Tag: news

Recent news events, including an anti-establishment surge in Italy, and President Trump’s tariff tirade, underpin the argument for Mario Draghi to avoid any sudden moves in tomorrow’s ECB statement and press conference.

“Draghi is likely to err on the side of caution at the meeting of the Governing Council on March 8. The next major change to forward guidance probably won’t materialize until June — only concessionary tweaks are likely this month.” -David Powell and Jamie Murray, Bloomberg Economics

With the euro having traded somewhat sideways for a month as most of the European equity markets collapsed, analysts suggest that Draghi may take his currency-strength-jawboning foot off the pedal and tweak forward guidance estimates to signal the beginning of the end for easing.

SocGen’s Kit Juckes pointed out, “If we get a slight language tweak on Thursday and a drop in average hourly wage growth in the U.S., we’ll be above $1.25 by the weekend.”

As Ransquawk notes, last time round, the central bank refrained from providing much of a blueprint as to how they intend to unwind their current stimulus program after its current end-date of September with Draghi stating that no discussion took place with regards to tapering. When asked about EUR appreciation, Draghi stated that it was a source of uncertainty and it is too early to say whether FX moves have had a pass-through effect.

ECB JANUARY MINUTES: The highlights from the January minutes saw policymakers state that changes in communications were viewed as premature with some expressing the preference for dropping their current easing bias.

SOURCE REPORTS: In the immediate aftermath of the previous meeting, source reports revealed that ECB rate setters were split about the next move as the Euro’s rise complicates the outlook. Thereafter, further reports suggested that the Bank’s PSPP will conclude with a short taper and some officials want clearer guidance on interest rate hikes. However, the most pertinent of the sources for the March meeting came last week with ECB policymakers seen to be unlikely to signal a policy shift this time round but could discuss a dropping of their current easing bias. 

ECB RHETORIC: Perhaps the most significant recent contribution from ECB policymakers came from ECB’s Coeure who noted the ECB might end its net purchases even before it can see a sustained rise in inflation. However, this is likely to be more relevant for meetings later in the year than this time round. Elsewhere, Draghi highlighted last week that inflation is yet to show more convincing signs of sustained upward adjustment while the Euro area economy is expanding robustly.

DATA: From a growth perspective, Q4 GDP figures printed at 0.6% and thus in-line with the Bank’s current forecasts. On the inflation front, prelim Eurozone CPI slipped to 1.2% from 1.3% during the month of February with core measures still uninspiring. However, prospects for wage growth will likely appease some policy makers. Elsewhere, survey data via Markit saw the EZ composite figure slip to 57.1 from Jan’s 58.8 but remains firm by historical standards nonetheless.

Ransquawk points out that potential adjustments to the forward guidance are as follows:

RATES: No adjustment expected on this front until details of the curtailing of asset purchases have been announced later in the year. N.b., at the previous meeting Draghi stated that he sees “very little chance” that the ECB will raise interest rates this year.

ASSET PURCHASES: As revealed by the latest ECB source reports, a discussion around dropping the easing bias for asset purchases is expected to take place. After the notion being rejected by policymakers in January on the basis that fundamentals had not changed enough to warrant such an adjustment, this meeting might be too soon for consensus at the Bank to adopt such a change in communication. Note, consensus before the source reports suggested that this will not be actioned by the bank until June with the Bank to not reveal their method of curtailing bond purchases until the following meeting in July.

GROWTH: No adjustment expected on this front.

INFLATION: No adjustment expected on this front.

And here is what to watch out for…

ECB STAFF PROJECTIONS: Changes are widely expected to be particularly minor/non-existent with information since the previous forecasts unlikely to provide much incentive for the Bank to make any major adjustments.

From a growth perspective, Pictet suggest that there is some minor upside risk to the 2018 forecast but ultimately any changes are likely to be tweaks rather than the mass adjustments seen in December. On the inflation front, the firmer EUR is set to negate any upside pressure from the climb in oil prices and upside in food prices. However, BAML believe that 2018 inflation could see a minor nudge higher on the basis that the Dec projections were too soft at the time. See below for the December projections.  

PRESS CONFERENCE: Ultimately, aside from the macroeconomic projections and potential tweaks to the introductory statement, this week’s press conference could be one of the more uneventful presentations by the ECB President with Draghi set to ‘kick the can down the road’ on unveiling any major clues as to how and when the ECB will conclude their asset purchase programme. 

In terms of subjects the ECB President will likely be quizzed on by journalists, aside from the future path of the PSPP, Draghi will likely be questioned on the ECB’s view of ‘trade wars’ during the Q&A after the recently announced measures by US President Trump. This comes in the context of the ECB Jan minutes stating that “…the balance of risks to the global economic expansion was considered to remain tilted to the downside… uncertainty regarding the policy outlook in some major economies, including the risk of an increase in trade protectionism, continued to constitute downside risks.” However, as if often the case with Draghi it is likely that he will adopt a non-committal tone and state that the ECB are monitoring events abroad.

As far as other political issues are concerned, Sunday’s inconclusive Italian election result will also likely be a talking point given the success of the populist ‘anti-Euro’ parties. However, both the Northern League and MS5 have scaled back their desire for a EUR-referendum with the leader of the former stating that a vote on the issue would be ‘unthinkable’. That’s not to say that both parties (should they obtain power) wouldn’t opt for reform of the Euro-area but it is unlikely to impact the ECB’s thought process at this stage with the matter currently more of an issue for domestic Italian assets. 

There’s also a possibility that Draghi will be asked about the Bank’s view on the EUR exchange rate given how much of a focus it was last time round. However, since then, the EUR has seen little deviation from Jan levels on a trade-weighted basis and as such, Draghi may opt to reiterate his previous stance of labelling it as “a source of uncertainty and it is too early to say whether FX moves have had a pass-through effect”.

