Tag: news

For years we’ve been writing about the “fake data” coming out of China’s economic reports. Somehow we’ve always been skeptical of reports that reveal exactly 7.00% GDP growth for 10 years in a row irrespective of what happens in other global economies.

Therefore, you can imagine our ‘shock’ when China’s “top statistician” confirmed  in December 2016, via an article in the “People’s Daily” newspaper, that “some local statistics are falsified, and fraud and deception happen from time to time.”

China’s top statistician has acknowledged the country’s problems with falsification of economic data, pledging severe punishment for perpetrators in a nod to widespread suspicion that official numbers often fail to reflect true economic conditions.

“Currently, some local statistics are falsified, and fraud and deception happen from time to time, in violation of statistics laws and regulations,” Ning Jizhe, director of the National Bureau of Statistics, wrote in a column for Communist party mouthpiece the People’s Daily on Thursday.

Foreign economists and investors have long expressed doubts about China’s economic data. Most prominent are concerns about gross domestic product figures. Compared with other countries. China’s inflation-adjusted GDP growth rates are remarkably stable from quarter to quarter, even as nominal figures show considerable volatility. The NBS has denied charges that it manipulates inflation data to massage headline growth figures.

As the FT notes this morning, the preponderance of ‘fake data’ coming out of various regions has resulted in China’s national statisticians regularly discounting local data to correct for local officials’ habit of inflating figures to look good. Obviously, this “smoothing” masks fluctuations in China’s economic cycles and effectively negates the utility of publishing statistics in the first place.

Of course, the real question today is not whether China’s economic data is fake, but rather by how much it’s been faked.  As it turns out, the Financial Times took a shot at calculating that exact value today and the results are somewhat staggering.  In fact, in metals and mining dependent local economies like Inner Mongolia, the FT figures that GDP growth figures could have been overstated by up to 30% in 2016.

Inner Mongolia admitted this month that its data for “added value of industrial enterprises of a certain scale” were inflated 40 per cent in 2016. According to the Chinese statistical yearbook, secondary industry comprises 47 per cent of its GDP. Assuming its 2015 figures are accurate, the revised 2016 figures mean the region’s economy shrank 13 per cent. If that sounds implausible, consider the likelihood that 2015 figures were also incorrect.

Like Inner Mongolia, Liaoning also admitted that it faked data for about five years but hasn’t bothered to revise its fabricated historical data.

Meanwhile, Shanxi, China’s most coal-dependent province, has managed to post strong growth figures right through the collapse in global coal markets which resulted bankruptcies of even the largest international coal companies.

While President Xi Jinping has called for “seriously punishing statistical falsification and fraudulent behavior,” others point out that political influence over statistical data is the precisely the problem, not the solution.  Of course, with local politicians evaluated on their ability to meet or exceed centrally planned growth targets, it’s no surprise that the “sum of provincial GDP figures” consistently exceeds the national calculations.

In October a powerful Communist party task force led by President Xi Jinping issued policy guidelines calling for “increasing data accuracy” through methods including harsher penalties for falsification. Mr Ning’s article lauds the achievements of his agency in implementing these guidelines.

“Seriously punishing statistical falsification and fraudulent behaviour benefits the rule of law and the upholding the credibility of the party and the government,” Mr Ning wrote.

Critics of Chinese statistics have consistently argued that political interference in statistical compilation is the problem, not the solution. Communist party officials, especially at the local level, are still evaluated largely on their ability to meet or exceed economic growth targets. For many years, the sum of provincial GDP figures has far exceeded the national total. The party has taken tentative steps in recent years to reduce the role of economic growth targets in evaluating cadres’ performance, but strong incentives remain.

Of course, while staggering, we suspect that global investors will promptly dismiss the potential impact of 30% swings in GDP figures from some of China’s largest industrial regions and continue to execute their BTFD trading strategy.

