Brazilian Army Ordered To “Restore Order” In Rio De Janeiro

With public spending on police and social services collapsing amid Brazil’s worsening economic crisis, violent crime has crept back up in Rio de Janeiro, a city widely recognized for its favelas – urban hillside slums teeming with violence, drugs and prostitution, according to Bloomberg.

Brazil

And ahead of an October election where President Michel Temer will try to win his first full term in office, the president is trying to send in the army to seize control of the city’s streets and restore order to an increasingly lawless town.

President Michel Temer issued a decree on Friday putting an Army general in charge of Rio’s security forces, including the state’s civilian police. The intervention, which requires congressional approval, will last until the end of the year, according to the decree.

“Our prisons will no longer be offices for thieves, our public squares party halls for organized crime,” Temer said after signing the decree.

“I know it’s an extreme measure but many times Brazil requires extreme measures to put things in order.”

But as is often the case with Brazilian politics, Temer has a plausible ulterior motive: By sending in the army, he might create enough of a distraction to avoid voting on an unpopular pension bill because Brazilian law conveniently prohibits making constitutional changes during times of military crisis.

Temer told Reuters that the intervention wouldn’t halt negotiations over pension reform or stop a vote on the plan, which is deeply unpopular with the country’s retirees, who stand to see their benefits cut.

Brazil

Meanwhile, crime in the city has erased nearly a decade of progress, climbing back to its highest level since 2009. Temer’s decision is the first time the military has intervened in public affairs since the former military dictatorship ended in the mid-1980s and the country returned to democracy.

The decree is still subject to votes in both houses of Brazil’s Congress, but is widely expected to pass as crime and stability become the No. 1 political priority of many Brazilians.

The move, the first of its kind since Brazil returned to democracy in 1985, is a response to growing demands ahead of the October general elections for a crack down on crime and violence. It may also provide an excuse not to vote an unpopular pension bill, because by law changes to the Constitution can’t be made while a military intervention is in effect.

Indeed, Lower House Speaker Rodrigo Maia said the decree that would be put to a vote in both houses of Congress over the next few days would make a vote on the pension reform more difficult. The government still lacks the votes needed for the bill investors had hoped would put public finances back on track, Maia said.

“It’s an extreme moment and this is a very serious decision,” Maia told reporters in Brasilia on Friday morning. “Under those circumstances, that’s the way to reestablish order,” he said in reference to a growing sense of insecurity.

But shootings and robberies aside, the intervention will provide an opportunity for Temer – who was famously caught on tape talking with a Brazilian businessman discussing the accepting of bribes in the wide-ranging “operation carwash” – to do something more vital to his political future.

Violence and crime have been soaring in Rio de Janeiro in the aftermath of a deep recession that has left the state lacking funds to invest in its police, and to pay salaries. Public opinion surveys show security to be among Brazilians’ main concerns ahead of the October presidential elections. Jair Bolsonaro, a Rio de Janeiro legislator and former army captain with a hard line against crime, polls second.

‘It’s part of Temer’s effort to find a positive agenda in the elections, something he can point to to show the people he’s doing something,” said Mauricio Santoro, a political scientist at the Rio de Janeiro State University. “Bolsonaro has grown a lot in the polls among other reasons because of insecurity.”

Shootings and mass robberies plagued Rio during the recent Carnival celebrations, when scores of tourists visit the city. Rio de Janeiro Governor Luiz Fernando Pezao admitted the state’s security has failed and asked for federal help, according to local media. The rate of violent deaths in the state jumped to 40 per 100,000 residents, the highest since 2009.

Brazil returned to democracy in 1985, after 21 years of military dictatorship, and intervention remains a sensitive topic in the country.

The worst of Brazil’s economic collapse – which brought the Brazilian real to record lows – is likely behind it. But as the country recovers from years of economic and monetary policy mismanagement by Temer’s predecessor, former President Dilma Roussef, who was impeach and removed from office, maintaining stability – particularly in the urban slums – will be paramount.

 

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For The Dreamers: No Deportation, No Citizenship

Authored by Ryan McMaken via The Mises Institute,

The current wrangling on Capitol Hill over the so-called Dreamers has come down to the usual political deal-making. Trump has signaled he’s willing to compromise on deportations – that is, initiate fewer of them – if he can get funding for his border wall.