Here is a selection of analysts’ views on bonds and the euro ahead of the meeting, via Bloomberg:

Barclays

Changes to forward guidance are coming but in “small doses,” strategist Cagdas Aksu writes in a note

Sees ECB dropping the asymmetric forward guidance in QE first, coming as early as this week

Societe Generale

The meeting should confirm a gradual shift in the policy outlook, loosening forward guidance slightly, according to strategists including Jorge Garayo

Remain bearish on euro rates, with the belly of the curve having further room to re-price

NatWest Markets

Minor alterations are in the cards for forward guidance, but base case is for no change, according to analysts including Anna Tokar

“It appears there is little reason to disrupt the markets at the moment, when the ECB views the current pricing as fair”

See Draghi making further mention of the strong euro in the question and answer session

Rabobank

“Any adjustment to the forward guidance will have a minimal impact given the market has already accepted the fact that the program will be wound down between end-September and December this year,” said strategist Matthew Cairns

“The material lack of wage growth and still-low inflation expectations will serve to keep a lid on a sustained, significant rise in yields”

In summary:

• Unanimous expectations look for the ECB to leave its three key rates unchanged

• ECB set to discuss a dropping of their current easing bias

• Macro projections unlikely to be subject to major revisions

And finally here is ING’s guide to trading tomorrow’s ECB meeting…

via RSS http://ift.tt/2G4YLdD Tyler Durden

Authored by Brandon Smith via Alt-Market.com,

First, I would like to say that the timing of Donald Trump’s announcement on expansive trade tariffs is unusual if not impeccable.

I say this only IF Trump’s plan was to benefit establishment globalists by giving them perfect cover for their continued demolition of the market bubbles that they have engineered since the crash of 2008.

If this was not his plan, then I am a bit bewildered by what he hopes to accomplish. It is certainly not the end of trade deficits and the return of American industry. But let’s explore the situation for a moment…

Trump is in my view a modern day Herbert Hoover. One of Hoover’s first actions as president in response to fiscal tensions of 1929 was to support increased tax cuts, primarily for corporations (this was then followed in 1932 by extensive tax increases in the midst of the depression, so let’s see what Trump does in the next couple of years).  Then, he instituted tariffs through the Smoot-Hawley Act.  His hyperfocus on massive infrastructure spending resulted in U.S. debt expansion and did nothing to dig the U.S. out of its unemployment abyss. In fact, infrastructure projects like the Hoover Dam, which were launched in 1931, were not paid off for over 50 years. Hoover oversaw the beginning of the Great Depression and ended up as a single-term Republican president who paved the way socially for Franklin D. Roosevelt, an essential communist and perhaps the worst president in American history.

This is not to say Hoover was responsible for the Great Depression.  That distinction goes to the Federal Reserve, which had artificially lowered interest rates and then suddenly raised them going into the economic downturn causing an aggressive bubble implosion (just like the central bank is doing right now).  But Hoover did actually aid the Fed in their undermining of economic stability by pursuing policies which were poorly timed.

I’m hitting readers with all of this because I am growing rather tired of the contingent of Trump apologists in the liberty movement scrambling to defend every single Trump action no matter how illogical. These people should know better.  Sorry, but Trump is not “playing 4D chess” against the globalists.  His primary initiatives have only served so far to create a useful distraction away from the globalists.

The disturbing key to all of this is the fact that many of Trump’s policies are things that I and many others have argued for in the past. The problem is, he is implementing them out of order and with bad timing, which will only make such policies appear destructive in the end, rather than constructive.

In terms of the implementation of tariffs, the people who are defending this action at this time do not seem to understand the basics of international trade. Tariffs can only be enacted from a position of economic strength and resource development. This strength comes from internal self-sufficiency in production; meaning, in order for the U.S. to force a trade balance (which is what tariffs are supposed to do) the U.S. must have a strong industrial base and MUST be capable of producing most if not all necessary goods and goods in broad demand.

The fact is, U.S. manufacturing has been utterly outsourced by the very corporations Trump just gave a 10% tax cut to, and rebuilding that industrial base would take decades. Why? Because there are no incentives for corporations to bring manufacturing back.

As I already stated, Trump is instituting potentially solid policies but he is doing so out of order. Tax cuts for corporations should have been enacted only as an incentive for manufacturing jobs to be returned to America. Instead, corporations got tax cuts for absolutely nothing. And will those tax cuts go towards more jobs or innovation? Nope. They will be going to pay off unprecedented corporate debts, and stock buybacks, most of which were accrued through borrowing from the Federal Reserve.

Will this stock buyback bonanza even generate new highs in the Dow? Probably not. But I’ll explain why that is later.

If Trump had given tax incentives for corporations to bring manufacturing back into the U.S., and then given those corporations a few years to make the shift, only then would tariffs have been an effective action. But as the situation stands now, we have minimal tangible production in this country, and, historic debts held by the same overseas competitors that Trump is now seeking to “teach a lesson.”

Debt is the next issue which needs to be addressed before tariffs can ever be implemented in a practical way. In terms of national debt, rather than setting up a plan to reduce U.S. debt expenditures, Trump is increasing debt by reducing taxes while at the same time increasing spending. Trump did not take a hard stand on the debt ceiling debate as he originally claimed he would, and so, the debt train continues unabated.

Who is going to purchase this debt, I wonder? Over the past several years the largest buyer of U.S. treasury debt was the Federal Reserve through fiat money creation. Now, the Fed has tapered quantitative easing and is dumping their balance sheet at a rate faster than anyone expected. The Fed is pulling the plug on its artificial support of the economy.

The next largest buyers are major foreign central banks in countries like China, Japan and to some extent the supranational EU. If the debt buyers of last resort are now the very same countries Trump is seeking to enact tariffs over, how do you think this little theater will end? Yes, with a dump of U.S. treasury bonds and perhaps the dollar as world reserve by those nations.

But what about the U.S. consumer? Isn’t the consumer market in America so enticing that nations like China would “never dare” dump U.S. debt or the dollar? No, not really. If we are talking about a trade “war,” then a country like China, which has a vast manufacturing base and which has also been building up its own domestic consumer market, would be willing to make the sacrifice. America would be hurt far more by the threat of debt default and the loss of the dollar’s international buying power than China ever would be by the loss of American consumers.  With tariffs being implemented, they may lose the American consumer anyway.

Our retail market is hardly as appetizing as it was 10 years ago given the decade of drudgery Americans have endured, with the largest number ever of working age citizens no longer participating in the jobs market, as well as real worker wages in continued decline while the American consumer is now more indebted than at any other time in history.

