Month: September 2017

Drone Footage Shows Puerto Rico Devastation From The Air

Hurricane Maria caused widespread damage to Puerto Rico. Drone footage captured the scene in San Juan and Canóvanas on Sept. 21.

As we reported earlier, flash flooding caused by the storm has prompted the NWS to warn that a dam in the northwestern part of the island is in danger of failing, prompting the government to scramble to evacuate the 70,000 residents of the river valley beneath the dam that is in danger of being completely submerged.

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Spain In Crisis: Catalan Police Reject Madrid Takeover, Vow To “Resist”

Spain found itself on the verge of a full-blown sovereign crisis on Saturday, after the “rebel region” of Catalonia rejected giving more control to the central government in defiance of authorities in Madrid who are trying to suppress an independence referendum on Oct. 1.

As tensions rise ahead of the planned Catalan referendum on October 1, and as Madrid’s crackdown on separatist passions took a turn for the bizarre overnight when as we reported Spain’s plan to send boatloads of military police to Catalonia to halt the referendum backfired with dockers in two ports staging a boycott and refused access, on Saturday Spain’s Public Prosecutor’s Office told Catalan Police chief Josep Lluis Trapero that his officers must now obey orders from a senior state-appointed police coordinator, Spanish news agency EFE reported on Saturday.

The Catalan Police, however, disagreed and as Bloomberg reports, the SAP union – the largest trade group for the 17,000-member Catalan Police, known as Mossos d’Esquadra – said it would resist hours after prosecutors Saturday ordered that it accept central-government coordination. The rejection echoed comments by Catalan separatist authorities.

“We don’t accept this interference of the state, jumping over all existing coordination mechanisms,” the region’s Interior Department chief Joaquim Forn said in brief televised comments. “The Mossos won’t renounce exercising their functions in loyalty to the Catalan people.”

The Mossos are one of the symbols of Catalonia’s autonomy and for many Catalans the prosecutor’s decision may be reminiscent of the 1936-39 Spanish Civil War and subsequent dictatorship of Francisco Franco, when the Mossos were abolished.

In a joint press conference today with the Catalan home affairs minister Joaquim Forn and the Mossos chief Josep Lluís Trapero, Forn said that the move by Spain was “unacceptable”.

“We denounce the Spanish government’s will of seizing the Mossos, as they did with Catalonia’s finances” Forn said adding that that “the Catalan government does not accept this interference, it bypasses all the institutions that the current legal framework already has in place to guarantee the security of Catalonia.” Additionally, Trapero expressed his intention to not accept the measure, which he described as “interference by the state”, and also warned that “it skips over all the bodies of the legal framework to coordinate the security of Catalonia”.


Catalan minister Joaquim Forn (L) with Mossos chief Josep Lluís Trapero

Earlier on Saturday, El Pais reported that Civil Guard Colonel Diego Perez de los Cobos, chief of staff of the Interior Ministry’s security department, was named by a prosecutor to coordinate the efforts of the Civil Guard, the National Police and the local Mossos.  Spanish media reported unnamed Home Office sources as saying the measure did not mean withdrawing any powers from the Mossos formally, but rather requiring them to submit to a joint coordination operation to stop the Catalan referendum taking place on October 1.

However, shortly after the reshuffling, Catalan police chief Josep Lluis Trapero rejected giving up control to the central government during a meeting with the heads of the other police forces on Saturday, adding that all possible legal challenges would be studied. According to La Vanguardia Trapero “protested at that meeting about the decision to impose central government control” on the regional police force.

Also on Saturday morning, as the police meeting in Barcelona took place, the regional interior minister, Forn, published a defiant message on Twitter: “We will encounter many difficulties. The state wants to take control of our self-government, but they will not stop us! #HelloRepublic”.

Ironically, as Bloomberg writes, while Mossos chief Trapero reports to the regional government, his force’s funding is mostly provided by Madrid and it’s supposed to take orders from judges and prosecutors from across the country. Article 155 of the Spanish Constitution lets the central government take control of a regional administration if it poses a threat to the national interest. Rajoy has already made moves in that direction.

Earlier this week, the budget ministry took over management of Catalan’s finances and will issue paychecks to more than 200,000 public workers in the region, including the police.

That said, any more direct challenge to the Mossos would be fraught with risk because Trapero, its leader, has become something of a local hero since leading the response to the terrorist attacks in August. Separatists are selling T-shirts with his face printed on them.

According to Reuters, the Catalan government also believes that the Mossos takeover bypasses the Catalan statute  – article 164 – and constitutional law and the Spanish prosecutor that ruled in favour of Madrid taking control had overstepped his legal boundaries, saying that it had no power to rule on who had the authority to issue orders to Mossos.

