautious and suggest the time to “buy” has not yet arrived.

Intermediate-Term Picture Remains Bearish

On an intermediate-term basis, both of our weekly “sell signals” remain, and as shown below, despite the sharp rally on Friday, the market once again failed at its overhead trend line and closed lower for the week. Furthermore, the intermediate-term moving average has turned sharply lower and is beginning to threaten crossing below the longer-term average. This is not a good setup for a bull market continuation.

With confirmed “sell signals” still firmly intact, the easiest path for prices currently remains lower. This does not mean you can not have sharp reversal rallies from short-term oversold conditions as we saw last week, but those rallies should be used to reduce risk.

Furthermore, as we discussed last week, the “seasonally strong” period of the year has come to an end. My friend Dana Lyons made another interesting observation with reference to the Presidential cycle. To wit:

“There is some evidence to suggest that stock investors would be well served by selling in May and going away this year.

In parsing the data, however, we have found one historical trend that may suggest that the ‘Sell In May…’ advice may be better served this year than most. It is based on the (also relatively consistent) 4-year Presidential Cycle. Naturally, the average Sell In May returns are not uniform across all years. And specifically, we see dispersion, and a wide one at that, among the 4 years within the Presidential Cycle. For example, during ‘Year 4’s’, the May-October average returns actually exceed those of the November-April period.”

“It is a different story in ‘Year 2’s’, however. In fact, at +0.00%, the average May-October return during Year 2’s is the worst of any of the 4 years.”

Given the ongoing issues of “trade wars,” tariffs, Russia, Syria and North Korea combined with an extraction of liquidity from both the Fed and the ECB, the risk of a policy misstep is certainly elevated. Furthermore, with the long-term weekly indicator very close to tripping a “sell-signal,” we certainly remain more cautious currently.

“Cash” remains a safety net for now.

The Fed Is Walking A Tight Rope

by Michael Lebowitz

In March 2012, Chris Cole of Artemis Capital wrote:

“Imagine the world economy as an armada of ships passing through a narrow and dangerous strait leading to the sea of prosperity. Navigating the channel is treacherous for to err too far to one side and your ship plunges off the waterfall of deflation but too close to the other and it burns in the hellfire of inflation. The global fleet is tethered by chains of trade and investment so if one ship veers perilously off course it pulls the others with it.”

At the time the letter was written, the most pressing concern for the global economy was clearly the “waterfall of deflation.” Now consider the actions of the Federal Reserve (Fed) since December 2015. They have raised the Fed Funds rate five times and more recently began reducing their balance sheet, aka quantitative tightening (QT). In measured fashion, they expect to continue both sets of actions which will progressively reduce financial liquidity for the foreseeable future.

The removal of stimulus despite economic growth and inflation that is well within the range of the last five years raises important questions about the Fed’s objectives.

Some will say that the Fed is concerned that inflationary pressures are building as witnessed by some corporate earnings comments and economic surveys. Others claim that the large fiscal deficits and tax reform are likely to provide a boost in the near future to economic growth and inflation and that their actions are pre-emptive. While we acknowledge the possibility for an uptick in inflation, we think the main factor driving the Fed is the normalization of policy, both interest rates, and balance sheet, to provide them monetary ammunition for when it is needed next. Said differently, they are looking beyond the current economy with an eye toward the next recession. As Chris Cole so graphically illustrated, however, the strait through which the global armada of ships now sail may appear less treacherous, but the reality is that accumulating global debt is actually guiding the fleet into even more treacherous waters.

Damned if they do– If the Fed’s overarching goal behind recent policy is normalization, they run the risk of stamping out the recent uptick in economic growth and inflation. Given the $70 trillion of government, consumer, and corporate debt, interest rates are economically more important today than any time in the past. As such, each step higher in interest rates and reduction in balance sheet increases the sensitivities to debt and therefore reduces economic activity.

Damned if they don’t– The flip side of the argument is that if they do not increase rates and reduce their balance sheet, they run the risk that recent fiscal stimulus and dollar weakness will stoke inflation. While the Fed has a 2% inflation goal, letting inflation rise much beyond 2% would also impose upward pressure on interest rates and harm economic activity.