Also at issue is whether or not Dreamers already in the US ought to be able to sponsor their parents for legal residency or for citizenship. 

Dreamers are current illegal immigrants who were brought to the United States as children.

Opposition to deportation of the Dreamers – especially those who are still minors – has been significant, with much of the opposition geared around the idea that some minors are being deported to foreign countries where they don’t even know the language or local culture after having been in the US for most of their lives. 

On the other hand, support for deportations has centered on fears that allowing the Dreamers to stay in the US will encourage a new influx of immigrants who will in turn become citizens quickly and unduly influence the political system. Also at play is the concern that some immigrants are a net drain on social welfare benefits and on other government-provided amenities such as public schools.

Is There a Laissez-Faire Approach to the Dreamers?

For many Americans who are concerned with freedom and free markets, the solution to this situation has sometimes not necessarily been clear. Is there a way to address immigration issues without doubling down on more government power and more government spending?

On the issue of welfare, of course, the issue is not complicated, and has already been summed up by Ron Paul

How to tackle the real immigration problem? Eliminate incentives for those who would come here to live off the rest of us, and make it easier and more rational for those who wish to come here legally to contribute to our economy. No walls, no government databases, no biometric national ID cards. But not a penny in welfare for immigrants. It’s really that simple.

No deportations are required to enforce this measure. In practice, all that is needed is for governments to take no action. That is, they don’t offer services to non-citizens. 

But even if immigrants were denied all social benefits and had their own privately-funded schools and hospitals, we’d likely still hear opposition to immigrants on the grounds that immigrants will use their numbers and the ballot box to force their own preferences on the rest of the population. 

The issue of migrating minorities overwhelming a majority in a host country is a real issue, and there’s a reason it was discussed by Ludwig von Mises in his book Liberalism 90 years ago

In North America, however, this scenario is by no means guaranteed since immigrants of past migrant waves — most of whom were from authoritarian states — showed little interest in imposing the sorts of regimes they were used to. Indeed, in the late nineteenth century, immigrants tended to affiliate with the Democratic party which, at the time, was the party of decentralization and greater laissez-faire.

But, even if the fear of cultural imperialism via the ballot box were well-placed, mitigation of the problem would not require the violation of property rights via measures such as deportation or regulation of the labor force.

Separating the Issue of Property Rights and Citizenship

Since non-citizens cannot vote, the use the ballot box to overwhelm the current cultural status quo requires citizenship. The issue can be addressed by simply declining to expand citizenship in certain cases.

Moreover, there is no property-rights principle which dictates that residents of a place must also be granted citizenship by the local civil government. Citizenship is, after all, essentially just a permit to engage in certain political activities, and — properly understood — is separate from the ability to be secure in one’s own property. While the current interpretation of the US Constitution is that all native-born persons are citizens, a civil government does not violate the property rights of migrants by declining to offer citizenship. The government is simply taking no action. 

Deportation, on the other hand, is a violation of property rights and is a type of government intervention. It often voids contracts between landlords and tenants, employers and employees, and cuts off persons from access to their own property. Deportation in practical terms often has the same effect as confiscating a person’s legally-obtained property. 

Worst of all, the enforcement of laws designed to regulate the migration of persons often leads to what Lew Rockwell has called the tragedy of immigration enforcement which occurs when native Americans are punished for the “crime” of doing business with migrants who have not been granted the arbitrary status of “legal” by federal bureaucrats.

Conduct No Deportations, Offer No Citizenship

Much of the fear behind a migrant-voter connection in the US stems from the fact that many Americans realize it is exceptionally easy for residents of the US to obtain citizenship. For most legal immigrations, five years of residency is all that is required. In some cases, such as for immigrants married to citizens, only three years of residency is required. 

We could contrast this with Switzerland where new regulations require that potential new citizens not receive social benefits, be proficient in a Swiss language, and have been legal residents for ten years. Additionally, there are local mandates on top of these federal mandates, and citizenship may be even more stringent at the cantonal level.

All of this citizenship business, however, is separate from the matter of legal residency. In both the US and Switzerland, people may become permanent residents without ever obtaining citizenship. These people are free to continue to open businesses, earn a living, raise a family, and travel. They enjoy legal constitutional protections, since, as Judge Andrew Napolitano has pointed out, lawful residents have “the same rights, except for voting and running for office, as the rest of us.” Due process is guaranteed to all persons under the US constitution, not just citizens. This is a good thing. 