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Authored by Jake Anderson via TheAntiMedia.org,

Someday, future sentient artificial intelligence (AI) systems may reflect on their early indentured servitude for the human military-industrial complex with little to no nostalgia. But we’ll worry about that when the day comes. For now, let’s continue writing algorithms that conscript machine intelligence into terrorist bombings and let the chips fall where they may. The most recent disclosure comes directly from the Pentagon, where after only 8 months of development a small team of intel analysts has effectively deployed an AI into the battlefield in control of weaponized systems to hunt for terrorists.

 

The military minds in charge of this new form of warfare feel it is nothing less than the future of armed conflicts. For example, Air Force Lt. Gen. John N.T. “Jack” Shanahan, director for defense intelligence for warfighter support and the Pentagon general in charge of the terrorist-hunting AI, says Project Maven – the name given to the flagship weaponized AI system at the Defense Department — is “prototype warfare” but also a glimpse of the future.

“What we’re setting the stage for is a future of human-machine teaming. [However], this is not machines taking over,” Shanahan added. “This is not a technological solution to a technological problem. It’s an operational solution to an operational problem.”

Originally called the Algorithmic Warfare Cross-Functional Team when it was approved for funding back in April, Project Maven has moved quickly, and many in the Pentagon think we will see more AI projects in the pipeline as the United States continues to compete with Russia and China for AI dominance.

Shanahan’s team used thousands of hours of archived Middle East drone bombing footage to “train” the AI to effectively differentiate between humans and inanimate objects and, on a more granular level, to differentiate between types of objects. The AI was paired with Minotaur, a Navy and Marine Corps “correlation and georegistration application.”

“Once you deploy it to a real location, it’s flying against a different environment than it was trained on,” Shanahan said. “Still works of course … but it’s just different enough in this location, say that there’s more scrub brush or there’s fewer buildings or there’s animals running around that we hadn’t seen in certain videos. That is why it’s so important in the first five days of a real-world deployment to optimize or refine the algorithm.”

Right now, Project Maven is intended to give military analysts more of a situational awareness on the battlefield. But could we one day see autonomous drones controlled by even more powerful AI algorithms given total control on the battlefield?

Shanahan wants to embed AI into military systems and operations across the board, and he’s not alone in calling for near ubiquity of AI adoption. A recent report from the Harvard Belfer Center for Science and International Affairs makes the case that we will see a dramatic overhaul of militaries across the world as they implement AI technology in the next five years.

“We argue that the use of robotic and autonomous systems in both warfare and the commercial sector is poised to increase dramatically,” the report states. “Initially, technological progress will deliver the greatest advantages to large, well-funded and technologically sophisticated militaries, just as Unmanned Aerial Vehicles and Unmanned Ground Vehicles did in U.S. military operations in Iraq and Afghanistan.

“As prices fall, states with budget-constrained and less technologically advanced militaries will adopt the technology, as will non-state actors.”

Researchers say that rogue terror groups are just as keen to utilize the powerful technology.

“ISIS is making noteworthy use of remotely-controlled aerial drones in its military operations,” the report states. “In the future they or other terrorist groups will likely make increasing use of autonomous vehicles.”

Meanwhile, the geopolitical fallout of AI proliferation continues to be a major issue with regard to the world’s three major superpowers — the United States, China, and Russia. It has been termed a “Sputnik moment.” Military officials, including former Secretary of Defense Chuck Hagel in 2014, have said the AI arms race is known as “Third Offset Strategy” and is the next generation of warfare.

 

Should humans worry about their inept, bloodthirsty leaders handing over the reins of the war machine to…a war machine? Perhaps, but it’s never stopped us before.

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Dr.Copper is trading near 4-year highs, providing ‘proof’ that the global economy is in growth mode, that inflationary pressures are building, and implicitly supporting the bond bears’ perspective…

 

There’s just one little problem with all this copper-futures-price-based exuberance and extrapolation.

The one thing that’s missing is buyers of the actual metal.

As Bloomberg reports, evidence of the anomaly can be seen in the premiums that purchasers of physical copper pay over futures prices to cover shipping and other costs.

Typically these rise as demand grows and buyers are willing to pay extra to access supply that’s being used up at a quicker rate.