On her way out, Janet Yellen assured us the pace of Fed tightening would be “gradual and predictable.” Mrs. Yellen seemed to understand the risks of moving too fast or too slow as summarized above but it was always couched in terms of the threat of derailing the recovery. What her analysis seems to have neglected was a long-forgotten scenario that has precedent in U.S. economic history.

The biggest risk may not necessarily be slowing growth or higher inflation but the combination of both, otherwise known as stagflation. Such an environment is a worst-case scenario for the Fed where debts are harder to service due to higher rates combined with weaker wages, tax base, and corporate earnings. Stagflation would not only increase credit defaults but put significant pressure on stock prices and other risky assets that stand at elevated valuations based on low-interest rates. Perhaps most importantly, that scenario would greatly limit any ability of the Fed to intervene if the market swoons.   

via RSS https://ift.tt/2rp0LX4 Tyler Durden

The era of flying taxis could be near. As we explained in March, more than a dozen drone and flying automobile manufacturers have already passed conceptualization/design phase, and a majority of the manufacturers are currently exiting the prototype stage into the testing phase, with most manufactures targeting launch/delivery by 2020.

“If safety and regulatory hurdles are cleared, passenger drones are expected to get wings by 2018–2020, and traditional flying cars by 2020–2022, while revolutionary vehicles could be a reality only by 2025,” Deloitte reported.

In particular, Workhorse Group Inc., an Ohio-based passenger drone startup, could be flying into the lead with their latest drone field test. The company unveiled its Surefly, a vertical-take-off-and-landing (VTOL) drone designed to carry human passengers, at the Paris Air Show last summer, and has since sent it into the air with a pilot inside for the first time.

Workhorse Group describes the details surrounding SurFly’s maiden voyage, which occurred last week in the Cincinnati, Ohio region.

“SureFly the personal helicopter/EVTOL aircraft designed for safe and easy flight – completely conceived, designed, built and tested in America by Workhorse – has taken flight, completing its first successful, manned, untethered hover outside of Cincinnati. This video is a progress report of the past few months’ work leading up to lift off.

Workhorse is the only company with the necessary FAA experimental certification to test this type of vehicle in the United States. The team is working closely with the FAA, which had a representative on site for the test.”

According to the company’s website, SureFly is a two-seater octocopter with a hybrid gasoline piston engine which drives dual generators to provide power to eight prop motors. The aircraft weights roughly 1,100 pounds, with the ability carry 400 pounds over a maximum range of 70 miles.

Workhorse believes their flying taxi could be up and running by 2020, though technical and regulatory issues have been significant headwinds for them in the past. Recently, the company was granted the only FAA experimental certification to test this type of vehicle in the United States, which could accelerate their program towards commercialization much quicker than their competitors like Uber.

Speaking to Digital Trends, Workhorse CEO Steve Burns said their flying drone could have a wide variety of uses. He told Digital Trends that the drone is affordable and priced much cheaper than a typical helicopter, which he went into some detail on how exactly the average American could get their hands on these flying machines:

” It’s designed to be less expensive, safer, and easier to fly than a helicopter. The reason that everyone doesn’t currently have a helicopter in their garage is because of those three issues. We think that if you can have something moderately priced, easy enough that anyone can fly, and that people will feel safe in, there are tons of applications.

It could be a farmer checking on his cattle; it could be an emergency responder able to get to the scene of an accident faster than a road ambulance; it could be military, an air taxi, or just someone wanting to avoid traffic in the city. There are a lot of uses for a short-hop electric flying machine.”

While the all-important field test takes SureFly one step closer towards commercialization, Boeing and other major corporations are right behind them pouring billions into the development of flying taxi drones. Will this trend be another bubble, as we have seen many in this Central-Bank-free-money-anything-goes-induced environment, or is there something legitimate here?

via RSS https://ift.tt/2KG0yrx Tyler Durden

A western Illinois coroner is taking heat over how he handles the remains of those whose loved ones can’t afford a proper burial: after signing over their rights to the body, he cremates the deceased and keeps the ashes until the family pays him $1,000 – at which point he’ll release the death certificate. Of the $1,000, $800 goes to a funeral home and $200 to the crematory.

If a family can’t pay, the ashes of their loved one are mixed with others and buried in an unmarked grave. Meanwhile, if the death certificate is needed for some purpose (life insurance, settling the estate, etc.), the coroner, James Keller, will arrange for the county to recoup its costs from any proceeds. 

