Category: zerohedge

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

Reportage in The Wall Street Journal on April 4th states that “A fund owned by China’s foreign-exchange regulator has been taking stakes in some of the country’s biggest banks, raising speculation that it may be a new member of the so-called ‘national team’ of investors the Chinese government unleashes to support its stock market.”

Statists and interventionists around the world (read: `those who embrace State Capitalism) think “Big Players,” as the academic literature has dubbed them, will protect us from economic storms. While there is a budding and serious academic literature on Big Players – aka Market Disrupters – the financial press virtually ignores the Disrupters’ potential to bury us. Indeed, instead of stabilizing markets, the Big Players disrupt them. They are the purveyors of instability. For those who wish to grapple with the technical literature, I recommend: Roger Koppl. Big Players and the Economic Theory of Expectations. New York: Palgrave Macmillan, 2002.

Big Players have three defining characteristics. Firstly, they are big — big enough to influence markets. Secondly, they are largely insensitive to the discipline of profits and losses, insulating them from competitive pressures. Thirdly, their freedom from a prescribed set of rules affords them a high degree of discretion.

With these characteristics, Big Players are hard to predict. In consequence, they can disrupt. They divert entrepreneurial attention away from the assessment of strictly economic market fundamentals, such as the present value of prospective cash flows. Instead, the focus shifts toward attempting to predict the actions of Big Players, which are inherently political and unpredictable.  This reduces the reliability of expectations, replacing skill with luck.

The Big Players’ discretionary interventions render unreliable most market signals about fundamentals. They foster environments that are ripe for herding and bandwagon effects, as well as noise trading, which is subject to fads and fashions. This partially explains why investment groups are spending big bucks to create a thinking, learning, and trading computer — a search for a master algorithm. Never mind. Big Players heighten volatility and create bubbles. They are the disrupters of the universe.

Just who are the Disrupters? Most central banks possess all the characteristics of Big Players in spades. Since the advent and implementation of quantitative easing (QE), they have become bigger players, with the state money they produce making up a much greater portion of broad money (state, plus bank money) than before 2009. Not only have their balance sheets exploded, but the composition of some of their balance sheets has changed in surprising ways. Not so long ago, central bank assets were largely comprised of domestic and foreign government bonds. Well, now you can find corporate bonds on some central bank balance sheets. And that’s not all. Central banks use their discretion to purchase equities, too. Just take a look at the Swiss National Bank (SNB), one of the alleged paragons of conservative central banking. By late last year (Q3), the total value of stocks held by the SNB had risen to $38.95 billion. That’s the size of some of the largest hedge funds in the world, and amounts to over 5 percent of Switzerland’s GDP.

The Bank of Japan (BoJ) is also openly a big buyer of stocks — namely, Japanese ETFs. The BoJ is authorized to purchase roughly $25 billion of ETFs per year, and the government leans on the BoJ to use its fire power — especially when the Japanese stock markets are “weak.”

The rogues’ gallery of Big Players also includes: sovereign wealth funds, state-owned enterprises, and many other friends who do the State’s bidding. 

We are becoming grossly over-reliant on Big Players. In consequence, fundamental-based investing has been forced to take a back seat and the markets have become less safe. 

via Zero Hedge http://ift.tt/1q8C2DV Steve H. Hanke

Two days after stocks slid in a coordinated risk-off session, and one day after a DOE estimate of US oil inventories sent US stocks surging while the failed Allergan-Pfizer deal unleashed torrential hopes of a biotech M&A spree leading to the single best day for the sector in 5 years, sentiment has again shifted, this time due to a violent surge in the Yen as the market keeps testing the resolve of the Japanese central bank to keep its currency weak, and so far finding it to be nonexistent.

As a result, as we reported previously, the USDJPY plunged nearly 200 pips overnight, undoing all its gains since the expansion of Japan’s QQE on October 31 2014, and while equities did their best to ignore this move for as long as possible, ultimately they too succumbed.

The yen gained even after a government official said authorities would take necessary action on foreign exchange if needed. Futures, after urgently trying to ignore the Yen move, finally noticed it overnight, pushing the E-mini to session lows, and undoing almost all of the DOE gains.

 

As noted earlier, and as Bloomberg also reports, “the yen is being driven higher by risk aversion and by market participants testing the Bank of Japan’s tolerance toward a stronger currency,” said Thu Lan Nguyen, a foreign exchange strategist at Commerzbank AG in Frankfurt.

Also according to Bloomberg, JPMorgan’s Tohru Sasaki predicted the world-beating surge that carried the yen to a 17-month high. Now the former Bank of Japan official says the government will be reluctant to intervene to stem the currency’s advance – especially as such a move would probably be futile.

Exporters bringing cash home are the main driver of the yen’s 11 percent rally against the dollar this year, not speculators, so selling the currency to weaken it would be ineffective, said Sasaki, head of Japan markets research at JPMorgan in Tokyo. He forecasts a gain to 103 yen per dollar by year-end. He also sees attempts by officials to talk the currency lower as counterproductive.

“If you only shoot blanks, it just makes a sound — at first everyone is surprised, but once they get used to it, it’s just noise,” said Sasaki, who’s been the most accurate forecaster of the yen this year. More jawboning will encourage speculators to buy the yen on dips against the dollar, he said.

It’s not just the Yen. “There is a lot of fear in the market,” Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna, told Bloomberg. “A lot of large investors do not believe in rising stock prices and were positioning themselves for a downturn.”

In other key overnight news, the Fed meeting minutes reaffirmed U.S. policy makers aren’t rushing to raise interest rates. Elsewhere, EMC said planning to sell Documentum business amid Dell deal. In China, the PBOC announced that after 4 months of declines, its foreign reserves posted a $32 billion rebound in the month of March.

This is where markets are currently:

• S&P 500 futures down 0.5% to 2050
• Stoxx 600 down 0.3% to 329.77
• MSCI Asia Pacific up 0.9% to 126
• US 10-yr yield down 2bps to 1.74%
• Dollar Index up 0.03% to 94.46
• WTI Crude futures up 0.2% to $37.82
• Brent Futures up 0.4% to $39.98
• Gold spot up 1.3% to $1,239
• Silver spot up 1.3% to $15.26

Global Top News:

• Dell and EMC Said to Be Talking to Buyers for EMC’s Documentum: Dell also said to seek buyer for Sonicwall, Quest for $4b; Dell and EMC are targeting deal completion by October
• U.S. Braces for Worst Earnings Season Since the Financial Crisis; 1Q earnings are seen falling 9.8% y/y
• McDonald’s Chairman McKenna Plans to Retire From Board: McKenna, 86, won’t stand for re-election at the May 26 shareholders’ meeting, will become chairman emeritus
• Sprint Plans to Sell, Lease Back Network Assets for $2.2b: tower equipment is used as collateral to raise new loans; new finance entity will be consolidated into Sprint’s books
• Valeant Said to Win Majority Lender Support to Waive Default: creditors gave their consent after Valeant revised terms Tuesday
• March U.S. Retail Sales Seen Helped by Easter, Spring Break Deals: U.S. comp. sales are expected to rise 0.1% for the 5- week retail month of March, according to Retail Metrics; Costco, Zumiez kick off March comp. sales with releases post-mkt
• Treasury Nears Rule to Force Banks to ID Shell Company Owners: Customer Due Diligence rule would close anonymity loophole; maneuver is in the spotlight after leak of law firm files
• Monsanto Says It No Longer Sees Large-Scale M&A as Strategy: future deals will be collaborations, small acquisitions
• Key Pieces of Dimon’s Annual Letter: Risks, Rates and Trading: warns Treasury rally may turn to rout as rates rise; Brexit outcomes are ‘large and potentially unknown,’ he says
• China Foreign Exchange Reserves Rise for First Time in 5 Months: China’s forex reserves unexpectedly rose in March after capital outflow pressure eased as the nation’s currency steadied
• SoftBank Said to Not Have Had Formal Talks on Yahoo Buy: Re/Code
• China’s Apex Technology Said in Talks to Buy Lexmark: Reuters
• Indonesia Demands Google, Facebook to Pay Taxes: Jakarta Post

Looking at regional markets, Asian stocks traded mixed as the region shrugged-off a firm Wall St. lead, where continued advances in crude prices and a cautious Fed initially boosted sentiment. ASX 200 (+0.4%) and Nikkei 225 (+0.2%) were both supported at the open by the energy sector after an unexpected DoE Inventory drawdown which saw oil prices break above USD 38/bbl. However, Japanese stocks then saw choppy trade as JPY strength persisted, while Shanghai Comp (-1.4%) failed to hold on to early gains amid weakness in telecoms and sentiment dampened following a reserved open-market-operation by the PBoC. 10yr JGBs saw relatively range-bound trade with prices marginally lower amid improved risk-appetite in Japan, while prices saw a mild recovery following the enhanced liquidity auction for 20y, 30yr and 40yr bonds.

Top Asia News:

• China, Hong Kong Top Market for Firm at Center of Panama Papers: Region represents almost third of Mossack Fonseca’s cos.
• Nomura Warned Against Lying After Jefferies Trader Charged: Charges against ex-Jefferies trader spurred training session
• Yen Intervention Futile at 110 for JPMorgan After Picking Rally: Sasaki says currency will rise to 103 per dollar by year-end
• OCBC to Buy Barclays’s Asia Wealth Division for $320 Million: Bank beats competing bid by DBS Group
• Samsung Beats Estimates as Early Debut of S7 Boosts Sales: Analysts upgraded S7 estimates after channel checks

European equities struggle to form any significant direction as overall fundamental newsflow remains relatively light thus far, despite the fallout from last night’s FOMC meeting minutes. As such, Eurostoxx (+0.25%) resides in modest positive territory led by pharmaceuticals amid M&A speculation circulating for the likes of AstraZeneca following the collapse of a tie-up between Pfizer and Allergan, while gains had been capped by the pullback observed in oil prices.

In terms of the fixed income, Bunds saw a slight break above 164.00 having found support from the softness in energy prices, however German paper has retreated from earlier highs despite the market digesting supply from France, Spain and the UK.
 

Top European News

• Praet Says ECB Can Recalibrate Stimulus Again If Shocks Arise: the ECB can boost the scale of its support to the euro-area economy yet further in the event that fresh risks to the outlook arise, Executive Board member Peter Praet says
• ‘Brexit’ Risks Leaving European Banks With $123 Billion to Cover: lenders may have to dump some securities if Britain leaves EU; bonds may no longer meet liquidity requirements under Basel
• Citigroup Sees ‘Brexit’ Risks Moving East as Zloty Most Exposed
• Italian Officials Said to Hold Meeting on Banks’ State Backing: Finance Minister Padoan said to have met with some bank executives on Tuesday; officials said to discuss option of EU3b fund
• Fintech Seen Risking 250,000 Jobs as Europe Insurers Cut Costs: old IT systems burden companies as savvy start ups compete; cuts among only options to boost S/T profitability
•     U.K. House Prices Surge as Halifax Flags ‘Brexit’ Uncertainty: values +11% in March vs year earlier; EU vote and weakening confidence may damp price rises: Halifax
• ING Groep CEO Targets Corporate Banking Expansion in Scandinavia: Dutch bank will target Scandinavia’s corporate lending market as fastest route to expansion in region

FX markets have been dominated by the relentless JPY buying, which is no doubt of great concern to Japanese officials, but outside of verbiage against these moves, have done little to respond to the rapid rise. USD/JPY is now approaching the 108.00 level, and after topping out at 113.80 a week and a half ago, we are close to 6 JPY lower in what will be seen to be a very short space of time. Cross rate losses are equally rapid, though EUR/JPY is now finding some support ahead of 123.00. GBP/JPY losses take us to levels last seen in mid-2013, while AUD/JPY has now taken out 82.00. GBP is again under pressure against the USD and EUR — the latter back above .8100 again, but Cable is finding support ahead of 1.4000 again as the USD index is pressured in the wake of the Fed minutes last night — not that this revealed anything new to prompt the latest hit on the USD.ECB meeting report later today, but EUR/USD still managed to take out the previous highs to tip 1.1350. All on the JPY though today.

In commodities, despite starting the session off on the front-foot in the wake of yesterday’s DoE report and FOMC minutes, energy prices have slipped into negative territory in recent trade alongside a modest recovery in the USD. Overall, newsflow in energy markets continues to remain light in the run up to the upcoming Doha meeting next weekend. Gold (+1.2%) saw steady gains overnight following cautious FOMC minutes and weakness in the greenback. Silver has also recovered currently priced at around USD 15.20/oz, while copper and iron ore prices saw subdued trade amid a risk-averse tone in China and a pullback in steel prices.

It’s a fairly quiet calendar over in the US this afternoon too with last week’s initial jobless claims (expected at 270k) and the February consumer credit reading the only data of note. There are a few more interesting events outside of the data to keep an eye on: the IMF release chapters of its World Economic Outlook, while the ECB’s Draghi is due to speak in Portugal. Later we will see Fed Chair Yellen partake in a discussion with former Fed Chief’s Bernanke, Greenspan and Volcker, so it’ll be interesting to see if that throws up anything of interest.