All of these negative effects are weighing down our economy while the Federal Reserve is quickly deflating the fraudulent markets that the establishment used during the Obama administration to argue that America was “in recovery.” Of course, alternative economists have known since the beginning that this was a lie, and that the only thing propping up the economy and stock markets was central bank manipulation.

The Fed under Jerome Powell has made it crystal clear that they WILL be raising interest rates and cutting the Fed balance sheet, perhaps more than their dot plots had indicated in the past. Without low rates and a steadily rising balance sheet we have already seen the results. Stocks in particular have gone crazy compared to the past few years, dumping nearly 10% one week, spiking about half that the next week. One thing is certain, the supposedly endless bull market induced by the Fed years ago is now over. Stocks are in heart attack mode.

It is no coincidence that the first two times the Fed reduced its balance sheet the Dow plunged over 1,000 points. The latest dump of $23 billion at the end of February resulted in a drop of around 1,500 points. It is too early in this process to know what the trend will be, but it seems to me that stocks are being steam valved down every month. With a marked decline just after a balance sheet dump, followed by a less impressive dead cat bounce the week after.

In the meantime, Trump’s “trade war” is now being blamed in the mainstream for the decline in stocks that the Fed is actually responsible for. As I have always said, Trump is the ideal scapegoat for the inevitable economic crisis the central bankers have staged.  Trump’s tariffs might exacerbate the problem, just as Hoover’s policies did in the beginning of the Great Depression, but the blame rests squarely on the Federal Reserve and central banks around the world.  Will the average person understand this dynamic once the dust settles on our financial system?  Probably not.

So, to summarize, while Trump has indeed set in motion policies that conservatives in general tend to approve of, he has done so in an impractical way that will ultimately be blamed for a market crash the Fed created.  If conservative ideals such as limited government and sovereign trade protection get the blame for an unprecedented economic crisis then this could sabotage conservatism for generations to come.  If elections are still even a factor as this crisis unfolds, the chances of the public accepting a socialistic nightmare regime after Trump exits the White House are high. And, the banking elites that conjured the whole mess will escape once again without any punishment.

The question we must ask is this – Is Trump aware that his policies are creating a perfect distraction for those same banking elites? I believe we will know for certain the answer to that before 2018 is over.

*  *  *

If you would like to support the publishing of articles like the one you have just read, visit our donations page here.  We greatly appreciate your patronage.

via RSS http://ift.tt/2Id7FpQ Tyler Durden

The House Select Committee on Intelligence has John Kerry in its crosshairs – as Congressional investigators explore what involvement, if any, the former Secretary of State had in the unverified “Steele dossier” which relied on intelligence from high level Kremlin officials at a time when US-Russia relations were deteriorating.

Assembled by former British spy Christopher Steele, the “dossier” is actually a collection of memos which contain both wildly salacious claims and loosely factual information – much of it based on hearsay or public knowledge. 

Steele was paid $168,000 by opposition research firm Fusion GPS, while Fusion was funded by the DNC and the Clinton campaign. The FBI, however, had previously agreed to pay Steele $50,000 if he could verify the dossier’s claims – which he was unable to do. 

Still, the FBI used Steele’s dossier – a collection of 17 memos, in their application for a FISA warrant to spy on Trump advisor Carter Page – and via “unmasking,” his associates.

After the House Intel Committee majority released their four-page “FISA memo” detailing how senior officials at the FBI and DOJ used the unverified and highly biased Steele dossier to obtain a FISA warant, and the House Intel Committee minority released their own “counter memo,” the investigation moved into Phase II. 

Phase II

House Intel Committee chair Devin Nunes (R-CA) gave us a peek behind the curtain in early February, telling Fox’s Bret Baier “We are in the middle of what I call phase two of our investigation, which involves other departments, specifically the State Department and some of the involvement that they had in this.” 

#BREAKING: Devin Nunes says this is just the first memo to be released. He says there will be another one dealing specifically with the State Department’s role in everything that happened. pic.twitter.com/kpHVDQ44WX

— Ryan Saavedra 🇺🇸 (@RealSaavedra) February 3, 2018

While it is unclear what role the State Department may have in surveillance abuses, the Washington Examiner‘s Byron York noted last month that former MI6 spy, Christopher Steele, was “well-connected with the Obama State Department,” according to the book Collusion: Secret meetings, dirty money, and how Russia helped Donald Trump win” written by The Guardian correspondent Luke Harding.

Harding notes that Steele’s work during the World Cup soccer corruption investigation earned the trust of both the FBI and the State Department: 

The [soccer] episode burnished Steele’s reputation inside the U.S. intelligence community and the FBI. Here was a pro, a well-connected Brit, who understood Russian espionage and its subterranean tricks. Steele was regarded as credible. Between 2014 and 2016, Steele authored more than a hundred reports on Russia and Ukraine. These were written for a private client but shared widely within the State Department and sent up to Secretary of State John Kerry and to Assistant Secretary of State Victoria Nuland, who was in charge of the U.S. response to the Ukraine crisis.

Shedding more light on the subject is longtime Kerry colleague and Steele pal, Jonathan Winer – who penned a Feb. 8 op-ed in the Washington Post entitled “Devin Nunes is investigating me: Here’s the Truth”

From Winer – along with a Senate Judiciary Committee criminal referral of Christopher Steele – we learned that several Clinton allies were also connected to both the dossier and the Kerry State Department. 

Winer notes that “in late September [2016], I spoke with an old friend, Sidney Blumenthal, whom I met 30 years ago when I was investigating the Iran-contra affair for then-Sen. Kerry and Blumenthal was a reporter at The Post. At the time, Russian hacking was at the front and center in the 2016 presidential campaign. The emails of Blumenthal, who had a long association with Bill and Hillary Clinton, had been hacked in 2013 through a Russian server.

While talking about that hacking, Blumenthal and I discussed Steele’s reports. He showed me notes gathered by a journalist I did not know, Cody Shearer, that alleged the Russians had compromising information on Trump of a sexual and financial nature.”