Keller says he adopted the policy after the state announced that it was too broke to pay for indigent funerals and burials – instead shifting the cost to funeral homes and county coroners.

After Chris Weible died last month, his family held a memorial service at a Quincy church with just a photograph and an empty container. Weible and his ex-wife, Wendy Smith, who had three children together, were both on disability.

“I just think they pick on the people that are poor,” Smith said. –AP

Keller says his approach protects taxpayers in the tiny county bordering the Mississippi River, while ensuring that funeral homes are paid for their services and poor families can see their loved one buried without having to pay for a full burial. 

Keller has continued the policy despite the fact that Illinois has resumed paying for funerals.

“We do our very best and our due diligence to taxpayers, and we try to be supportive of families, with the hand that we’re dealt with by the state,” Keller said.

Local residents outraged at the policy are trying to force Keller to change it – claiming that “it amounts to the coroner’s office holding ashes hostage and creates a financial crisis for grieving relatives already struggling to pay for basic necessities,” reports AP.

“I felt like it was a kidnapping. He was being held against his will,” said Tom McElroy, whose brother, Mark, died last year with nothing to his name except $200 found in his wallet.

Dignity vs. Solvency

Over a dozen states provide funding to cover the costs of funerals – however many others, from Indiana to West Virginia, say their funds fall short of demand.

Illinois provides up to $1,655 — $1,103 for funerals and $552 for cremation and burial. But the money was cut off in 2010 and again in 2015 as the state headed into a more than two-year budget impasse. In some cases, counties ended up picking up the costs.

Rod Cookson, co-owner of Zehender Robinson Stormer Cookson Funeral Home in Quincy, said at one point the state owed his business about $20,000. Cookson said he didn’t know the Legislature restored the funding.

“They’re bankrupt,” he said of the state. –AP

In other words, Illinois coroners and funeral homes know they’ll probably get stuck footing the bill the next time Illinois legislators realize they’re still in deep financial trouble.

That said, perhaps many Illinois funeral homes simply didn’t realize they can now receive state funding again. While lawmakers have appropriated $9.3 million to pay for final expenses for the indigent – the same amount as 2015, the number of claims has dropped dramatically, from 5,652 in FY 2015 to 1,084 so far this fiscal year ending June 30.

Keller – who is also a funeral director, has the support of Cookson – who says it’s not fair that some people are making him out to be “next to the devil.” 

“These people that don’t have any money are very, very lucky to live in Adams County,” Cookson said.

Keller says he’s had 90 inquiries about indigent burials last year. He insists he gives families ample opportunity to back out of signing over their loved one’s body, and that he doesn’t give them the death certificate or ashes to protect against “abuse,” such as a case in which he learned a family that didn’t want to pay for burial had received life insurance.

Smith has a different version of events. She says she was unclear about what the form she was signing would do, and that she asked Keller if he could work with her to make payments toward the $1,000 and he refused. She also says Keller told her that if she didn’t pay, he’d bury the ashes in a cemetery and not reveal the location. He denies that, but several friends and family say they heard Keller make that statement or that he separately told them the same thing. –AP

Smith was eventually able to come up with $1,000 through donations. 

via RSS https://ift.tt/2Imwrak Tyler Durden

Via Global Macro Monitor,

Religious suffering is, at one and the same time, the expression of real suffering and a protest against real suffering. Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people. – Karl Marx,  A Contribution to the Critique of Hegel’s Philosophy of Right

Social media is becoming the new whipping boy and poster child for all that ills our culture and contributing to its decline.

We added our two cents in a recent post,  Why Google Is A Short,

…social media probably generates negative productivity.  We read some time ago the average American spends 40 minutes per day playing Farmville.   How does planting virtual corn add to the GDP?

Though we are more ambivalent about Google, Facebook is doing some severe psychological damage to an entire generation, including my 15-year daughter.   They spend much of their time competing with trophy photos loaded up on Instagram.  Never gonna win that game, which leads to increased anxiety and depression for an entire generation.

The Google Short

That brings us to the Google (we are old school and can’t bring ourselves to call it Alphabet) short.

