It’s getting harder for the mainstream media and their asset-gathering sponsors to hide the reality of the post-Trump rally economic ‘improvement’ from investors’ eyes.
During a Bloomberg TV interview this morning, New York Fed President Bill Dudley admitted there’s “no rush to hike” as the “economy is clearly not overheating,” warning of the potential for Q1 weakness as “sentiment [improvements] are not showing up in the hard data yet.”
Indeed Mr. Dudley… and the ‘hard’ data has NEVER caught up to spiking sentiment…
Credit Suisse has confirmed that the Swiss bank, some of its employees and hundreds of account holders are the subjects of a major tax evasion probe launched in UK, France, Australia, Germany and the Netherlands, setting back Swiss attempts to clean up its image as a haven for tax evaders.
According to Bloomberg, Dutch investigators seized jewellery, paintings and even gold bars as part of a sweeping investigation into tax evasion and money laundering in the Netherlands. They added that the sums involved amounted to “many millions” of lost tax revenue.
Two individuals who were arrested on Thursday in connection with the raids were accused of concealing millions of euros from authorities by placing them, where else, in Swiss bank accounts, the Fiscal Information and Investigation Service said in a statement Friday. Criminal investigations are also underway in Australia, Germany, the U.K. and France.
The Swiss bank also said Friday that its offices in London, Paris and Amsterdam were raided Thursday by authorities in connection with client tax matters.
In a statement by the U.K. tax authority, it said it was investigating “senior employees” at a global financial institution. Australia’s Serious Financial Crime Taskforce said it had identified 346 of its citizens “with links to Swiss banking relationship managers alleged to have actively promoted and facilitated tax evasion schemes.”
While Credit Suisse said it was cooperating with the authorities, the investigations threatened an international row, with the Swiss public prosecutor expressing “astonishment” at the actions taken by Dutch authorities. The raids were done without informing authorities in Switzerland, the attorney general’s office in that country said in a statement. The Swiss aren’t conducting a criminal probe into the matter, a spokeswoman said.
According to the FT, statements by authorities in the UK and Netherlands did not mention Credit Suisse by name but suggested the inquiries were widespread with the potential to expand further.
The bank said it has “implemented Dutch and French voluntary tax disclosure programs and exited non-compliant clients,” and has applied a withholding tax agreement with the U.K. since 2013.
The latest tax crackdown takes place years after the second largest Swiss bank was hopeful it had put its tax-evasive days in the past.
To be sure, Credit Suisse was hit hard in the past over tax evasion allegations, and was fined $2.6 billion in the U.S. in 2014 and pleaded guilty to helping Americans evade taxes. The bank paid a 150 million-euro fine in Germany in 2011 to end court proceedings over allegations it helped clients evade taxes.
“The sheer volume of data and its international scope makes this an exceptional case,” said Thierry Boitelle, a lawyer with Bonnard Lawson in Geneva.
As Bloomberg adds, the investigations come as Credit Suisse begins implementing a new global standard for the automated exchange of information for its European locations. About 100 countries, or jurisdictions, including Switzerland, have agreed to collect data from banks to share annually with other tax authorities, making it harder for tax dodgers and money launderers to hide money with private banks.
Meanwhile, the Dutch public prosecutor’s office confirmed that authorities had received information on 55,000 people with accounts at a Swiss bank, including 3,800 Dutch people, spokeswoman Marieke van der Molen said. In the Netherlands, there are “dozens of suspects,” she said.
“The international reach of this investigation sends a clear message that there is no hiding place for those seeking to evade tax,” the U.K. authority said in its statement.
What is most confusing about this latest scandal, however, is that years after Obama launched an unprecedented crackdown on Swiss banking secrecy, effectively ending it, tens of thousands of clients still entrusted Swiss banks with their untaxed savings without concerns of confiscation. The other confusing aspect of this whole affair, namely that Europeans still save money at a time of negative interest rates, we will leave to the philosophers to debate.
California is looking to impose an estate tax if the federal government’s tax is repealed.
Steven Greenhut writes:
Sen. Scott Wiener, a San Francisco Democrat who ironically has a reputation as being pro-business, has introduced Senate Bill 726. If approved by the legislature and then voters, it would impose a California estate tax that’s identical to the federal one, but only if the federal tax is repealed. His goal, according to a statement, is “recapturing the lost funds and investing them here at home in our schools, our health-care system, and our roads and public-transportation systems.”
It’s the latest example of Trump-spite in the state Capitol, but it sends a clear message that California isn’t in any danger of becoming a business-friendly state any time soon.
And I chuckle at the idea of “investing” in the state’s governmental operations. Pick any government agency or project and the waste is rampant. Infrastructure is crumbling, yet it’s not from a lack of dollars, given that taxpayers spend far more on most things per-capita than other states. There is never any serious discussion about improving the delivery of services.