The prosecutor had ordered that the Catalan police, the Spanish National Police and Spain’s Guardia Civil be managed from the Ministry of Home Affairs in Madrid. The decision, according to the prosecution, aims at “reinforcing the operation to prevent crime and to keep public order” a week before the October 1 independence referendum.

 

The decision was announced during a meeting between the prosecutor and the chiefs of the three police forces.

The disobedience will fuel further speculation the Mossos will not work with the national Civil Guard in Spain’s largest regional economy. The standoff came a day after Prime Minister Mariano Rajoy’s government acknowledged it’s sending more reinforcements to help control street demonstrations and carry out a separate court order to halt the vote.

Additionally, the latest move by Madrid will also increase the tension between the two sides which increasingly looks like it could descend into a direct confrontation as neither side appears to be willing to back down.


Catalan President Carles Puigdemont speaking a pro-independence rally

Carles Puigdemont, Catalonia’s president, called the independence vote in an attempt to push the secession movement forward after decades of political and legal fights over the region’s traditions and language. Since Rajoy took office in 2011, he’s had persistent clashes with separatists seeking to foment a backlash against Madrid. Catalonia is home to about 7.5 million people, or 16 percent of the population, but accounts for a fifth of the economy, on a par with Portugal and Finland.

Several pro-independence groups have called for widespread protests on Sunday in central Barcelona. “Let’s respond to the state with an unstoppable wave of democracy,” a Whatsapp message which was used to organize the demonstration read.

The Catalonian government opened a new website on Saturday with details of how and where to vote on Oct. 1, challenging several court rulings that had blocked previous sites and declared the referendum unconstitutional.

“You can’t stem the tide,” Catalonia’s president Carles Puigdemont said on Twitter in giving the link to the new website.

But Spanish Prime Minister Mariano Rajoy insisted again that the vote should not go ahead. “It will not happen because this would mean liquidating the law,” he said at the PP event in Palma de Mallorca. Acting on court orders, the Spanish state police has already raided the regional government offices, arrested temporarily several senior Catalan officials accused of organizing the referendum and seized ballot papers, ballot boxes, voting lists and electoral material and literature. The finance ministry in Madrid has also taken control of regional finances to make sure public money is not being spent to pay for the logistics the vote or to campaign.

How this escalating clash between Madrid and Catalonia is resolved over the coming week will define the fate of Spain for years to come.

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Former Democratic Congresswoman Urges All NFL Players To Kneel During National Anthem

Having left public office in January, former U.S. Congresswoman from Maryland, Donna Edwards, has decided to get involved in the current meme of the moment battle over respect and freedom of ‘speech’ between President Trump and The NFL…

We have to admit we are a little confused.

We thought that if you disrespected anything American, you were automatically a ‘Russian puppet’, but now it’s ‘cool’ to bash America’s flag, its anthem, and The White House?

For some reason, Edwards decided to tweet this shortly after…

So do as I say, not as I do?

This seemed to sum up what we suspect will occur should this former congresswoman get her wishes…

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Cops Delete Facebook Post Of Massive “Weed” Bust After The Internet Corrects Them

Authored by Carey Wedler via TheAntiMedia.org,

Last week, officers from Missouri’s Jasper Police Department celebrated a marijuana bust they deemed worth roughly $100,000.

In a now-deleted Facebook post, they disclosed their satisfaction with their operation, which took ten cops and sheriff’s deputies and a National Guard helicopter to conduct.

As the Riverfront Times noted (grabbing screenshots before the post was taken down):

"’What a great team effort today,’ the Jasper department’s now-deleted post read. ‘It was hot and humid and not easy getting these plants. We ALL got in the thick of things and got it done.’“

The Times summarized the post’s sentiment:

“In a curious bit of show-your-work math, the department calculated the nearly 290 plants seized would have produced — “on the low side” — 63 pounds of marijuana with a “street value” of roughly $100,000.”

But commenters were quick to point out an apparent flaw in the officers’ bust: it wasn’t cannabis they had seized, but hemp, they said.

You can’t get high from smoking hemp, and the material can be used to create anything from clothing, soap, paper to sails, rope, fuel, and concrete, called “hempcrete.” It is both durable and sustainable.

“That’s hemp,” one comment bluntly said, according to the Times, though the rest of the comments are not available to view because the original post has been removed.

 

One of Missouri’s two entities allowed to grow hemp for certain medicinal purposes, Mitch Meyers of BeLeaf, said, “Sure looks like hemp to me.”

 

“These look to me like wild hemp plants, because they are tall and without buds,” Show-Me Cannabis Executive Director John Payne told the Times, which sent images of the confiscated plants to several experts. 

 

“That probably means that no one was actively cultivating them. If that’s the case, the street value of those plants is next to nothing.”