Winer also describes a meeting with Christopher Steele during which he learned that Steele’s sources were pointing to collusion between Trump associates and the Kremlin – which also allegedly hacked the DNC.

In September 2016, Steele and I met in Washington and discussed the information now known as the “dossier.” Steele’s sources suggested that the Kremlin not only had been behind the hacking of the Democratic National Committee and the Hillary Clinton campaign but also had compromised Trump and developed ties with his associates and campaign.

Winer’s op-ed corroborates the series of events outlined in a criminal referral for Steele issued by Senate Judiciary Committee Chairman Chuck Grassley (R-IA) and Lindsey Graham (R-SC), which asks the DOJ to investigate Steele for allegedly lying to the FBI about his contacts with the media. 

Winer gives Blumenthal’s memos to Steele…

While we’ve known for a while that Steele used Kremlin officials for information contained in the infamous “Steele dossier,” Winer’s op-ed reveals that he gave Steele memos from Clinton operative Sydney Blumenthal – which originalted with Clinton “hatchet man” Cody Shearer. 

Winer claims he didn’t think Steele would share the Clinton-sourced information with anyone else in the government.

“But I learned later that Steele did share them — with the FBI, after the FBI asked him to provide everything he had on allegations relating to Trump, his campaign and Russian interference in U.S. elections,” Winer writes. 

Deeper Kerry Connections

As Journalist Sara Carter notes, “Also in September, 2016 Steele briefed Winer on the dossier at a Washington Hotel, according to an expose recently published in The New Yorker. Winer prepared his summary and shared it with former Assistant Secretary for European and Eurasian Affairs Victoria Nuland and Jon Finer, who was then chief of staff Kerry. Kerry was then briefed by Finer several days later, according to the report. 

 

via RSS http://ift.tt/2G4Uw1H Tyler Durden

Authored by Barry Donegan via TruthInMedia.com,

Northeastern researchers James Alan Fox and Emma Fridel released a new study claiming that mass school shootings are not on the rise, that mass shootings are happening at a historically typical pace, and that shooting deaths in schools have been on the decline since peaking in the 1990s.

The study entitled “The Three R’s of School Shootings: Risk, Readiness, and Response” by Lipman Family Professor of Criminology, Law, and Public Policy James Alan Fox and doctoral student Emma Fridel, which is set to be published in The Wiley Handbook on Violence in Education: Forms, Factors, and Preventions in June of 2018, compiled data on school shootings from USA Today, the FBI’s Supplementary Homicide Report, Congressional Research Service, Gun Violence Archive, Stanford Geospatial Center and Stanford Libraries, Everytown for Gun Safety, a Mother Jones compilation of shooting statistics, and an NYPD active shooters report.

While each of those reports define a mass and school shooting differently, Fox said that according to his examination of the totality of the data, since 1996, 16 multiple-victim shootings have taken place in schools, defined as shooting incidents in which there were 4 or more victims and at least 2 fatalities excluding the perpetrator. Fox defined 8 of those shootings, involving deaths of 4 or more victims excluding the perpetrator, as mass shootings, which mirrors the 1980s FBI definition of mass murder, The Washington Post noted.

Fox also said that, including school shootings below the threshold of a mass shooting, four times as many children were fatally shot in schools in the 1990s compared to the present day. He also added that an average of 10 students per year die to gunfire in schools in the United States, meaning that bicycle accidents and pool drownings are significantly greater threats to the lives of schoolchildren.

source: Northeastern University

“There is not an epidemic of school shootings,” said Fox.

Incidentally, Professor Fox is a supporter of gun control legislation and said that he believes that banning bump stocks and raising the legal age to purchase tactical rifles from 18 to 21 could help reduce overall gun crime. However, he claimed that these policy changes would do little to impact mass shootings.

“The thing to remember is that these are extremely rare events, and no matter what you can come up with to prevent it, the shooter will have a workaround,” he said. Fox also noted that there have only been five times in the past 35 years in which a person between the ages of 18 and 20 used a tactical rifle along the lines of an AR-15 to carry out a mass shooting.

Fox slammed the idea of arming teachers, calling it “absurd” and said, “I’m not a big fan of making schools look like fortresses, because they send a message to kids that the bad guy is coming for you—if we’re surrounding you with security, you must have a bull’s-eye on your back. That can actually instill fear, not relieve it.”

Emma Fridel pointed out that many security policies aimed at stopping mass shootings have been ineffective. She said that mass shooting drills have not been shown to work in studies and that students find them traumatizing. She also noted that many mass shootings have taken place at schools with metal detectors and other security precautions, as shooters have found ways around them, such as targeting students outside during fire drills or ambushing security guards at the front door to gain entry.

“These measures just serve to alarm students and make them think it’s something that’s common,” Fridel claimed.

via RSS http://ift.tt/2FBjpUI Tyler Durden

We wondered why the pace of leaks from Special Counsel Bob Mueller’s office started to slow late last summer – and then, suddenly, Mueller dropped the Manafort-Gates indictments, unsealed George Papadopoulos’s plea agreement and announced the cooperation of Michael Flynn, all in a relatively narrow time period, with almost nothing appearing in the press ahead of time.

It’s notable that the pace of leaks started to slow after Mueller reportedly demoted Peter Strzok,  the FBI agent who was first outed for trading anti-Trump text messages with his mistress, Lisa Page, and also helped steer the FBI’s probe away from signs of Hillary Clinton’s guilt.

But now, the pace of leaks out of the special counsel’s office is quickening once again: Tonight, for the first time in months, the Washington Post and New York Times published twin bombshells based on information clearly leaked by a member of Mueller’s team. 

The NYT reports that President Trump considered firing White House Counsel Don McGahn III after he refused to release a statement denying reports that he had threatened to resign when Trump asked him about firing Mueller.

Trump’s conversation with McGahn, which occurred after McGahn had met with investigators from Mueller’s team, was one of two conversations where Trump reportedly asked witnesses about what they said to the grand jury.

Former White House Staff Secretary Rob Porter later told McGahn that Trump had considered firing him for his disloyalty.

