Month: July 2018

096: I was just offered a $500 million investment deal… and I worry it’s a sign the top is in

In today’s podcast, I share the details of a deal a well-known private bank just offered me (and its roster of other high-net worth clients).

It’s a bad deal in every way… the asset in question is valued insanely high, there’s likely a ton of debt attached to this deal and I doubt anyone who invests will make their money back.

Still, I’m confident this deal will get done. It’s classic top-of-the-cycle economics.

If you look back throughout history, during every boom, there’s one asset that gets insanely bubble.

In the 90’s, it was tech stocks.

In the 2000’s, it was real estate.

And I tell you what that asset class is today… and why, just like every time in the past, this will end in recession.

I also looked back to see how long it takes for the economy to correct after the Fed starts raising interest rates.

You should listen in for the reveal… But I will tell you, the Fed started raising interest rates in December 2015. And, if history is any indicator, a recession could happen very, very soon.

Luckily, as an individual investor, you don’t have to participate in this madness. You’re allowed to wait it out on the sidelines.

Because better deals will be on the way. And you’ll have the opportunity to buy incredibly high-quality assets for pennies on the dollar.

That’s what I’m doing. And I share a few ideas toward the end of today’s discussion.

You can listen in here…

Source

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Rand Paul: ‘We Do Need a Pro-Life Justice, and I’ve Always Been in Favor of That’

Sen. Rand Paul (R–Ky.) wants retiring Supreme Court Justice Anthony Kennedy’s replacement to oppose abortion.

CNSNews.com asked Paul on Friday whether he wants President Donald Trump to nominate a judge who thinks “an unborn child with a beating heart is a ‘person’ entitled to equal protection of the law under the 14th Amendment.” Fetuses generally develop beating hearts roughly three weeks after fertilization.

“I think we do need a pro-life justice, and I’ve always been in favor of that,” Paul responded.

Though Kennedy was nominated to the Supreme Court by President Ronald Reagan, a conservative, he was considered a swing vote. In the landmark case Planned Parenthood v. Casey (1992), he joined the plurality opinion upholding Roe v. Wade (1973), the case that legalized abortion at the federal level.

With Kennedy gone, many people are predicting that Roe v. Wade could be overturned. Trump said while running for president that he would nominate “pro-life” justices to the Court, but it’s not exactly clear how pro-life they have to be.

In an interview with Fox News host Maria Bartiromo on Sunday Morning Futures, Trump said his nominee to replace Kennedy will be “conservative,” but he said he “probably” won’t ask his pick whether he or she supports overturning Roe v. Wade. Overturning that 1973 ruling would not make abortion illegal, but it would allow individual states to ban the procedure.

It’s not entirely clear how current conservatives on the Court would vote on the issue of overturning Roe v. Wade. Chief Justice John Roberts, for example, wrote a brief as a Department of Justice employee in 1990 that supported overturning the ruling. But during his 2006 confirmation hearing before the Senate, he said the ruling was “settled as a precedent of the Court.”

Similarly, Justice Neil Gorsuch, who Trump nominated to the Court last year, is widely seen as a pro-life conservative. But during his Senate confirmation hearing, he said he accepts Roe v. Wade as “the law of the land.”

So whether or not Trump appoints another pro-life justice to the Court, Roe v. Wade might remain in place. Even Leonard Leo of the conservative Federalist Society, who is advising Trump on his Court pick, has noted the importance of precedent. “I don’t think at the end of the day it’s about Roe v. Wade,” Leo said on Fox News Sunday. “It’s about having judges on the Court who are going to interpret the Constitution the way it’s written, and part of interpreting the Constitution is taking into account major precedents.”

Trump has said he will announce his Supreme Court nominee on July 9.

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Ron Paul: “Who’s Afraid Of The Trump-Putin Summit?”

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

President Trump’s National Security Advisor John Bolton was in Moscow last week organizing what promises to be an historic summit meeting between his boss and Russian President Vladimir Putin. Bolton, who has for years demanded that the US inflict “pain” on Russia and on Putin specifically, was tasked by Trump to change his tune. He was forced to shed some of his neoconservative skin and get involved in peacemaking. Trump surely deserves some credit for that!