Many comments echoed similar sentiments, “as the post racked up hundreds of comments, among them mocking congratulations to cops for confiscating the raw material of natural fiber rope,” the Times reported.“Jasper Police, who cover an area about twenty miles northeast of Joplin, pulled the post on Wednesday morning.”

However, there is still some doubt as to whether the plants were hemp or cannabis. Dr. Jason Strotheide, founder of licensed hemp grower Noah’s Arc Foundation, said it is “nearly impossible to tell the difference between hemp and marijuana until late in flower.“

Rusty Rives, police chief of the Lamar Police Department, which participated in raid stuck by the claim that it was weed. “I’m just looking at the picture,” he said. “but they look like marijuana plants to me.”

It doesn’t matter either way. Both are illegal in the state of Missouri despite nationwide efforts to legalize both marijuana and the hemp plant.

The Times had difficulty obtaining comment other officials involved, but by last Thursday, Jasper police chief Chad Karr responded, defending the Facebook post.

“The goal, Karr says, was never to brag about a bunch of pot plants, but rather to serve notice to a suspected meth dealer operating in the area.” But the post reached many more people, accruing over 1,000 comments, Karr said, some of which were “abusive.”

As far as the “$100,000” estimation, “Karr says he tried to estimate conservatively. He admits he’s no expert when it comes to marijuana and doesn’t care to be.” However, he suggested the plants were not growing on their own, without human cultivation, because there were trails leading out to the field where they were confiscated.

Nevertheless, he claims cannabis is not an issue for him.

“I think the misconception is we go to work to bust pot heads,” he said. “I personally do not. I know what the problem is — it’s opiates and methamphetamine.”

Hopefully, his sentiment will continue to grow among law enforcement, who are increasingly trolled when they boast of cannabis busts on social media. The Times reports that for now, it doesn’t appear any charges have been filed over the plants.

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U.S. B-1B Bombers Fly Just Off Coast Of North Korea: 4 Reasons Why This Time It’s Different

Just before North Korea’s foreign minister was due to address the United Nations, the Pentagon announced that U.S. Air Force B-1B Lancer bombers escorted by fighter jets flew in international airspace over waters east of North Korea on Saturday, in a show of force which “demonstrated the range of military options available to President Donald Trump.” The flight was the farthest north of the demilitarized zone separating North and South Korea that any U.S. fighter jet or bomber has flown in the 21st century, the Pentagon added.


B-1B Lancer prepares to take off from Andersen AFB, Guam, Sept. 23, 2017

According to Reuters, the B-1B Lancer bombers came from Guam and the U.S. Air Force F-15C Eagle fighter escorts came from Okinawa, Japan. The Pentagon saod the operation showed the seriousness with which it took North Korea’s “reckless behavior.”

“This mission is a demonstration of U.S. resolve and a clear message that the President has many military options to defeat any threat,” said Pentagon spokeswoman Dana White, calling North Korea’s weapons program “a grave threat” adding that “we are prepared to use the full range of military capabilities to defend the U.S. homeland and our allies.”

The DMZ is a strip of land running across the Korean Peninsula near the 38th Parallel, separating North Korea from South Korea. It was created in 1953, following the armistice which ended the Korean War.

The patrols came after officials and experts said a small earthquake near North Korea’s nuclear test site on Saturday was probably not man-made, easing fears Pyongyang had exploded another nuclear bomb just weeks after its last one. Reversing its original assessment, China’s Earthquake Administration said the quake was not a nuclear explosion and had the characteristics of a natural tremor.

While the US has flown similar sorties before, according to The Aviationist, the show of force is a bit more interesting than usual, for four reasons:

  1. it is the farthest north of the Demilitarized Zone (DMZ) any U.S. fighter or bomber aircraft have flown off North Korea’s coast in the 21st century;
  2. unlike all the previous ones, the latest sortie was flown at night, hence it was not a show of force staged to take some cool photographs;
  3. no allied aircraft is known to have taken part in the mission at the time of writing, whereas most of the previous B-1 missions near the Korean Peninsula involved also ROKAF (Republic Of Korea Air Force) and/or JASDF (Japan’s Air Self Defense Force) jets;
  4. it was a U.S. Air Force job: no U.S. Marine Corps F-35B stealth jet took part in the show of force this time, even though the STOVL (Short Take Off Vertical Landing) variant of the Joint Strike Fighter has taken part in all the most recent formations sent over Korea to flex muscles against Pyongyang. The photo here below shows the “package” assembled for Sept. 14’s show of force.


Munitions from a U.S. Air Force, U.S. Marine Corps and Republic of Korea Air Force (ROKAF)
bilateral mission explode at the Pilsung Range, South Korea, Sept 17, 2017.

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Congress Passed A Bill To Deport Suspected ‘Gang’ Members – There’s Just One Problem

Authored by Sarah Cronin via TheAntiMedia.org,

Last week the House passed a bill to expand the government’s ability to deport immigrants on the basis of alleged gang affiliation. 