Trump also reportedly asked former chief of staff Reince Preibus whether Mueller’s team was “nice” to him when Preibus sat for an interview with investigators…

The report clearly suggests that Mueller is still casting about for evidence that the president has tried to obstruct justice – and, as part of this, is also exploring whether Trump tried to disrupt the Mueller probe.

The experts said the meetings with Mr. McGahn and Mr. Preibus would probably sharpen Mr. Mueller’s focus on the president’s interactions with other witnesses. The special counsel has questioned witnesses recently about their interactions with the president since the investigation began. The experts also said the episodes could serve as evidence for Mr. Mueller in an obstruction case.

The WaPo report focuses on another branch of the Mueller investigation (it’s not really accurate to refer to it as “the Russia probe” anymore because, though Mueller says he’s still looking into the Russia angle, he has clearly moved on to other potentially more fruitful avenues). That branch is the financial and business conflicts of both the Trump family and his associates – epitomized by Mueller’s prosecution of former Trump campaign executive Paul Manafort.

In the WaPo report, Congressional investigators apparently believe they’ve caught Blackwater founder Erik Prince (brother of Trump Secretary of Education Betsy DeVoes) in a lie.

According to the story, Prince told investigators that an already-public 2017 meeting in the Seychelles between Prince and a Russian emissary wasn’t planned.

Erik Prince

But apparently, George Nader, a Lebanese-American businessman who’s been caught up in the probe, told investigators that the meeting was planned for the purposes of establishing a relationship between Trump and Moscow as Trump prepared – and this is important – to take the oath of office. As we’ve already learned, communications between an incoming administration (or its representatives) and foreign officials isn’t illegal (it’s actually quite common)

Last year, Prince told lawmakers, and the news media, that his Seychelles meeting with Kirill Dmitriev, the head of a Russian government-controlled wealth fund, was an unplanned, unimportant encounter that came about by chance because he happened to be at a luxury hotel in the Indian Ocean island nation with officials from the United Arab Emirates.

In his statements, Prince has specifically denied reporting by The Washington Post that said the Seychelles meeting, which took place about a week before Trump’s inauguration, was described by U.S., European and Arab officials as part of an effort to establish a back-channel line of communication between Moscow and the incoming administration.

Prince told lawmakers on the House Intelligence Committee that he did not plan to meet Dmitriev in the Seychelles but that once he was there discussing possible business deals with UAE officials, they unexpectedly suggested that he visit the hotel bar and meet Dmitriev.

“At the end, one of the entourage says, ‘Hey, by the way, there’s this Russian guy that we’ve dealt with in the past. He’s here also to see someone from the Emirati delegation. And you should meet him, he’d be an interesting guy for you to know, since you’re doing a lot in the oil and gas and mineral space,’ ” Prince told lawmakers.

The two men, he said, spoke for no more than 30 minutes, or about the time it took him to drink a beer.

While the meeting itself may have been legal, lying to the FBI is, of course, blatantly illegal – and Mueller has already demonstrated an eagerness to bust people for perjury. Which the begs the question: Why, then, has Prince not been arrested and charged? If WaPo’s reporting is accurate, then it wouldn’t be out of the question – in fact, it’d be likely. Though, there’s also the possibility that Nader could be lying, which isn’t addressed in the story.

Either way, we imagine the leaks from these past couple weeks are only the beginning: Expect updates from the interminable Mueller probe to become a daily fact of life once again.

via RSS http://ift.tt/2oZGKFl Tyler Durden

The Trump-Russia probe is a “running joke” between Rep. Jim Himes (D-CT) and fellow Rep. Cheri Bustos (D-IL).

Himes made the comment on a Tuesday morning appearance with MSNBC’s Morning Joe while making a point about how their constituents don’t care about Russia. 

When asked by the Washington Post’s Robert Costa why Democrats aren’t campaigning on the Russia probe, Himes had this to say: 

HIMES: “…Here’s the thing. My good friend [Dem Rep.] Cheri Bustos who represents a very tough district in Illinois, we have sort of a running joke going in the mornings, which is, she’s got a district very different from mine and I represent Fairfield County, Connecticut. She’s in the heartland in a distinct that we need to figure out how to win again. Every Monday morning when I see Cheri and we come up there’s a little bit of laughter and she says, ‘you know what? My constituents are still not asking me about Russia.

Rep. Jim Himes (D-CT) admits Trump-Russia probe is running joke with fellow Democrat lawmaker, says voters never ask about it. pic.twitter.com/7rQD3NVGF7

— Josh Caplan (@joshdcaplan) March 6, 2018

Himes says that American are worried about “kitchen table issues,” and that Democrats will “pay a cost at the polls” if they can’t understand this. 

“A case that is made here inside the Beltway rarely I think has a lot of resonance to middle-class families sitting around in small towns in Ohio and Michigan,” he said.

Wrap it up

One of the key Democrats behind the Trump-Russia push has been Rep. Adam Schiff (D-CA), who recently admitted on The View that no evidence of Russian collusion exists. 

Rep. Adam Schiff conceded Thursday there is still no evidence President Trump or his campaign colluded with Russia to win the election, and made a point of distancing himself from any charges of treason against the president. –The Federalist

Considering that no collusion has been found during nearly two years of ongoing investigations, and the Russian “Troll farm” from Special Counsel Robert Mueller’s February indictment turns out to have bought most of their Facebook ads after the election (and didn’t favor a particular candidate) – the Russia “witch hunt” as President Trump calls it is quickly becoming a national embarrassment. 

Even former Secretary of State Condoleezza Rice thinks it’s time to stick a fork in the Russia investigation.

Condoleezza Rice To Adam Schiff On Russia Investigation: “Wrap It Up…The Country Needs To Get Back To Business.” pic.twitter.com/mzmU14kdMO

— Ryan Saavedra 🇺🇸 (@RealSaavedra) March 1, 2018

Even CNN employees caught on undercover camera by Project Veritas admitted that network is pushing the Russia story for ratings, and that it’s a big nothingburger.