Bulletin Headline Summary:

• FX markets have been dominated by relentless JPY buying, which is no doubt of great concern to Japanese officials, but outside of verbiage against these moves, have done little to respond to the rapid rise
• European equities struggle to form any significant direction as overall fundamental newsflow
  remains relatively light thus far, despite the fallout from last night’s FOMC meeting minutes
• Looking ahead, highlights include ECB Minutes, Initial Jobless Claims, EIA Nat Gas Storage Change, comments from Fed Chair Yellen and George
• Treasuries rise in overnight trading as global equity markets mixed in Europe, higher in Asia while WTI crude oil moves lower amid global growth concerns.
• Yen climbed above 109 vs dollar for first time in 17 months as market participants shrugged off remarks by Japanese government officials aimed at curbing the currency’s gains, according to analysts
• European Central Bank officials underlined their readiness to ease monetary policy even further should fresh risks to the economic outlook arise
• If Britain decides to leave the European Union, a corner of the credit market may depart with it and European banks could be left having to replace as much as 108 billion euros ($123 billion) of securities
• Dutch voters rebelled against a treaty between the European Union and Ukraine in a referendum on Wednesday, albeit on low turnout that fell short of the stampede that anti-EU campaigners hoped for
• Italian Treasury and central bank representatives are meeting again in Rome on Thursday to discuss the creation of a state-backed fund as the country’s cooperative lenders struggle to draw private investors
• China’s foreign-exchange reserves unexpectedly rose by $10.3 billion to $3.21 trillion last month after capital outflow pressure eased as the nation’s currency steadied
• Sovereign 10Y bond yields mixed; European equity markets mixed, Asian markets rise; U.S. equity-index futures drop. WTI crude oil and copper drop, gold rallies

US Event Calendar

• 8:30am: Initial Jobless Claims, April 2, est. 270k (prior 276k)
• Continuing Claims, March 26, est. 2.170m (prior 2.173m)
• 9:45am: Bloomberg Consumer Comfort, April 3 (prior 42.8)
• 3:00pm: Consumer Credit, Feb., est. -$14.9b (prior $10.538b)

Central Banks

• 5:30pm: Fed’s Yellen in New York with Volcker, Greenspan and Bernanke
• 9:15pm: Fed’s George speaks in York, Nebraska

DB’s Jim Reid concludes the overnight wrap

With newsflow fairly light yesterday, much of the broadly better sentiment which enveloped markets was blamed on the sharp bounce in Oil prices with WTI rallying back +5.18% and towards the $38/bbl mark again (which it has subsequently broken through this morning). The latest US crude inventory numbers, which showed an unexpectedly sharp decline in stockpiles, helped the story there, although digging deeper into some of the sector level performance yesterday it was actually healthcare names which led the way despite the news of that failed merger between Pfizer and Allergan. As reported by Bloomberg it appears that the two companies may look elsewhere in the sector for other potential M&A which lent some support to pharma names generally.

This morning in Asia we had initially seen most bourses follow the lead from the US last night (S&P +1.05%) in the early stages of trading, but momentum appears to be fading as we go to print. It’s bourses in China in particular which have dipped lower with the Shanghai Comp and CSI 300 -0.76% and -0.80% respectively. That has come before the latest China foreign reserves data for March (expected to show a modest fall) which is due to be released shortly.

Elsewhere the Hang Seng is flat along with the Nikkei after both opened strongly. Much of the focus has been on further strengthening for the Yen which is currently +0.6% firmer and close to breaking below ¥109 which it hasn’t done since October 2014. Elsewhere the Kospi is -0.23%, while the ASX (+0.23%) is just about holding onto gains.

The main focus yesterday was arguably on the release of those FOMC minutes. In truth there wasn’t much new material information to come out of them, instead they reinforced that fact that the Fed is clearly looking at both domestic and global economic and financial conditions. The minutes noted that ‘several participants expressed the view that the underlying factors abroad that led to a sharp, though temporary, deterioration in global financial conditions earlier this year had not been fully resolved and thus posed downside risks’. In light of that, the minutes also noted that ‘several expressed the view that a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate’.

That being said that view clearly wasn’t shared by all with the text also suggesting that some officials indicated that a move as soon as the next committee meeting this month could be warranted should the data allow for it. Clearly futures markets are unconvinced however with the market pricing in no hope of a move later this month and a still low 20% chance of a move in June.

Staying with the Fed, yesterday we heard from the Fed’s Bullard who once again maintained his view that all meetings remain live, but highlighted that the US data since the March meeting has been somewhat mixed and that ‘growth has been somewhat tepid’ and that should sluggish growth persist unexpectedly, then ‘I’d be willing to push rate hikes further into the future’.

While we’re on the subject of Fed officials, yesterday our US economists published an update of their FOMC scorecard, looking at the relative hawkishness/dovishness of each member and the overall committee as a result. Using a 1-5 scale, with the former being the most dovish and latter being the most hawkish, they attribute scores of 1 to Brainard and Tarullo and scores of 2 to Yellen, Dudley and Rosengren. Esther George (who was the only dissenter at the March meeting) is the lone voter to score a 5 with the remaining four officials scoring a 3 or 4. That means the average ranking comes in at 2.7 or in other words fairly middle of the park in terms of the dove/hawk scale.

Moving on. It was a broadly better day for risk in Europe yesterday too and particularly in the equity space where we saw the Stoxx 600 bounce back +0.76%. A less softer than expected German IP print in February (-0.5% mom vs. -1.8% expected) was the only data of note, while in the rates space we saw 10y Bunds have a rare weaker session with the yield closing up 2bps at 0.117%. In fact, that’s just the third time in since March 15th that 10y Bund yields have closed higher. Much like the moves for Oil, it was a fairly decent day for the bulk of the commodity space although Gold was an exception to that after weakening -0.72%. That hot start to the year for the precious metal, particularly through January and February, has paused for breath somewhat with Gold now 12% below where it closed February.

Wrapping things up, performance for credit markets and particularly in Europe was a little more subdued yesterday. The iTraxx Main and Crossover indices finished 0.5bps and 2bps tighter respectively however financials were a notable underperformer (sub fins +6bps, senior fins +1bp) during the day with some attributing this to some concern of a potential weak upcoming quarterly reporting period. There’s been no stopping the primary market this week though where in Europe we saw close to €13bn price in what was the busiest day for issuance in 3 weeks. It was a similar story across the pond where we saw the third straight double digit day of issuance. Meanwhile and on a more bottom-up specific topic, after the market close yesterday the WSJ reported that Valeant is said to have secured a commitment from debt holders to amend the terms of its debt in a long running saga which had investors call into question a potential technical default not long ago. The deal looks like giving the company some breathing room for now.

Taking a look at today’s calendar, this morning in Europe the only notable data of note is out of France, where we’ll get the February trade balance reading, and the UK where the latest house price data is due. Shortly after midday we’ll then get the ECB minutes from that famous March meeting. It’s a fairly quiet calendar over in the US this afternoon too with last week’s initial jobless claims (expected at 270k) and the February consumer credit reading the only data of note. There are a few more interesting events outside of the data to keep an eye on. This afternoon we’ll see the IMF release chapters of its World Economic Outlook, while the ECB’s Draghi is due to speak in Portugal this afternoon. This evening will see Fed Chair Yellen partake in a discussion with former Fed Chief’s Bernanke, Greenspan and Volcker, so it’ll be interesting to see if that throws up anything of interest.

via Zero Hedge http://ift.tt/25MPTjW Tyler Durden

Ever since the USDJPY breached the 110 support level three days ago for the first time in 17 months, the pressure on this all important FX carry cross has been rising, and then overnight, following the latest bout of recurring and increasingly ignored jawboning by various Japanese officials, the Yen soared, with the USDJPY plunging first below 109 and then moments ago dropping as low as 108.02 before rebounding modestly, dragging US equity futures lower with it.

 

Today’s latest drop has dragged the USDJPY to levels not seen since the October 2014 expansion of Japan’s QE, when Kuroda unexpectedly announced a boost to the monthly amount to be monetized.

