Month: December 2019

With a week to go before the long-awaited DOJ Inspector General’s report on the FBI’s conduct surrounding the 2016 election, former agency lawyer Lisa Page would like everyone to know that she’s the real victim.

Speaking with the Daily Beast‘s Molly Jong-Fast, who challenged her on exactly nothing (such as whether she altered Mike Flynn’s 302 form, or what the ‘insurance policy‘ was, or if she coordinated with the Washington Post on a “media leak strategy”), Page insists that her hatred of Trump never influenced her work investigating him, and that while she prefers to live in obscurity – she was compelled to tell her side of the story after President Trump mocked her with a fake orgasm routine at a rally last month – and not because of IG Michael Horowitz’s FISA report due on December 9th.

Lisa Page is a “survivor” now.

Pay no attention to the IG report that said her corruption caused irreparable harm that “goes to the heart of the FBI’s reputation for neutral fact finding and political independence.” https://t.co/32cF4Fg2XX

— Jordan Schachtel (@JordanSchachtel) December 2, 2019

Horowitz has circulated the report to key figures for legal review, and is rumored to clear to clear Page and other FBI officials of letting their raging hatred of Trump (and love of Clinton) color their work – hence the ‘Teen Vogue’ – tier puff piece. We’re sure she’ll go into greater detail when she writes a book on the whole ‘matter.’

Highlights

• Trump’s Oct. 11 impression of her sleeping with Strzok pushed her over the edge. “Honestly, his demeaning fake orgasm was really the straw that broke the camel’s back.“

• Her extramarital affair with FBI agent Peter Strzok while they were both investigating Trump and Clinton was “the most wrong thing I’ve ever done in my life.”

“And that’s when I become the source of the president’s personal mockery and insults. Because before this moment in time, there’s not a person outside of my small legal community who knows who I am or what I do. I’m a normal public servant, just a G-15, standard-level lawyer, like every other lawyer at the Justice Department.”

• Page is”slightly crumbly around the edges the way the president’s other victims are,” and is experiencing something beyond PTSD.

Does it feel like a trauma? “It is. I wouldn’t even call it PTSD because it’s not over. It’s ongoing. It’s not a historical event that is being relived. It just keeps happening.”

…

“It’s almost impossible to describe” what it’s like, she told me. “It’s like being punched in the gut. My heart drops to my stomach when I realize he has tweeted about me again. The president of the United States is calling me names to the entire world. He’s demeaning me and my career. It’s sickening.” 

• Page is always on edge – avoiding people in MAGA hats as she lives in daily anguish.

“I’m someone who’s always in my head anyway—so now otherwise normal interactions take on a different meaning. Like, when somebody makes eye contact with me on the Metro, I kind of wince, wondering if it’s because they recognize me, or are they just scanning the train like people do? It’s immediately a question of friend or foe? Or if I’m walking down the street or shopping and there’s somebody wearing Trump gear or a MAGA hat, I’ll walk the other way or try to put some distance between us because I’m not looking for conflict. Really, what I wanted most in this world is my life back.”

• In response to Trump suggesting she committed treason, Page insists “[T]here’s no fathomable way that I have committed any crime at all, let alone treason…“

• Page insists that Trump wasn’t the target of the 2016 investigation into his campaign, and that the FBI learned of “the possibility that there’s someone on the Trump campaign coordinating with the Russian government in the release of emails, which will damage the Clinton campaign.”

“We were very deliberate and conservative about who we first opened on because we recognized how sensitive a situation it was,” Page says. “So the prospect that we were spying on the campaign or even investigating candidate Trump himself is just false. That’s not what we were doing.” 

• Her text messages with Strzok were ‘cherry picked’ and ‘out of context.’

Page felt abandoned by the FBI and Justice because of the release of the messages and because the bureau issued no statement defending her and Strzok. “So things get worse,” she continues. “And of course, you know, those texts were selected for their political impact. They lack a lot of context. Many of them aren’t even about him or me. We’re not given an opportunity to provide any context. In a lot of those texts we were talking about other people like our family members or articles we had sent each other.”

At the end of the day, Page wants us to know that she’s the real victim here. Perhaps she can provide those missing 19,000 text messages for some even better context?