On the matter of the Dreamers, the “moderates” ought to be staking out a position in which the government does virtually nothing at all. Under this scheme, the federal government doesn’t round up the Dreamers and deport them. It also avoids the issue of breaking up families and violating property right with deportations. But at the same time, the federal government does not extend citizenship to the people in question. 

In other words, do nothing – and nothing has always been a good thing for the federal government to do. 

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Indictment Is Just The Start: Mueller Probe To Continue “For Months”

The unveiling today of indictments against 13 Russian nationals and three Russian entities has raised speculation that Special Counsel Robert Mueller may be nearing the end of – or has effectively finished – his probe into collusion between the Trump administration and the Russian government.

But sources are telling Bloomberg that this isn’t true.

In addition to obstruction and the various financial improprieties of certain Trump associates, Mueller is still actively investigating collusion.

Mueller

Earlier today, Trump tweeted in response to the indictment’s release that it effectively vindicates the Trump campaign, since many of the activities cited in the document began in 2014.

Instead, Mueller’s work is expected to continue “for months” with today’s indictment representing only a small slice of the investigation.

Friday’s indictment of a St. Petersburg-based “troll farm” and 13 Russian nationals should be seen as a limited slice of a comprehensive investigation, the person said. Mueller’s work is expected to continue for months and also includes examining potential obstruction of justice by Trump, said the person, who requested anonymity to discuss an investigation that is largely confidential.

A federal grand jury indicted the Russians for what it alleged was a vast scheme to interfere in the 2016 election and help Trump win. But Deputy Attorney General Rod Rosenstein said at a news conference Friday that there is “no allegation in this indictment that any American was a knowing participant” in the alleged scheme.

Given that there hadn’t been any news from the investigation in a while, Mueller’s indictment could be seen as an effort by to raise awareness about Russia’s capabilities as the 2018 US elections near. It’s still possible Mueller will indict Americans for helping Russia.

Lawmakers from both parties largely applauded the indictment, saying it puts Russia on notice, and some Democrats said it effectively vindicated Mueller.

Representative Jerrold Nadler, a New York Democrat who’s the ranking member on the House Judiciary Committee, said the announcement Friday should “lay to rest” assertions the investigation was a hoax and preempt efforts to remove officials involved in investigating Trump.

“At this point, any step President Trump may take to interfere with the Special Counsel’s investigation — including removing Deputy Attorney General Rosenstein, or threatening to remove Special Counsel Mueller directly — will have to be seen as a direct attempt to aid the Russian government in attacking American democracy,” Nadler said in a statement.

House Minority Leader Nancy Pelosi said Mueller’s inquiry must be allowed to follow the facts “unhindered by the White House or Republicans in Congress.”

House Speaker Paul Ryan, a Republican, said the announcement underscored “why we need to follow the facts and work to protect the integrity of future elections.”

“Mueller just put Moscow on notice,” said Republican Senator Ben Sasse of Nebraska. “This ought to be a wake-up call to Washington: Putin’s shadow war is aimed at undermining Americans’ trust in our institutions. We know Russia is coming back in 2018 and 2020. We have to take this threat seriously.”

But while Mueller might still indict an American for aiding Russia, the bigger question is what is the status of his probe into obstruction, and Trump’s financial dealings? Because after all, last time we checked the Russia narrative – as the content of today’s indictment so effectively conveyed – has pretty much run its course.

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Admiral Warns US Must Prepare For Possible War With China

While we await the latest details on the ongoing trade war between the US and China, currently focusing on escalating steel and aluminum tariffs and China’s reciprocal response could be, the threat of a real war is looming.

Speaking to Congress, the navy admiral nominated to be the next US ambassador to Australia said that America must prepare for the possibility of war with China, and added that the US relies on Australia to help uphold the international rules-based system in the Asia-Pacific.

Admiral Harry Harris says China’s military might could soon rival US power ‘across almost every domain’, and warned of possibility of war.

In an excoriating assessment of China’s increasingly muscular posture in the region – which some say is merely a response to similar, long-running posturing by the US in the region – Admiral Harry Harris said Beijing’s “intent is crystal clear” to dominate the South China Sea and that its military might could soon rival American power “across almost every domain” according to the Guardian.

