Month: October 2017

Authored by Patrick Buchanan via Buchanan.org,

Well over a year after the FBI began investigating “collusion” between the Trump campaign and Vladimir Putin, Special Counsel Robert Mueller has brought in his first major indictment.

Trump campaign manager Paul Manafort has been charged with a series of crimes dating back years, though none is tied directly to President Donald Trump or 2016.

With a leak to CNN that indictments were coming, Mueller’s office stole the weekend headlines.

This blanketed the explosive news on a separate front, as the dots began to be connected on a bipartisan plot to bring down Trump that began two years ago.

And like “Murder of the Orient Express,” it seems almost everyone on the train had a hand in the plot.

The narrative begins in October 2015.

Then it was that the Washington Free Beacon, a neocon website, engaged a firm of researchers called Fusion GPS to do deep dirt-diving into Trump’s personal and professional life — and take him out.

A spinoff of Bill Kristol’s The Weekly Standard, the Beacon is run by his son-in-law. And its Daddy Warbucks is the GOP oligarch and hedge fund billionaire Paul Singer.

From October 2015 to May 2016, Fusion GPS dug up dirt for the neocons and never-Trumpers. By May, however, Trump had routed all rivals and was the certain Republican nominee.

So the Beacon bailed, and Fusion GPS found two new cash cows to finance its dirt-diving — the DNC and the Clinton campaign.

To keep the sordid business at arm’s length, both engaged the party’s law firm of Perkins Coie. Paid $12.4 million by the DNC and Clinton campaign, Perkins used part of this cash hoard to pay Fusion GPS.

Here is where it begins to get interesting.

In June 2016, Fusion GPS engaged a British spy, Christopher Steele, who had headed up the Russia desk at MI6, to ferret out any connections between Trump and Russia.

Steele began contacting old acquaintances in the FSB, the Russian intelligence service. And the Russians began to feed him astonishing dirt on Trump that could, if substantiated, kill his candidacy.

Among the allegations was that Trump had consorted with prostitutes at a Moscow hotel, that the Kremlin was blackmailing him, that there was provable collusion between the Trump campaign and Russia.

In memos from June to October 2016, Steele passed this on to Fusion GPS, which passed it on to major U.S. newspapers. But as the press was unable to verify it, they declined to publish it.

Steele’s final product, a 35-page dossier, has been described as full of “unsubstantiated and salacious allegations.”

Steele’s research, however, had also made its way to James Comey’s FBI, which was apparently so taken with it that the bureau considered paying Steele to continue his work.

About this “astonishing” development, columnist Byron York of the Washington Examiner quotes Sen. Chuck Grassley:

“The idea that the FBI and associates of the Clinton campaign would pay Mr. Steele to investigate the Republican nominee for president in the run-up to the election raises … questions about the FBI’s independence from politics, as well as the Obama administration’s use of law enforcement and intelligence agencies for political ends.”

The questions begin to pile up.

What was the FBI’s relationship with the British spy who was so wired into Russian intelligence?

Did the FBI use the information Steele dug up to expand its own investigation of Russia-Trump “collusion”? Did the FBI pass what Steele unearthed to the White House and the National Security Council?

Did the Obama administration use the information from the Steele dossier to justify unmasking the names of Trump officials that had been picked up on legitimate electronic intercepts?

In testimony before the Senate Intelligence Committee, Clinton campaign chair John Podesta and DNC chair Debbie Wasserman Schultz claimed they did not know that Perkins Coie had enlisted Fusion GPS or the British spy to dig up dirt on Trump.

Yet, when Podesta testified, the lawyer sitting beside him in the committee room was Marc Elias of Perkins Coie, who had engaged Fusion GPS and received the fruits of Steele’s undercover work.

Here one is tempted to cite Bismarck that, if you wish to enjoy politics or sausages, you should not inquire too closely how they are made.

Thus we have Free Beacon neocons, never-Trump Republicans, the Hillary Clinton campaign, the DNC, a British spy and comrades in Russian intelligence, and perhaps the FBI, all working with secret money and seedy individuals to destroy a candidate they could not defeat in a free election.