Imagine when a politician has his/her epiphany that all those porn searches they have done over the years on Google are stored somewhere and could be hacked and released to the public?  That will ignite a prairie fire of potential legislation, which will spread faster than you can say SNAP.  – GMM, Apr 24th

Our Friend Weighs In

We received this email from a very close friend yesterday,

Yesterday I downloaded the data Facebook has stored on me.  407 pages including every message I sent, every like, every picture, on and on.  Below I pasted just one of these pages, the list of advertisers who requested all my data.  I know nothing about most of these companies and to my knowledge do not use them. Just saying.

Psychological Damage On Children

In 2013, one of my daughters was seeing a therapist to help her work through the psychological complications of her just diagnosed epilepsy.   She is  in good company –  Julius Caesar and Chief Justice Roberts.

The therapist had all the right credentials from all the right institutions,  Harvard grad, Ph.D. from Stanford.   Until I asked her about the damage smartphones are doing to children.

She began to justify, almost saying they were good for kids.

The takeaway quote I recall, she had just attended a seminar and smartphones are good for children, “it is changing their brains.”

No shit.  I fired her on the spot.

Moreover, I can’t tell you how many conversations I have had with friends who have trouble with their children’s use of social media.

Nefarious Activity On Social Media

By the way, I came out of that meeting with my daughter’s therapist to find my trading account had lost several thousand dollars as some dickhead  ‘bots hacked into AP’s twitter account posting the White House had been bombed and President Obama was injured.   Stocks plunged and I was sold out of my long postions by deep out-of-the-money stops.

 The FBI and SEC are to launch investigations after more than £90bn was temporarily wiped off the US stock market when hackers broke into the Twitter account of the Associated Press and announced that two bombs had exploded at the White House, injuring Barack Obama. – The Telegraph

I couldn’t figure out what happened to my account as the S&P was higher than before I entered the meeting.  Until I looked at the chart.

F-tards!

We are not as negative on Twitter as much as Facebook but this is just another example of why the government has to take a closer look at social media.   Furthermore,  and more important, many believe that even the  fate of democracy hinges on the future of clickbait.

Noah At Bloomberg Opines

The great Noah Smith of Bloomberg penned a must-read yesterday,  Social Media Looks Like the New Opiate of the Masses, with the subtitle, Researchers have found some troubling parallels with addictive drugs.

Here are the non-wonkish money quotes:

• I suspect it will be many years before the true scale and scope of the changes are appreciated, and even then much will never be fully understood. The era when humans interacted mainly by gathering in physical space, or maintained personal networks through one-to-one connections, has drawn to a close, and the next generation won’t even really understand what that era was like. Social media has changed the meaning of human life itself.

• But many of us who lived through the shift from Internet 1.0 to the new age of social media can’t help but feel a nagging worry. In addition to concerns about privacy, electoral influence and online abuse, social media seems like it has many of the qualities of an addictive drug.

• Research isn’t conclusive on whether social-media addiction is real. But it certainly has some negative side effects that loosely resemble the downsides of recreational drugs.

•  experiments found that smartphone deprivation induced anxiety among young people, a phenomenon that certainly has parallels to drug withdrawal.

• once the internet offered an escape from the real world, now the real world is a much-needed escape from the internet.

• If social media really does act on many users in a manner loosely analogous to cigarettes or heroin, that means the benefits are less than people’s willingness to pay. Junkies would pay quite a lot for their fix, but that doesn’t mean the money would be well-spent.

• before we conclude that social media is like tobacco. And even if it is, the harm would need to be very substantial in order to get government policy involved in limiting social-media use.

• Whereas Karl Marx declared that religion is the opiate of the masses, our modern capitalists may have invented a better one.

Upshot

Who in their right minds would have thought five years ago we would be comparing Facebook use to tobacco addiction?

We are less sanguine than Noah on the future of our social media economy.

More so, not because of the addiction thing, but because of privacy issues.  The behemoths will surely try and adapt their business models to survive. Will you pay $120 per year for Facebook?   There is no free lunch, right?

That brings us to investing.

Are the toothless F$%Gs out of the woods?  Hardly.  It is only two outs in the top of first, in our opinion.   The blowback is just getting started.