 

Overnight, Japanese finance ministry officials told reporters that there are one-sided moves in yen market, and will take necessary action if needed, a finance ministry official tells reporters. “We monitor the markets with sense of vigilance and will take necessary action as needed,” Chief Cabinet Secretary Suga says in response to a question on FX.  The market however, completely ignored this attempt to normalize the “one sided” move, and sent the USDJPY crashing.

Some analyst thoughts:

• BOJ’s ability to influence market is waning and it’s hard for central bank to prevent yen strength by itself, says Shusuke Yamada, a currency strategist at Bank of America’s Merrill Lynch unit in Tokyo; intervention possible at 105, but more likely at 100; yen may reach 100 per dollar this year
• Even though BOJ’s rhetoric is intensifying, USD/JPY may fall further if there are no concrete actions from central bank and finance ministry, Credit Suisse macro strategist Trang Thuy Le says; market is disappointed that 110 didn’t hold
• FX intervention is unjustifiable above 105, says Yunosuke Ikeda, head of Japan foreign-exchange research at Nomura Securities; until around 105, FX intervention is difficult because of recent G-20 meeting in Shanghai; intervention requires U.S. support
• BOJ “shock and awe” stimulus is a risk at April meeting, but any USD/JPY boost may only provide speculators with a better level to sell dollars, says Peter Redward, principal at Redward Associates; BOJ may increase monetary base to JPY100t, accelerate ETF purchases and lower interest rates by 10 bps after Governor Kuroda said Japan is ready to ease without hesitation
• Negative rates reduce buffer for Japanese investors’ risk-taking and USD/JPY’s recent drop could keep Mitsubishi UFJ Kokusai Asset Management from “aggressively” making new investments, according to Hideo Shimomura, chief fund investor in Tokyo; says USD/JPY may reach about 105 this month or in May

As Bloomberg explains, expressions of concern from Japanese officials failed to convince markets that yen sales or other measures to curb the gains were imminent, and the currency rose at least 0.9 percent against all 16 of its major peers. It advanced even as a Ministry of Finance official said recent moves have been one-sided and that the authorities will take what action is necessary.

“The yen is being driven higher by risk aversion and by market participants testing the BOJ’s tolerance toward a stronger currency,” said Thu Lan Nguyen, a foreign-exchange strategist at Commerzbank AG in Frankfurt. “Japan doesn’t want to give the impression it’s planning to intervene given it’s hosting the next Group-of-Seven summit. There’s also a perception that it has very few measures left to aggressively ease monetary policy.”

Japan’s government is watching yen movements with vigilance, Chief Cabinet Secretary Yoshihide Suga said for a third day Thursday. Excessive currency moves have a negative impact on the economy, he said.

“If Japanese officials start saying ‘will take bold action if necessary,’ then it is time to be wary of the risks of market intervention,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “In any case, history shows market intervention by the MOF via the Bank of Japan does not lead to a sustained weakening of the yen.”

For now, however, the market is roundly ignoring any words coming out of Japan, and demanding action instead.

The funny thing is that “currenct intervention” is precisely what was agreed upon at the Shanghai Accord, but for now the concern for China and its currency is far greater than that for Japan, or Europe, where the Euro is likewise soaring. As such, Draghi and Kuroda will have to last it out, unless they are willing to form a strategic splinter group of central banks in what is shaping up to be a massive round of currency warfare.

Elsewhere, the ECB did try to jawbone a little, and was “undermined after European Central Bank Vice President Vitor Constancio reiterated that policy makers will do “whatever is needed” to return inflation to target, sparking speculation that another interest-rate cut is in the cards,with the EURUSD declining from 1.450 to just under 1.40.

Equity futures did their best to ignore the move as long as possible but even they ultimately had to admit that something is cracking below the surface.

Meanwhile, the only currency that does not need central banks manipulation to preserve its value under any circumstances, gold, spiked moments ago, hitting a one week high of $1240.

via Zero Hedge http://ift.tt/23kg2o6 Tyler Durden

Submitted by Michael Krieger of LibertyBlitzkrieg

Blast From the Past – Hillary Clinton vs. Bernie Sanders on Panama

Unlike most politicians, Bernie Sanders becomes increasingly impressive the more you learn about him. Forget for a moment whether you think the tax dodging strategies popularized by the Panama Papers are ethical or not, it’s important to note that Bernie Sanders publicly warned about an expansion in such behavior all the way back in 2011. On the other hand, Hillary Clinton and Barack Obama pushed for legislation that made such controversial strategies easier, under the guise of “free trade” with Panama.

First, here’s what Senator Sanders had to say on the matter in 2011:

The man’s prescience is remarkable. As his votes against the Patriot Act, Iraq War and banker bailouts demonstrate, Bernie Sanders has been on the right side of history on all the major issues of the 21st century. In contrast, Hillary Clinton has been on the wrong side of history on pretty much everything.

For some additional insight on the Panama situation, let’s turn to the International Business Times:

Years before more than a hundred media outlets around the world released stories Sunday exposing a massive network of global tax evasion detailed in the Panama Papers, U.S. President Barack Obama and then-Secretary of State Hillary Clinton pushed for a Bush administration-negotiated free trade agreement that watchdogs warned would only make the situation worse.

 

Soon after taking office in 2009, Obama and his secretary of state — who is currently the Democratic presidential front-runner — began pushing for the passage of stalled free trade agreements (FTAs) with Panama, Colombia and South Korea that opponents said would make it more difficult to crack down on Panama’s very low income tax rate, banking secrecy laws and history of noncooperation with foreign partners.

 

Even while Obama championed his commitment to raise taxes on the wealthy, he pursued and eventually signed the Panama agreement in 2011. Upon Congress ratifying the pact, Clinton issued a statement lauding the agreement, saying it and other deals with Colombia and South Korea “will make it easier for American companies to sell their products.” She added: “The Obama administration is constantly working to deepen our economic engagement throughout the world, and these agreements are an example of that commitment.”

 

Critics, however, said the pact would make it easier for rich Americans and corporations to set up offshore corporations and bank accounts and avoid paying many taxes altogether.

 

“The FTA would undermine existing U.S. policy tools against tax haven activity,” warned consumer watchdog group Public Citizen at the time, saying the agreement would encourage corporations to thwart any U.S. efforts to combat financial secrecy. The group also noted that U.S. government contractors, as well as major financial firms supported by taxpayer bailouts, stood to gain from the trade deal’s provisions that could make it harder to crack down on financial secrecy.

 

Despite the warnings from watchdog groups, some Democratic lawmakers urged the Obama administration to aggressively push for the Panama agreement. According to a 2009 email sent to Clinton by her top State Department aide, high-ranking then-Sen. Max Baucus, D-Mont., was pushing for passage of the Panama and Colombia free trade pacts, and Rep. Charles Rangel, D-N.Y., said “the president had to lend his star power to pushing them through.” Obama ultimately did just that, hosting Panama’s president at a 2011 Oval Office event touting the proposed trade pact.

Beyond once again illuminating stark differences between Hillary and Bernie, this episode also demonstrates how dishonest politicians like Obama and Clinton frequently use “free trade” language to push forward crony legislation that has little to do with trade.