If future revelations demonstrate that this is what went down, it is not only the White House that has major problems.

If you wish to know why Americans detest politics and hate the “swamp” that has been made of their capital city, follow this story all the way to its inevitable end. It will be months of unfolding.

The real indictment here is of the American political system, and the true tragedy is the decline of the Old Republic.

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Earlier today Bloomberg shared their thoughts that recent data released by the National Association of Realtors (NAR), namely the fact that homes are sitting on the market for a record low average of just 3 weeks before being scooped up, pointed to a devastating shortage of housing inventory for sale.  Here was Bloomberg’s take:

Here’s more evidence that the defining characteristic of the U.S. housing market is a shortage of inventory for sale: Homes are sitting on the market for the shortest time in 30 years, according to an annual report on homebuyers and sellers published today by the National Association of Realtors.

 

The typical home spent just three weeks on the market, according to the report, which focused on about 8,000 homebuyers who purchased their home in the year ending in June. That was down from four weeks in the year ending June 2016 and 11 weeks in 2012, when the U.S. housing market was still reeling from the foreclosure crisis. It was the shortest time since the NAR report began including data on how long homes spend on the market, in 1987.

 

Buyers are snapping up homes quickly at a time when for-sale listings are in short supply, forcing them to compete. The number of available properties declined in September, according to NAR’s monthly report on existing home sales, marking the 28th consecutive month of year-on-year decline in inventory.

Moreover, the “inventory shortage’ thesis was further reinforced by data showing that a growing percentage of buyers are once again having to pay asking price or more to win their fair share of the American dream. 

In addition to moving fast, buyers also had to pony up to close the deal. Forty-two percent of buyers paid at least the listing price, the highest share since the NAR survey started keeping track in 2007.

 

“With the lower end of the market seeing the worst of the supply crunch, house hunters faced mounting odds in finding their first home,” said Lawrence Yun, NAR chief economist, in a statement. “Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked homeownership out of reach for countless would-be buyers.”

That said, while Bloomberg has taken the ‘glass half full’ approach in it’s analysis, one could also easily make the argument that the housing market isn’t suffering from a lack of supply at all but rather an artificially high level of demand courtesy of a combination of perpetually low interest rates and taxpayer subsidized mortgages that require minimal down payments of just 3%.

For evidence of the slightly more pessimistic assessment of the housing market, one has to simply review the fine print included in the NAR report which reveals that the average first-time homebuyer is financing roughly 95% of their purchase price and the tightest housing markets are those that fall below FHA limits.  So, what does that tell you about how “tight” housing markets would be if they weren’t subsidized by the U.S. taxpayer?

Of course, to suggest that millennials should hold off on purchasing a home until they can actually afford a debt-to-equity ratio somewhere south of 19x is probably considered a hate crime in many social circles so we can understand why it might be avoided.

In any event, here is a summary of the NAR report so you can make your own assessment:

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Crude Oil has been moving higher of late, putting it at a price point that looks to be important from a long-term perspective.

Below looks at Crude Oil over the past 10-years and how it is facing a key breakout test on Halloween-

CLICK ON CHART TO ENLARGE

As mentioned above, Crude Oil is kissing the underside of long-term falling channel (1) and 2017 highs at the same time at (3). It humbly appears to the Power of the Pattern to be a very important price test for Crude.

Below looks at the pattern in Exxon (XOM) over the past few years-

CLICK ON CHART TO ENLARGE

Exxon hit 7-year support recently at (1) and the rally of late has it testing the top of a falling channel and highs earlier this year at (3).

What Crude and Exxon does at these key breakout tests look to be very important for the lagging Energy sector.

Full Disclosure- Premium and Sector members have owned Exxon for almost two months. Stops were pulled up of late, as the breakout tests are in play.

Why you see chart pattern analysis with brief commentary:   There is a ton of news and opinions around markets and assets that make the decision-making process more difficult than it needs to be.   I believe the Power of the chart Pattern provides all you need to see what is taking place in an asset and determine the action to take.  This approach has worked well for me and our clients and I encourage you to test it for yourself.