But hey, maybe tone-deaf Democrats will continue to robotically parrot the Russia narrative through Midterms and again in 2020, while increasingly turned off voters will continue to see through this national embarrassment designed to preserve Hillary Clinton’s halo. 

via RSS http://ift.tt/2FnfWpG Tyler Durden

Last week we discussed that while Trump’s steel and aluminum import tariffs were reportedly conceived mostly to hurt China and force it to reduce its trade surplus with the US, at least in their current iteration they will hardly make much of a dent, as China is not even in the top 10 list  of direct steel exporters to the US.

In other words, we summarized “if Trump hopes to punish China (and Russia and South Korea), he will have to try mach harder.”

Meanwhile, in addition to hurting US foreign trade partners, tariffs – which will push the prices of steel and aluminum materially higher – will also have a detrimental impact on US states which are net importers of the two commodities.

According to an analysis by the Trade Partnership, while the tariffs will boost the prospects of US steelmakers, they will have a net negative impact on other US industries. Specifically, economists Joseph Francois and Laura Baughman found that the new policy would increase employment in the US metals industry by 33,464 jobs while at the same time decreasing employment in other industries by about 179,334 jobs, resulting in a net loss of 146,000 jobs.

The majority of these job losses, according to Francois and Baughman, would come from lower-paying industries.

“High-skilled jobs (managers, professionals, technicians and related workers) account for one-third of the net job losses. Low-skilled workers (production workers, machine operators, office workers, administrative workers, sales/shops staff, and farm workers) bear the brunt of the tariffs, accounting for two-thirds of the total job losses.”

Furthermore, other industries would see declines in employment as households scale back their spending in response to higher prices. From the study:

“Consumers have reduced spending power when they are hit by higher costs (of a new car, a new washing machine, etc.) and, for many, lost wages from unemployment. As a result, households pull back on spending; services like education, entertainment and even healthcare are on the front lines of the spending reduction impacts, with additional attendant job losses.”

In other words, as steel and aluminum costs rise, so will prices of items made with those materials. Consumers will then feel the squeeze and buy fewer items, dealing another blow to consumer-sensitive businesses and causing cutbacks.

What does this mean when transposed to the state level? According to an analysis by Deutsche Bank’s Torsten Slok, 15 US states are net importers of steel and aluminum: the chart shows the share of steel and aluminum imports as a share of the state’s total imports. In other words the states shown below would be hit the hardest from Trump’s tariffs, with Louisiana, Connecticut and Missouri expected to suffer the biggest hit.

The irony, as the WSJ’s Nick Timiraos points out, is that 12 of the 15 states listed above voted for Trump.

via RSS http://ift.tt/2D8QLVW Tyler Durden

Authored by James Rickards via The Daily Reckoning,

The Fed says incessantly that “price stability” is part of their dual mandate and they are committed to maintaining the purchasing power of the dollar. But the Fed has a funny definition of price stability.

Common sense says price stability should be zero inflation and zero deflation. A dollar five years from now should have the same purchasing power as a dollar today. Of course, this purchasing power would be “on average,” since some items are always going up or down in price for reasons that have nothing to do with the Fed.

And how you construct the price index matters also. It’s an inexact science, but zero inflation seems like the right target. But the Fed target is 2%, not zero. If that sounds low, it’s not.

Inflation of 2% cuts the purchasing power of a dollar in half in 35 years and in half again in another 35 years. That means in an average lifetime of 70 years, 2% will cause the dollar to 75% of its purchasing power! Just 3% inflation will cut the purchasing power of a dollar by almost 90% in the same average lifetime.

So why does the Fed target 2% inflation instead of zero?

The reason is that if a recession hits, the Fed needs to cut interest rates to get the economy out of the recession. If rates and inflation are already zero, there’s nothing to cut and we could be stuck in recession indefinitely.

That was the situation from 2008–2015. The Fed has gradually been raising rates since then so they can cut them in the next recession.

But there’s a problem.

The Fed can raise rates all they want, but they can’t produce inflation. Inflation depends on consumer psychology. We have not had much consumer price inflation, but we have had huge asset price inflation. The “inflation” is not in consumer prices; it’s in asset prices. The printed money has to go somewhere. Instead of chasing goods, investors have been chasing yield.

In a recent article, Yale scholar Stephen Roach points out that between 2008 and 2017 the combined balance sheets of the central banks of the U.S., Japan and the eurozone expanded by $8.3 trillion, while nominal GDP in those same economies expanded $2.1 trillion.

What happens when you print $8.3 trillion in money and only get $2.1 trillion of growth? What happened to the extra $6.2 trillion of printed money?

The answer is that it went into assets. Stocks, bonds and real estate have all been pumped up by central bank money printing.

The Fed, first under Ben Bernanke and later under Janet Yellen — repeated Alan Greenspan’s blunder from 2005–06.

Greenspan left rates too low for too long and got a monstrous bubble in residential real estate that led the financial world to the brink of total collapse in 2008.

Bernanke and Yellen also left rates too low for too long. They should have started rate and balance sheet normalization in 2010 at the early stages of the current expansion when the economy could have borne it. They didn’t.

Bernanke and Yellen did not get a residential real estate bubble. Instead, they got an “everything bubble.” In the fullness of time, this will be viewed as the greatest blunder in the history of central banking.

The problem with asset prices is that they do not move in a smooth, linear way. Asset prices are prone to bubbles on the upside and panics on the downside. Small moves can cascade out of control (the technical name for this is “hypersynchronous”) and lead to a global liquidity crisis worse than 2008.

If the Fed raises rates without inflation, higher real rates can actually cause the recession and/or market crash the Fed is preparing to cure. The systemic dangers are clear. The world is moving toward a sovereign debt crisis because of too much debt and not enough growth.

Inflation would help diminish the real value of the debt, but central banks have obviously proved impotent at generating inflation. Now central banks face the prospect of recession and more deflation with few policy options to fight it.

So the Fed is now considering some radical ideas to get the inflation they desperately need.

One idea is to abandon the 2% inflation target and just let inflation go as high as necessary to change expectations and give the Fed some dry powder for the next recession. That means 3% or even 4% inflation could be coming sooner than the markets expect.

But the Fed should be careful what it asks for. Once inflation expectations develop, they can take on lives of their own. Once they take root, inflation will likely strike with a vengeance. Double-digit inflation could quickly follow.