You’ve been warned.

via Zero Hedge http://ift.tt/1VaoYLe Tyler Durden

Yesterday we first reported something unexpected: when looking at the constituents of the record short squeeze that started two months ago, and still continues, traders had largely maintained kept single-name shorts, and instead covered short ETF exposure.

 

This followed a previous observation showing that when it comes to NYSE short interest, it is near the record highs (in absolute terms, if not as a % of market cap) reached during the financial crisis.

 

Furthermore, as we have been reporting for the past 2 months, the “smart money” clients of BofA have been consistently selling this rally, and as of this last week, have sold shares for 10 consecutive weeks,with the selling actually accelerating, and in the last week, during which the S&P 500 was up 1.8%, BofA clients sold a total of $4 billion, the largest since September, and the fifth-largest in BofA history.

 

Bloomberg summarized all of this overnight in a note discussing the well-known short overhang, amounting to $1 trillion in total short interest.

Amid its biggest about-face in nine decades, a funny thing has happened in the U.S. stock market, where rather than loosen their grip bears have grown ever-more impassioned. They’ve sent short interest to an eight-year high and above $1 trillion, by one analyst’s math. Position reports from the Commodity Futures Trading Commission show mutual fund managers are more skeptical now than any time since at least 2010.

 

“There’s an enormous demand coming,” said Thomas J. Lee, managing partner at Fundstrat Global Advisors LLC., in an interview with Bloomberg TV . “Retail investors are about to put a lot of money into the equity markets because they’re trend followers and the S&P has had two positive quarters in a row. Funds can’t keep a trillion short position, larger than March ’09.”

 

It started in August, when bearish investors sent bets against U.S. stocks above 4 percent of available shares for the first time in six years. They haven’t backed off since. By the end of February, the ratio climbed to 4.4 percent, the highest since 2008, according to exchange data compiled by Bloomberg. As of March 15, that level was 4.3 percent, equivalent to a short position just under $1 trillion.

So, supposedly the market is the most short since 2008.

Which is odd because according to a report released this morning by UBS, while there are allegedly record shorts, the market is somehow, at the very same time, the most overbought since 2009. Here are technicians Michael Riesner and Marc Muller:

With the SPX hitting a new reaction high on Wednesday we were obviously too early in expecting the SPX to top out last week. However, our base case has not changed. The SPX continues to trade in the time window of our late March/early April top projection. The market is still in its most overbought position since 2009 and together with the internal momentum starting to deteriorate we see the SPX in a final extension instead of starting a new breakout, and in this context we are sticking to our recent comment and would not chase the market on current levels.

 

 

So, at the very same time, this market is the “most overbought since 2009” and “most shorted since 2008“…

No Wonder Morgan Stanley chief equity strategist Adam Parker lost it this week, and is seeing nothing but cockroaches.

 

via Zero Hedge http://ift.tt/2098T84 Tyler Durden

The following research was jointly produced by: J. Brett Freeze, CFA of Global Technical Analysis and 720 Global

Buying Dollar Bills For $1.10

720 Global has written four articles to date on stock buybacks and the harm these actions will likely have on future corporate growth rates and the economy. To better gauge the effect of buybacks we join forces with Brett Freeze to present a unique analysis on the S&P 100.

As we have previously noted, a large majority of companies, including 94 of the S&P 100, have actively repurchased shares since 2011. These companies often announce and execute share repurchases without providing a rationale to shareholders. As a fiduciary of shareholder’s capital, managements’ core responsibility is to act in the best interest of its shareholders. Unfortunately, we believe the majority of current repurchase activity is dictated by management’s self-serving desire – temporarily inflating the current market-value of company stock, while enriching themselves through the exercise and sale of equity-based incentive compensation.

There are two conditions that should be met when a company engages in a stock buyback. 1) The shares should be trading below intrinsic value 2) there are no investment opportunities available that would allow the company to continue to grow at a desirable rate. If both conditions can be met a case may be made for share buybacks.

This article solely focuses on the first aforementioned condition– intrinsic value. For more information on the second condition, please read “In Yahoo, Another Example of the Buyback Mirage” by Gretchen Morgenson of the New York Times. In her recent article, which quoted 720 Global, she demonstrates how Yahoo weakened future earnings growth rates and corporate value through questionable stock buybacks.

Intrinsic value is not the market price or market capitalization of a company or its stock, but a theoretical value formulated through analysis of the balance sheet and income statement of the company. Conceptually, investors should seek companies whose share prices trade below intrinsic value and shun those trading above intrinsic value. This logic equally applies to corporate management executing buybacks.

When shares are purchased below intrinsic value, the company has added value. It is equivalent to buying a dollar bill for fifty cents. Conversely, share repurchases executed at a premium to intrinsic value destroy intrinsic value. Existing shareholders who sell are rewarded by the share-repurchase program, but those who hold are irreparably damaged. In the words of Warren Buffett from his assault on buybacks – “Buying dollar bills for $1.10 is not good business for those who stick around.”

For this analysis we evaluate share repurchase activity and intrinsic values for the companies in the S&P 100 Index. Our measure of intrinsic value for non-financial companies was calculated using Global Technical Analysis’s proprietary discounted cash-flow model. For each non-financial company, 20-years of estimated forward cash flows were discounted by the weighted-average cost of capital (energy company data was normalized, when necessary). For financial companies, our measure of intrinsic value was calculated using Global Technical Analysis’s proprietary residual income model.

The following table provides a glimpse of the value being reduced by share buybacks of five widely-held companies.

The entire analysis is presented below by S&P Sector. Within each sector, companies are ranked by cumulative share repurchases relative to Q1 2011 outstanding shares. The final column of data shows the effect of share repurchase activity on intrinsic value. This column reveals the positive or negative effect that buybacks have had on the intrinsic value of each respective company.

The results of our analysis confirm our beliefs regarding share repurchases. Approximately two-thirds of the S&P 100 destroyed intrinsic value, by an average amount of 12.03%, as a result of their share-repurchase programs.

 

***Corporate names have been withheld from this presentation. A full analysis can be acquired by contacting the authors.

via Zero Hedge http://ift.tt/1UXzIgs Tyler Durden

Recently, we’ve shown you where wealthy people reside within the US, and where they’re fleeing from (here, and here). We now present to you the US city that is winning the race to drive out their wealthiest taxpayers. 

As the Chicago Tribune reports, that city is none other than Chicago, Illinois. 

Millionaires are leaving Chicago more than any other city in the United States on a net basis, according to a report by New World Wealth.

About 3,000 individuals with net assets of $1 million or more (not including their primary residence) moved from the city last year, representing about 2% of the city’s high net worth individuals.  It is unclear where they went: cities in the United States that saw a net inflow of millionaires included Seattle and San Francisco. One thing is certain: they couldn’t wait to get out. 

Among the reasons cited for leaving their former home town, many said rising racial tensions and worries about crime as factors in the decision.

The gun violence part we get. Over the weekend, when we penned that “Chicago Disintegrates – Gun Shootings Soar An Unprecedented 89%: “It’s The Struggling Economy” we broke out the stunning statistics within America’s very own warzone:

“Gun violence in the windy city is on track to post its worst year in the 21st century, the result of an unprecedented surge in gun deaths in the first three months of the year.  By March 31, 141 people had been killed, according to the Chicago Police Department.

