Month: July 2017

Authored by Mark St.Cyr,

There has not been a mantra that’s emulated a teenagers go-to excuse of “Because!” for both tactical effect, as well as childish reasoning than the term “it’s different this time.” And for nearly the last 10 years that phrase has meant something entirely different to two distinct groups.

The issue at hand is that one side (i.e., “The Valley”, Wall St., and its sycophantic chorus of enablers throughout the financial/business media) is going to suddenly become aware that this once reliable sword against any and all reasoning not only had an ominous double entendre like quality, but also a double-edged-sword. And the cleaving of reputations, along with investment dollars and sense has only just begun.

So what about the other side you may be wondering since I said there were two? Fair point, and it is this:

The other-side as we’ll now call them (where you can place me if you wish) also understood that, yes, it was different this time, but not in the way that the prior believed. And that is the key. e.g., Believed.

The prior truly believed and embraced that it was different this time. In other words, fundamentals of any sort whether they be tried and true business metrics, paying customers, profits, net profits, __________(fill in the blank) were suddenly immaterial for measuring a business for what its valuation could, would, or should be.

Business 101 was reduced to: Get an idea, Get funded, Get listed, Get out, rinse repeat. And if you didn’t “get out?” Then the only metric that mattered is “eyeballs for ads.” i.e., Spend (or lose) $100mm per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free. Why? “It’s different this time.”

This is what business, valuations, metrics, and fundamentals had now become, and again here’s the key – they believed – would remain forever more.

The others understood (and argued) that yes, it was indeed different, but not for any of the reasonings or defensive arguments put forth by the prior. It was different but for only one key distinction: it was only made possible via central banks (the Fed. in-particular) pumping $TRILLIONS into the markets via one channel or another.

And here’s where “belief” comes into play that works against the farcical belief that it was – different.

Once the Fed. and others began withdrawing or halting their “free money” programs, the first to suffer the consequences would be the true believers, disciples, and evangelists of the “it’s different this time” paradigm. And guess what? That is precisely what has, is, and will continue to happen. Why? I’ll just use the abbreviation, IDTT.

When the Fed. seemed ready, and all too eager to continue printing, anything and everything seemed not just possible in “The Valley” but also for much of tech in general, especially for anything deemed disruptive. Fundamental business metrics be damned.

Losing $Billions quarterly? Have no fear; raise a few $Million and declare you’re worth $Billions. And if you’re truly daring: Raise $100’s of millions and declare you’re worth $10’s of Billions! e.g., The more you’re losing means, the more you’re winning! Why? IDTT!

But as I alluded to earlier – then comes the dark-side of the new “religion.” For you can’t have the good without the bad, right?

To illustrate this I can’t help but be reminded of a scene that comes near the end of the movie “Constantine” (2005 Village Road Show™) starring Keanu Reeves. (a personal favorite I’ll add)

The scene takes place between the Devil (Peter Stormare) and Gabriel (Tilda Swinton) where Gabriel who had been stirring up quite the mischief on Earth tries to muster his angelic powers to smite the Devil only to find – IDTT – when suddenly nothing happens; and the Devil rebukes the entire affair with one simple, but foreboding phrase, “Looks like somebody doesn’t have your back anymore.” And with it renders Gabriel to now live according to the effects of the mortal world.

The entire “It’s different this time” complex along with its evangelists, and true believers just had a very similar revelation or experience. For the Fed. has now declared in no uncertain terms – they too – no longer have someone’s back. And the IDTT resulting effects can no longer be contained behind the closed doors, or closed minds with any IDTT prayers for salvation.

Where’s the proof for such a claim? Fair enough, to wit:

(Chart Source) The above are: Twitter™, Twilio™, Snap™, Blue Apron™)

I initially used the prior three back in March in the article, “Silicon Valley: From Rarified Air To Exhaust Fumes” to demonstrate how the IDTT model has reacted since it became apparent it was – different this time. i.e., Once the Fed. and other central banks remove their largess in any way? “Looks like somebody doesn’t have your back anymore.” Seems appropriate, no?

What’s so telling of the above is the progression of time it now takes to show the fallacy of the IDTT model and belief. For the last chart of the above (far right) shows Blue Apron’s inability to not only hold any semblance of “so worth it” valuation, it couldn’t even stay above its IPO debut of $10 that was dramatically cut back from a $15 – $17 range, where it closed well below its offering some 13 trading hours later.