“I’m completely nonpartisan you Walmart-smelling Trump supporters” – Lisa Page

— Jack Posobiec 🇺🇸 (@JackPosobiec) December 2, 2019

Authored by Paul Joseph Watson via Summit News,

A video out of China shows a man being called in and interrogated by authorities for the crime of criticizing the police on social media.

The clip shows the man handcuffed to a metal chair as he is asked personal questions.

“Why did you complain about police on QQ and WeChat?” police ask the man.

He is then grilled about his screen name and activity in a group chat on the WeChat platform.

China spies on social media conversations. Then they bring dissidents in for a real-life chat. I’d say we’re AT LEAST five years away from that over here, so no worries. pic.twitter.com/HjXzqsgr8S

— Ezra Levant 🍁 (@ezralevant) December 1, 2019

“Why did you talk about the traffic police online…what’s wrong with police confiscating motorcycles?” he is then asked.

The man attempts to come across as apologetic but is then asked again, “Why did you badmouth the police? Do you hate the police?”

The man explains that he was drunk when he made the comments and is then asked to apologize to the police.

“I’m so sorry, I’m wrong, I know, I know that now, please forgive me, I won’t do it again ever,” he states.

Under its social credit score system, China punishes people who criticize the government, as well as numerous other behaviors, including;

• Bad driving.

• Smoking on trains.

• Buying too many video games.

• Buying too much junk food.

• Buying too much alcohol.

• Calling a friend who has a low credit score .

• Having a friend online who has a low credit score.

• Posting “fake news” online.

• Visiting unauthorized websites.

• Walking your dog without a leash.

• Letting your dog bark too much.

Back in August, the Communist state bragged about how it had prevented 2.5 million “discredited entities” from purchasing plane tickets and 90,000 people from buying high speed train tickets in the month of July alone.

Citizens will also be forced to pass a facial recognition test that runs them through the social credit score database before being allowed to use the Internet.

*  *  *

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US equity markets surged overnight on China and European PMIs but have accelerated losses this morning after US Manufacturing ISM (and construction spending) disappoints.

Dow futures are down over 300 points from overnight highs…

The dollar is also being dumped…

Source: Bloomberg

For now, bonds refuse to move much after their ugly selloff overnight, but the short-end is outperforming…

Source: Bloomberg

Seems like we are going to need a “China deal is close” tweet to save the market.

After China’s “surprise” PMI beat…

…and Europe’s ‘bottoming’…

…the world seems convinced that everything is awesome again (despite China Industrial Profits collapsing at a record pace) and expectations were for US Manufacturing surveys to extend their rebound in November.

• Markit’s final Manufacturing PMI for November beat expectations, printing 52.6 (from 52.2 flash and 51.3 in October)

• ISM’s Manufacturing survey for November missed expectations, printing 48.1 (from 49.2 exp and 48.3 prior)

This is the highest PMI since Feb 2019.

Source: Bloomberg

According to Markit, manufacturing output and new order growth rates improve to 10-month highs with the fastest rise in employment since March, but business confidence remains subdued.

And, according to ISM, new orders and employment both contracted further…

Source: Bloomberg

Chris Williamson, Chief Business Economist at IHS Markit said:

“A third consecutive monthly rise in the PMI indicates that US manufacturing continues to pull out of its soft patch. New orders and production are rising at the fastest rates since January, encouraging increasing numbers of firms to take on more workers. Exports are also back on a rising trend, firms are buying more inputs and re-building inventories, adding to the signs of improvement.

“Some caution is needed, as these improved survey numbers merely translate into very subdued growth in comparable official gauges of manufacturing production and factory payrolls. Business sentiment also remains worryingly subdued, with expectations about future output growth well down on earlier in the year and running at one of the lowest levels seen since comparable data were first available in 2012.

“Firms remain very concerned about the disruptive effects of tariffs and trade wars in particular, both in terms of rising prices and weakened demand, though the survey also saw further worries among manufacturers that the economy could slow in the upcoming presidential election year as customers delay spending and investment decisions.”

So one is left wondering, given this global rebound in ‘soft’ survey data, whether the terrifying global depression that was forecast due to Trump’s unilateral trade war was just more “Project Fear”-driven propaganda… or is this the eye of the global trade hurricane?