Trump has continued to bully members of the House Freedom Caucus, calling out several individually in a series of Thursday tweets. The president also floated the idea of changing libel laws somehow in order to go after “the failing” New York Times for having “gotten [Trump] wrong for the past two years.”
A 14-year-old girl pretending to be 18 created a “Sugar Baby” profile on SeekingArrangement.com, met with an adult man, had sex, accepted $100, and never mentioned her real age. The man has now been arrested by the FBI for child sex trafficking.
Harvard administrators are proposing further sanctions against students who choose to join unrecognized single-sex groups or clubs—including prohibiting them from Rhodes and Marshall Scholarships, leading athletic teams, or receiving post-graduate fellowships—under the banner of being “intolerant of intolerance.”
Is this why the ‘data dependent’ Fed is suddenly so keen to hike rates?
For the first time since April 2012, The Fed’s preferred inflation indicator – the so-called Personal Consumption Expenditure Deflator – has topped 2% (The Fed’s mandated goal).
So unless The Dow drops by more than 3%, The Fed will keep hiking based on this ‘data’, no matter what the rest of the economy is doing.
For 12 months in a row, Americans’ spending has grown faster than their incomes.
Income growth YoY is the highest since May 2015 as spending growth slowed… with real disposable personal income seeing its first YoY increase since July.
February personal spending disappointed modestly, rising just 0.1% MoM while incomes grew at 0.4% MoM, as the savings rate rose to its highest since October 2016
Not exactly the animal spirits everyone is expecting.
‘Three wise men’ are warning that the next financial crash is coming and that one of the ways to protect and grow wealth in the coming crash will be to own gold.
The men who have recently warned are Jim Rogers (video below), Martin Armstrong (blog below) and Tony Robbins (video below). Each come from somewhat different backgrounds and are respected experts in their respective fields.
Each has different views in terms of asset allocation and how best to weather the coming financial storm but all are united in believing that gold will act as a wealth preservation tool and will likely rise in value when other assets fall.
Jim Rogers is a world renowned investor who co-founded the Quantum Fund with fellow investor George Soros. He is an investor, traveler, financial commentator and author who believes that this will be the ‘Asian Century.’
In his usual plain speaking, honest manner, Jim Rogers warned on Bloomberg TV that
“the Federal Reserve… has no clue what they are doing. They are going to ruin us all.”
Central banks have driven rates to all time record lows and in the process, debt has “sky-rocketed.”
Rogers slams the ‘counterfactual’ arguments that things would have been a lot worse if the Fed had not done all this, “propping up zombie banks and dead companies is not the way the world is supposed to work. … It’s been nine years and we have nothing to show for it [economically] except staggering amounts of debt.”
Rogers is pessimistic about the outlook for America and thinks that Donald Trump will see the US continue on the path to bankruptcy – a path set by Bush and Obama before him.
He concludes the Bloomberg interview ominously by saying that “this is all going to end very, very, very badly.”
In recent years, Rogers has consistently said that he wants to own more gold and silver and will continue to accumulate the precious metals on any price dips.
Financial analyst and trends forecaster, Martin Armstrong warned on his Armstrong Economics blog this week that governments are in increasing trouble and people will start to lose confidence in their governments:
“Gold and the stock market will take off when people realize that government is in trouble. When they lose confidence, that is when they will start to pour into tangible assets.”
Armstrong is nervous about gold in the short term and thinks it could fall as low as $1,000 per ounce prior to surging to as high as $5,000 per ounce in the coming years.
Tony Robbins, performance coach and self help guru has warned that “The Crash is Coming.”
Robbins, who is focusing more on finances and wealth in recent years and in his latest book, ‘Money: Master The Game’, says plan now for what’s to come. Things may be looking rosy on Wall Street as of late, but the crash will come.
“We are in a really artificial situation. There is a new high, on average, every month. Feds around the world have been printing money,” said Robbins in a tv interview.
Robbins has long advocated owning gold as part of a diversified portfolio and has cited Kyle Bass, Marc Faber and more recently Ray Dalio as his financial gurus. In his recent book, Robbins cited Dalio and recommended an asset allocation strategy that involves a 7.5% allocation to gold.
All Seasons strategy via Ray Dalio via Tony Robbins
Given the increasing risks of another financial crash, the warnings from these very different three men should be taken heed of. They underline the importance of being prudent, of real diversification and of owning gold.
The smart money sees what is coming and is once again preparing.
Lawmakers in Mississippi this week passed the nation’s most significant occupational licensing reforms.
The bill, which is expected to be signed by Gov. Phil Bryant early next month, would require that any new regulations created by Mississippi’s licensing boards be approved by a majority of three executive branch officials: the governor, the state attorney general, and the secretary of state.