Receive my free research posted on the blog daily here 

Or,  send an email if you would like to see sample research and take me up on a trial of my premium or weekly research where I provide actionable alerts on breakouts and reversals in broad market indices, sectors, commodities, the miners and select individual stocks 

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Authored by Kevin Muir via The Macro Tourist blog,

I sure hope Julian Robertson is a Ryan Reynolds fan. And although I doubt the MacroTourist Letter is on the legendary hedge fund manager’s daily reading list, if he happens across this post, Julian (and the rest of you on the board) – know it was all done with tongue firmly in cheek (kind of).

Ryan’s movie DeadPool is by far and away, the best Marvel movie ever made. I guess you can disagree with that statement – that’s what makes a market, but you would still be wrong.

For those who haven’t seen the movie, Ryan Reynold’s character frequents a bar that has a DeadPool. There, listed for everyone to see, are the bets on who will die first. Whoever “owns” the first person to die, wins the pool.

Today’s market is in desperate need of a “Value Investor’s DeadPool.” With the constant fleeing of capital from active management into passive (most of which can certainly not be described as moving into “value”), the pain for those investors still believing that buying cheap companies has merit is intense.

And as I watch this passive investing renaissance unfold, all I can think about is the last time value was so scorned. It was the year 2000, and the DotCom bubble was in full force.

The S&P value versus growth index ratio had been plummeting for four years, and investors were openly mocking those who didn’t “get it” and embrace the new technology era.

Into this mania, one of the greatest value investors of all time, Julian Robertson decided enough was enough, and he closed his Tiger Hedge Fund awfully close to the bottom.

For kicks, I dug up his final letter to investors. The funny part? It seems just as applicable today as 17-years ago.

Tiger Management released the following letter on March 30, 2000 to its limited partners, announcing the closure of its funds.

In May of 1980, Thorpe McKenzie and I started the Tiger funds with total capital of $8.8 million. Eighteen years later, the $8.8 million had grown to $21 billion, an increase of over 259,000 percent . Our compound rate of return to partners during this period after all fees was 31.7 percent . No one had a better record.

 

Since August of 1998, the Tiger funds have stumbled badly and Tiger investors have voted strongly with their pocketbooks, understandably so. During that period, Tiger investors withdrew some $7.7 billion of funds. The result of the demise of value investing and investor withdrawals has been financial erosion, stressful to us all. And there is no real indication that a quick end is in sight.

 

And what do I mean by, “there is no quick end in sight?” What is “end” the end of? “End” is the end of the bear market in value stocks. It is the recognition that equities with cash-on-cash returns of 15 to 25 percent , regardless of their short-term market performance, are great investments. “End” in this case means a beginning by investors overall to put aside momentum and potential short-term gain in highly speculative stocks to take the more assured, yet still historically high returns available in out-of-favor equities.

 

There is a lot of talk now about the New Economy (meaning Internet, technology and telecom). Certainly the Internet is changing the world and the advances from biotechnology will be equally amazing. Technology and telecommunications bring us opportunities none of us have dreamed of.

 

“Avoid the Old Economy and invest in the New and forget about price,” proclaim the pundits. And in truth, that has been the way to invest over the last eighteen months.

 

As you have heard me say on many occasions, the key to Tiger’s success over the years has been a steady commitment to buying the best stocks and shorting the worst. In a rational environment, this strategy functions well. But in an irrational market, where earnings and price considerations take a back seat to mouse clicks and momentum, such logic, as we have learned, does not count for much.

 

The current technology, Internet and telecom craze, fueled by the performance desires of investors, money managers and even financial buyers, is unwittingly creating a Ponzi pyramid destined for collapse. The tragedy is, however, that the only way to generate short-term performance in the current environment is to buy these stocks. That makes the process self-perpetuating until the pyramid eventually collapses under its own excess.

 

I have great faith though that, “this, too, will pass.” We have seen manic periods like this before and I remain confident that despite the current disfavor in which it is held, value investing remains the best course. There is just too much reward in certain mundane, Old Economy stocks to ignore. This is not the first time that value stocks have taken a licking. Many of the great value investors produced terrible returns from 1970 to 1975 and from 1980 to 1981 but then they came back in spades.