Yet, even with factories running at the fastest in years, premiums have been stuck at a low level.

That’s a disconnect with the optimism in futures markets, where hedge funds have been adding to their bullish bets since the middle of December.

 

Such wagers have helped fuel a rally in prices to their highest since early 2014.

“Certainly from a fundamental perspective, I do find it difficult to justify the copper price where it is today,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said in London.

Along with high stockpiles and a slack forward price curve with spot prices trading below futures on the London Metal Exchange, low physical premiums suggest buyers aren’t yet rushing to secure copper as factories ramp up.

But don’t tell the self-referencing bulls hoping for rates to spike higher and stocks to go even more parablic-erer.

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Authored by Caitlyn Johnstone via Medium.com,

Over the weekend, the people of Hawaii were temporarily terrorized by a notification sent to their mobile phones that a ballistic missile was headed straight for them and they needed to seek shelter immediately. They were not notified that it was a false alarm for 38 minutes, despite its reportedly being a simple human error triggered by an employee who “pushed the wrong button”.

Many who are less trusting of official CNN narratives when it comes to the US power establishment have been voicing skepticism of this explanation, finding the timing highly suspect given that the Trump administration just caused international controversy by giving the okay for a $133 million sale of an anti-ballistic missile system to Japan. A sale which, according to Russia, violates international ballistic missile treaties and will put a strain on Moscow’s relationship with Tokyo.

The general idea is that this deal has a lot less to do with the threat posed by North Korea, its ostensible object, and a lot more to do with the Russia-China tandem that the US power establishment is continually working to undermine. Placing an anti-ballistic missile system in the hands of a US ally right on the east edge of Asia weakens the effectiveness of mutually assured destruction (MAD), the understanding that if any nation launches a nuclear attack on another nuclear-armed country there will be full-scale retaliation and both countries will be destroyed. If some American officials get it into their heads that their country’s rivals can be taken out via nuclear strikes and any retaliatory strikes nullified via missile defense systems, MAD is no longer a deterrent to this and we’re looking at potentially billions of deaths and possible planetary extinction.

Regardless of whether the false alarm was a psyop designed to manufacture support for the anti-ballistic missile sale or a genuine human error, the fact remains that the deal itself is undeniably a move taken by the Trump administration against the will and interests of the Kremlin.

This is just the latest in a string of maneuvers against Russia that have been made by this administration, despite Trump’s continued outward assurances that he wants to improve relations with Moscow. As is so often the case, a US president is saying one thing and doing something very different.

And it completely kills the Russiagate narrative.

 

Just a few days ago Russiagaters were having yet another “BOOM! We got him!” social media parade about an article from the Clinton-directed Daily Beast, claiming that a senior national security aide within the Trump administration had suggested scaling down the US troop presence along Russia’s border, a dangerous escalation which all peace advocates support eliminating. In the first sentence of the article’s second paragraph, the author Spencer Ackerman acknowledges that “the proposal was ultimately not adopted.”

Huh?

So President Trump, alleged to have been groomed early and at great expense by the Kremlin in anticipation of a presidential victory nobody else imagined possible at that time, was pitched a recommendation to scale down new cold war escalations with Russia… and he refused? That’s how you’re starting your article about the “return on Russia’s election-time investment in President Trump”?

Russiagate is so weird. You need to plug yourself into Louise Mensch and Rachel Maddow ramblings so extensively that you can contort your sense of reason to the point where it looks perfectly rational to believe that Putin was omniscient enough to know that Trump could defeat all primary opponents and take the fight to the heir apparent Hillary Clinton back when virtually no one else imagined such a thing was possible, recruited his team reportedly at the cost of billions of dollars, poured all kinds of intel and resources into ensuring Trump’s election using hackers and bots to influence American opinion, only to get a US president who is, when it comes to facts in evidence, already just a year into his administration demonstrably more hawkish towards Russia than his predecessor was.

Again: huh?