As could be expected given the current political climate in the US, the neoconservatives have joined up with the anti-Trump forces on the Left – and US client states overseas – to vigorously oppose any movement toward peace with Russia. The mainstream media is, as also to be expected, amplifying every objection to any step away from a confrontation with Russia.

Bolton had hardly left Moscow when the media began its attacks. US allies are “nervous” over the planned summit, reported Reuters. They did not quote any US ally claiming to be nervous, but they did speculate that both the UK and Ukraine would not be happy were the US and Russia to improve relations. But why is that? The current Ukrainian government is only in power because the Obama Administration launched a coup against its democratically-elected president to put US puppets in charge. They’re right to be nervous. And the British government is also right to be worried. They swore that Russia was behind the “poisoning” of the Skripals without providing any evidence to back up their claims. Hundreds of Russian diplomats were expelled from Western countries on their word alone. And over the past couple of months, each of their claims has fallen short.

At the extreme of the reaction to Bolton’s Russia trip was the US-funded think tank, the Atlantic Council, which is stuck in a 1950s time warp. Its resident Russia “expert,” Anders Åslund, Tweeted that long-time Russia hawk Bolton had been “captured by the Kremlin” and must now be considered a Russian agent for having helped set up a meeting between Trump and Putin.

Do they really prefer nuclear war?

The “experts” are usually wrong when it comes to peacemaking.

They rely on having “official enemies” for their very livelihood. In 1985, national security “expert” Zbigniew Brzezinski attacked the idea of a summit between President Reagan and Soviet leader Mikhail Gorbachev. It was “demeaning” and “tactically unwise,” he said as reported at the time by the Washington Times. Such a meeting would only “elevate” Gorbachev and make him “first among equals,” he said. Thankfully, Reagan did engage Gorbachev in several summits and the rest is history. Brzezinski was wrong and peacemakers were right.

President Trump should understand that any move toward better relations with Russia has been already pre-approved by the American people. His position on Russia was well known. He campaigned very clearly on the idea that the US should end the hostility toward Russia that characterized the Obama Administration and find a way to work together. Voters knew his position and they chose him over Hillary Clinton, who was also very clear on Russia: more confrontation and more aggression.

President Trump would be wise to ignore the neocon talking heads and think tank “experts” paid by defense contractors. He should ignore the “never Trumpers” who have yet to make a coherent policy argument opposing the president. The extent of their opposition to Trump seems to be “he’s mean and rude.”

Let us hope that a Trump/Putin meeting begins a move toward real reconciliation and away from the threat of nuclear war.

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Survey of Juul Customers Shows Many Vapers Stop Smoking

A new study of people who use Juul e-cigarettes provides further evidence that such products can reduce tobacco-related disease by offering smokers a much less hazarous source of nicotine. In a Juul-sponsored survey of nearly 19,000 vapers who had purchased the company’s products online, the Centre for Substance Use Research, a Scottish consulting firm, found that smokers who had switched to vaping far outnumbered vapers who had switched to smoking.

A large majority of the Juul customers (87 percent) were current or former smokers when they first used one of the company’s vaping devices. Of those who were smoking when they first tried Juul, 64 percent were no longer smoking, and more than three-quarters of that group said they had quit by switching to Juul. The “new former smokers” who had quit by switching to Juul represented 31 percent of the total sample.

Most of the Juul users who were still smoking (56 percent) had reduced their daily cigarette consumption by 50 percent or more. The respondents who had not quit but had reduced their smoking by at least half represented about 7 percent of the total sample.

By comparison, about 8 percent of the respondents who were former smokers when they started using Juul products had returned to smoking. They represented 2 percent of the total sample. About 2 percent of the respondents who had never smoked before trying Juul were smoking at the time of the survey, although the vast majority of them (more than nine out of 10) were not smoking every day. They represented 0.3 percent of the total sample.