 

The 141 deaths in the first three months of the year mark a 71.9% jump from the same period in 2015, when 82 people were killed. It’s the worst start to a year since 1999, when 136 people died in the first three months the year, according to the Chicago Tribune.

 

At that pace – an average of three killings every two days – Chicago would have 564 homicides by the end of the year. That would eclipse the 468 killings recorded in 2015 and 416 in 2014.“

 

Still, at least for the time being, these mass shooting sprees are largely isolated to poor neighborhoods of the windy city. As such, it is difficult to see millionaires be directly impacted by what happens in inner city ghettos.

Which probably explains why while the article touches on crime and racial tensions as reasons people are leaving, there is also another little, or rather big, matter that is driving the people away: taxes. 

According to the Tribune, Illinois Comptroller Leslie Munger recently had this to say about the mounting unpaid bills and budget concerns that the state continues to face.

“We can’t go bankrupt and we can’t print money. Taxpayers are going to have to pay this bill.”

Actually it can go bankrupt.

Recall that just two weeks ago we reported that the “Countdown To Insolvency Begins For Chicago Pensions As State Supreme Court Rejects Reform Bid“, in which we wrote that following a controversial Supreme Court decision, “there will be no legislating away pension benefits – even if doing so is the only realistic way for officials to ensure that state and local governments can continue to pay out any benefits at all going forward. That is, even if long-run insolvency is certain, benefits will be paid out in full up to and until the day of reckoning finally comes and it will be up to lawmakers to figure out how to rescue the system in the meantime. If that means raising taxes and/or going into further debt, then that’s what it means.”

And although they may not be able to print money, we can’t help but wonder if the organization that can, will begin to take on the state insolvency issue in the future to prevent that from happening. After all, the bailout tour must continue to roll on.

For now however, Chicago’s future is bleak, and when the hammer finally does hit, it will do so without Chicago’s wealthiest present.

Finally, it may not come as a surprise that of all cities around the globe, Chicago was only third in millionaire exodus rankings.

Which was first? Paris, France.

A Rolls-Royce is displayed Feb. 11, 2016, at the Chicago Auto Show. 3,000
millionaires moved out of Chicago in 2015, it is unclear what cars they drove

via Zero Hedge http://ift.tt/2091hTf Tyler Durden

By Ben Hunt of Salient Partners

“My Passion Is Puppetry“

We are supposedly living in the Golden Age of television. Maybe yes, maybe no (my view: every decade is a Golden Age of television!), but there’s no doubt that today we’re living in the Golden Age of insurance commercials. Sure, you had the GEICO gecko back in 1999 and the caveman in 2004, and the Aflac duck has been around almost as long, but it’s really the Flo campaign for Progressive Insurance in 2008 that marks a sea change in how financial risk products are marketed by property and casualty insurers. Today every major P&C carrier spends big bucks (about $7 billion per year in the aggregate) on these little theatrical gems.

This will strike some as a silly argument, but I don’t think it’s a coincidence that the modern focus on entertainment marketing for financial risk products began in the Great Recession and its aftermath. When the financial ground isn’t steady underneath your feet, fundamentals don’t matter nearly as much as a fresh narrative. Why? Because the fundamentals are scary. Because you don’t buy when you’re scared. So you need a new perspective from the puppet masters to get you to buy, a new “conversation”, to use Don Draper’s words of advertising wisdom from Mad Men. Maybe that’s describing the price quote process as a “name your price tool” if you’re Flo, and maybe that’s describing Lucky Strikes tobacco as “toasted!” if you’re Don Draper. Maybe that’s a chuckle at the Mayhem guy or the Hump Day Camel if you’re Allstate or GEICO. Maybe, since equity markets are no less a financial risk product than auto insurance, it’s the installation of a cargo cult around Ben Bernanke, Janet Yellen, and Mario Draghi, such that their occasional manifestations on a TV screen, no less common than the GEICO gecko, become objects of adoration and propitiation.

For P&C insurers, the payoff from their marketing effort is clear: dollars spent on advertising drive faster and more profitable premium growth than dollars spent on agents. For central bankers, the payoff from their marketing effort is equally clear. As the Great One himself, Ben Bernanke, said in his August 31, 2012 Jackson Hole speech: “It is probably not a coincidence that the sustained recovery in U.S. equity prices began in March 2009, shortly after the FOMC’s decision to greatly expand securities purchases.” Probably not a coincidence, indeed.

Here’s what this marketing success looks like, and here’s why you should care.

This is a chart of the S&P 500 index (green line) and the Deutsche Bank Quality index (white line) from February 2000 to the market lows of March 2009.

Now I chose this particular factor index (which I understand to be principally a measure of return on invested capital, such that it’s long stocks with a high ROIC, i.e. high quality, and short stocks with a low ROIC, all in a sector neutral/equal-weighted construction across a wide range of global stocks in order to isolate this factor) because Quality is the embedded bias of almost every stock-picker in the world. As stock-pickers, we are trained to look for quality management teams, quality earnings, quality cash flows, quality balance sheets, etc. The precise definition of quality will differ from person to person and process to process (Deutsche Bank is using return on invested capital as a rough proxy for all of these disparate conceptions of quality, which makes good sense to me), but virtually all stock-pickers believe, largely as an article of faith, that the stock price of a high quality company will outperform the stock price of a low quality company over time. And for the nine years shown on this chart, that faith was well-rewarded, with the Quality index up 78% and the S&P 500 down 51%, a stark difference, to be sure.

But now let’s look at what’s happened with these two indices over the last seven years.

The S&P 500 index has tripled (!) from the March 2009 bottom. The Deutsche Bank Quality index? It’s up a grand total of 10%. Over seven years. Why? Because the Fed couldn’t care less about promoting high quality companies and dissing low quality companies with its concerted marketing campaign — what Bernanke and Yellen call “communication policy”, the functional equivalent of advertising. The Fed couldn’t care less about promoting value or promoting growth or promoting any traditional factor that requires an investor judgment between this company and that company. No, the Fed wants to promote ALL financial assets, and their communication policies are intentionally designed to push and cajole us to pay up for financial risk in our investments, in EXACTLY the same way that a P&C insurance company’s communication policies are intentionally designed to push and cajole us to pay up for financial risk in our cars and homes. The Fed uses Janet Yellen and forward guidance; Nationwide uses Peyton Manning and a catchy jingle. From a game theory perspective it’s the same thing.

Where do the Fed’s policies most prominently insure against financial risk? In low quality stocks, of course. It’s precisely the companies with weak balance sheets and bumbling management teams and sketchy non-GAAP earnings that are more likely to be bailed out by the tsunami of liquidity and the most accommodating monetary policy of this or any other lifetime, because companies with fortress balance sheets and competent management teams and sterling earnings don’t need bailing out under any circumstances. It’s not just that a quality bias fails to be rewarded in a policy-driven market, it’s that a bias against quality does particularly well! The result is that any long-term expected return from quality stocks is muted at best and close to zero in the current policy regime. There is no “margin of safety” in quality-driven stock-picking today, so that it only takes one idiosyncratic stock-picking mistake to wipe out a year’s worth of otherwise solid research and returns.