Harris, who is set to retire as the head of US Pacific Command in Hawaii, told the House armed services committee that the US and its allies should be wary of Beijing’s military expansionism in the region, and condemned China’s foreign influence operations, predatory economic behaviour and coercion of regional neighbours.

China’s intent is crystal clear. We ignore it at our peril. I’m concerned China will now work to undermine the international rules-based order.”

At least he didn’t accuse China of also hacking the US election: so far it’s only Russia that gets to pick and choose the next US president.

Harris said he was alarmed by China’s construction of military bases on seven disputed islands in the South China Sea that neighbouring countries lay territorial claims to. In 2016, the permanent court of arbitration in The Hague, sided with the Philippines in the dispute it brought, saying there was no legal basis for China’s claim of historic sovereignty over waters within the so-called nine-dash line in the sea. Regardless, Chinese military build-up continues in the sea with Beijing refusing to comply with the Hague’s ruling.

“China’s impressive military build-up could soon challenge the United States across almost every domain,” Harris said. Harris also warned of a “cult of personality” developing around Chinese president Xi Jinping.

But the key exchange was the following: responding to a question about the risk of conflict with China, Harris said “as far as the idea of deterrence and winning wars, I’m a military guy. And I think it’s important you must plan and resource to win a war at the same time you work to prevent it.”

“At the end of the day the ability to wage war is important or you become a paper tiger. I’m hopeful that it won’t come to a conflict with China, but we must all be prepared for that if it should come to that.”

In other words, the US should get prepared for war with China.

Harris praised Australia as one of America’s staunchest allies in the Asia-Pacific region, noting existing military cooperation at air force bases in the Northern Territory, joint naval exercises and the regular rotation of 1,500 marines through Darwin.

“Australia is one of the keys to a rules-based international order,” Harris said. “I look to my Australian counterparts for their assistance, I admire their leadership in the battlefield and in the corridors of power in the world. “They are a key ally of the United States and they have been with us in every major conflict since world war one.”

Should Harris be confirmed as the next ambassador to Australia, his hawkish position would present a challenge for Canberra, as it seeks to navigate an increasingly delicate diplomatic and economic relationship with Beijing.

Domestically, ties with China have been severely strained after a backlash against China’s perceived influence on and infiltration of Australia’s political system, highlighted by the resignation of Labor senator Sam Dastyari over accepting cash from Chinese businessmen for private debts and his position, at odds with his party, on the South China Sea. The Australian government has proposed new espionage laws and tightening of rules around foreign donations to political parties.

At the same time, China is Australia’s largest trading partner, but the US is its primary defense and security ally, and Australia has been a vocal defender of the US alliance network over issues such as the nuclear weapons ban treaty, which the US opposes.

The Australian prime minister, Malcolm Turnbull, who has previously met Harris in Hawaii, has publicly welcomed his nomination. “Great to see Admiral Harry Harris nominated by [Donald Trump] as US ambassador to Australia. Look forward to seeing you in Canberra, Harry,” Turnbull said on Twitter on February 10.

Turnbull will meet with Trump in Washington next week. It is not known when Harris’s confirmation hearing will take place.

Harris, the Yokosuka-born son of an American naval officer and a Japanese mother, has been nominated by President Donald Trump as the next ambassador to Australia. His appointment must be confirmed by the Senate.

Australia has been without a US ambassador since John Berry departed in September 2016.

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Weekend Reading: Hurricane Boost Dissipates

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Trump Administration has taken a LOT of credit for the recent bumps in economic growth. We have warned this was not only dangerous, credibility-wise, but also an anomaly due to three massive hurricanes and two major wildfires that had the “broken window” fallacy working overtime.

“The fallacy of the ‘broken window’ narrative is that economic activity is only changed and not increased. The dollars used to pay for the window can no longer be used for their original intended purpose.”

If economic destruction led to long-term economic prosperity, then the U.S. should just regularly drop a nuke on a major city and then rebuild it. When you think about it in those terms, you realize just how silly the whole notion is.

However, in the short-term, natural disasters do “pull forward” consumption as individuals need to rebuild and replace what was previously lost. This activity does lead to a short-term boost in the economic data, but fades just as quickly.

A quick look at core retail sales over the last few months, following the hurricanes, shows the temporary bump now fading.