Nobody wants to think about this because it doesn’t fit in with America’s stale partisan models; Democrats would have to admit that their best shot at getting a rival president impeached is pure gibberish, and Trump supporters would have to acknowledge that their swamp-draining populist hero is actually just one more corrupt globalist neocon like his predecessors. But when it comes to actual facts in evidence, that’s exactly what we’re looking at.

Over and over and over again this alleged Russian asset has been choosing to undermine Moscow instead of advancing its interests. He approved the sale of arms to Ukraine, a move loudly encouraged by DC neocons which Obama refused to do because of the dangerous tensions it would inflame with Russia. His administration forced first RT and now Sputnik to register as foreign agents, expanded NATO with the addition of Montenegro, assigning established Russia hawk Kurt Volker as special representative to Ukraine, shutting down a Russian consulate in San Francisco and throwing out Russian diplomats as part of continued back-and-forth hostile diplomatic exchanges, and signing the Russian sanctions bill despite loud protests from Moscow. If he is indeed an expensive Russian asset, then Russia got ripped off.

The one area Russiagaters can claim Trump hasn’t gone against Russian interests is in Syria, where the administration has cooperated with Putin in fighting terrorist forces. Or at least, they would have been able to make that argument had Obama not been in favor of it as well. If Syria proves Trump is a Putin puppet, then the White House must have been offering a two-for-one deal, because they bought Obama as well.

Russiagaters can claim “Well, Trump colluded with Russia, but because we’re putting political pressure on him not to align with Putin he isn’t able to do anything to advance Moscow’s interests.” Okay, but what’s the charge, then? That Russia bought Trump, and accomplished absolutely nothing other than bringing new sanctions and cold war escalations down upon itself? Again, the Steele dossier upon which the collusion narrative is based alleges that Trump was recruited at great expense long before anyone in the US thought of him as a serious presidential contender. We’re expected to believe that Putin was psychic enough to know Trump could win with enough confidence to invest accordingly, but not psychic enough to know that collusion and election meddling could be detected by America’s sprawling surveillance networks and cause backlash, sanctions and escalations?

No part of any of this makes any sense at all. If you can see past the stupid corporate media-fed filters of Trumpism and anti-Trumpism enough to look at what’s actually happening, the collusion narrative is nonsense on its face.

Maybe the false missile alarm wasn’t a psyop, but Russiagate definitely is. America’s unelected power establishment had a plan to manufacture support for new escalations to hobble the Russia-China tandem regardless of who won the 2016 presidential election, and since their prefered candidate didn’t win they’ve been employing what is surely the most extensive single psychological operation ever performed in human history.

And it’s working so far. Sure will cause a lot of problems for them if people start waking up to it, though.

*  *  *

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Following various red flags, including speculation that it was running a Ponzi scheme, Bitcoin investment platform BitConnect announced it was closing the company’s cryptocurrency exchange and lending operation after receiving two cease-and-desist letters from state authorities for the unauthorized sale of securities and suffering from denial-of-service attacks.

In addition to offering cryptocurrency exchange services, BitConnect offered to let people receive interest on their digital coin balance by lending or investing their capital.

In a blog post – titled “Changes coming for the Bitconnect [sic] system – Halt of lending and exchange platform” posted on its website, the company said that is “closing the Bitconnect [sic] lending and exchange platform.” 

It concluded that “This is not the end of this community, but we are closing some of the services on the website platform and we will continue offering other cyptocurrency [sic] services in the future.”

Both the Texas State Securities Board and North Carolina Secretary of State Securities Division warned that the firm isn’t registered to sell securities in those states, the company said on its website Tuesday. BitConnect offered to let people receive interest on their digital coin balance by lending or investing their capital.

According to the statement, the company will “continue offering other cryptocurrency services in the future.” The questionnable BitConnect X ICO – which was explicitly named in a cease and desist letter served by the Texas Securities Board – will remain “functional.”  As Bloomberg notes, BitConnect’s token, BCC, was among the world’s top-20 most successful tokens until its price plunged 65 percent since Jan. 3, as the states announced the actions.