Yes, that’s hours, not days, not weeks, months, or years. That’s why the above chart is so telling. Those bars on the far right chart above represent 15 minute intervals. You think IDTT? Hint: You better believe it is.

All I heard across much of the main stream business/financial media when it came to the now ill-fated IPO debut of Blue Apron were phrases such as “bad business model” or “bad metrics.” They were bandied about with so much consistency I couldn’t help but marvel when only months prior such heresy talk was euphemistically met with IDTT arguments for the likes of Snapchat. (Remember all the video reports of everyone on “news” desks and reporters augmenting their photo looking ridiculous prior to the IPO to show how “cool” or “so worth it” this was?)

But if you’re still one of the “true believers” and think this all just some IPO hiccup in the road to 401K salvation where the next one will more than make up for any losers? I’ll just share with you something which I said would also appear that the entire IDTT complex stated could or would never happen. From the article “Is This Uber’s Theranos Moment” To wit:

“The revising of valuations and more came when suddenly everyone no-longer could justify the valuations based on “it’s different this time” arguments.

 

That argument works fine when the Fed’s QE program is in full effect and works like some magical cloak to hide the naked fallacy that a company with less than $100 Million in revenues is worth some $9 BILLION because the VC’s invested say it is. (I can’t help myself from laughing as I typed that, it’s so far beyond ludicrous.)

 

But once the term “law suits” and more get thrown across a unicorns saddle? Let’s just say – viewpoints, and valuation metrics begin to change, and change quickly.”

Today’s proof for such? Fair point, here’s something from none other than the Harvard Business Review™ and again, to wit:

“Uber Can’t Be Fixed – It’s Time for Regulators to Shut It Down”

When you do nothing but defend an argument against any and all business reasoning or sense, using nothing more than “Because!” or “It’s different this time” type arguments, along with the other coveted types of “disruptor” styled defenses as to just label or group critics into some form of conspiratorial, tin-foil-wearing, gloom-and doom, Chicken Little’s, nay-sayers? It works fine, until IDTT comes face-to-face with the prospects of:

“Looks like somebody doesn’t have your back anymore.”

Welcome to the dark side – aka – reality.

via http://ift.tt/2sENA34 Tyler Durden

And so, three months after the US State Department famously flip-flopped, when first at the end of March Rex Tillerson said at a news conference that “the longer term status of President Assad will be decided by the Syrian people” adding that “our priority is no longer to sit and focus on getting Assad out” only to follow one week later with Tillerson’s warning to Russia that “coalition steps are underway to remove Assad” which in turn segued into the first US attack on Syrian soil with the launch of no less than 59 cruise missiles, the US has done it again and according to Foreign Policy, Secretary of State Rex Tillerson has once again told the U.N. Secretary General Antonio Guterres that the fate of Syrian leader Bashar Al-Assad now lies in the hands of Russia, and that the Trump administration’s priority is limited to defeating the Islamic State.

The striking reversal was announced during a private State Department meeting last week, according to three diplomatic sources cited by FP.

And, as FP adds, “the remarks offer the latest stop on a bumpy U.S. policy ride that has left international observers with a case of diplomatic whiplash as they try to figure out whether the Trump administration will insist that Assad step down from power. Nearly three months ago, Tillerson had insisted that Assad would have to leave office because of his alleged use of chemical weapons.”

The news, which will again be met with an angry response by neocons like John McCain – as happened in March – signaled the Trump administration’s increasing willingness to let Russia take the driver’s seat in Syria. Tillerson also signaled that U.S. military action against Assad’s forces in recent months is intended to achieve only limited tactical goals–deterring future chemical weapons attacks and protecting U.S. backed-forces fighting the Islamic State in Syria–not weakening the Assad government or strengthening the opposition’s negotiating leverage.

And a startling admission by the website owned by the Slate Group:

Tillerson’s position reflects a recognition that Syria’s government, backed by Russia and Iran, is emerging as the likely political victor in the country’s six year long civil war. It also marks a further retreat from the 2012 U.N.-brokered Geneva Communique — signed by Russia, the United States, and other key powers — which called for the establishment of a transitional government with members of the regime and the opposition. The Geneva pact, according to the Obama administration and other Western allies, was to result in Assad’s departure from power. 

When asked for a comment, a State Department official insisted that the U.S. remains “committed to the Geneva process” and supports a “credible political process that can resolve the question of Syria’s future. Ultimately, this process, in our view, will lead to a resolution of Assad’s status.” He added that “The Syrian people should determine their country’s political future through a political process.”