Promoted by Republicans as a way to target members of gangs such as the transnational M13 gang, H.R. 3697, the “Criminal Alien Gang Member Removal Act,” amends the Immigration and Nationality Act by adding gang affiliation to the list of criminal offenses that qualify as grounds for detention and deportation.

The bill passed 233 – 175 with almost unanimous Republican support and now must gain approval in the Senate, where it is currently pending in the Committee on the Judiciary. While the bill still has yet to come to a vote in Senate, it has already gained the presidential nod of approval. Shortly following the bill’s passage, the White House Press Secretary published a statement applauding Congress’ decision, and the administration already affirmed that “If H.R. 3697 were presented to the president in its current form, his advisors would recommend that he sign the bill into law,” according to a  statement of administrative policy published last Tuesday.

The bill has received strong criticism from House Democrats and organizations such as the National Immigrant Justice Center (NIJC) and the American Civil Liberties Union (ACLU), who claim the bill provides the government with sweeping discretion to detain and deport immigrants using a broad and arbitrary label.

The bulk of the debate on the bill revolves around how it defines ‘gangs.’ The bill defines a gang as any group of five or more people that has as one of its primary purposes the commission of one or more specified criminal offenses. The bill goes on to expand on these ‘criminal offenses’ to include felony drug offenses, which would include the possession of marijuana. It also explicitly names the ‘harboring’ of undocumented immigrants as a crime.

This means, theoretically, that any organization that helps, shelters, or hires undocumented immigrants could be considered a gang, and thus any immigrant member of such group could theoretically be detained or deported as a gang member.

The National Immigrant Justice Center’s recent policy report explains: 

“For example, the government could attempt to designate a church group that elects to offer shelter to an undocumented immigrant as a gang. Similarly, a fraternity whose members use expired identification documents to purchase liquor or engage in initiation rites or a Fortune 500 company that employs workers who may or may not have irregular documents could also fall under this definition.”

The government already has a history of liberally applying the ‘gang’ label. Just ask the Juggalos, a fan group of the Insane Clown Posse. They took to the streets Saturday to protest the FBI’s designation of their group as a gang in the bureau’s National Gang Threat Assessment report back in 2011. The fans and the band have been fighting to clear their name ever since. The issue even ended up in court last year when the Clown Posse sued the FBI for withholding documentation about the gang classification of their fans.

In a revealing profile about the group, Vox writer Dylan Matthews explained that the parallel would be to criminalize someone for being a “Belieber”(Justin Bieber fan) or a “Swiftie” (Taylor Swift fan). While perhaps ridiculous in theory, the classification has had serious consequences for group members, causing some fans to lose their jobs and, in some cases, their parental rights because of their affiliation with the so-called ‘gang.’

In the case of H.R. 3697, the consequences of alleged gang affiliation would be much more dire — as in no-bond mandatory detention.

“Mandatory detention refers to a provision of the INA that states that non-citizens with certain criminal convictions must be detained by ICE. People who are subject to mandatory detention are not entitled to a bond hearing and must remain in detention while removal proceedings are pending against them,” explains a policy handout by the Immigrant Law Research Center.

H.R. 3697 would expand the terms of mandatory detention, which the ACLU considers a clear violation of the Fifth Amendment’s Due Process Clause. It also transfers the discretion of determining bond eligibility from the Attorney General to the Secretary of Homeland Security.

“[The bill] grants the Department of Homeland Security massive discretion to designate a group of people as a ‘criminal gang,’ based on secret evidence, and without meaningful judicial review,” the ACLU writes in their vote recommendation and analysis of the bill.

While the practice may appear unconstitutional, it wouldn’t be the first time the government has sanctioned detention without trial. During the War on Terror era, the government adopted the practice of ‘indefinite detention’ whereby suspected terrorists can be held without charge or trial. Despite facing challenges in Congress and in the courts, indefinite detention was signed into law as a provision of the 2012 National Defense Authorization Act, where it remains in legal standing today.

In the same way the War on Terror became a catch-all justification for constitutionally questionable policies, it seems that the vaguely defined threat of immigration and ‘criminal aliens’ will be this administration’s keyword for getting around civil liberties.

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Pentagon To Probe “Evacuation Hoax” Messages Sent To US Soldiers In South Korea

The Pentagon announced Friday that it would be launching an investigation into a series of fake messages sent to US soldiers stationed in South Korea and their family members on Thursday. In what probably sent a temporary chill down the spines of recipients, the messages warned that all "non-essential" (i.e. non-combat) personnel must evacuate the Korean Peninusla – suggesting that the long-dormant Korean War was about to explode once again into violence, Reuters reports.