These percentages are important because public health officials worry that e-cigarettes might lure people into smoking or cause former smokers to relapse. This survey suggests that sort of behavior is not very common. The number of smokers who quit after using Juul (7,520) was 137 times the number of never-smokers who started (55) and 21 times the number of former smokers who relapsed (359). In total, the people who went from smoking to vaping outnumbered the people who went from vaping to smoking by 18 to 1.

These results should be interpreted with caution because the survey was limited to online Juul customers and only 35 percent of the 89,000 or so people who were invited to participate agreed to do so. Eliminating respondents who did not meet the study’s criteria and those who did not complete the survey left just 21 percent of the people who received invitations. The low response rate is cause for concern because people who had successfully used Juul to quit smoking might have been especially inclined to participate, meaning they would be overrepresented in the sample.

Even allowing for response bias, the survey shows it is not at all unusual for people to stop smoking after they begin vaping. It also suggests that vaping is more likely to be a gateway to cessation than a gateway to smoking, which is consistent with the continued downward trend in cigarette consumption. Firmer evidence for that hypothesis will require surveys with broader and more representative samples.

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Could Puerto Rico Be the Solution to Our Latest Immigration Fight?: New at Reason

Thousands of Spanish-speakers have fled from their homelands in Guatemala, Honduras, and elsewhere in Central America, only to be greeted at the border with harsh family separation policies and other barriers designed to discourage foreign newcomers.

Meanwhile, Puerto Rico’s population has suffered a sharp decline in recent years. After peaking at 3.8 million in 2004, the island’s population fell by to an estimated 3.3 million people by mid-2017 due to low birth rates and out-migration. In the aftermath of Hurricane Maria, the rate of departures spiked, with many of those leaving not expected to return. Projections recently released by Puerto Rico’s federal oversight board call for a 6.4 percent population decline during the current fiscal year, with further decreases through 2023.

Could we solve one problem with another, asks Marc Joffe.

View this article.

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Martin Shkreli Starts A Blog, Teaches Discounting To Convicts, Offers Biotech Research From Prison

“America’s most hated man” Martin Shkreli may be serving a 7 year prison sentence (for various offenses among which having the temerity to raise drug prices, something which Pfizer just did today) but that does not mean he has any interest in disappearing from the public spotlight.

To confirm that, on July 1, Shrekli launched a new blog at the martinshkreli.com address (the URL was registered on May 5, 2015 with godaddy) in which he will share “My thoughts on biopharma and other topics like my friendship with my best friend mo she is seriously the best and i love her dog ringo i do not compare to him at all.”

This is how his first blog post begins:

Welcome to my first blog. I’ll be discussing biopharmaceuticals and other topics. I’ll try to mark sections clearly for those who are here for industry commentary as compared to my personal life.

He then lays out his thoughts on several recent developments in the biotech space, before highlighting that he is now teaching discount rates to convicted felons:

In teaching discount rates to some of the guys here, we find dogma like ‘sovreigns always have less default risk than corporates’, when obviously most S&P 100 companies have lower default risk than the Eastern European countries I come from. Or my notion that a conglomerate should always have (all else being equal) less default risk than an industry-focused company. Certainly GE has more default risk than Amgen. You can slap together a lot of low-margin businesses with leverage and you’re far less safe than a well-run industry leader. But, ceritus paribus, the Novartis move is risk-neutral since healthcare conglomerates aren’t really conglomerates. Having an eye healthcare business isn’t particularly diversifying other than somewhat eliminating concentration risk which naturally comes with scale. GE selling Healthcare markedly increases risk, in my eyes. Any precision that comes from better operational focus is overwhelmed by the idea that one of their highest-return businesses is being spun off. Companies need to weather bad times. There’s a reason Berkshire Hathaway, the consummate rollup/conglomerate (dirtiest words possible) bailed everyone out in 2008.