Some more details:

The decision to cede ground to Russia on the question of Assad’s future comes on the eve of President Donald Trump’s first face-to-face meeting next week with President Vladimir Putin on the sidelines of the G20 Summit in Hamburg, Germany.  It also comes at a time when the Trump administration is seeking to repair relations with the Kremlin despite a series of scandals that have plagued the White House since Trump’s election.

 

Tillerson said earlier this month that Trump tasked him with repairing the broken U.S.-Russia relationship. The secretary of state has also cautioned Congress that new sanctions against Russia for its alleged role in interfering in the U.S. election could undercut efforts to cooperate with Moscow on Syria.

And this is the part the neocons will hate the most:

Tillerson made clear to Guterres that the U.S. was once again shifting gears. “What happens to Assad is Russia’s issue, not the U.S. government’s,” one source said Tillerson told the U.N. chief in last week’s meeting. Tillerson’s message, the official added, was that “the U.S. government will respond to the terrorist threat,” but that it is largely agnostic about “whether Assad goes or stays.”

 

Tillerson’s retreat suggests the State Department is willing to skirt the ethical morass of what to do about the Assad regime as it navigates the dense thicket of conflicting alliances fighting in Syria.

 

“The reason the United States is involved in Syria is to take out ISIS,” State Department Spokeswoman Heather Nauert told reporters Wednesday. “That’s why we care and that’s why we are there.” Fred Hof, former State Department special advisor for transition in Syria, called the Trump administration’s stance on Russia in Syria “confusing.”

 

He pinned the blame on Trump’s lack of a coherent, overarching national security strategy. “There’s no hymnal that’s supposed to guide how everybody sings,” he said. “The fact that there are multiple voices and stances coming out on this doesn’t surprise me.”

 

On ceding Assad’s fate to Russia: “It is one thing to walk away from the problem and say let the Russians take care of it,” he said. “It’s another thing to assume you can actually get somewhere policy-wise by relying on the Russians to deliver good results.”

FP observes the anger already building following the latest pivot, mostly among legacy staffers from the Obama administration:

Former senior U.S. officials are vexed by how the Trump administration is ceding political ground on Syria to the Kremlin for almost nothing in return. “The things we’re hearing coming out of the administration have mainly to do with what the U.S. might offer Russia, and not the other way around,” said Evelyn Farkas, former deputy assistant secretary of defense for Russia.

 

Moscow stands to benefit the most from a slew of contradictory Syria messages coming out of Washington, according to Farkas. Without a clear agenda going into the meeting next week with Putin at the G20, she said, “there’s a danger the president will get outfoxed.”

The latest pivot by the Trump administration back to its stance to before the US president launched missiles at a Syrian airfield for allegedly using chemical weapons on rebels means that it is only a matter of time before yet another staged “chemical attack” is widely publicized by the press, greenlighting yet another escalation of hostilities against the Assad regime, and so on, because to those in the deep state hell bent on preserving the new cold war between the US and Russia, there is no such thing as a discredited narrative.

via http://ift.tt/2syK8f9 Tyler Durden

It all started off well, dip-buyers moved in on quiet volume and everything was awesome. But then the cash market opened and selling started in both bonds and stocks, slamming both to 2-month lows…

The dead cat bounce in FANG stocks is over…

And the bond bloodbath continues…

As the dollar strengthens…

via http://ift.tt/2uia2Rh Tyler Durden

The Point

by Fay Dress for Soren K. Group

Can you, the reader, substitute Bitcoin for Gold in this statement made by a pre-sellout Alan Greenspan?

?

We  cannot. 

Bitcoin is Not Money ( and Neither is FIAT)

Here is why we cannot:  Bitcoin is a medium of transfer. It is not money yet. It will likely NEVER  be money.

While it shares one excellent characteristic with Gold right now, that being it is a borderless  currency, it will not sustain that quality as envious governments, banks, and corporations will demand it be reeled in. And as such, it will NEVER  be a substitute for Gold. And we are aware that the use of superlatives is ALWAYS a sign  that an argument is specious.  So be it.

Bitcoin shares with Gold for the moment the ability to unshackle people’s economic freedom, but it is ludicrous to think it could satisfy the other requirements needed to be called money let alone the other qualities that make gold the best example of the definition of “Money” itself.