So how has that stock-picking mutual fund worked out for you? Probably not so well. Here’s the 2015 S&P scorecard for actively managed US equity funds, showing the percentage of funds that failed to beat their benchmarks over the last 1, 5, and 10 year periods. I mean … these are just jaw-droppingly bad numbers. And they’d be even worse if you included survivorship bias.

Small wonder, then, that assets have fled actively managed stock funds over the past 10 years in favor of passively managed ETFs and indices. It’s a Hobson’s Choice for investors and advisors, where a choice between interesting but under-performing active funds and boring but safe passive funds is no choice at all from a business perspective. The mantra in IT for decades was that no one ever got fired for buying IBM; today, no financial advisor ever gets fired for buying an S&P 500 index fund.

But surely, Ben, this, too, shall pass. Surely at some point central banks will back away from their massive marketing campaign based on forward guidance and celebrity spokespeople. Surely as interest rates “normalize”, we will return to those halcyon days of yore, when stock-picking on quality actually mattered.

Sorry, but I don’t see it. The mistake that most market observers make is to think that if the Fed is talking about normalizing rates, then we must be moving towards normalized markets, i.e. non-policy-driven markets. That’s not it. To steal a line from the Esurance commercials, that’s not how any of this works. So long as we’re paying attention to the Missionary’s act of communication, whether that’s a Mario Draghi press conference or a Mayhem Guy TV commercial, then behaviorally-focused advertising — aka the Common Knowledge Game — works. Common Knowledge is created simply by paying attention to a Missionary. It really doesn’t matter what specific message the Missionary is actually communicating, so long as it holds our attention. It really doesn’t matter whether the Fed hikes rates four times this year or twice this year or not at all this year. I mean, of course it matters in terms of mortgage rates and bank profits and a whole host of factors in the real economy. But for the only question that matters for investors — what do I do with my money? — nothing changes. Stock-picking still won’t work. Quality still won’t work. So long as we hang on every word, uttered or unuttered, by our monetary policy Missionaries, so long as we compel ourselves to pay attention to Monetary Policy Theatre, then we will still be at sea in a policy-driven market where our traditional landmarks are barely visible and highly suspect.

Here’s my metaphor for investors and central bankers today — the brilliant Cars.com commercial where a woman is stuck on a date with an incredibly creepy guy who declares that “my passion is puppetry” and proceeds to make out with a replica of the woman.

What we have to do as investors is exactly what this woman has to do: get out of this date and distance ourselves from this guy as quickly as humanly possible. For some of us that means leaving the restaurant entirely, reducing or eliminating our exposure to public markets by going to cash or moving to private markets. For others of us that means changing tables and eating our meal as far away as we possibly can from Creepy Puppet Guy. So long as we stay in the restaurant of public markets there’s no way to eliminate our interaction with Creepy Puppet Guy entirely. No doubt he will try to follow us around from table to table. But we don’t have to engage with him directly. We don’t have participate in his insane conversation. No one is forcing you keep a TV in your office so that you can watch CNBC all day long!

Look … I understand the appeal of a good marketing campaign. I live for this stuff. And I understand that we all operate under business and personal imperatives to beat our public market benchmarks, whatever that means in whatever corner of the investing world we live in. But I also believe that much of our business and personal discomfort with public markets today is a self-inflicted wound, driven by our biological craving for Narrative and our social craving for comfortable conversations with others and ourselves, no matter how wrong-headed those conversations might be.

Case in point: if your conversation around actively managed stock-picking strategies — and this might be a conversation with managers, it might be a conversation with clients, it might be a conversation with an Investment Board, it might be a conversation with yourself — focuses on the strategy’s ability to deliver “alpha” in this puppeted market, then you’re having a losing conversation. You are, in effect, having a conversation with Creepy Puppet Guy.

There is a role for actively managed stock-picking strategies in a puppeted market, but it’s not to “beat” the market. It’s to survive this puppeted market by getting as close to a real fractional ownership of real assets and real cash flows as possible. It’s recognizing that owning indices and ETFs is owning a casino chip, a totally different thing from a fractional ownership share of a real world thing. Sure, I want my portfolio to have some casino chips, but I ALSO want to own quality real assets and quality real cash flows, regardless of the game that’s going on all around me in the casino.

Do ALL actively managed strategies or stock-picking strategies see markets through this lens, as an effort to forego the casino chip and purchase a fractional ownership in something real? Of course not. Nor am I using the term “stock-picking” literally, as in only equity strategies are part of this conversation. What I’m saying is that a conversation focused on quality real asset and quality real cash flow ownership is the right criterion for choosing between intentional security selection strategies, and that this is the right role for these strategies in a portfolio.

Render unto Caesar the things that are Caesar’s. If you want market returns, buy the market through passive indices and ETFs. If you want better than market returns … well, good luck with that. My advice is to look to private markets, where fundamental research and private information still matter. But there’s more to public markets than playing the returns game. There’s also the opportunity to exchange capital for an ownership share in a real world asset or cash flow. It’s the meaning that public markets originally had. It’s a beautiful thing. But you’ll never see it if you’re devoting all your attention to CNBC or Creepy Puppet Guy.

via Zero Hedge http://ift.tt/208Z1LG Tyler Durden

While the furious rally that proppeled gold higher in the first quarter – by the most in 25 years – appears to have fizzled, it is hardly over. So for those wondering when they should add to their position, or start a new one, here is some advice from Geneva Swiss Bank, which believes that $1,180-$1,190 “may be a good level to buy gold.”

The bull case is known to everyone by now, but here it is again, from the source:

• We believe that gold remains a great hedge against currency debasement
• Investors increasing doubts on the effects of central banks aggressive monetary policies will continue to be a tailwind for the only currency that machines can’t print
• Last but not least, asset allocators are piling back into gold again.

The result: the following chart.

via Zero Hedge http://ift.tt/1S3rJ0G Tyler Durden

Submitted by Douglas Herman

    “The majority of men are not capable of thinking, but only of believing and are not accessible to reason but only to authority.”

    -­ Arthur Schopenhauer
 
Voting is like bungee jumping: it’s for people who like big jerks. If the 2016 US Presidential election seems like a manufactured media circus, perhaps we can blame Hollywood. More precisely, we can blame fictional Senator Jay Billington Bulworth and his bluster for providing the blueprint.

In books and movies, Life often imitates Art. I know from personal experience, having penned a historical fiction novel, The Guns of Dallas, that apparently came true two years after publication. When an old CIA operative named E. Howard Hunt made a deathbed confession to Rolling Stone magazine about the JFK Assassination, he echoes a similar confession my protagonist made in my novel a couple years before.

But they give no prizes for such prescience.  Instead they give Pulitzer Prizes and Nobel Prizes to liars and war criminals. They give Presidential Medals of Freedom to corrupt, incompetent or deceitful career public servants who do a huge disservice to the public and endanger the Republic. They give Oscars and Emmys and glowing accolades to filmmakers who create violent movies based on fantasies and fabrications that prop up the deep state. But they give no awards for speaking truth to power. Often only a bullet awaits those who do.