After years of fighting against onerous occupational licensing laws in a piecemeal way, reformers see the Mississippi proposal as a major step towards comprehensive change in how licensing boards—often controlled by the very industries they are meant to be regulating and frequently used to limit competition in certain professional fields—operate, writes Eric Boehm:
Over the past 15 years, opponents of occupational licensing have repeatedly challenged both the laws themselves and the boards that write and enforce them.
Many of these legal challenges have been successful, overturning hair braiding licensing requirements or inspiring legislation to eliminate them in Louisiana, Iowa, and Nebraska, for example. Similar efforts have taken down licensing rules for florists, cosmetologists, eyebrow threaders, animal caretakers, landscape architects, interior designers, and tour guides, among other professions, in various states. Part of Tennessee’s licensing laws for makeup artists have been successfully overturned in court. Mandatory barber licenses have been challenged in a handful of states, as has Washington, D.C.’s requirement that interior designers and tour guides get a government permission slip before matching a resident’s furniture with her carpets or explaining the history of the Jefferson Memorial.
Each of those victories tore down unnecessary and restrictive occupational licensing rules, but most cases only resulted in the defeat of a small part of a state licensing regime, or the creation of a narrow exemption. In the 1960s, about 5 percent of all jobs required permission from the government. Today that number is more like 30 percent. Additional rules are added every year.
The fight against needless occupational licensing laws can feel like an elaborate and expensive game of Whac-A-Mole, where there are always more moles than mallets.
Instead of continuing to play the game, then, what if there were a way to unplug the machine?
Licensing reformers hope the key to that paradigm shift might lie in a U.S. Supreme Court decision that turned 2 years old earlier this year. In that ruling, the high court held that some state licensing boards can be held accountable under federal antitrust laws designed to protect consumers from cartels and monopolies—which is exactly what some licensing boards have become, captured by the very industries they’re meant to be regulating.
Armed with that ruling, officials at the Federal Trade Commission (FTC) and state lawmakers are reaching for the plug.
WikiLeaks’ latest Vault 7 release contains a batch of documents, named ‘Marble’, which detail CIA hacking tactics and how they can misdirect forensic investigators from attributing viruses, trojans and hacking attacks to their agency by inserted code fragments in foreign languages. The tool was in use as recently as 2016. Per the WikiLeaks release:
“The source code shows that Marble has test examples not just in English but also in Chinese, Russian, Korean, Arabic and Farsi. This would permit a forensic attribution double game, for example by pretending that the spoken language of the malware creator was not American English, but Chinese, but then showing attempts to conceal the use of Chinese, drawing forensic investigators even more strongly to the wrong conclusion, — but there are other possibilities, such as hiding fake error messages.”
Per RT, this latest release could potentially allow for ‘thousands’ of cyber attacks to be attributed to the CIA which were originally blamed on foreign governments.
WikiLeaks said Marble hides fragments of texts that would allow for the author of the malware to be identified. WikiLeaks stated the technique is the digital equivalent of a specialized CIA tool which disguises English language text on US produced weapons systems before they are provided to insurgents.
It’s “designed to allow for flexible and easy-to-use obfuscation” as “string obfuscation algorithms” often link malware to a specific developer, according to the whistleblowing site.
The source code released reveals Marble contains test examples in Chinese, Russian, Korean, Arabic and Farsi.
“This would permit a forensic attribution double game, for example by pretending that the spoken language of the malware creator was not American English, but Chinese, but then showing attempts to conceal the use of Chinese, drawing forensic investigators even more strongly to the wrong conclusion,” WikiLeaks explains, “But there are other possibilities, such as hiding fake error messages.”
The code also contains a ‘deobfuscator’ which allows the CIA text obfuscation to be reversed. “Combined with the revealed obfuscation techniques, a pattern or signature emerges which can assist forensic investigators attribute previous hacking attacks and viruses to the CIA.”
Previous Vault7 releases have referred to the CIA’s ability to mask its hacking fingerprints.
WikiLeaks claims the latest release will allow for thousands of viruses and hacking attacks to be attributed to the CIA.
CIA’s “Marble Framework” shows its hackers use potential decoy languages https://t.co/Hm3pTPSXIS
Today, March 31st 2017, WikiLeaks releases Vault 7 “Marble” — 676 source code files for the CIA’s secret anti-forensic Marble Framework. Marble is used to hamper forensic investigators and anti-virus companies from attributing viruses, trojans and hacking attacks to the CIA.
Marble does this by hiding (“obfuscating”) text fragments used in CIA malware from visual inspection. This is the digital equivallent of a specalized CIA tool to place covers over the english language text on U.S. produced weapons systems before giving them to insurgents secretly backed by the CIA.