1. Medium of exchange: Bitcoin satisfies this. It is used as a means to transfer your Rubles to Dollars without being “watched”. Not unlike how the USD is used to convert your chicken sales into a purchased cadillac. But different in the sense the Government is watching that trade and will not let you sell your chickens to that guy in Haiti even though he is offering a higher price. 
2. Unit of account: Bitcoin is too volatile, and not “commonly accepted” as a standard – although that may change as it evolves. just know that volatility undermines confidence in a currency (Zimbabwe, Reichmarks etc)
3. Store of value: Bitcoin does not hold its value over time. Yes it is growing in value, but that is precisely what we mean. It is also NOT a convenient way to store wealth. Just ask the guy expatriating Yuan to Australia to convert it to  USD and his Bitcoins drop 20% in 5 minutes. Stability is key. And Bitcoin has none of that.

FIAT is a horrible long term store of value. Bitcoin is a horrible short term store of value

Do a Sharpe vs Sortino ratio comparison on both BITCOIN and all FIAT to make our volatility point. We are sure the Sharpe ratio will show up as lower in both  Bitcoin and FIAT than their Sortino ratios. And the Sortino ratios will show most volatility in Bitcoin is to the upside, while all FIAT will show volatility to the downside.  

The USD:  slowly sucking you dry.

?Sharpe Ratio says “Low Volatility!!” ; Sortino Ratio Replies: Yea but it is all to the downside Post Bretton Woods 

Bitcoin: All upside, unless of course you store your wealth in it today and are fine with it being +/- 20 % when  you go to buy lunch with  it.

We are not going to even show you a BTC chart because it will be obsolete by the time  you read this. Suffice to say, until recently, it was alsmost all upside volatility if you mearued it in months. Now it is also showing some downside volatility. But overall, it is more than likely that BTCs Sortino ratio is awesome over its life. Lets put our savings in it. I’ll buy Christmas presents with it in 6 months. What could go wrong?  Ok Fine. Here is a chart. It’s what you all came here for  isnt’t it? The shiny new thing?

CRYPTO CHARTS and  Prices HERE

Both FIAT and Bitcoin are Fraudulent Money

Thus based on volatility analysis Bitcoin would be a new hedge fund with a short tremendously positive reason to invest. FIAT is a hedge fund that loses money every year. Yet we keep allocating our assets to it. Both are poor investments for different reasons. Neither is a store of value. 

Assuming it does become stable over time, do you think a government will permit Bitcoin  to be money? Any central banker who does not abuse his dictatorial privilege, whether rationalized b/c of some monetary dogma (Yellen) or  being just plain self-interested (Any Leftist LATAM dictator survival), is not worth his salt as a CBer

It would be easier for China to print 1Trillion Yuan, buy Bitcoins with it, then sell those same coins. This is how easily it would be to destroy confidence in a new currency that is just a medium of transfer so far. Who cares if China loses money on the exit? And they have ways to make sure they do not lose money we are sure. Bitcoins are currently capped. FIAT is not.

To the extent that Bitcoin rallies it is probably a good  proxy for demand to leave a country. But what do you do after you’ve gotten out of your Venezuelan Bolivars? You put them in the FIAT of the country you deem as having a more stable currency. To keep your wealth in Bitcoins would be like remaining in a doorway between  universes. Sure you could spend them but you’d be hostage to the 100% volatility if you used it as a store of value instead of a transitional medium of exchange from one FIAT to another. Those who buy and hold Bitcoins are likely the speculative class inadvertantly betting on collapse of economies and wealth moving around. That is fine. But do not tell us it is money. At least not yet anyway.  It is used practically as a pipeline to some other asset. And that is a medium of exchange.

We’d suggest you take your expatriated Venezuelan wealth and on the other end change it to gold. For when you look at it, No FIAT currency is a store  of value. The  volatility of FIAT may be low, but by no  means does it hold purchasing power.  

Gold on the other hand does. So if you are buying BTC as a subsitute  for Gold because it is enjoying the rallytaht you’d hoped Gold would get when the world figured out FIAT was fraud; then  your premise is wrong. Money is a store of wealth with stable buying power  over time. If BTC collapses with your wealth and you’ve bought on  this premise, then  good luck. Not only will you have confused a Nasdaq stock  with a store of value, you will have no wealth left to actually buy something that protects your  buying power.. you know GOLD.

So, Where the hell is blockchain product with the Gold front end? To  be fair, if a good one even existed ( we haven’t done the work yet) do you think the financial powers and their lackey media shills would discuss it as a viable store of wealth and a liquid  medium of exchange? Not likely.