He proceeds to list several science papers he has been reading, and then hits us with the punchline: he is now offering biotech research services from prison:

If there is a biopharma stock you want me to review, email martin@thotpatrol.com (gets snail mailed to me by a friend) or send me a snail mail at:

Martin Shkreli
Register #87850-053
FCI Fort Dix
Federal Correctional Institution
PO Box 2000
Joint Base MDL, NJ 08640

Shkreli concludes with the following update, which includes everything from his person thoughts about reading on himself, to the fate of the Wu-Tang album and his financial assets, even his thoughts on the current political situation, saying that “politics seem to be tearing this country apart. I think both sides have to start capitulating or perhaps California/NYC should become a special entity with their own federal government.” He won’t, however, discuss prison life:

I have around 38 months to go assuming no success on an appeal. I spend most of my team reading. A newspaper misreported that I’m ‘buff’. This is not the case. Oh, the Wu-Tang album is still in my possession. As are all of my assets. I couldn’t have a lower opinion of newswriters now that I’ve had folks report on me. It’s astonishing, really. I understand that not everyone can be capable or excel at their chosen career, and the reporting of occurrences and chronicling of history is not a vitally important task to those charged with it. So, don’t pay too much attention (an admonishment to the reader and a reminder to myself). Anyway, the fate of the Wu-Tang album remains to be seen, but the choice is distinctly mine. I’m a bit frustrated by the Clan’s insistence on making a further album. I was told this would be the final work–I would have never purchased ‘Shaolin’ if that representation was false. That sounds like a violation of a certain section of Title 18 I’m familiar with, come to think of it. Anyway, I’ll decide at some point if I want to sell the album. If a higher-return troll opportunity occurs, I just might.

What else? Politics seem to be tearing this country apart. I think both sides have to start capitulating or perhaps California/NYC should become a special entity with their own federal government. The rest of the backwards nation will have to make do. It’s more practical than what we have going on. Same federal taxes but less whining. Just thinking way outside the box 🙂

You probably won’t find me talking too much about jail as I think it’s in bad taste. This will undoubtedly be read my inmates and staff and it’s easier (and safer) for me to just avoid certain topics. The only thing I can probably say is I miss my family, friends and cat, roughly in that order.

Finally, he urges anyone out there to reach out:

Well, this will be a living project. If you have any advice, like, “less this and more that”, leave some comments or email martin@thotpatrol.com (my people will slowly deliver this email to me in the form of printed snail mail — takes about 2 weeks from your email until I get it in the actual paper mail). I write this message on our “TRULINCS” prison email system to a friend. That friend posts it on the blog. Hope you enjoy this!

 

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The Most Important Geopolitical Meeting This Year

Authored by Venand Meliksetian via OilPrice.com,

Relations between the United States and Russia have deteriorated dramatically over the years due to Moscow’s intervention in neighbouring Ukraine and its annexation of Crimea. This change in foreign policy has some analysts talking about a ‘new cold war’. Moscow’s participation and support for President Assad of Syria put Russian interest and soldiers against America’s. One of the reasons the intervention took place during the height of the Ukraine crisis was the Kremlin’s intention to reduce the effectiveness of the isolationist policy of the West vis-à-vis Russia by making itself indispensable for solving the crisis.

The alleged meddling of Moscow in the American presidential elections of 2016 created a political minefield for President Donald Trump when trying to meet with President Vladimir Putin of Russia. Although they have spoken several times on the fringes of international events such as the G20 gathering in 2017, an official bilateral visit has not yet been organised. Recent developments, however, have provided an opening for both leaders. Besides the civil war in Syria and the ongoing conflict in Ukraine, coordination in the energy domain has proven to be another reason for communication.

The recent unilateral withdrawal of the United States as a signatory to the JCPOA, or the Iran Nuclear Deal, requires the cooperation of major energy producers to absorb the shocks of Trump’s decision. In order to isolate Iran and deprive it of financial resources, it is imperative for the U.S. administration to reduce the export of Iranian oil. However, as Iran is a major exporter of oil with 2,6 million barrels/day, withholding the world’s markets this amount in the current situation, will seriously increase prices. With midterm elections on the horizon for 2018, President Trump fears higher prices for the summer driving season will negatively affect support for Republican candidates.

Enter the fray Russia and OPEC.

Although the U.S. president has lambasted OPEC for “artificially increasing the price of oil”, cooperation with other major producers is the only viable alternative for the U.S. administration to keep prices in check while isolating Iran. The U.S. apparently has quietly asked Saudi Arabia and some other producers of OPEC to increase production with 1 million barrels/day.