 

The difficulty is predicting when this change will occur and in this regard I have no advantage. What I do know is that there is no point in subjecting our investors to risk in a market which I frankly do not understand. Consequently, after thorough consideration, I have decided to return all capital to our investors, effectively bringing down the curtain on the Tiger funds. We have already largely liquefied the portfolio and plan to return assets as outlined in the attached plan.

 

No one wishes more than I that I had taken this course earlier. Regardless, it has been an enjoyable and rewarding 20 years. The triumphs have by no means been totally diminished by the recent setbacks. Since inception, an investment in Tiger has grown 85-fold net of fees; more than three time the average of the S&P 500 and five-and-a-half times that of the Morgan Stanley Capital International World Index. The best part by far has been the opportunity to work closely with a unique cadre of co-workers and investors.

 

For every minute of it, the good times and the bad, the victories and the defeats, I speak for myself and a multitude of Tiger’s past and present who thank you from the bottom of our hearts.

Although this cycle’s decline in value stocks relative to growth stocks has not been as steep as the DotCom bubble, the last ten years has been every bit as painful for the Julian-Roberston-disciples who practice the ancient witchcraft of value investing.

And when I saw one of my favourite investors write a letter to his clients about this very subject, I couldn’t help but draw parallels to the 2000 Tiger closing.

David Einhorn’s Greenlight Capital monthly piece has the same tone as Roberston’s 2000 letter:

I don’t have much to add. As Roberston and Einhorn both say – it will end when it ends (I am paraphrasing).

I am not sure who will be the big name that taps out at the bottom. Probably someone who has made enough money that he/she doesn’t need to bother with this Central Bank fueled madness.

But for long-term investors, think about doing a little style switch down here. You don’t need to fight the market and get short (like your idiot author), but there is nothing wrong with switching some of your higher octane growth names for cheaper value plays. Maybe even give Einhorn a little money – after all, I don’t have Greenlight in the DeadPool. I need him to stick around.

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As the mainstream media circus ran wild with the Paul Manafort indictment yesterday, Trump, who repeatedly dismissed the charges as being unrelated to his campaign, has just tweeted that the biggest story revealed yesterday, a story which was largely ignored by the “fake news”, was Tony Posesta’s sudden resignation from the powerful lobbying group that bears his name.

Meanwhile, Trump also seemingly called on the Podesta brothers to “Drain the Swamp” by dishing whatever “earth shattering” dirt they have on Democrats to Special Counsel Mueller.

“The biggest story yesterday, the one that has the Dems in a dither, is Podesta running from his firm. What he know about Crooked Dems is earth shattering. He and his brother could Drain The Swamp, which
would be yet another campaign promise fulfilled. Fake News weak!”

The biggest story yesterday, the one that has the Dems in a dither, is Podesta running from his firm. What he know about Crooked Dems is….

— Donald J. Trump (@realDonaldTrump) October 31, 2017

….earth shattering. He and his brother could Drain The Swamp, which would be yet another campaign promise fulfilled. Fake News weak!

— Donald J. Trump (@realDonaldTrump) October 31, 2017

Of course, as we noted yesterday, the founder of the Podesta Group, Tony Podesta, stepped down from his own lobbying shop after coming under investigation by Special Prosecutor Robert Mueller.

Meanwhile, even though the Podesta / Manafort news might seem unrelated, as we explained in Aug 2016, Paul Manafort – now under indictment on 12 charges – and his deputy
Rick Gates previously worked with the Podesta Group where they lobbied various U.S. senators and congressmen on behalf of various Ukranian officials.

…emails obtained by the Associated Press showed that Gates personally directed two Washington lobbying firms, Mercury LLC and the Podesta Group, between 2012 and 2014 to set up meetings between a top Ukrainian official and senators and congressmen on influential committees involving Ukrainian interests. Gates noted in the emails that the official, Ukraine’s foreign minister, did not want to use his own embassy in the United States to help coordinate the visits.