Short of a trade indexed USD, Gold is the best way to hedge your buying power whether it be inflation or deflation you are scared of. Diatribe over.

-SKB

Recco – Read

Yet more proof we have much to learn below. This is scary to us and a wake-up call to our own naivete on our hope for even the technicological ability to remove a human intermediary in Blockchain exists. It may not.

Blockchain: Almost Everything You Read Is Wrong

Blockchain needs no ‘Human Trust Intermediation’ – so long as you confine yourself to Bitcoin.- Steve Wilson

Introduction

by Soren K. Group

The article is worthy for reading whether you are a Blockchain  wonk or not. It explains why Blockchain is NOT going to cure cancer. For us, as semi-wonks we agree.  But the last part of the article was new info  to us. We had labored under the assumption that Blockchain itself was a catalyst for a banking revolution for 2 reasons. 1- Ledger technology lowers clearing turn-around time and thus makes double transactions all but impossible. (Still true) 2- Its ledger tech obviates the human centralization needed for “trust” verification. (Not so much). Now we need to re-examine. And that is the reason for our headline. To examine what we’ve assumed in the context of this new white-paper:

First: Blockchain May Need Bitcoin– In the last part of the author’s article, he describes that Blockchain without Bitcoin as its front-end does NOT eliminate the need for “trustee” type oversight. We do not claim to know if this is true or not. But it does force us to examine everything we thought we knew about the Blockchain ledger mechanism and our thought that it alone removed the need for centralized “trust” in human form.  We do know that corporations are now creating their own products using Blockchain. That fact tells us the Banks are looking to co-opt the tech for cost reduction for sure. But now we must add into our calculus that they might not be disintermediated by their own success at all when their branded products are implemented

Second: We Feel Bitcoin is Doomed in the U.S.– one of the two things that make Blockchain attractive to us is its ability to remove a need for human/ corporate centralized “trustees”. (The other quality is its removal of clearing risk and potential  “double dipping” transactions). If Blockchain’s disitntermediation ability is intrinsically tied to using Bitcoin as its front end, then all may be lost in this  “Banking revolution”.

For we “know” Bitcoin will not be allowed to prosper here. We feel strongly that once Bitcoin is seen as a threat to the US banking industry (and/or they do not have their own product up and running thereby ring-fencing their own client base) the paid for politicians will be ruthless in stopping it. Banks will reject money for Bitcoin  transactions on the grounds of “know your client”. The Government will back this up.  Lawmakers and Fed shills like Ken Rogoff will use “But the criminals are using it!” to ban its use. Trust JPM’s Blockchain product! etc etc. 

If what Mr.  Wilson says is true, and additionally  there is no future chance of a front-end asset that uses Blockchain as its pipeline being completely non-dependent on  centralized “trustee” oversight in design; then Blockchain is going to be a corporate tool for branding and  lowering cost and increasing profit margins for them only. And Bitcoin will crash on the rocks of the U.S. if it attempts to supplant Banking’s most important franchises. 

Author  Steve Wilson for constellationr.com

Almost everything you read about the blockchain is wrong. No new technology since the Internet itself has excited so many pundits, but blockchain just doesn’t do what most people seem to think it does. We’re all used to hype, and we can forgive genuine enthusiasm for shiny new technologies, but many of the claims being made for blockchain are just beyond the pale. It’s not going to stamp out corruption in Africa; it’s not going to crowdsource policing of the financial system; it’s not going to give firefighters unlimited communication channels. So just what is it about blockchain?

The blockchain only does one thing (and it doesn’t even do that very well). It provides a way to verify the order in which entries are made to a ledger, without any centralized authority. In so doing, blockchain solves what security experts thought was an unsolvable problem – preventing the double spend of electronic cash without a central monetary authority. It’s an extraordinary solution, and it comes at an extraordinary price. A large proportion of the entire world’s computing resource has been put to work contributing to the consensus algorithm that continuously watches the state of the ledger. And it has to be so, in order to ward off brute force criminal attack.

How did an extravagant and very technical solution to a very specific problem capture the imagination of so many? Perhaps it’s been so long since the early noughties’ tech wreck that we’ve lost our herd immunity to the viral idea that technology can beget trust. Perhaps, as Arthur C. Clarke said, any sufficiently advanced technology looks like magic. Perhaps because the crypto currency Bitcoin really does have characteristics that could disrupt banking (and all the world hates the banks) blockchain by extension is taken to be universally disruptive. Or perhaps blockchain has simply (but simplistically) legitimized the utopian dream of decentralized computing.