It is in Riyadh’s interest that the prices remain as high as possible as it would provide highly needed revenues and it would ensure the maximum result on the coming IPO of 5%of the national Saudi Aramco oil company. Saudi Arabia, however, seems to have listened to the heeded calls and advice from partners and allies. During the meeting this June in Vienna, OPEC in cooperation of non-members such as Russia and Mexico agreed to increase the daily production with one million barrels/day.

Just days after the agreement to boost oil production, U.S. energy secretary Rick Perry is expected to meet with his Russian counterpart energy minister Alexander Novak at the World Gas Conference. It is expected that the U.S. will discuss cooperation in light of sanctions kicking in this summer for Iranian oil exports. Moscow welcomes cooperation with Washington as it proofs the indispensable position of Russia in world affairs.

Furthermore, a cooperation of some sorts between the two countries is a good precursor for the upcoming meeting between the Russian and American presidents on 16th of July in Helsinki. National security advisor John Bolton has met with Russian foreign minister Sergei Lavrov on 26 June in Moscow in order to discuss a meeting between Trump and Putin and its possible content. Coordination in the energy domain could pave the way for the upcoming visit.

Unlike other partners, the modest bilateral trade and the corresponding deficit between the U.S. with Russia, respectively $24 and $10 billion in 2017, will most likely not lead to a trade war. Therefore, Moscow could make use of the opportunity to improve relations with Washington in areas of agreement while lacking serious imperatives such as trade.

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Michael Moore Thinks Trump Will Win the 2020 Presidential Election

Michael Moore thinks he knows who will win the 2020 presidential election. Appearing last Friday on HBO’s Real Time with Bill Maher, the filmmaker declared that Donald Trump would be reelected. Moore begged the audience to take his prediction seriously, saying that otherwise America could turn into an episode of The Handmaid’s Tale:

It’s obviously a little early for any certainty about the next presidential race, but Moore at least has a track record he can point to. In October 2016, he declared on Meet the Press that Trump could defeat Hillary Clinton, calling the Republican a “human Molotov cocktail” that Rust Belt voters were preparing to throw at a political system they once supported.

||| HBOLater in the month, Moore predicted Trump’s win during a promotional event.

“I know a lot of people in Michigan that are planning to vote for Trump, and they don’t necessarily agree with him,” he explained to the audience. “Trump’s election is going to be the biggest ‘fuck you’ ever recorded in human history—and it will feel good.”

Trump won Moore’s home state on election night, carrying 12 counties that had previously voted for Barack Obama. A breakdown of the election revealed that Trump’s decision to take his message to working-class Michiganders contributed to his win. At the same time, the Clinton campaign failed to appreciate how many more resources were needed in the state, campaigning somewhat harder but not to the extent urged by party activists on the ground.

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Nassim Taleb Slams “These Virtue-Signaling Open-Borders Imbeciles” In 3 Short Tweets

As liberals across America continue to attempt to one-up one another with the volume of virtue they can signal, specifically on the question of ‘open borders’ – especially since ‘jenny from the bronx’ victory over the weekend, none other than Nassim Nicholas Taleb unleashed a trite 3-tweet summary of how farcical this argument is…

What intellectuals don’t get about MIGRATION is the ethical notion of SYMMETRY:

1) OPEN BORDERS work if and only if the number of pple who want to go from EU/US to Africa/LatinAmer equals Africans/Latin Amer who want to move to EU/US

2) Controlled immigration is based on the symmetry that someone brings in at least as much as he/she gets out. And the ethics of the immigrant is to defend the system as payback, not mess it up.

Uncontrolled immigration has all the attributes of invasions.

3) As a Christian Lebanese, saw the nightmare of uncontrolled immigration of Palestinians which caused the the civil war & as a part-time resident of N. Lebanon, I am seeing the effect of Syrian migration on the place.

So I despise these virtue-signaling open-borders imbeciles.

Silver Rule in #SkinInTheGame

* * *

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Seattle’s First-in-the-Nation Straw Ban Goes Into Effect. More Will Follow.