Submitted by Michael Every of Rabobank

It’s December, and the start of the season of good will to all and peace on earth. Not much of that about, of course.

In the UK, the election has been interrupted by the terrorist attack at London Bridge, which both sides are naturally playing politics with in different ways (The Left is soft on terrorists vs. police underfunding and foreign policy, etc.); the latest opinion polls suggest Labour continues to make up some ground but remains well behind, but London Bridge may perhaps see that impetus stalled. Let’s see if the imminent arrival of US President Trump tips the scales, as President Obama did on Brexit, or if he can hold off on commenting as protocol dictates.

In Germany, Angela Merkel’s coalition partners the SPD have just elected new leadership, and they have veered to the left, hardly a surprise against this global backdrop, but likely accelerating the eventual collapse of the current government and opening up questions about what any new one could look like. Instability, or at least uncertainty, at the heart of the Eurozone is certainly not going to be welcome to investors – yet could it herald an imminent fiscal shift?  

Tomorrow and Wednesday will also see the 2019 NATO summit, again in London, where the world’s largest military alliance will get together and try to decide what it is for and if it still has a purpose. Trump continues to put pressure on all members to spend the pledged 2% of GDP to keep it a fighting force vs. Russia, and perhaps China(?): relatively few do or show they even want to (e.g., Germany). He’s is also going to bring up Huawei and 5G to discuss. President Macron of France has called NATO “Brain dead” due to the absence of US leadership–I thought it was leading?–and has suggested it should shift from seeing Russia or China as potential enemies and refocus on terrorism: does France keep its nuclear deterrent to deal with events like London Bridge? President Erdogan of Turkey, the second-largest contributor militarily after the US, has no problems making friends with Russia and China–he is buying Russian weapons now–but has publicly called Macron “Brain dead” too. And Jeremy Corbyn, who would of course be the UK PM in under two weeks if the polls are wrong or misleading, has stated that NATO should be used to fight inequality: bomb the rich? Or spend as much on defence as he is pledging on everything else to rebuild British (defence) industry and provide quality jobs? It should make for a remarkable meeting one way or another: at the very least, it will be a world-class exercise in papering-over-cracks.

Does this actually matter for markets? Well, it depends. If the markets in question are only looking at things like the bounce in Chinese PMI data (the headline PMI rose to 50.2 from 49.3 in October, and the private Caixin index edged up to 51.8 from 51.7), or at US Black Friday spending (brick and mortar sales were up 4.2% y/y according to First Data, and on-line shopping pulled in USD7.2bn, up 14% y/y), then perhaps not – all is well with the world! Or the same markets might instead focus on China’s Global Times reporting that Beijing is insisting on the US rolling back tariffs for a trade deal, NOT just the delay of the looming 15 December tariffs, as the price of any ‘phase one’ – in which case all is decidedly not well. Expect USD/CNY and USD/CNH to continue to hover around the Lucky Seven level until this is resolved, of course. (But underlying our CNY bearishness, the data the market isn’t talking about this morning is that China is apparently set to see just 11m births in 2019 in a population of 1.4 billion. That’s down from 15.2m in 2018 and 17.2m in 2017. If true, its demographics are vastly worse than the already-poor projections: it is going to be very old long before it is rich enough to retire, and growth will suffer without automation, innovation, or immigration.)  

Yet from data to the bigger picture: consider it was the likes of NATO that built the post-Cold War (1?) world within which these global markets now operate. As Polanyi pointed out back in The Great Transformation, though not in so many words, ‘free markets aren’t free’ – they are carved out of the political jungle with force, and require constant tending to stop them from being over-run. In that respect, we can posit that the problems in NATO are symptomatic of a broader collapse of the global institutional architecture in the face of populism.

But does that matter in a world which, as Branko Milanovic argues in his new book, and as markets continue to price for, capitalism is actually triumphant and there is no genuine alternative being offered by NATO’s enemies? Perhaps not, which of course fully supports our house view that on rates, “lower for longer” is now “lower forever”. China’s (and Russia’s) state-capitalist models certainly imply lower forever as the cost of capital is suppressed for national/geostrategic goals; in the West, markets are as utterly reliant on central-bank largesse, which hasn’t had any geostrategic goals up to now, but which may be about to get some.