The hoax, which was spread via fake SMS messages and Facebook posts, was carried out during a particularly tense period in the ongoing standoff between the US and North Korea over the latter's insistence on developing a nuclear weapon capable of striking the US. Also on Thursday, the North's foreign minister warned that the regime was considering a test of a nuclear weapon over the Pacific – something that would represent an unprecedented escalation and possibly force the US to respond with a military strike. A military spokesman said there was no way of knowing how many soldiers or family members received the messages, but said the chain of command quickly acted to shut down the hoax.

“We have no accurate way to know how many people received it,” the spokesman said. “Incidents were ‘self-reported’ and many people claimed the message disappeared as soon as they unlocked their phone.”

The spokesman added that the “good news here” is that the hoaxer's attempt to create an outbreak of chaos was foiled.

“The good news here is: informed, savvy family members plus an engaged chain of command means no panic or over-reaction,” he added. “We had no reports of anyone acting on message other than notifying the appropriate authorities.”

Stars and Stripes reports that the hoax was reported by soldiers less than an hour after the alerts were sent. The hoax was spread via fake text messages and Facebook posts, the military said.

The USFK posted a statement on its official Facebook page on Thursday making clear that the US military did not issue any evacuation-related alerts. It has also instructed all US Department of Defense personnel and their family to confirm any evacuation-related communications before acting.

The notice alerted soldiers and their family members that the USFK did NOT issue the alert: “On Thursday, 21 SEP, we received multiple reports of a fake text-to-cell and social media message regarding a  “real world noncombatant evacuation operation (NEO) order issued” which instructed DOD family members and non-emergency essential DOD civilians on the Korean peninsula that an evacuation order had been issued.”

Warnings were also posted on the 8th Army’s official Facebook page.

 

As Stars and Stripes explains, the messages referred to what is known as a noncombatant evacuation operation, or NEO, which would affect family members of the 28,500 U.S. servicemembers stationed in South Korea and non-emergency essential Defense Department civilian employees. According to Reuters, the USFK holds biannual NEOs to prepare soldiers and their families for just such an eventuality.
 

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Bond Market Bulls Embrace China Debt Downgrade

It appears credit ratings agencies simply get no respect…

Four months after Moody's downgraded China to A1 from Aa3, unwittingly launching a startling surge in the Yuan as Beijing set forth to "prove" just how "stable" China truly is through its nationalized capital markets, S&P followed suit this week when the rating agency also downgraded China from AA- to A+ for the first time since 1999 citing risks from soaring debt growth, less than a month before the most important congress for Chiina's communist leadership in the past five years is set to take place. In addition to cutting the sovereign rating by one notch, S&P analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. are unlikely to avoid default should the nation default on its sovereign debt. Following the downgrade, S&P revised its outlook to stable from negative.

“China’s prolonged period of strong credit growth has increased its economic and financial risks,” S&P said.

 

“Since 2009, claims by depository institutions on the resident nongovernment sector have increased  rapidly. The increases have often been above the rate of income growth.  Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to  some extent."

According to commentators, the second downgrade of China this year represents ebbing international confidence China can strike a balance between maintaining economic growth and cleaning up its financial sector, Bloomberg reported. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.

The cut will “have a relatively big impact on Chinese enterprises since corporate ratings can’t be higher than the sovereign rating,” said Xia Le, an economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. “It will affect corporate financing.”

 

“The market has already speculated S&P may cut soon after Moody’s downgraded,” said Tommy Xie, an economist at OCBC Bank in Singapore. “This isn’t so surprising.”

 

S&P said that its stable outlook "reflects our view that China will maintain robust economic performance over the next three to four years. We expect per capita real GDP growth to stay above 4% annually, even as public investment growth slows  further. We also expect the stricter implementation of restrictions on  subnational government off-budget borrowing to lead to a declining trend in the fiscal deficits, as measured by changes in general government debt in terms of GDP."

But bond investors are saying meh to the downgrade and bid bonds back to their richest in 2 months…

The average spread on dollar bonds from the nation’s corporations fell 3.3 basis points on the day to 266, the second largest drop since May 31, according to JPMorgan indexes. 

While the timing of the rating cut was less than opportune because China is planning to sell a dollar bond soon, “this might make the Chinese authorities more determined to price a very tight sovereign new issue,” said Jethro Goodchild, head of Asian credit at Aviva Investors.

 "It will be an opportunity for the Chinese government to create the image in investors’ minds that they have a coherent and well-articulated plan for the country’s economic growth and fiscal stability."

But, of course, S&P (and Moody's) are correct in their downgrade.

All is not at all well under the hood in China and without the endless flood of liquidity ("well we have to put it somewhere"), the reactions to downgrades could be very different.

As we previously noted, China's dent minefield is worse than ever. Last June, Goldman made a "surprising" finding when it calculated that China real debt load was far higher than it had represented.