Long before Donald Trump uttered his first shocking statement, a fictional Hollywood politico named Senator Bulworth spoke truth to power and shocked a nation. So much so that the movie lost money, was critically panned and may have gotten the iconic actor and producer, Warren Beatty, blacklisted from Hollywood.

Why? Truth is a dangerous weapon. More dangerous than a thousand light sabers. But sadly, Truth is the First & Last Casualty in America’s Penultimate War.

* * *

Some people think that truth is relative. At least my relatives do. Try telling your friends and family that all truth passes through Three Stages, from ridicule to violent opposition to eventual acceptance, according to that guy Schopenhauer again, who must have been a lot of fun at parties. My friends and family remain at stage one.

In an essay called Bulworth In 2013, artist Jim Kirwan remarked: “Warren Beatty made Bulworth in 1998 to warn America about what this country had become . . . The film is about a disillusioned Senator who tires of the lies and begins to tell it like it is.  No other major filmmaker has dared to produce, much less chosen to put these topics before the public.”

Bulworth quickly insults or provokes everyone he meets, from Black civic leaders to Jewish movie moguls to a roomful of the Senator’s corrupt corporate donors.  While on a fundraiser, Senator Bulworth visits the home of some Hollywood heavyweights and is asked bluntly by one of them: “Senator, do you think those of us in the entertainment business need government help in determining limits on sex and violence in today’s films and television programs?”

Bulworth replies: “You know the funny thing is, how lousy most of your stuff is. You make violent films, you make dirty films, you make family films, but just most of them are not very good, are they? Funny that so many smart people could work so hard on them and spend so much money on them and, I mean, what do you think it is? It must be the money, huh. It must be the money, it turns everything to crap you know. Jesus Christ how much money do you guys really need?”

And that is how you get black-listed from Hollywood, despite all the Oscars you have won in the past. Talk truth to power and damn if they don’t try to ruin you.

Bulworth continues on in his suicidal mission. Warren Beatty is masterful and marvelous, like Trump on truth serum or steroids. Intoxicated with his candor, Senator Bulworth begins to rhyme, to a roomful of stunned corporate backers. “And over here, we got our friends from oil/ They don’t give a shit how much wilderness they spoil/ They tell us they are careful, we know that it’s a lie/ As long as we keep driving cars, they’ll let the planet die/ Exxon, Mobil, the Saudis and Kuwait, if we still got the Middle East, the atmosphere can wait/ The Arabs got the oil, we buy everything they sell/ But if the brothers raise the price, we’ll blow them all to hell.”

Imagine Trump saying something like THAT?

So ask yourself this, dear reader: When has ONE candidate managed to provoke and then UNITE the hysterical Left liberals and the entrenched, super rich & powerful oligarchs of the Extreme Right against him? Not to mention uniting the puppets and pundits of the mainstream media? Has that ever happened in American history? Before Bulworth? Before Trump?

Consider the growing list of powerful, special interests arrayed against Donald Trump. Billionaire corporate heads oppose Trump. Dozens of them flew down to Sea Island, Georgia to devise ways to remove Trump from the Republican ticket. “”What we see at Sea Island is that, despite all their babble about bringing the blessings of democracy to the world’s benighted, AEI, Neocon Central, believe less in democracy than in perpetual control of the American nation by the ruling Beltway elites,” wrote Patrick Buchanan. “If an outsider like Trump imperils that control . . . the elites will come together to bring him down, because behind party lines, they’re soul brothers in pursuit of power.”

Speaking of soul brothers, another billionaire, and self-confessed Nazi collaborator, George Soros backs BlackLivesMatters.  Soros provided in excess of $30 million in “seed” money to BLM.  Tweeted top BLM activist and rapper Tef Poe: “ If Trump wins, young niggas such as myself are fully hell bent on inciting riots everywhere we go.”
 
Billionaires bankrolling ghetto brothers to burn and riot? And NO outcry from the American media, naturally.
 
Soros also backs unlimited immigration with his Open Borders group, the same people responsible for blocking a state highway in Arizona. Again not a peep from the mainstream media. But a cabal of connected newspaper columnists, who style themselves “National Security Leaders,” many who pimped for the endless wars in the Middle East, including such aptly named warmongers as Max Boot, Charles Krauthammer, Michael Chertoff and Robert Kagan oppose Trump.  Likewise billionaire Jewish movie moguls, many of whom have donated millions to Hillary Clinton, oppose Trump. Billionaire Chinese oligarchs and manufacturers, with factories filled with low-paid workers and fearful that tariffs may curtail their obscene profits, oppose Trump. Pop political celebs such as Elizabeth Warren and RINO relics Mitt Romney and John McCain oppose Trump and urge voters to reject him.
 
Every one of these outspoken opponents of Trump was represented in the Bulworth movie in some fashion, especially the network talking heads. In the movie, Bulworth finally confronts the media. The American mainstream media hates and fears Trump, I mean Bulworth. He knows exactly what kind of prostitutes they are. But the media realizes Bulworth is hot news. So they have to cover him. They are forced to cover him, against their will. Exactly as they are forced to cover Trump.

* * *

“You know the guy in the booth who’s talking to you in that tiny little earphone,” says Bulworth to some bimbo who reminds me of Meagan Kelly. “He’s afraid the guys at network are gonna tell him that he’s through/ If he lets a guy keep talking like I’m talking to you/ Cause the corporations got the networks and they get to say who gets to talk about the country and who’s crazy today/ I would cut to a commercial if you still want this job/ Because you may not be back tomorrow with this corporate mob/ Cut to commercial, cut to commercial, cut to commercial. Okay Okay I got a simple question that I’d like to ask of this network/ That pays you for performing this task/ How come they got the airwaves? They’re the peoples aren’t they?/ Wouldn’t they be worth 70 billion to the public today?/ If some money-grubbin Congress didn’t give them away?”

Bulworth, like Trump nearly 20 years later, seems to present the people, the voters,  with a fresh perspective. Even if the apparent fresh perspective is a fraud or a mirage. But to the Powers-That-Be, any courageous man who speaks truth to power presents a fearful challenge: How to rein in this dangerous man, before he does any more damage? Easy enough. Whether a Bulworth or a Trump, similar wild card candidates who have suddenly become the newest darling of the public, they must be taught to toe the party line, or be removed from the picture. Simple.

How? Assassination or electoral fraud.

In the movie, Bulworth is eventually removed, at the height of his fame and popularity with the voters. In reality, so is anyone else who dares to challenge the status quo. JFK and RFK most recently. I imagine the powerbrokers are devising a scenario as I write this. Perhaps a disgruntled bus boy with three names, a troubled sort who keeps a diary and owns a handgun will ambush Trump. Naturally the media presstitutes will gloat in private but pretend a somber sorrow. And Hillary will be selected, or someone suitable to Wall Street and the police state. Hardly matters who.

As our empire erodes, and overseas tyranny evolves into full moral meltdown at home, and the economy becomes a series of bubbles, the sociopaths in charge resort to more inventive and draconian measures. Trump is neither the solution nor the answer but more like another symptom. A long simmering effect of a longer lingering cause. The cause and effect of bad governance, of corruption without any consequences.

via Zero Hedge http://ift.tt/22dy7le Tyler Durden