For the above reasons,  a long-term sword of Damocles is hanging over the market and these companies, in particular.  Their stocks, which have heavy weights in the indices,  will experience fits of volcanic eruptions and existential crises to periods of calm and euphoria.   In other words, prepare for a Key Stone Cops chase scene.

Is Our Social Media Economy Good For The Economy

This is one issue where the president is right-freaking-on.    Building a ballroom trumps building a chatroom, as it creates more income and real wealth.

Think back when GM and Ford dominated the economy.   How many secondary jobs were created when a car rolled off the assembly line?   Gas stations, tire shops, mechanics, smog inspectors, auto body painters?

They still do with imported BMWs (especially German cars, they are so expensive to repair) but the input multiplier is not as great.

We won’t fix our economic problems by reducing trade, especially with tariffs, but by making auto workers more productive with both human and physical capital investments.  Maybe 3-D printed cars will eventually rule the day?

This type of anufacturing is more likely (cannot say with certainty, we have not done the research) to have a greater jobs multiplier than the social media economy, and is more egalitarian in income and wealth distribution.

We will concede that the social media jobs  multiplier is not zero.  For example, vendors of, say, banana flavored condoms can sell their junk over these platforms.   But, come on, man!

The Bigs And AI

The one big caveat to our view is that the Facebooks and Googles are big spenders and on the cutting edge of artificial intelligence (AI), which is subsidized by their advertising revenues.  Soomeday they may be big players in the AI/robotic manufacturing displacement that is already here and only  surely to accelerate.

But will they have enough time? Uhh…probably.

via RSS https://ift.tt/2KEzHMs Tyler Durden

The FBI is refusing to pursue work-related text messages and emails sent on the personal devices of Peter Strzok and Lisa Page – the FBI “lovebirds” discovered to harbor extreme political bias for Hillary Clinton and against Donald Trump while actively involved in cases against each candidate during the 2016 US election. Clinton was of course exonerated by the FBI despite overwhelming evidence of criminal conduct, while Trump’s entire presidency has been tainted by the spectre of unproven Russian collusion.

Over 50,000 text messages between Strzok and Page were discovered by the Department of Justice’s internal watchdog, the Office of Inspector General (OIG), leading to their removal from special counsel Robert Mueller’s Russia investigation – which has since devolved into trying to embarrass the President over allegedly paying a porn star not to discuss consensual sex. Of note, Page tendered her resignation on Friday.

In a Wednesday letter to the Senate Judiciary Committee, FBI Director Christopher Wray said that the FBI was not “obligated” to collect all communications between employees, and would not be pursuing communications Strzok and Page sent to each other on their personal devices.

In response, Committee Chairman Chuck Grassley (R-IA) went nuclear – reminding Wray in a Friday letter cc’d to Deputy Attorney General Rod Rosenstein and Dianne Feinstein (D-CA) that “Although, as your letter notes, the FBI is not “obligated” to collect all communications between employees, it is obligated to collect and preserve federal records.” 

Grassley goes on to note that previously released text messages between Strzok and Page “show substantial reason to believe government work was performed on non-government systems during the course of a high-profile investigation,” and that those communications could prove vital to the Committee’s investigation.

The work-related communications on nongovernment systems could shed more light on how the FBI handled the Clinton investigation and would constitute federal records that the FBI would be obligated to retrieve and preserve under the Federal Records Act. –Sen. Grassley to FBI Director Wray

The letter then provides several examples in which Strzok and Page explicitly referred to exchanging work-related information over their personal devices.

“For example, in two text messages Strzok said to Page:”

Gmailed you two drafts of what I’m thinking of sending Bill, would appreciate your thoughts. Second (more recent) is updated so you can skip the first.

…

Yep. Sent something to your gmail, work-related. Think I’m going to pull here and send to Kortan….

“In another text message, Strzok and Page appear to use the encrypted iMessage application on their personal Apple devices to discuss work-related material:”

Strzok: Want to imsg it to me, or want to do it in person?

Page: It’s not that sensitive.

Strzok: Ok. You can imsg just for convenience of typing, too, if you want

…

Strzok: And I have no good, awful, sh*tty terrible (work) news. I can’t say it here, and you can’t share with Andy (yet). I’m upset.

Page: Can you share it on imsg?