Blockchain is antiauthoritarian and ruthlessly “trust-free”. The blockchain algorithm is rooted in politics; it was expressly designed to work without needing to trust any entity or coalition. Anyone at all can join the blockchain community and be part of the revolution.

The point of the blockchain is to track every single Bitcoin movement, detecting and rejecting double spends. Yet the blockchain APIs also allow other auxiliary data to be written into Bitcoin transactions, and thus tracked. So the suggested applications for blockchain extend far beyond payments, to the management of almost any asset imaginable, from land titles and intellectual property, to precious stones and medical records.

From a design perspective, the most troubling aspect of most non-payments proposals for the blockchain is the failure to explain why it’s better than a regular database. Blockchain does offer enormous redundancy and tamper resistance, thanks to a copy of the ledger staying up-to-date on thousands of computers all around the world, but why is that so much better than a digitally signed database with a good backup?

Remember what blockchain was specifically designed to do: resolve the order of entries in the ledger, in a peer-to-peer mode, without an administrator. When it comes to all-round security, blockchain falls short. It’s neither necessary nor sufficient for any enterprise security application I’ve yet seen. For instance, there is no native encryption for confidentiality; neither is there any access control for reading transactions, or writing new ones. The security qualities of confidentiality, authentication and, above all, authorization, all need to be layered on top of the basic architecture. ‘So what’ you might think; aren’t all security systems layered? Well yes, but the important missing layers undo some of the core assumptions blockchain is founded on, and that’s bad for the security architecture. In particular, as mentioned, blockchain needs massive scale, but access control, “permissioned” chains, and the hybrid private chains and side chains (put forward to meld the freedom of blockchain to the structures of business) all compromise the system’s integrity and fraud resistance.

And then there’s the slippery notion of trust. By “trust”, cryptographers mean “out of band” or manual mechanisms, over and above the pure math and software, that deliver a security promise. Blockchain needs none of that (Edit: Human Trustee mediation- Soren] – so long as you confine yourself to Bitcoin. Many carefree commentators like to say blockchain and Bitcoin are different things, yet the connection runs deeper than they know. Bitcoins are the only things that are actually “on” the blockchain. When people refer to putting land titles or diamonds “on the blockchain”, they’re using a short hand that belies blockchain’s limitations. To represent any physical thing in the ledger requires firstly a schema – a formal agreement about which symbols in the data structure correspond to what property in the real world – and secondly a process to bind the owner of that property to the special private key (known in the trade as a Bitcoin wallet) used to sign each ledger entry. Who does that binding? How exactly do diamond traders, land dealers, doctors and lawyers get their blockchain keys in the first place? How does the world know who’s who? These questions bring us back to the sorts of hierarchical authorities that blockchain was supposed to get rid of.

There is no utopia in blockchain. The truth is that when we fold real world management, permissions, authorities and trust, back on top of the blockchain, we undo the decentralization at the heart of the design. If we can’t get away from administrators then the idealistic peer-to-peer consensus algorithm of blockchain is academic, and simply too much to bear.

I’ve been studying blockchain for two years now. My latest in-depth report was recently published by Constellation Research.

Read more by Soren K.Group

via http://ift.tt/2tEzxyk Vince Lanci

The state of US manufacturing at any given moment is supposed to be simple: it is either expanding, or it is contracting. Except, of course, when it is doing both.

We wont bore readers with details (we did that earlier), and instead will just present two headlines with some supporting data, from two different sources discussing the sector which, with all due respect to the US services sector, still accounts for well more than half of the S&P’s net income.

First, here is Markit, which in its June report on US manufacturing said that “Manufacturing growth weakens again in June” with the chief economist at IHS, Chris Williamson, saying “Manufacturers reported a disappointing end to the second quarter, with few signs of growth picking up any time soon.”

And then there is Bloomberg, which in a featured article writes “Manufacturing Pickup in U.S. Signals Boost to Economic Growth” and adds “American factories powered up in June at the fastest pace in nearly three years, with robust advances in production, orders and employment that indicate a firming in the economy”

Good luck spotting the real fake news.

via http://ift.tt/2t9kgoQ Tyler Durden

A Turkish-flagged ship has comes under fire off the Greek island of Rhodes, according to Turkey’s Deniz news, citing the ship’s captain, Haluk Sami Kalkavan, who told CNN TURK there were at least 16 bullet holes on board, although no injuries have been reported.