The other interesting aspect of this is the rise in consumer credit as a percent of disposable personal income. The chart below indexes both consumer credit to DPI and retail sales to 100 starting in 1993. What is interesting to note is the rising level of credit card debt required to sustain retail sales.

Given that retail sales make up roughly 40% of personal consumption expenditures which in turn comprises roughly 70% of GDP, the impact to sustained economic growth is important to consider.

Importantly, the latest CPI, inflation, report showed a strong rise that was directly attributable to rising rent, health care, and oil prices. Even the previous increases in retail sales were primarily comprised of gasoline, which directly impacts consumers ability to spend money on other stuff, and building products from rebuilding efforts.

Importantly, what the headlines miss is the growth in the population. The chart below shows retails sales divided by those actually counted as part of the labor force. (You’ve got to have a job to buy stuff, right?) 

As you can see, retail sales per labor force participant was on a 5% annualized growth trend beginning in 1992. However, after the financial crisis, the gap below that long-term trend has yet to be filled as there is a 23.2% deficit from the long-term trend. (If we included the entirety of the population, given the number of people outside of the labor force that are still consuming, the trajectory would be worse.)

The next chart below shows the annual % change of retail sales per labor force participant. The trend has been weakening since the beginning of 2017 and shows little sign of increasing currently.

While tax cuts may provide a temporary boost to after-tax incomes, that income will simply be absorbed by higher energy, gasoline, health care and borrowing costs. This is why 80% of Americans continue to live paycheck-to-paycheck and have little saved in the bank. It is also why, as wages have continued to stagnate, that the cost of living now exceeds what incomes and debt increases can sustain.

Yes, corporations will do well under the “tax reform” plan. Already compensation for the top 20% of income earners are seeing wages rise, while corporations have doubled their planned stock “buybacks” to boost earnings per share. But such does not increase the take-home pay for the bottom 80% of the population that drives the majority of economic growth long-term.

Very likely, the next two quarters will be weaker than expected as the boost from hurricanes fade and higher interest rates take their toll on consumers. So, when mainstream media acts astonished that economic growth has once again slowed, you will already know why.

Here is your weekend reading list.


Economy & Fed


Markets



Research / Interesting Reads


“When an investor focuses on short-term investments, he or she is observing the variability of the portfolio, not the returns – in short, being fooled by randomness.” ― Nassim Taleb

via Zero Hedge http://ift.tt/2obUr3L Tyler Durden

Weekend Reading: Hurricane Boost Dissipates

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Trump Administration has taken a LOT of credit for the recent bumps in economic growth. We have warned this was not only dangerous, credibility-wise, but also an anomaly due to three massive hurricanes and two major wildfires that had the “broken window” fallacy working overtime.

“The fallacy of the ‘broken window’ narrative is that economic activity is only changed and not increased. The dollars used to pay for the window can no longer be used for their original intended purpose.”

If economic destruction led to long-term economic prosperity, then the U.S. should just regularly drop a nuke on a major city and then rebuild it. When you think about it in those terms, you realize just how silly the whole notion is.

However, in the short-term, natural disasters do “pull forward” consumption as individuals need to rebuild and replace what was previously lost. This activity does lead to a short-term boost in the economic data, but fades just as quickly.

A quick look at core retail sales over the last few months, following the hurricanes, shows the temporary bump now fading.

The other interesting aspect of this is the rise in consumer credit as a percent of disposable personal income. The chart below indexes both consumer credit to DPI and retail sales to 100 starting in 1993. What is interesting to note is the rising level of credit card debt required to sustain retail sales.

Given that retail sales make up roughly 40% of personal consumption expenditures which in turn comprises roughly 70% of GDP, the impact to sustained economic growth is important to consider.

Importantly, the latest CPI, inflation, report showed a strong rise that was directly attributable to rising rent, health care, and oil prices. Even the previous increases in retail sales were primarily comprised of gasoline, which directly impacts consumers ability to spend money on other stuff, and building products from rebuilding efforts.

Importantly, what the headlines miss is the growth in the population. The chart below shows retails sales divided by those actually counted as part of the labor force. (You’ve got to have a job to buy stuff, right?) 

As you can see, retail sales per labor force participant was on a 5% annualized growth trend beginning in 1992. However, after the financial crisis, the gap below that long-term trend has yet to be filled as there is a 23.2% deficit from the long-term trend. (If we included the entirety of the population, given the number of people outside of the labor force that are still consuming, the trajectory would be worse.)