In other words, whether due to using shadow banking strategies to cover the true debt load, or simply because Chinese corporations and the government were not booking all their obligations, China was covering up its true debt load. That strategy worked as long as China was flooding its ponzi debt system with far more debt than we maturing or being otherwise taken out.

However, now that Beijing once again appears intent on breaking China's leverage addition – at least until overnight repo rates soar to 30% or higher as happened in the summer of 2013 when China tried this exercise for the first time – this is changing, but the real catalyst is China's recent surge in defaults, a development which the local financial system had not had to deal with until as recently as two years ago, as virtually all defaults were settled privately, and usually involved a government bailout of some nature.

Now, with corporate bankruptcies soaring, we are finally getting first hand evidence that Goldman – and many other skeptics – were right, because as Bloomberg reports, "defaults in China are unearthing hidden debt at companies across the country."

Think of it as nested debt: big companies, themselves reliant on debt, arbing interest expense by providing loans to smaller companies at higher rates, without declaring said loans, or as Bloomberg puts it, "small firms that can’t get loans by themselves have been winning banks over by getting other companies to guarantee their borrowings. The companies making those pledges exclude them from their balance sheets, leaving creditors in the dark. Borrowers often extend the guarantees for each other, raising the risk that failures could ricochet, at a time when increasing borrowing costs have already added to strains."

*  *  *

And just in case you needed a reminder, this is what happened when S&P dared to downgrade the US Sovereign rating in 2011…

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Trump Trounces “Hypocrite” McCain, Thinks Rand Paul “May Find A Way” To Save Obamacare Repeal Bill

In a surprising demonstration of wit, President Donald Trump told a crowd of rowdy Alabamians Friday night that it would be amusingly “ironic” if Kentucky Senator Rand Paul offered to vote for the Republicans’ floundering Graham-Cassidy health-care bill after John McCain blindsided the administration by withdrawing his support On Friday. The two senators, Trump explained, do not get along. And by swooping in to save the Republicans’ Obamacare repeal-and-replace effort at the last second, Paul would be coronated a hero.

After saying earlier this year that he is determined to win Paul’s vote on health-care, the president appears to be making good on his word, launching what appears to be a personal charm offensive to try and win the support of one of the most intransigent Republican senators. That campaign continued Saturday morning, when the president tweeted that he “might have” a way to finally win the Kentucky senator’s vote.

“I know Rand Paul and I think he may find a way to get there for the good of the Party!”

The tweet was part of a series about the Graham Cassidy bill, which was effectively killed on Friday when McCain withdrew his support. In the series, Trump took shots at McCain, and also Alaska Moderate Lisa Murkowski, who opposes the bill. The third Republican “no” vote belongs to Sen Susan Collins of Maine.

Trump began by bashing McCain for opposing repeal and replace after campaigning on repealing Obamacare during his most recent Senatorial bid. The president also warned that McCain’s decision could elicit substantial political backlash in his state as premiums skyrocket…although, given his recent brush with brain cancer, we doubt McCain is still motivated by these types of political considerations…particularly after opposing a bill sponsored by his close friend, South Carolina Sen. Lindsey Graham.

In a plug for Graham Cassidy, Trump said adopting a system of large block grants to states would be “a good thing to do.”

In a shot at Murkowski, Trump tweeted that Alaskans would be angry after their premiums skyrocket 200%, implying that they would express that anger by voting against their senator. But “Lisa M” still has a chance to be a hero by changing her mind and voting for the bill.

So, has Trump found a way to save the repeal and replace effort by turning Paul? Maybe, maybe not. As the public is well aware, Trump is fond of bluffing.

Of course, the math is simple: Republicans have 52 seats and need 50 senators to support the bill, which would require Vice President Pence to break a tie, under the special budget rules being used to avoid a Democratic filibuster. The clock on those rules runs out at the end of the month, effectively closing the Republicans’ window to pass a repeal and replace bill – for now, at least.

Of course, on Friday, Paul reaffirmed his opposition to the bill in a series of tweets on Friday, saying he "wouldn't be bullied" into supporting it after Trump had admonished him via twitter earlier in the week.

That sounds like a "hard pass" to us.

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Kass Warns: “The Scent Of Group Stink Is As Strong As In 2000 & 2007”

Authored by Doug Kass via RealInvestmentAdvice.com,

* In a paperless and cloudy world, are investors and citizens as safe as the markets assume we are? –Kass Diary

Another provocative missile launched by North Korea and another apparent terrorist attack in London, England, are, once again, overnight and early-morning features of our reality as investors and as citizens.

The S&P futures fell a meaningless four handles from the time of the events, indicating even the machines and algorithms couldn’t care less about much of anything impacting equities!