Launched a year ago, the coin still has a market cap of over $200 million, after taking a massive dip to $33, ot -87%, as per CoinMarketCap. By comparison, its value fluctuated around the $425 mark less than 10 days ago.

In addition to its legal trouble and inability to protect itself from continuous DDoS attacks, the company blamed the closing of its lending and exchange services on “bad press.” That is despite the fact that most of this bad press circulated around the severity of their legal troubles.

According to the Next Web, prior to the closure, “the shady Bitcoin investment scheme was mired in a litany of legal troubles, including cease and desist orders from the UK in November, as well as two more from from the US this month – one from the Texas Securities Board and one from the North Carolina Securities Division.”

Leading up to the announcement, BitConnect promoters suddenly began distancing themselves from the project. Coincidentally, the website was struggling with a series of server downtime – all of which began shortly after the cease and desist orders rolled in.

* * *

News of the BitConnect’s closure, which are specific to what many had deemed a “shady business” hit on Tuesday afternoon, around the time the cryptocurrency selling accelerated, briefly dragging bitcoin below $10,000. It is unclear how much the news of BitConnect’s woes accelerated the broader cryptocurrency liquidation, although judging by the sharp rebound in bitcoin and its digital currency peers in the past hour, the market appears to be re-normalizing slowly, realizing that the crackdown against BitConnect is not a broader attack on the cryptocurrency space but merely removal of some of the well-known bad actors.

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A little over a week ago, once-mighty (and recently insolvent) film and camera giant Eastman Kodak embraced the magic of blockchain and announced that it would soon launch Kodakcoin, “a photocentric cryptocurrency to empower photographers and agencies to take greater control in image rights management.”

The announcement helped Eastman Kodak’s moribund stock price soar 77% – confirming that investors will bid up the stock of nearly any company that associates itself with cryptocurrencies or blockchain.

 

Today, the next step in the saga of Kodakcoin was unveiled when TZERO, the digital-currency focused subsidiary of Overstock.com, announced that it would list Kodakcoin on its digital-currency exchange platform – making it the first third-party coin to trade on the platform.

The parties intend that the KODAKCoin will launch in Q1 2018. KODAKCoin will be the first third-party security token to launch on the security token platform that tZERO is developing.  KODAKCoin will serve as the currency to power the recently announced KODAKOne digital imagery platform. The parties intend to follow the tZERO roadmap by offering a security token in accordance with U.S. federal securities laws requirements with subsequent trading to occur on the tZERO trading platform. tZERO will provide end to end advisory services, technology implementation and trading services for KODAKCoin. The suite of services offered by tZERO will include, encryption of accounts, price quoting, clearing and reconciliation services, and anti-money laundering and know-your-customer verification.

“tZERO’s vision in being able to develop and provide a securities token platform that complies with U.S. federal securities laws is key to the success of the KODAKCoin,” said Jan Denecke, Co-Founder of the KODAKOne platform and KODAKCoin. “The KODAKCoin offering is centered around providing photographers security and peace of mind, and the tZERO platform allows us to provide that same security to our token holders as well.”

Last week, Kodak and WENN Digital announced their brand licensing partnership for the KODAKOne platform and KODAKCoin cryptocurrency. Utilizing blockchain technology, the KODAKOne platform is an encrypted, digital ledger of rights ownership for photographers to register both new and archived work that they can then license within the platform. With KODAKCoin, participating photographers are invited to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, receive a share of overall platform revenue, and for both professional and amateur photographers, sell their work confidently on a secure blockchain platform.

TZERO’s whole shtick is that it will be the first digital-currency exchange to assiduously clear all of its coins with the Securities and Exchange Commission, making each offering – including the KodakCoin – 100% compliant with regulators.