Double-digit inflation is a non-linear development. What I mean by that is, inflation doesn’t go simply from two percent, three percent, four, five, six. What happens is it’s really hard to get it from two to three, which is ultimately what the Fed wants. But it can jump rapidly from there.

We could see a struggle to get from two to three percent, but then a quick bounce to six, and then a jump to nine or ten percent. The bottom line is, inflation can spin out of control very quickly.

So is double-digit inflation rate within the next five years in the future? It’s possible. Though I am not forecasting it. But if it happens, it would happen very quickly. So the Fed is playing with fire if it thinks it can overshoot its inflation targets without consequences.

Why is the Fed’s forecasts so consistently wrong?

There are many reasons for this horrible record, including the use of equilibrium models to describe a nonequilibrium complex dynamic system.

For years I’ve said that the Fed has defective economic models and the worst forecasting record of any major official institution (although the IMF gives the Fed a run for their money in terms of bad forecasts).

The facts back up my claim.

For eight years in a row, from 2009–2016, the Fed’s one-year forward forecast for annual economic growth was off by orders of magnitude. The Fed has failed to achieve self-sustaining growth anywhere near former trends, along with its failure to achieve its 2% inflation targets.

Perhaps the Fed’s biggest analytic and forecasting blunder is their reliance on the Phillips curve, which describes a purported inverse relationship between inflation and unemployment. The hypothesis is that as unemployment goes down, inflation goes up and vice versa. There is no evidence for this theory.

In the late 1960s we had low unemployment and rising inflation. In the late 1970s and early 1980s we had high unemployment and high inflation. Today we have low unemployment and low inflation. There is no correlation between employment and inflation at all.

The Fed has been pondering this lack of evidence. The Fed has concluded that they don’t really understand the relationship between employment and inflation. That’s a start. Maybe I can help.

The reason they don’t understand the relationship is because there is no relationship. Inflation is not catalyzed by employment or money supply. Inflation is a result of psychological expectations and the behavioral patterns of consumers acting on those expectations.

If people believe inflation is coming, they will act accordingly en masse, the velocity of money will increase and soon enough the inflation will arrive unless money supply has been severely constricted. That’s how you get the rapid inflation increases I described above.

It is only in the past two years that the Fed forecast has become more accurate, and that’s only because the Fed simply trimmed their forecast to the prevailing nine-year trend growth rate of just over 2%. Better late than never.

Meanwhile, the Fed is creating financial and economic headwinds with rate hikes and by reducing the money supply through its new program of quantitative tightening, or QT.

With the return of stock market uncertainty and the economy not much above stall speed, a severe stock market correction/and or recession is in the cards. I can’t say exactly when, but I’d say it’ll be sooner rather than later.

Got gold?

via RSS http://ift.tt/2I8YDdA Tyler Durden

AS dozens of corporations have bowed to corporate pressure and severed their relationship with the NRA, Bloomberg reports Wednesday that none other than Wells Fargo is the biggest financial institution lending money to the country’s two largest gun manufacturers.

Not only that, but Wells Fargo also has a long relationship with the National Rifle Association, inherited from banks that Wells took over. The San Francisco-based Wells Fargo created a $28 million line of credit for the NRA and operates the primary accounts for the pro-Second Amendment group, financial documents show.

On Valentine’s Day, a disturbed teenager left 17 dead when he shot up his former high school in Parkland, Fla. Meanwhile, retailers such as Dick’s Sporting Goods Inc. have implemented stricter gun rules, like increasing the age necessary to buy one, and some companies, like Delta Air Lines Inc., have cut ties with the NRA’s member-benefits program.

And Wells, of course, isn’t the only bank involved in extending long-term financing to gun manufacturers. Bowing to media pressure, Bank of American has said it would review its relationships with gun makers.

Other banks are active as bookrunners for gunmakers, sometimes jointly. Morgan Stanley helped arrange $350 million in debt and TD Securities $332.5 million, according to data compiled by Bloomberg. Bank of America Corp. and JPMorgan Chase & Co. and two other banks each arranged $273.6 million. That’s counting loans and bonds to gun and ammunition manufacturers American Outdoor Brands Corp. and Vista Outdoor Inc. since the day of the Sandy Hook bloodshed. Another gunmaker, Sturm Ruger & Co., currently has no public debt. Remington Outdoor Inc. has debt outstanding, but it was issued before December 2012.

TD Securities said the bank condemns violence in any form and shares the public’s outrage over the Florida school shooting. “We strongly support bipartisan efforts aimed at preventing these types of tragedies from happening again.” The bank declined to comment further, citing policy against speaking about customer relationships.

In total, the NRA paid $9.9 million in banking fees in 2015 and 2016, according to annual reports filed with the Internal Revenue Service. And since Wells is the biggest lender to several troubled gun manufacturers, the bank will likely be awarded their operations as part of the bankruptcy.

Remington Outdoor, a division of private equity giant Cerberus Capital Management that’s expected to file for bankruptcy this month, is saddled with nearly $1 billion in debt. Unable to pay its creditors, Remington Outdoor and the 12 firearms companies it owns will likely become the property of lien holders.

Remington Outdoor’s term loan fell to 26 cents on the dollar after the company announced its bankruptcy intention, and its third-lien bond due 2020 trades around 23 cents on the dollar.

Banks who provided Vista Outdoor with a $400 million revolving line of credit in 2016 are faring better. They reap 0.30 percentage points in a commitment fee for unused parts of the revolver. For Wells Fargo, who was credited with pledging $57.14 million, that adds up to a maximum of $171,420 each quarter when the fee is assessed assuming the credit line is unused at the time. If the full credit line were in use, Wells Fargo would stand to make 1.75 percentage points over the benchmark Libor rate. Vista Outdoor’s 5.675 percent 2023 bond traded at around 98.25 cents on the dollar as of March 5, according to Trace bond price data, and its term loan traded at 99.75.

Wells’ banking relationship with the NRA was the brought through various acquisitions.

Wells’ relationship with the NRA is a legacy acquisition from banks that Wells has acquired, Wells inherited the NRA account when it bought Wachovia Corp. Wachovia’s relationship with the NRA, in turn, came from its takeover of First Union National Bank.