Marble forms part of the CIA’s anti-forensics approach and the CIA’s Core Library of malware code. It is “[D]esigned to allow for flexible and easy-to-use obfuscation” as “string obfuscation algorithms (especially those that are unique) are often used to link malware to a specific developer or development shop.“
The Marble source code also includes a deobfuscator to reverse CIA text obfuscation. Combined with the revealed obfuscation techniques, a pattern or signature emerges which can assist forensic investigators attribute previous hacking attacks and viruses to the CIA. Marble was in use at the CIA during 2016. It reached 1.0 in 2015.
The source code shows that Marble has test examples not just in English but also in Chinese, Russian, Korean, Arabic and Farsi. This would permit a forensic attribution double game, for example by pretending that the spoken language of the malware creator was not American English, but Chinese, but then showing attempts to conceal the use of Chinese, drawing forensic investigators even more strongly to the wrong conclusion, — but there are other possibilities, such as hiding fake error messages.
The Marble Framework is used for obfuscation only and does not contain any vulnerabilties or exploits by itself.
Wall Street claims surge in stocks is based on rising corporate earnings.
So, let’s see. The Commerce Department’s Bureau of Economic Analysis released its third estimate of fourth quarter 2016 GDP and corporate profits today. This second revision of its first estimate of January 27 contains more data and is considered a more accurate approximation of what happened in the vast, devilishly hard-to-quantify US economy.
In terms of GDP, the fourth quarter was revised up slightly, but there were adjustments for prior quarters, and overall GDP growth for the year 2016 remained at a miserably low 1.6%. We’ve come to call this the “stall speed.” It’s difficult for the US economy to stay aloft at this slow speed. As Q4 gutted any hopes for a strong finish, GDP growth in 2016 matched the worst year since the Great Recession.
And corporate profits, despite a stock market that has been surging for years, are even worse. A lot worse. They’ve declined for years. In fact, they declined for years during the prior two stock market bubbles, the dotcom bubble and the pre-Financial-Crisis bubble. Both ended in crashes.
However, Wall Street remains assiduously silent on this.
The BEA offers various measures of corporate profits, slicing and dicing them in different ways. One of them is its headline number: “Corporate profits with inventory valuation and capital consumption adjustments.”
It estimates “profits from current production,” based on profits before taxes, not adjusted for inflation, but with adjustments for inventory valuation (IVA) and capital consumption (CCAdj).These adjustments convert inventory withdrawals and depreciation of fixed assets (as they appear on tax returns) to the current-cost economic measures used in GDP calculations.
It’s a broad measure, taking into account profits by all corporations, not just the S&P 500 companies. This measure is reflected in the first chart below. Later, we’ll get into after-tax measures without those adjustments. They look even worse.
In Q4, profits rose to $2.15 trillion seasonally adjusted annual rate. That’s what the annual profit would be after four quarters at this rate. But profits in the prior three quarters were lower. And so Q4 brought the year total to $2.085 trillion. This was down from 2015, and it was down from 2014, and it was up only 2.6% from 2013, not adjusted for inflation.
This 20-year chart shows that measure. Note that the profits are not adjusted for inflation, and there was a lot of inflation over those 20 years:
Things get even more interesting when we look at after-tax profits on a quarterly basis. The chart below shows two measures:
Dark blue line: Corporate Profits after tax without adjustments for inventory valuation and capital consumption (so without IVA & CCAdj).
Light blue line: Corporate Profits after tax with adjustments for inventory valuation and capital consumption (so with IVA & CCAdj).
Q4 profits, at a seasonally adjusted annual rate, but not adjusted for inflation, were back where they’d been in Q1 2012:
By this measure, corporate profits have been in a volatile five-year stagnation. However, during that time – since Q1 2012 – the S&P 500 index has soared 70%.
It’s hard to blame oil: The price didn’t start collapsing until the fall of 2014. Earnings didn’t get hit until 2015. By mid-2016, oil was recovering. These dynamics have influenced the V-shaped drop and rise in 2015 and 2016. But the stagnation in the two prior years occurred when WTI was trading above $100 and occasionally above $110 a barrel!
The chart also shows that there were two prior multi-year periods of profit stagnation and even decline while the stock market experienced a massive run-up: from 1996 through 2000, leading to the dotcom crash; and from 2005 through 2008, which ended in the Financial Crisis.
This peculiar phenomenon – soaring stock prices during years of flat or declining profits – is now repeating itself. The end point of the prior two episodes was a lot of bloodletting in the markets that then refocused companies – the survivors – on what they needed to do to make money. For a little while at least, it focused executives on productive activities, rather than on financial engineering, M&A, and similar lofty projects. And it showed in their profits.
But that’s not happening now. Instead, executives are chasing after deals and paying record premiums to acquire other companies. And even data-provider Dealogic blamed stock market “exuberance” for driving merger valuations and premiums that have “soared to the highest level on record.” Read…. Why Does Pre-Collapse Year 2007 Keep Popping Up in M&A?