 

…

 

And this is where the plot thickens, because while the bulk of the press has so far spun the entire Ukraine lobbying scandal, which led to Manafort’s resignation, as the latest “proof” that pro-Moscow powers were influencing not only Manafort but the Trump campaign in general (who some democrats have even painted of being a Putin agent), the reality is that a firm closely tied with the Democratic party, the Podesta Group, is just as implicated.

 

As AP further adds, the European Center for a Modern Ukraine, a Brussels-linked nonprofit entity which allegely ran the lobbying project, paid Mercury and the Podesta Group a combined $2.2 million over roughly two years. In papers filed in the U.S. Senate, Mercury and the Podesta Group listed the European nonprofit as an independent, nonpolitical client. The firms said the center stated in writing that it was not aligned with any foreign political entity.

Perhaps Podesta knows what is likely to happen next. Podesta announced his decision during a firm-wide meeting Monday morning and is alerting clients of his impending departure.

“[Tony] was very magnanimous and said, “This is an amazing group of people,” a source said of Podesta’s remarks.

 

Podesta also told staff he “doesn’t intend to go quietly, or learn how to play golf.” He said he “needs to fight this as an individual, but doesn’t want the firm to fight it.”

 

Fritts also addressed the gathering, telling staff that she is “thrilled at this opportunity” and that, “This is not about me, this is about y’all.”

 

Several other senior staff spoke about their excitement about the future of the firm. The meeting ended with a standing ovation for Podesta.

It emerged last week that Podesta is the subject of a criminal investigation led by Mueller’s team for potentially violating a federal disclosure law. That law, known as the Foreign Agents Registration Act, pertains to working on behalf of foreign governments. An NBC report found that the Podesta Group was one of several firms working on Paul Manafort’s public relations campaign for European Centre for a Modern Ukraine, which the Podesta Group claims it thought was a nonpartisan think tank, something which this site reported first last August.

It goes without saying, that Podesta’s brother, John, is arguably one of the top figures in Democratic politics, serving most recently as chief of staff in the Bill Clinton White House and also as the chairman of Hillary Clinton’s 2016 presidential campaign.

What happens next to Tony (and perhaps his brother John) is to be determined, but one thing is clear: both sides of the swamp should probably control themselves in any premature celebrations as this appears to be far from over….

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Mylan’s second-highest-ranking executive, Rajiv Mailk, is the target of a civil investigation by dozens of states conducting in a widespread, multiyear probe into alleged price collusion by makers of generic drugs.  

As Bloomberg reports, state attorneys general said they’re seeking to sue Rajiv Malik, Mylan’s president and executive director, as part of an expanded complaint against pharmaceutical companies from 45 states and the District of Columbia, according to a statement by Connecticut Attorney General George Jepsen.

Malik would be the first senior executive from a major drugmaker sued in the case.

 

“These conspiracies were part of a much broader, overarching industry code of conduct that enabled the defendant manufacturers to divvy up the market for specific generic drugs in accordance with an established, agreed-upon understanding for assigning each competitor their share of the market,” Jepsen said in the statement.

 

Connecticut and other states are asking a federal judge to allow them to add to their existing complaint against six drugmakers.

Mylan share price immediately feel over 7% on the news…

Led by Jepsen, the civil investigation is naming executives for the first time, as well as expanding the number of drugmakers in the probe to 18 from 6, and the number of drugs to 15 from two, according to Jepsen. Previously, it had focused on an antibiotic and an oral diabetes medication, which it said executives had fixed prices on while meeting at trade shows, customer events and dinners.

The drugmakers the states are seeking to add to the lawsuit include Apotex Inc., Dr. Reddy’s Laboratories Ltd., Lannett Co., Glenmark Pharmaceuticals Ltd., Endo International Plc’s Par Pharmaceutical unit, Novartis AG’s Sandoz unit, Sun Pharmaceutical Industries Ltd. and others. Mylan and Teva Pharmaceutical Industries Ltd. were among the drugmakers named in the earlier version of the suit.

“‘We allege in this complaint that the defendant companies’ collusion was so pervasive that it essentially eliminated competition from the market for these 15 drugs in its entirety,” Jepsen said. The result, he said, was higher costs for patients and states.

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