Seattle continues to play its role as an incubator of bad policy ideas by imposing the nation’s first ban on plastic straws. First articulated in September of last year, the new ban officially went into effect on Sunday.

The law prohibits all food-service businesses, including restaurants, coffee shops, delis, and pubs, from offering any disposable straw or utensil to patrons unless they specifically request one. Should a customer ask for one, said straw will have to be not just biodegradable but compostable under Seattle’s exacting city-level standards. Violators will be hit with $250 fines.

Seattleites will still probably see plastic straws around town for the next couple months, as plenty of businesses are still scrambling to make the switch to their compostable counterparts.

Caroline Lee of Young Tea, a boba tea shop in downtown Seattle, told Reason last week that she was still in the process of working with her supplier in Taiwan to make a straw that meets the new regulation. Lee says the new straws are six to seven times more expensive and fall apart from exposure to high heats, requiring special packaging when shipped by sea. She is considering having a test batch flown in by air, which will raise costs further.

Lee expressed her hope that the city would give business owners a grace period and even compensate them for the extra costs they are being asked to take on. So far, compensation seems out of the question. But there will, mercifully, be a grace period. Ellen Pepin-Cato of Seattle Public Utilities (SPU)—the agency responsible for enforcing the ban—tells The Seattle Times that the focus for now would be on “continuing outreach and assistance to businesses to help them come into compliance, rather than enforcement.”

As businesses in the Emerald City struggle to comply with the new straw ban, other jurisdictions are passing or seriously considering bans of their own.

Vancouver, Canada, prohibited straws back in May, much to the chagrin of boba tea shop owners, plastics manufacturers, and disability advocates (who take issue with banning a essential utensil for those who have difficulty bringing cup to mouth). Several New York City councilmembers are trying to do the same in their city, introducing legislation in May that would ban straws for everyone who doesn’t need one for medical purposes.

These councilmembers are being spurred on by the Lonely Whale, an environmental group that sees straws as a “gateway plastic” that could spawn more bans of more plastic items. Lonely Whale played a crucial role in Seattle’s ban with its Strawless in Seattle campaign. They’ve since deployed actor Adrian Grenier to make videos and co-sign op-eds demanding that the Big Apple follow Seattle’s lead and ditch single-use straws altogether.

An exhausting number of celebrities and corporations are jumping aboard the craze too. From Tom Brady and Ikea to Calvin Harris and McDonald’s, everyone is telling you to stop sucking and start think about the planet.

They’ll sometimes claim that Americans use 500 million straws a day. Always they’ll argue that ditching straws is an unambiguous good for our oceans filling with plastic. Neither argument is very convincing.

That 500 million straw a day figure—cited by The Washington Post yesterday—has been debunked as the product of a nine-year-old’s research. But even if that stat were accurate, straw bans are unlikely to help the planet much. The U.S. is responsible for a tiny portion of the world’s marine plastic waste (less than 1 percent), as are plastic straws themselves (about .03 percent). The best approach to the problem of oceanic plastic pollution is better waste management systems in the developing world, not bans on plastic products.

It is easy to see a parallel between this movement and the once-popular urge to prohibit or restrict the use of plastic bags. Likewise spurred on by bad stats and feel-good activism, San Francisco became the first major city to ban plastic bags in 2007, with prohibitions later moving on to the usual suspects of Seattle, Los Angeles, Austin, and eventually the entire state of California. But once the easy wins were out of the way and consumers became increasingly irritated at the loss of convenience, a blacklash set in. Ten states have passed preemption ordinances prohibiting municipalities from imposing their own bag bans (among them Minnesota, which overturned a Minneapolis ban). Last week the Texas Supreme Court ruled that Austin’s bag ban was illegal under preexisting state law.

Something similar will likely happen with plastic straws. As the novelty of straw bans wear off and as their costs become more apparent, momentum will slow, and hopefully reverse. That will leave a handful of municipalities clinging to their prohibitions, a few states with straw ban preemption laws, and a lot of consumers and businesses hoping just to be left alone.

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