Strzok: Yes just sent[.]8

Grassley then excoriates the FBI – comparing Strzok and Page’s use of personal devices for work purposes to Hillary Clinton’s mishandling of classified information on her personal server – which Strzok and Page were investigating. 

“Under 18 U.S.C. § 2071, it is illegal to willfully and unlawfully conceal, remove, or destroy a federal record. Secretary Clinton alienated thousands of federal records when she used a nongovernment server and email for official work, many of which were deleted rather than returned to the State Department when the Department requested them. Ironically, as FBI employees tasked with investigating Clinton’s similar conduct, Strzok and Page appear to have used nongovernment systems for official work as well. This Committee has yet to receive a satisfactory explanation as to why the FBI apparently let Secretary Clinton off the hook for multiple § 2071 violations. It is disturbing that even at this late date, and with all the litigation surrounding Secretary Clinton’s use of a private email server for official business, the FBI seems similarly uninterested in even attempting to retrieve federal records of its own employees that appear to have been alienated as well.“

Grassley then asks three questions of Wray, noting that he expects the response to be unclassified:

• Why has the FBI not requested from Ms. Page or Mr. Strzok any official work-related material from their personal devices and email accounts?
• Why has the FBI not conducted searches of non-FBI-issued communications devices or non-FBI email accounts associated with Mr. Strzok or Ms. Page for official work-related material?
• The FBI’s May 3, 2018, response letter also failed to answer questions 1-5, 8, and 11. Please provide answers and the requested documentation by the deadline. 

Full letter below

via RSS https://ift.tt/2rqWKRQ Tyler Durden

Despite the fact that many polls show her at or near the top of potential Democratic contenders in 2020 (polling even higher than Vice President Joe Biden)…

(courtesy of Zogby Analytics)

…former First Lady Michelle Obama again denied that she has ambitions to seek her husband’s former office on Saturday during a speech at the United States of Women Summit. In response to a question form the audience, Obama said she isn’t interested in running for office, adding that “it doesn’t matter who runs” for the presidency until the US becomes unified.

Obama called the speculation about the Democrats’ 2020 candidate “a distraction.”

“Well, that’s a whole other story because, that’s not the answer either. And when I hear people say, ‘you run,’ it’s part of the problem. We still didn’t get ‘yes we can’ right,” she said, referencing her husband’s 2008 presidential campaign slogan. “It’s not ‘yes you can,’ it’s ‘yes we can.’ And until we get that right, it doesn’t matter who runs.”

She also correctly pointed out that voters across America – especially people of color – put so much hope in Barack Obama…but he didn’t end racism.

“Change starts close to home. So looking for the next person to run … I don’t mean to cut that off, but that’s been our distraction,” she said. “We’re going to wait for the next person to save us. We thought it was going to be Barack Obama, but he didn’t end racism.”

Obama said at a Women’s Forum in April that she doesn’t want the presidency and that she would rather see somebody with “passion for the position” run for office.

Of course, with Hillary Clinton’s historic defeat in the 2016 election is still fresh in the public consciousness, American political dynasties have never been less popular with voters.

…But we wouldn’t be surprised to see Obama recover her “passion” for politics some time between now and the deadline for declaring her candidacy to run in 2020…or maybe even 2024, or 2028.

via RSS https://ift.tt/2jBrZGy Tyler Durden

One year ago, in June 2017, we wrote “Why The (Collapsing) Global Credit Impulse Is All That Matters“ in which we explained that among the relentless barrage of economic data, the only indicator that truly matters for global macro was how much credit China – which has been responsible for the bulk of global debt creation since the financial crisis – is unleashing upon the world at any given moment: the so-called Chinese credit impulse.

Today, in its weekly Sunday Start piece titled “Don’t Fear China’s Policy Tightening“, Morgan Stanley follows up on this observation, with its Chief Asia Economist Chetan Ahya confirming that “if you had been able to reliably pick the key global macro variable over 2012-16, China’s credit impulse would have been your choice” and explains why (this should be obvious to regular readers): 

The incredibly tight link between the credit impulse and China’s growth cycle, emerging markets (EMs) exports, global growth and commodity prices meant that it would have accurately predicted the direction of almost all other global macro variables that mattered, with about six months’ lead time.