“Nothing succeeds like success.” –Alexandre Dumas

“Group stink” runs thick these days, as Dumas, a 19th century French writer, noted.

To this observer, our markets’ resilience is all too reminiscent of former Citigroup CEO Chuck Prince, who kept on dancing because the music was still playing.

To me, the indomitable market is more a function of lemming-like behavior in a market, economy and profit setting that is far less secure and strong than many subscribe to.

Group stink is a powerful force in the markets, especially when the machines and algorithms and the ever-constant inflows into popular passive funds and ETFs dominate the investment backdrop. These factors exacerbate short-term trends and may contribute to the perpetuation of an ill-conceived perception of a daunting and inexhaustible virtuous market cycle.

Golfer Tom Watson once wrote, “Sometimes thinking too much can destroy your momentum.” And most investors and traders, in a reactionary mode, seem to prefer to adopt such a strategy. But, I vividly remember the positive and incessant price momentum in early 2000 and late 2007 that appeared impossible to divert until, all at once, an important change in price trend occurred, seemingly overnight. The market consequences were ugly.

There is now a near-universality of view that stocks will move higher and that any dip is to be bought. Even the threat of a potential nuclear attack now brings on a market yawn.

The one-way action and lack of volatility have resulted in some of the greatest hedge-hoggers giving back tons of money (e.g., Seth Klarman’s Baupost) and/or closing down completely (as chronicled here and here.)

If some of the greatest minds can’t deliver alpha, we possibly should consider that things have gone awry and think about accepting something that Grandma Koufax used to say: “Dougie, something is rotten in Flatbush.”

As I recently wrote in “The Market Band Plays On, But You Won’t Catch Me Humming Its Mindless Tune”:

Throughout the last six months I have expressed the view that the S&P 500 Index was in the process of making an important top and that risk was being underpriced.

 

Throughout the last month I have grown more bearish than I have been in several years. That negative outlook is reflected in the extreme condition that, beyond indirect holdings in my hedge fund, I am in the unique position of owning no individual equities in my personal account.

 

That’s a statement of conviction in view.

In “Dark Conditions Totally Eclipse Anything We’ve Seen in Decades” I outlined my concerns:

* Markets: The dominance and popularity of passive investing — most notably ETFs and volatility-trending and risk-parity strategies — are relatively new to the market’s picture. I contend that the lack of price discovery from these influences may have spoiled stock charts and partially ruined the ability of some to rely on technical analysis.

 

* Valuations: Most valuation metrics are at least in the 95% decile, an occurrence that typically has coincided over history with the end of maturing bull markets or in the ninth inning of speculative eras.

 

* Corporate Profits: With the largest spread between GAAP and non-GAAP earnings in history, never has such liberal use of accounting standards been accepted by the masses of market participants.

 

* Central Banks: With $19 trillion ($1.5 trillion added in 2017 alone) in central bank assets, monetary authorities never have had such influence as they have in the past few years. Like quantitative strategies, the outsize role of central banks is new and its impact is great. It also has diminished price discovery. As I recently wrote, the “Debt Opioid Addiction Could Turn Ugly Fast.”

 

* Economic: As the years go by it is increasingly clear that, despite the unprecedented role of central bankers reducing interest rates, secular global growth prospects have been reduced relative to the last several decades. Moreover, The Screwflation of the Middle Class has resulted in an income and wealth gap that has not improved over the last three to five years.

 

* Politics: The Orange Swan is a new factor, as articulated here and here. Like him or hate him, President Trump is unlike any POTUS in history. Another aspect of politics that is different is the degree of animus in Washington, D.C. There has never been such partisanship. Ever.

 

* Geopolitical: Markets have never been as exposed to such geopolitical acts and risks. Specifically, it has been 53 years since we faced a nuclear risk.

Respectfully, unlike some others, I belief the cause of the recent market indigestion — and possible future market drawdowns — likely has very little to do with seasonality or the month of August, nor will it likely be a function of the historical weakness often seen in September and October.

The market’s issues run deeper and my concerns are based on both technical and fundamental grounds.

They have to do in part with the uncertainty surrounding various political, geopolitical, economic, market and monetary policy issues, many of them with potentially adverse outcomes. At least to me, the macroeconomic does impact Bristol-Myers Squibb (BMY) and Amazon (AMZN) and General Motors (GM) .

My concerns also have to do with the message of the bond market (this morning, the yield on the 10-year U.S. note is down by nearly five basis points to 2.11%), which indicates to me that the trajectory of domestic GDP growth and corporate profits is likely to disappoint for the fourth consecutive year.

Further adding to my concerns is the role of passive investing as the dominant influence on the markets. ETFs that rebalance daily and quantitative strategies such as volatility trending and risk parity exacerbate short-term moves and are, too often, the tail that wag the market dog. As I have asked, if the machines decide to sell, who is left to buy?