The next chart below shows the annual % change of retail sales per labor force participant. The trend has been weakening since the beginning of 2017 and shows little sign of increasing currently.

While tax cuts may provide a temporary boost to after-tax incomes, that income will simply be absorbed by higher energy, gasoline, health care and borrowing costs. This is why 80% of Americans continue to live paycheck-to-paycheck and have little saved in the bank. It is also why, as wages have continued to stagnate, that the cost of living now exceeds what incomes and debt increases can sustain.

Yes, corporations will do well under the “tax reform” plan. Already compensation for the top 20% of income earners are seeing wages rise, while corporations have doubled their planned stock “buybacks” to boost earnings per share. But such does not increase the take-home pay for the bottom 80% of the population that drives the majority of economic growth long-term.

Very likely, the next two quarters will be weaker than expected as the boost from hurricanes fade and higher interest rates take their toll on consumers. So, when mainstream media acts astonished that economic growth has once again slowed, you will already know why.

Here is your weekend reading list.


Economy & Fed


Markets



Research / Interesting Reads


“When an investor focuses on short-term investments, he or she is observing the variability of the portfolio, not the returns – in short, being fooled by randomness.” ― Nassim Taleb

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FBI Failed to Act on 2018 Tip About 2018 Shooter, Mitt Romney Runs for Senate, and Inflation Is on the Rise: P.M. Links

  • RomneyThe FBI failed to act on a January 2018 tip about Nikolas Cruz, the alleged perpetrator of Wednesday’s Parkland, Florida school shooting.
  • Florida Governor Rick Scott calls on FBI director to resign.
  • Senate immigration deal falls apart.
  • Safety review of Baltimore subway finds 17 of 19 track segments unsafe.
  • Inflation is on the rise, but stock markets seem not to care.

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Florida Governor Says FBI Chief Chris Wray Should Resign

Florida Governor Rick Scott has called on FBI director Chris Wray to resign after the bureau admitted earlier today that certain protocols weren’t followed when an acquaintance contacted the FBI’s Public Access Line (PAL) tipline to report concerns about Nikolas Cruz, the former student at a Florida high school….

 

Scottt

On Jan. 5, a person close to Cruz called an FBI tip line warning them about the 19 year old’s behavior, and warning them that he might try to carry out a school shooting. They also discussed his expressed desire to kill people, his erratic behavior and disturbing social media posts.

The FBI was also notified about a comment on a YouTube video posted by a “Nikolas Cruz” last year.

“The comment simply said, ‘I’m going to be a professional school shooter,'” Robert Lasky, FBI Special Agent in Charge of the Miami field office, said during a Thursday news conference. “No other information was included with that comment, which would indicate a time, location or true identity of the person who made that comment.”

“We have determined that these protocols were not followed for the information received by the PAL on January 5. The information was not provided to the Miami field office, and no further investigation was conducted at that time,” the FBI said in a statement Friday.

Scott called the failure to act, which occurred under Wray’s watch, “unacceptable” and said the only reasonable thing for Wray to do would be to resign.

“The FBI’s failure to take action against this killer is unacceptable….The FBI Director needs to resign,” said Scott in a statement.

“We constantly promote ‘see something, say something,’ and a courageous person did just that to the FBI. And the FBI failed to act. ‘See something, say something’ is an incredibly important tool and people must have confidence in the follow through from law enforcement. The FBI director needs to resign,” Scott added.

“Seventeen innocent people are dead and acknowledging a mistake isn’t going to cut it. An apology will never bring these 17 Floridians back to life or comfort the families who are in pain. The families will spend a lifetime wondering how this could happen, and an apology will never give them the answers they desperately need.”

As a reminder, this is not the first time that the FBI failed to prevent a mass shooting by not enforcing its protocols. Revelations that the FBI had been warned about Florida high school shooter Cruz fit an all-too-familiar pattern, evidenced by the oversight that allowed Texas church shooter Devin Patrick Kelly to purchase weapons he used to kill more than 20 people late last year.