The NRA’s political action committee, the Political Victory Fund, also banks with Wells Fargo, Federal Election Commission records show. Over the last three years, the political action committee has paid Wells Fargo nearly $71,000 in various banking fees.

Wells even extended a “profitable” loan to the NRA…

The NRA and Wells Fargo amended its longstanding financial arrangement in 2014, according to public records, when the lobbying group agreed to borrow $22.6 million in exchange for pledging its Fairfax, Virginia, headquarters as collateral. The building was assessed at $40.4 million last year, according to Fairfax County records, down from $57.9 million a decade ago.

It’s been a profitable relationship for Wells Fargo. The variable-rate loan of as much as $28 million carries an interest rate of 6.08 percent, according to the NRA’s most recent financial statement. That’s higher than typical commercial-mortgage rates. The NRA owed Wells Fargo $19.8 million as of Dec. 31, 2016.

One of the loans includes an interest-rate swap that is presently “in the money” for Wells. Indeed, the bank has made abut $2.1 million on paper from the swap (and that dosn’t include fees).

The firm has also recently been sanctioned by regulators in a humiliatingly public, though not actually effective, ways, like when the FED said Wells’ balance sheet would be constrained before admitting that the sanctions would be ineffective.

* * *

Given the lingering damage of the cross-selling scandal to Wells’ reputation, the company’s CEO Timothy Sloan clarified in a memo sent on Wednesday that “with respect to gun manufacturers, we have a strict due diligence process to ensure that each adheres to all state and federal laws before accepting them as customers.” The bank also said it was reaching out to customers that “legally manufacture firearms” to discuss what they can do to “promote gun safety.”

via RSS http://ift.tt/2oXCTsx Tyler Durden

Authored by Baruch Lev via Knowledge Leaders Capital blog,

Baruch Lev is the Philip Bardes Professor of Accounting and Finance at the Stern School of Business, NYU. This article first appeared on the Lev End Of Accounting Blog and is shared here with his permission.

We are inundated with great economic news: The stock market is at all-time high (despite wide fluctuations), unemployment is the lowest in two decades, consumer confidence is the highest in many years, and corporate profits are surging from quarter to quarter. A real economic recovery to be sure.

So, you will be shocked to see the following figure (developed with my colleague Feng Gu), which I haven’t seen anywhere else, nor mentioned by economists and pundits. The figure shows the percentage of U.S. public companies reporting an annual loss, from 1960 through 2016. The two curves portray the percent “losers” from all public companies (lower curve), and the percent “losers” from all technology and science-based companies (computers, software, pharma, biotech, etc.), presented by the upper curve.

The main finding: Both curves are fast increasing.

The percent losers from all companies increased from 18% in 1980 to 46% in 2016.

For high tech and science-based companies the losers reached 69%! In 2016.

The loss reporting epidemic rivals now the flu. High tech and science-based enterprises seem to be perennial losers rather than growth drivers.

So, where is the economic recovery if half the companies are reporting losses? Shouldn’t a recovery be reflected by an increasing number of profitable companies? I felt that there is something fishy in those GAAP-based earnings numbers, leading me to look deeper into the data.

The effect of one-time (transitory) items: Since the FASB switched in the 1980s to a “balance sheet model,” emphasizing the valuation at fair (current) values of assets and liabilities, corporate income statements increasingly included the consequences of these valuations: one-time items, such as gains/losses from adjustments of assets and liabilities to fair values, impairments of assets and goodwill, restructuring costs, etc. Most of these items reflect past events and are irrelevant for forecasting future firm performance―the focus of investors. Indeed, analysts routinely disregard some of these items in their “Street Earnings,” and managers delete them from their non-GAAP earnings.

So, I computed the percentage of loss firms due to one-time items (“special and extraordinary items” and restructuring charges) during 2010-2016. Namely, firms that would have reported a profit if the one-time charges were eliminated. These percentages ranged between 8-10% for all loss reporters, and 5-8% for high tech and science based companies. So, one-time items are one reason for loss reporting, though not the major one. I kept digging into the data.

The effect of intangible investments: Internally-generated intangible investments―R&D, brands, IT, human resources, organizational capital―are immediately expensed, following GAAP rules, despite the obvious fact that in modern economies these investments are the most important and consequential long-term value-drivers of business enterprises. This massive expensing in the income statements of U.S. companies―total corporate investment in intangibles during 2016 exceeds $2.1 trillion (yes, trillion!)―turns the profits of many successful and promising companies into losses. Tesla’s massive losses are mainly due to the expensing of R&D ($834 million in 2016).

So, how many loss reporting companies would have reported a profit if their R&D was capitalized? The data show that 9-10% of all “losers” and 20-26% of the loss reporting high tech and science-based companies would have reported profits if R&D were not expensed. Think about it: a quarter of all high tech and science-based firms report losses just because they invest in future growth. And you call this accounting?

But R&D is just one, and not even the largest, intangible expenditure. Other intangible investments, such as on IT, brands, human resources, designs, consulting engagements, etc., are not reported separately in the income statement by firms, and generally “buried” in SG&A (sales, general and administrative) expenses. So, what is the percentage of loss reporting firms who would have reported profits if SG&A expenses were added back to earnings (SG&A includes R&D in my data source―Compustat)? This is a big number: 43-51% of all losers and 50-56% of science-based and high tech losers during 2010-2016 would have reported profits before SG&A.

So, if I add the two major reasons for loss reporting – intangible investments and one-time items – I account for 50-60% of all the loss reporting. The fast increase in loss reporting portrayed by the figure above is thus mainly due to the increasing proliferation of new-age firms (high tech, science-based, telecom, media, etc.) whose investments are mostly intangible, and their reported earnings seriously misstated by GAAP-based financial reports.

So, while the above figure seems to contradict the economic recovery, it really doesn’t. If the archaic, detached from reality accounting rules will not be changed, we will continue to witness more and more “losing companies,” by GAAP misleading yardstick, while the economy continues to prosper. The real losers are investors who rely on GAAP-based financial reports.

via RSS http://ift.tt/2HeL9M3 Tyler Durden