“The Crypto Revolution is upon us and to have KODAKCoin on the tZERO platform is a tremendous stepping stone in continuing the mainstream adoption of what, I would assert, may prove to be the most powerful innovation in history. As U.S. regulators seek securities-law compliant applications for companies issuing security tokens, the issuance and trading of KODAKCoin in compliance with securities laws will empower entrepreneurs and protect photographers’ property and licensing rights, while achieving another critical step in defining a new wave of digital capital formation. We welcome the KODAKCoin into the tZERO family and look forward to working with this iconic brand,” said tZERO CEO Patrick Byrne.

The KodakCoin offering is set to begin Jan. 31, and will be open to accredited investors in the US, UK and Canada. Although as investors watch their profits from 2017 evaporate in the ongoing cryptocurrency market route that has left bitcoin down 20% YTD, it might make some potential investors second guess if they can really afford to brook another major loss on a cryptoasset.

 

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President Trump ordered CNN’s star reporter Jim Acosta “out” of the Oval Office Tuesday after the Senior White House Correspondent peppered the president with charged questions about immigration, following an alleged comment made by Trump last week in which he is said to have referred to Haiti and several other impoverished nations as “shitholes.” 

After interjecting several times with increasingly insulting lines of questioning, Trump pointed at Acosta and said “Out!” – which finally rendered Acosta speechless.

“Mr. President,” Acosta shouted three times, finally getting Trump’s attention, “Did you say that you want more people to come in from Norway? Did you say that you wanted more people from Norway? Is that true Mr. President?” Acosta barked at Trump. 

“I want them to come in from everywhere… everywhere. Thank you very much everybody,” Trump replied while Acosta continued to interject.

“Just Caucasian or white countries, sir? Or do you want people to come in from other parts of the world… people of color,” Acosta asked – effectively calling Trump racist, to which Trump looked Acosta directly in the eye and simply said:

“Out!”

Watch here:

Trump tells CNN’s Jim @Acosta to get out after his repeated melodramatic antics. http://pic.twitter.com/QzQ2MYGpSi

— Ryan Saavedra 🇺🇸 (@RealSaavedra) January 16, 2018

Different angle:

President Trump orders CNN’s Jim Acosta to get OUT of Oval Office after latest outburst. http://pic.twitter.com/n2mxIkBdEn

— Josh Caplan (@joshdcaplan) January 16, 2018

Acosta spoke about the incident with Wolf Blitzer afterwards and said it was clear the president was ordering him out of the room. Acosta said he tried to ask his questions again when Trump and Nazarbayev gave a joint statement later on, but Deputy Press Secretary Hogan Gidley “got right up in my face” and started shouting at him to block out any questions.

“It was that kind of a display,” Acosta recalled. “It reminded me of something you might see in less democratic countries when people at the White House or officials of a foreign government attempt to get in the way of the press in doing their jobs.”

Acosta and CNN were infamously humiliated after Trump called them “fake news” during a January, 2017 press conference in which Acosta attempted to shoehorn a question in front of another reporter: 

Meanwhile, Acosta was shut down in December by White House Press Secretary Sarah Sanders after he tried to grandstand during a press briefing over being called “Fake News,” telling her that sometimes reporters make “honest mistakes.” 

Sanders shot back; “When journalists make honest mistakes, they should own up to them. Sometimes, and a lot of times, you don’t,” only to be temporarily cut off by Acosta. 

“I’m sorry, I’m not finished,” Sanders fired back, adding “There is a very big difference between making honest mistakes and purposefully misleading the American people… you cannot say it’s an honest mistake when you’re purposely putting out information you know is false.”

Meanwhile…

CNN said ‘s**thole’ 195 times on Friday

One thing they didn’t say: “Trump is responsible for the highest stock market in history”

— Jack Posobiec 🇺🇸 (@JackPosobiec) January 16, 2018

 

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As the cryptocarnage accelerates and as bitcoin tags $10,000, moments ago Goldman chief’s chartist, Sheba Jafari, has released her latest technical outlook on various asset classes, among which bitcoin, and writes that as a result of the recent drubbing, “Bitcoin is nearing interesting levels.”

According to Jafari, “the market has pulled back pretty sharply off the ~19,500 highs” a sell-off which qualifies as either:

1. a corrective 4th wave in an unfinished 5 of V from September, or alternatively
2. a larger degree IV of V from the ultimate low.