Yet this does not mean there won’t be major financial market volatility if the architecture crumbles. You cannot think of a world dominated by multi-polar state-capitalism vs. a retreating more-free-market US-dominated system without seeing: 1) huge shifts in the USD and all resultant markets – either up, as its rivals falter, or down as its rivals combine to topple it (with what exactly?!); and 2) uncomfortable parallels with the pre-WW1 period. Like I said, not much peace on earth, sadly.

Another sign of the end of institutional architecture. The Apostrophe Society has closed down after admitting defeat in its quest to get Brits to understand when and how this simple but crucial grammar point is used (where tired eyes mean even The Global Daily occasionally falls short). So thats it for its members hopes for its vs. its; and a full societal circle from cave painting to Renaissance men-of-letters back to emojis beckons with a thumbs up. Perhaps current fuzzy market pricing fits perfectly in age where nobody can communicate properly anymore.

And another sign of crumbling related to architecture: Aussie building approvals slumped 8.1% in October, more than reversing the surprise 7.2% surge seen in September and vs. a consensus -1.0% figure. That puts them down -23.6% y/y. Likewise, Q3 Aussie company operating profits were -0.8% q/q vs. an expected 1.0% gain, and inventories -0.4% not the -0.2% consensus. Somehow Aussie yields are still up on the day despite those clear recession warnings: perhaps the apostrophe was in the wrong place.

Authored by Richard Breslow via Bloomberg,

With a few exceptions, that no one seems particularly bothered by, the economic numbers have come in to the upside today. Pride of place goes to China’s Caixin PMI. The mixed sub-components, notwithstanding. You know where traders’ heads are at when the focus is on the manufacturing number being the highest in almost three years, rather than the warts within the report. Nary a soul is raising the usual questions about the numbers’ veracity. When the world wants to be happy, who’s going to argue? Certainly not global equity markets.

Fixed-income markets had the self-respect to sell off. Hard actually…

Source: Bloomberg

Talk of recessions and further rate cuts will have to be suspended until further notice. Or we get the first share sell-off in the new year. It seems that the equity rally is so convincing that portfolio managers are questioning whether they need their bonds as must-have hedges for their stock holdings. If such thoughts continue, we could be in for a very interesting month. It’s tempting to get carried away. Which hasn’t been a great strategy this year.

Gold looks like it’s collapsing until you realize that, so far at least, it’s having an inside day from this past Friday.

Source: Bloomberg

And the Dollar Index refuses to get excited about anything.

Even though we have been assured that biggies like sterling and the euro are “in play.” Emerging market currencies never got the feel-good memo and can get no traction.

This is a market in search of a narrative.

And the only one it can comfortably settle on is the belief, rightly or wrongly, that equities remain the best game in town. Some would argue the only one. And why not? Everyone seems to be rooting them on.

You won’t be hearing any central bankers talking about asset bubbles. Especially in December. But you will be assured that favorable financial conditions are good for one and all. “We have room to do more” isn’t a favorite punchline because of anxiety over the prospects for the upcoming non-farm payrolls numbers. If anything the whisper number is creeping up.

I was reading a research report this morning, which laid out the issues they thought would be front and center in the U.S. presidential election. All relevant. Especially during debates. But the lack of including the level of the S&P 500 seemed like an overly squeamish, and mistaken, omission.

Over the holiday, I was fascinated by three separate conversations. They were certainly instructive.

1. One was on a farm where everyone avowed to being a staunch Republican.

2. Another with liberal and well-heeled suburbanites. Purportedly with mixed affiliations.

3. And, lastly, a table of New Yorkers who claim, one and all, to be committed Democrats.

In each case, the strength of the stock market was the great unifier. And a popular subject of discussion. No one was complaining. Or simply trying to be polite. Something to keep in mind. It made me wonder what they were actually giving thanks for. And to whom.

If you want to properly handicap election polls, you need to keep in focus what is actually on voters’ minds. Perhaps that’s why there have been so many surprises. And the U.S. isn’t the only country with choices to make.