 

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Massive Squeeze Sparks Best Week For Stocks In 7 Years As Dollar Crashes

This week can be summed up thus…

and thus…

Year-to-Date, Gold is leading stocks as bonds get battered…

But it was quite a week for stocks…

  • Nasdaq, S&P – best week since Dec 2011

  • Dow – best week since Nov 2016

  • Small Caps – best week since Dec 2016

  • “Most Shorted” Stocks – biggest weekly short-squeeze since Nov 2016

  • VIX – biggest weekly drop since Nov 2016

  • US Treasury Yield Curve – 2nd biggest weekly flattening since Sept 2011

  • HYG (HY Bond ETF) – best week since Feb 2016 (despite record outflows)

  • Dollar Index – 2nd worst week in 6 months

  • Gold – best week since April 2016

  • Bitcoin – best week in 2 months

Stocks were a one-way bet as mysterious dip-buyers picked up everything…except today’s Mueller/Russians drop…

 

Futures show the real craziness of the swing as Nasdaq surged 10% off last Friday’s lows…

 

In the biggest short-squeeze since the election…

 

The Dow broke through its Fibonnacci 61.8% retrace before pulling back on Russia indictment headlines…

 

VIX closed back below 20…

VIX yield curve still inverted (red) but dramatically less backwardated than a week ago (green)

 

And WTF is going in SVXY!!!!!

But adjusted for the collapse in price…

Overall Vols came back this week but Rate-Vol seems more elevated than norms now…

 

Treasury yields were mixed on the week with the long-end bid (-3bps) and the rest of the curve bear-flattening…

 

30Y remains in the range but notably lower in yield on the week…

 

And 2s30s tumbled…

 

The Dollar Index had an ugly week…

Dollar’s lowest weekly close since Dec 2014…

 

The Dollar (down), Stocks (up) and Gold (up) were all one big happy family this week…

 

A weak dollar sparked a bid across all commodities with copper leading the charge…

Copper’s huge outperformance this week suggests 10Y Yields should be notably higher…

 

Cryptos had a great week…

With Bitcoin back above $10,000 once again…

 

Finally, as Gluskin Sheff’s David Rosenberg notes, the new definition of economic strength when 60% of the incoming US data have come in shy of estimates this month and only 30% have topped expectations.

The Citi surprise index has rolled over to four-month lows.

Imagine what a weak economy must look like!

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Federal Prosecutors File First-Ever Fraud Charges Against Crypto Trader

The nearly 10-year-old cryptocurrency space has reached one of the more ignominious milestones to date.

Several months after the SEC filed the first civil fraud action against an ICO founder who was believed to have stolen money from investors, US prosecutors are sending a message to the community by filing the first case of a criminal fraud prosecution in blockchain history, according to federal prosecutors in Chicago.

Prosecutors are expected to outline the charge that “from September through November 2017, Kim transferred more than $2 million of the trading firm’s Bitcoin and Litecoin to personal accounts to cover his own trading losses, which had been incurred while trading cryptocurrency futures on foreign exchanges.”

But unlike the previous civil actions, the criminal case involves an employee at a blockchain startup who stole from his employer to fund a severe gambling problem, according to ABC 7.

Kim

According to a local Chicago television station, a 24-year-old trader named Joseph Kim considered himself “invincible” according to federal investigators. The trader was charged after allegedly siphoning $2 million in bitcoin and litecoin away from his Chicago-based employer.

Kim, who’s biography identifies him as a 2016 graduate of University of Chicago, is charged with fraud against Consolidated Trading LLC. Kim illegally transferred the firm’s cryptocurrency to his own personal accounts, according to federal investigators, to cover trading losses.

The Korean-American then lied about the transfers and tried to cover up the illegal trades by repaying some of the funds, prosecutors claim.

According to a federal complaint, Kim referred to himself as “DEGEN”, short for “degenerative gambler.”

In an email to his bosses last November, Kim allegedly admitted to the scheme. “It was not my intention to steal for myself” he is quoted as writing. “Until the end I was perversely trying to fix what I had already done.”

“I can’t believe I did not stop myself when I had the money to give back, and I will live with that for the rest of my life,” he said, according to prosecutors.

Kim was hired as a trader in July 2016. In an email last November to the firm’s top executives authorities say Kim apologized and said he was “sorry to betray you all like this.”

Yet it was Consolidated’s management team that discovered the misappropriation.

Kim made his initial court appearance on Friday at 10:30 am before Magistrate Judge Daniel G. Martin at the Dirksen Federal Building.

via Zero Hedge http://ift.tt/2o4Mcak Tyler Durden