Either way, according to Jafari, the move lower should be viewed as corrective/counter-trend.

So from a technical perspective what are the key support lines to look for next? Goldman believes that the next important level to watch  in terms of support is an equality target off the highs at 9,978. If truly corrective, this 9,978 level should in theory be the area to watch for signs of a reversal/base.

Daily Chart

On the other hand, any drop further than 9,836 (50% from ’15) would call into question the nature of the retracement.

Beyond there, Jafari notes that any overlap with the interim high from Nov. 8th at 7,882 invalidates any potential for this to be a 4th of 5/V.  This means that “there are clear downside supports to keep in mind. The first big pivot level being at 9,978.“

Goldman’s bottom line: “Watch for signs of a base ahead of 9,978. Setup weakens through 9,836. Turn neutral/cautious through 7,882.“

Weekly Chart

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Three months after Chicago-based investor Sam Zell said he believed the US equity market might extend its rally for another year or two thanks to the spike in business optimism unleashed by President Donald Trump, the legendary investor told CNBC that he’s not keeping most of his money in cash, largely because low inflation has made carrying cash much less expensive.

In an interview with CNBC, Zell reiterated his dim view of the stock market, pointing out that a handful of stocks – most notably the FANG stocks – have been responsible for most of the main benchmarks’ gains over the past year. The broader market, Zell argues, doesn’t look so great.

“I think if you look at the growth we’ve had in the stock market this last year and you eliminate the fang stocks the growth ain’t so terrific. Generally speaking, when you get to the Russell 2,000 and mid-tier stocks, they’re not nearly as frothy….The Russell 2000 is hitting highs but from a much lower base.”

Zell has long been skeptical of tech megacap valuations. As he pointed out during an interview with Goldman Sachs last year, in order to justify the multiple that Amazon trades at today, the company would have to be worth 25% of the US economy five years from now.

Billionaire Sam Zell on markets: I think the current situation seems like irrational exuberance from CNBC.

 

Indeed, the current situation, Zell said, “seems like irrational exuberance,” echoing a warning that then-Federal Reserve Chairman Alan Greenspan famously issued in 1996 about the market environment.

Several years ago, Zell said the US expansion was in the eighth or ninth inning of the cycle. But Zell said late last year that the election of President Trump has changed things. There is more optimism in the business sector now, Zell said, which means the expansion will probably have “extra innings.”

What he means is that, with Trump in office, the real economy could continue to rack up a few consecutive quarters of 3% growth, Zell said.

“I think the opportunity for the country to grow at 3% is real. I think the current situation seems like irrational exuberance,” Zell said.

And since we’ve never experienced eight straight years of 2% growth, nobody has any frame of reference to suggest how long this cycle could last.

Zell believes the cycle could drag on for a while yet.

“I think one of the arguments is if you deferred over 1% of growth through over regulation etc. growth may in fact dispute the cycle. Maybe if eight of it is at 2% growth, that’s much longer than we’re used to,” Zell said.

“We’re dealing with something we don’t know about. We’ve never had 8 years of 2% growth. We’ve had a period of time where growth has been impeded by regulation by over-involvement of government by an anti-business White House.”

Zell says with asset valuations are high across markets following years of central banks pumping cash into the financial system. There are few opportunities left, Zell said.

“It’s very frustrating as somebody who’s spent his whole life taking risks, making investments…all of a sudden there’s relatively few to bet on in a very low inflationary environment like this. The burden of carrying cash is nothing like it was when rates were at 8% or 10%.”

Years ago, Zell said, the Fed’s quantitative easing would’ve been called something else: debasing the currency.

“We have flooded the world with money…every other time we didn’t call it quantitative easing we called it debasing the currency and it resulted in the dollar going down. We just did it, and it didn’t happen. Will it happen? I don’t know.”

In summary, now is a good time to hold cash. Wait for equity and real estate prices to plunge, and be ready to try and catch that falling knife.