Son dakika… Yunan Sahil Güvenli?i’nden Türk gemisine uyar? ate?i

More details from CNN Turk, google translated:

According to the Deniz News Agency, the Greek Coast Guard boats from Iskenderun to the Gulf of Izmit have armed attack on the Turkish flagged M / V ACT named freighter. It was fired by Greek SSI boats on the island of Rhodes on the Turkish flagged dry dock named M / V ACT, which has a capacity of 4300 DWT carrying capacity towards the Izmit Gulf with the load it has loaded from ?skenderun.

 

M / V ACT named load cargo going to Izmit Gulf after ?skenderun’s iron steel load, Greek Coast Guard boats in international waters on the outskirts of Rhodes are required to dock to Greek Harbor but the captain can not comply with this directive. he gave. While heading to Turkish territorial waters, the Greek Coast Guard M / V ACT carried out a military attack on the named freighter.

 

‘There are 16 holes on board’

 

 

Sami Kalkavan, the captain of the island told CNN TURK. Kalkavan said, ‘Coast guard wanted immediate withdrawal of the ship from Port of Lodos, we did not accept it. They wanted to check, we did not accept it. They told us they would shoot if we did not stop. They did it. Now there are 16 holes in the ship. There’s no danger of water getting in the ship, but we’ve done a great deal of danger. These were all good things about us, ” he said.

Turkey’s NTV adds that the Turkish Foreign Ministry is “in contact with relevant institutions” over the incident.

While it is unclear yet if this is the start of another major diplomatic incident between the volatile neighbors, NTV also adds that there are now 2 Turkish coast guard vessels off Rhodes following the incident.

via http://ift.tt/2tBYZVF Tyler Durden

As we await all US carmakers to report June auto sales, we remind readers that when we discussed last month’s disappointing monthly car sales report, which badly missed expectations showing the fifth consecutive month of declining auto sales – the first time this has happened since July 2009 –  with domestic light vehicle auto sales printing at an annualized 12.59, the lowest sales number going back more than three years – we noted what may be the biggest concern for the auto industry: inventory days continued to trend higher as OEMs push product on to dealer lots even though sale-through to end customers has seemingly stalled.

Of note, we highlighted GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, which reported that May inventories increased to 101 days (963,448 vehicles) from 100 days at the end of April and just 71 days (681,402 vehicles) in April 2016. Indicatively, analysts say an overall inventory level of 60 to 70 days is healthy. 100 is not. GM management was eager to deflect attention from this troubling statistic, and said that soaring inventories are normal and, somehow, “reflect strong sales”, as per the press release: “As planned, GM’s inventories reflect strong sales, lower car production and strategic, launch-related growth in truck and crossover stocks.”

Or maybe not, because as Automotive News reporter Nick Bunkley pointed out something troubling: with 935,758 unsold GM units collecting dust in dealer lots at the end of June, this was the highest inventory number in 9.5 years,  the highest since November 2007, one month before the recession began.

Fast forward to today when GM reported its June results which again disappointed, and were down 4.7%, more than the expected 3.4% decline (although one wouldn’t know it by looking at the stock which was up as much as 3%). GM sales were dragged by most brands: Chevy -6.4%, GMC -3.6%, Buick +16.4%, Cadillac -11.8%. But that’s not what caught our attention: a bigger problem is what GM revealed in its deliveries report which disclosed a whopping 980,454 units in dealer inventory at the end of June, up nearly 17k from the past month, and representing 105 days of supply, up from an already red-flag raising 101 in May. As Buntkley notes, “GM’s inventory has officially hit a 10-year high. 980,454 units in stock (a 105-day supply) as of June 30, the most since June 2007.“

???? GM’s inventory has officially hit a 10-year high. 980,454 units in stock (a 105-day supply) as of June 30, the most since June 2007.

— Nick Bunkley (@nickbunkley) July 3, 2017

In short: GM “channel stuffing” just hit a new all time high for the restructured company, with the number of GM vehicles parked at dealer lots and patiently waiting for a buyer rising to the highest since the summer before recession officially began, when GM was still pre-bankruptcy GM, with far greater (if ultimately superfluous and in need of restructuring) production.

via http://ift.tt/2sEF4AT Tyler Durden

Authored by Charles Hugh Smith via OfTwoMinds blog,

The employment rate for males ages 25-54 has been stairstepping down for 30 years, but it literally fell off a cliff in 2009.