In part, these strategies have elevated valuation metrics above the 95% decile, alarming far too few market participants. Unfortunately, markets that are priced to perfection are vulnerable to exogenous shocks such as an Orange Swan, a missile aimed at Japan, a severe hurricane or a monetary policy mistake.

Meanwhile, there were technical breaks developing, starting with the outsize performance gains from the anointed FANG stocks. These conditions also were generally ignored by the bullish cabal.

Group Stink has ruled the day — a condition often seen historically at or near market tops.

As I have written, the thing to fear is the lack of fear itself.

Few commentators and talking heads in the business media, many of whom counseled the lemmings who stood strong in equities in both early 2000 and late 2007, have been willful participants in the Bull Market in Complacency and have contributed to the potential of a Minsky Moment.

My bearishness also reflects my view that the business cycle is mature and that there are Peaks Everywhere. Most notably, low interest rates have pulled forward sales in various sectors. Industries such as housing, where affordability again has been stretched, and autos, where the cycle has peaked, are samples of my concerns. Meanwhile, the retail industry has been eviscerated, with ugly consequences for real estate and employment, by a Dark Star named Amazon, a recent target of my disaffection.

Nearly three weeks ago on Aug. 10, I wrote “To Heck With the Crowd, I Remain Manifestly Bearish,” which underscored my multiple concerns (as they specifically relate to North Korea, see my boldfaced first question below that gnaws at me every morning).

It stated in part:

“I won’t tell you that the world matters nothing, or the world’s voice, or the voice of society. They matter a good deal. They matter far too much. But there are moments when one has to choose between living one’s own life, fully, entirely, completely – or dragging out some false, shallow, degrading existence that the world in its hypocrisy demands. You have that moment now. Choose!” –Oscar Wilde

Sometimes you need to sit alone on the floor in a quiet room in order to hear your own voice and not let it drown in the noise of others.

I am sitting on that floor now, and thinking — and shorting more.

Too many traders and investors think they know what will happen in the markets. They establish one, specific price target, usually clothed in certainty.

But the most successful traders and investors work with probabilities of outcomes.

I continue to maintain a historically high net short exposure because I believe we face numerous political, geopolitical, economic and market outcomes that could end badly — very badly.

After yesterday’s “fire and fury” (“TV-tough”) statement by President Trump regarding North Korea, I repeated five of my concerning questions:

* In a paperless and cloudy world, are investors and citizens as safe as the markets assume we are?

 

* With the G-8’s geopolitical coordination at an all-time low, how slow and inept will the reaction be if the wheels do come off?

 

* Remember when the big argument in favor of President Trump was that he was a dealmaker who knew how to get things done? That was when he was doing real estate deals. Now he has to deal with 535 other politically partisan legislators in Congress on their own real estate turf.

 

* Does the administration have the depth of experience, understand the extent of the legwork and organization required for passing legislation, or have a coherent idea or shared vision of what it wants to achieve and what problems it means to solve?

 

* If President Trump can’t easily put through a health care package, what does that mean for more difficult regulatory reforms and his tax and fiscal policy?

I then repeated my top 10 market concerns.

Bottom Line

“I wanted a perfect ending. Now I’ve learned, the hard way, that some poems don’t rhyme, and some stories don’t have a clear beginning, middle, and end. Life is about not knowing, having to change, taking the moment and making the best of it, without knowing what’s going to happen next. Delicious Ambiguity.” –Gilda Radner

Market views are like noses – everyone seems to have one!

To me, investors are complacent, numerous outcomes of all breeds (many of them adverse) seem possible, the business cycle is mature, machines and algorithms have undue market influence (and if the movie goes into reverse, selling rather than buying remains an existential market threat), valuations are at an historical extreme and thus make markets vulnerable to external shocks, and the market’s technical condition has been deteriorating for months.

And, in 2017, our interconnected, flat and networked world is unsafe on numerous fronts.

And, as I have expressed, after a lengthy period of quiet, volatility and uncertainty are likely to be great again. I plan to continue to err on the side of conservatism and I continue to maintain a skeptical view of the market’s reward compared to risk and the limited upside relative to downside.

But, as described in “Fearlessly Make Uncertainty and Volatility Your Friends!,” I also intend to capture alpha by being opportunistic, both from a trading and investing perspective.

***

As it is said, we live in interesting (and challenging) times, influenced by a set of relatively new circumstances and actors that have led to a Bull Market in Complacency – and the risk of a Minksy Moment – in which numerous outcomes, many of them adverse, are possible.

Today, as I did in early 2000 and in the late summer of 2007, I pay heed to Woody Allen, who said:

“More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”

Be alert, consider the contrary and think about sitting out some of the market’s dances, perhaps before your legs are chopped off.

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