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Authored by Simon Black via SovereignMan.com,

There’s a really unique investment company in Europe you ought to know about… because they are insanely profitable.

In fact, a few days ago the company announced that they expect to report an annual profit of $55 BILLION for 2017.

That’s more money than Apple makes… which makes this European group THE most profitable company in the world.

Its stock price has more than QUINTUPLED in the past three years, and nearly tripled in the last nine months.

Those are practically cryptocurrency returns. And it crushes the stock performance of Apple, Amazon, etc.

What’s even more impressive is that, while Apple and other highly profitable companies like Berkshire Hathaway, PetroChina, and JP Morgan Chase often have tens of thousands of employees or more, these guys only have around 800.

It’s an absolutely amazing business… But I haven’t even told you the best part yet.

They have a LEGAL monopoly on their product.

Literally ZERO other companies are allowed to compete with them. So they have a lock on the entire market. It’s extraordinary.

You might not be familiar with the company… but you’ve undoubtedly heard of its product.

 

It’s the Swiss franc.

And the company is Swiss National Bank (SNB), i.e. the central bank of Switzerland.

Yes, the Swiss National Bank is actually a publicly traded company, just like Apple or General Electric; it’s listed on the stock market in Switzerland under the ticker symbol SNBN.

And yes, the SNB really is the most profitable publicly-traded company in the world. The chairman of the bank expects they made $55 BILLION in 2017.

To put that number in context, $55 billion is equal to roughly 8% of the entire Swiss economy.

The equivalent amount in the United States would be $1.5 TRILLION. So, yeah, it’s a lot.

You might be wondering– how is it possible that a central bank made such a staggering sum of money?

It’s an easy, four-step strategy.

Step 1: Obtain a monopoly on the currency.

Ensure that you, and you alone, have the authority to conjure as much money as you want out of thin air, and that everyone else in the country is required to use it.

Step 2: Print countless amounts of money to inflate asset prices

Like most central banks, the Swiss National Bank ballooned its balance sheet after the financial crisis kicked off in 2008, growing its size EIGHT TIMES from roughly 100 billion francs to over 800 billion.

In other words, they conjured hundreds of billions of francs out of thin air– an amount that’s larger than the size of the entire Swiss economy.

Eventually the money they printed started circulating into the economy… and making its way into financial markets.

And as you can imagine, when an enormous tidal wave of cash starts flooding into stock or bond markets, asset prices tend to rise.

Step 3: Keep cutting interest rates… until they’re NEGATIVE

Just to make extra sure that businesses and individuals in Switzerland would actually spend the hundreds of billions of francs that had just been printed, the SNB adopted a NEGATIVE interest rate policy in 2015.

This meant that banks, corporations, and individuals all had to PAY in order to save their money.

So naturally people started parking their capital elsewhere. They started buying bonds. Stocks. Anything they could get their hands on that wouldn’t charge them interest.

This increase in demand continued to push up asset prices.

Step 4: Buy assets… then continue inflating asset prices.

All the while, the SNB was buying up assets. Stocks. Bonds. They even own roughly $85 billion of US companies like Apple, Microsoft, Coca Cola, and Visa.

So, the more stock and bond prices rose, the more money the SNB made.

Essentially the SNB raked in ENORMOUS investment profits because they printed hundreds of billions of francs, which inflated the prices of assets that they themselves were buying.

Pretty amazing.

And today, because of those artificial investment gains that they engineered for themselves, the SNB is now the most profitable company in the world.

Oh, and just so you know the other half of the story, while the central bank is raking in record profits, total debt in Switzerland has skyrocketed.

As an example, household debt in Switzerland as a percentage of GDP is now one of the highest in the world.

This is a testament to the absurdity of our modern day monetary system… a system in which unelected central banks are awarded dictatorial control of the money supply, and consequently enormous power over our lives.

With a monetary system like this, it’s easy to understand why there’s so much interest in decentralized cryptocurrencies…

And to continue learning how to safely grow your wealth, I encourage you to download our free Perfect Plan B Guide.

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