We all know there is a scourge of addiction and premature death plaguing the nation, a scourge that is killing thousands and ruining millions of lives: the deaths resulting from the opioid epidemic (largely the result of "legal" synthetic narcotics) are mounting at an alarming rate:

We also know that the proximate cause of this epidemic is Big Pharma, which promised non-addictive painkillers that lasted for 12 hours but delivered addictive painkillers that did not last 12 hours.

The unsavory truth was reported by the Los Angeles Times last May (2016) in a scathing investigative series: 'You Want a Description of Hell?' Oxycontin's 12-hour problem.

There are plenty of other participants who share responsibility for the public health and law-enforcement disaster: physicians who all too readily passed out prescriptions for powerful synthetic opioids like aspirin; the government agencies that approved the synthetic heroin as "safe" (heh) and paid for their distribution via Medicaid, the Veterans Administration, etc., and the patients who all too willingly accepted the false promises of synthetic opioids.

But what's missing from the public conversation is the underlying cause of the epidemic: a structural scarcity of paid work and positive social roles for vast swaths of America's workforce.

We all know what paid work means: jobs. Positive social roles include jobs–supporting oneself and one's family provides purpose, meaning, identity and a source of pride, all atrributes of positive social roles–but the concept extends beyond work to any role in which the participant feels needed and that offers dignity: this includes volunteer, guardian, mentor, coach, etc., many of which are unpaid.

A significant essay in the March/April issue of Foreign Affairs describes The Dignity Deficit: Reclaiming Americans' Sense of Purpose (subscription or registration required)

At its core, to be treated with dignity means being considered worthy of respect. Certain situations bring out a clear, conscious sense of our own dignity: when we receive praise or promotions at work, when we see our children succeed, when we see a volunteer effort pay off and change our neighborhood for the better. We feel a sense of dignity when our own lives produce value for ourselves and others. Put simply, to feel dignified, one must be needed by others.

Giving people welfare, cheap prescriptions for opioids and Universal Basic Income (UBI) does not make them feel needed–it makes them feel superfluous and worthless.

The recent decline in male employment in the peak earning years (ages 25-54) is striking: the employment rate for males ages 25-54 has been stairstepping down for 30 years, but it literally fell off a cliff in 2009. Is it coincidental that the opioid epidemic took off around 2010? I don't think so.

How do you support a consumer economy with stagnant incomes for the bottom 90%, rising basic expenses and crashing employment for males ages 25-54? Answer: you don't. The males working in two-income families in the top 10% of the work force are doing just fine. It's the bottom 50% of households that earn a fraction of the top 10% that reflect the decline of paid work for males below the top 20% or so:

The labor force participation rate (percentage of the civilian populace that is in the labor force, i.e. either working or actively seeking employment) has been crashing since 2000.

The participation rate of males has been in structural decine for decades. The entire 30-year boom in employment from 1970 to 2000 bypassed much of the male labor force.

Faced with a scarcity of jobs and social roles that provide the dignity of being needed and productive, people slip into the toxic depths of the opioid epidemic. As I keep saying here, We Need A 'Third' Economy, a community economy that provides an abundance of both paid work and positive social roles. I outline such a system in my book A Radically Beneficial World.

via http://ift.tt/2tIFaMM Tyler Durden

US Manufacturing stumbled to its lowest since Dec 2016 according to the latest 'soft' survey from Markit, as respondents reported a "disappointing end to the second quarter, with few signs of growth picking up any time soon."  However, if ISM's seasonal adjustments are listened to, US Manufacturing just surged to its highest since Aug 2014… you decide.

Under the covers of the ISM data, everything is awesome…

Which is an oddly divergent picture from the one painted by Markit respondents… Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“Manufacturers reported a disappointing end to the second quarter, with few signs of growth picking up any time soon.

 

“The PMI has been sliding lower since the peak seen in January and the June reading points to a stagnation – at best – in the official manufacturing output data.

 

“The survey’s employment index meanwhile suggests that factories will make little or no contribution to non-farm payroll growth in June.

 

“Forward looking indicators – notably a further slowdown in inflows of new business to a nine-month low and a sharp drop in the new orders to inventory ratio – suggest that the risks are weighted to the downside for coming months.

 

“Any good news was saved for inflation, with price pressures easing substantially in June on the back of waning global commodity prices.”

It's probably transitory though…

via http://ift.tt/2tITyF9 Tyler Durden