He further explains the “simple” – in retrospect of course – reason behind this observation:

China’s credit impulse – or its leverage cycle – was the only game in town back then. With global aggregate demand weak as developed markets (DMs) were deleveraging and EMs were adjusting, the change in China’s credit impulse was the most significant driver of the global economy

However, in a striking claim which breaks with precedent and which, if correct suggests a historic change in the relationship between China’s credit creation and its impact on global markets and economies, the Morgan Stanley economist then writes that the link between China’s credit impulse and the global economy “has now been broken” and justifies his answer as follows: 

China’s tightening has not had a material impact on the growth cycle either in China or globally, even though its credit impulse began to weaken about 24 months ago. As deleveraging and adjustment headwinds recede, the recoveries in domestic demand in both DMs and EMs have emerged as additional global growth engines.

Ahya uses the following chart to prove his thesis…

… and gives the following explanation as to why China’s credit tightening may no longer be a global factor:

Why hasn’t the tightening in China had a material impact on its growth trajectory? We see two reasons:

1) The pace of tightening is gradual and flexible in this cycle: Over the past 24 months, tightening in China has been slower than in 2013-15, and the pace of future tightening isn’t on auto-pilot. Policy flexibility is apparent in the recent cuts to reserve requirement ratios and the extended timeframe for implementing tighter regulations. What’s more, the bulk of the tightening cycle may well be behind us.

2) Tightening in China is counter-cyclical this time: As policy-makers in a highly levered economy attempt to tighten and slow credit growth, domestic demand should weaken. In China’s case, this usually raises worries of a hard landing, as it did in 2013-15 when policy-makers tightened pro-cyclically against a backdrop of weak growth in exports. However, with strong global demand now buoying exports, today’s tightening is counter-cyclical. While policy-makers continue to pare back stimulus in the infrastructure and real estate sectors, net exports, private investment and consumption are providing offsets, helping to support overall growth momentum. Indeed, on Morgan Stanley estimates, from 2016 to 2018, the contribution of net exports to GDP growth has swung by 120bp (from being a drag to a boost), offsetting the decline in contribution from investment.

Rising protectionist risks are an additional investor concern, given the importance of external demand to China’s outlook. Our long-standing view has been that the US and China will eventually negotiate a deal that brings about a gradual and non-disruptive adjustment in their trade relationship. This should limit the impact of trade frictions on economic growth. Furthermore, we expect the global trade cycle to stay buoyant, sustained by strong global demand. Also supportive is the prospect of fiscal expansion in the US when the economy is near full employment, which will keep non-oil import growth relatively high and likely widen the non-oil trade deficit.

It should therefore come as no surprise that our chief China economist, Robin Xing, projects only a moderate slowdown in China’s growth, to 6.5%Y, in 2018. Hence China will still contribute 1.2 percentage points to global GDP growth in 2018, close to its share in 2017. With growth holding up in DM and accelerating in EM ex China, we expect global growth to remain steady at around 3.8%Y over the next four quarters.

Nonetheless, some risks bear watching. We have been focused on financial stability in the US and tightening in China. As we argue here, we are relatively less concerned about China’s tightening. So if you had to pick just one factor to worry about, your choice should probably be US financial stability risks.

While we appreciate Morgan Stanley’s attempt at overhauling Austrian economics, we disagree with the conclusions, because when push comes to shove, it’s still all about credit creation, and – as we showed recently – China’s credit impulse works with a very distinct lag.

As for the best argument why Morgan Stanley is wrong, we will defer to what BofA’s Michael Hartnett also just wrote this morning, noting that “global central banks just eased led by the PBoC, reminding everyone that on April 17th China surprised with an easing of monetary policy” which incidentally has been the trigger for the most important move of the past month: the relentless US dollar strength.

In other words, just as the global slowdown from the ongoing Chinese credit impulse is finally being felt, China does what it has done every time global growth hit a brick wall: it has resumed easing in hopes of sending the country’s Credit impulse back into positive territory, re-stimulating global growth in the process.

So no, Morgan Stanley, the Chinese credit impulse link is most certainly not broken, and as for your advice to “not fear China’s policy tightening”, that may have been warranted 6 months ago, however now that China is once again easing, you may want to reassess.

via RSS https://ift.tt/2FPpYz1 Tyler Durden