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The first to suffer Beijing’s crackdown against China’s private merger-crazy conglomerates, wave was the acquisitive “insurance” behemoth, Anbang, whose CEO Wu Xiaohui briefly disappeared as the Politburo made it clear that the “old way” of money laundering – via offshore deals – is no longer tolerated. Then, several weeks later and shortly after the stocks of the “famous four” Chinese conglomerates plunged after China officially launched a crackdown on foreign acquirers amid concerns of “systemic risk“, it was HNA’s turn, which as we described last week, risks becoming a “reverse rollup from hell“, as HNA’s stock tumbled, sending the LTV of billions in loans collateralized by the company’s shares soaring and in danger of unleashing an catastrophic margin call among the company’s lenders.

Then Beijing’s attention shifted to the biggest conglomerate of them all: billionaire Wang Jianlin’s Dalian Wanda Group, which as the WSJ and Bloomberg reported was being “punished” by Beijing, and would see its funding cutoff after China “concluded the conglomerate breached restrictions for overseas investments.”

The scrutiny could rein in Wang’s ambitious attempt to create a global entertainment empire, including Hollywood production companies and a giant cinema chain he’s built up through acquisitions from the U.S. to the U.K. Six investments, such as the purchases of Nordic Cinema Group Holding AB and Carmike Cinemas Inc., were found to have violations, said the people, who asked not to be identified discussing a private matter. The retaliatory measures will include banning banks from providing Wanda with financial support linked to these projects and barring the company from selling those assets to any local companies, the people said.

 

The move is an unprecedented setback for the country’s second-richest man, who has announced more than $20 billion of deals since the beginning of 2016. By targeting one of the nation’s top businessmen, the government is escalating its broader crackdown on capital outflows and further chilling the prospects of overseas acquisitions during a politically sensitive year in China.

Summarizing the abrupt shift in sentiment in China was Castor Pang, head of research at Core-Pacific Yamaichi, who said that “to investors, political risk is now the biggest concern when investing in Chinese companies. Not only Wanda, every Chinese company won’t find it easy anymore to acquire assets overseas. Stabilizing the yuan is the top priority for Beijing now.”

While it is not exactly clear just why Beijing so quickly soured on foreign transactions – as we explained back in 2015, it was abundantly clear back then these were nothing more than a less than sophisticated way to launder money offshore – unless of course the capital flight out of China is far worse than what Beijing would disclose, what has become quite clear is that Wanda was among the conglomerates including Fosun International, HNA Group and Anbang Insurance whose loans are under government scrutiny after China’s banking regulator asked some lenders to provide information on overseas loans to the companies.

In other words, the foreign merger party is over. In fact, for some of the above listed 4 conglomerates, the party may be over, period.

And now as the WSJ reported over the weekend, it has become clear that China’s government reined in one of its brashest conglomerates with the explicit approval of President Xi Jinping, “according to people with knowledge of the action—a mark that the broader government clampdown on large private companies comes right from the top of China’s leadership.”

The measures, with President Xi’s previously unreported approval last month, bar state-owned banks from making new loans to property giant Dalian Wanda Group to help fuel its foreign expansion.

The cutoff in bank financing for the company’s foreign investments highlights Beijing’s changing view of a series of Wanda’s recent overseas acquisitions as irrational and overpriced. In short, and as noted above, Yuan stability above all.

For the local market, the shift in Beijing’s strategy is nothing short of a seismic shift:

“It feels like an avalanche,” said Jingzhou Tao, a lawyer at Dechert LLP in Beijing, who does mergers and acquisitions work. “This is sending a shock wave through the business community.”

* * *

Regular readers are aware of what, until recently, was China’s unquenchable thirst for foreign money laundering transactions, something we first pointed out at the start of 2016, and which had – until recently – grown exponentially. Since 2015, the four companies completed a combined $55 billion in overseas acquisitions, 18% of Chinese companies’ total. In recent days, however, as reported here 2 weeks ago, Wanda’s billionaire founder Wang Jianlin has been shrinking his empire by selling off assets and paying back the company’s bank loans.

What is surprising about the sudden shift, is that Beijing had for years been encouraged Chinese companies to scour the globe for deals. Now, in a dramatic U-turn, it is reining in some of its highest-profile private entrepreneurs in what officials say is growing unease with their high leverage and growing influence. As the WSJ notes, “the measures serve as a stern warning for other big companies that loaded up on debt to buy overseas assets, officials and analysts say.”

How does the president fit into all of this? According to the WSJ, “Xi acted after China’s cabinet set the government machinery in gear by directing financial regulators, the economic planning agency and other bureaucracies to take a hard look at foreign acquisitions, once seen as a means for China to showcase its economic might.”

And, as previously reported, the crackdown started at Anbang and HNA, when Chinese banking regulators first ordered banks to scrutinize loans to Anbang in June, and other highfliers including airlines-and-hotels conglomerate HNA Group, which has pulled back on overseas investments. HNA said in a statement it continues to take a “disciplined approach” to identifying “strategic acquisitions across our core areas of focus.”

Discussing the government’s crackdown on conglomerates, officials at Fosun said the firm has “overseas funds and other stable financing channels,” including a fund of around U.S. $1 billion to invest, but emphasized it “fully respects the government regulations both in China and overseas markets.” Fosun has a listed unit in Hong Kong, and its strategy to invest in health care and technology “adheres to China’s global investment strategy,” said a spokesman, Chen Bo.

In any case, the most likely outcome is that in the future China’s private companies will have trouble getting capital, which would help shift financial clout further in favor of big state-owned enterprises, which may also explain President Xi’s change in opinion. Beijing’s sterner line comes as big private businesses and others have been amassing capital and influence that challenge the authoritarian Chinese leadership’s firm hold on the economy.

Its grip has been tested over a bumpy few years. After a 2015 stock market meltdown and a botched government rescue, a gush of money flowed out of the country looking for better returns. That in turn put pressure on China’s tightly controlled yuan and foreign-exchange reserves, both seen by Beijing as barometers of confidence in the economy. It has also led to a chilling effect on Chinese outbound investment which has crashed as shown in the chart below.

Putting the foreign merger spree in context, Chinese firms completed $187 billion in outbound deals last year, according to Dealogic, as private companies snapped up trophy properties, soccer clubs and hotels, while Chinese with means bought homes and pushed up real-estate prices from Texas to Sydney.

The private sector’s share of overseas spending shot up from barely above zero about a decade ago to nearly half of China’s total overseas investments in 2016, before slipping back to 36.9% in the first half of 2017, according to Derek Scissors, a China expert at the American Enterprise Institute.

But the most important factor, and among the main reasons for the current crackdown, is that amid the rush of investments, Beijing burned through nearly a trillion dollars in foreign-exchange reserves trying to steady the yuan. That ultimately led government regulators to clamp controls on money exiting the country and to scrutinize all proposed major offshore investments.

Just as we predicted over a year ago would happen, once the government finally realized that all that M&A is nothing more than capital flight.

As the WSJ puts it, “the latest scrutiny is a watershed moment in the Communist government’s relations with a private sector it has never been comfortable with. Though some senior leaders, particularly Premier Li Keqiang, are urging a new culture of startups and small businesses, Mr. Xi has promoted plans to make already-large state enterprises larger and strengthen their sway over the economy.”

There are other reasons for the crackdown too: one is the still fresh memory of what happened in Japan when it did the exact same thing. China is acutely aware that as Japan rose to economic prominence in the 1980s, its companies splurged on American real estate and other trophy assets, resulting in losses that cascaded through Japan’s banking sector.

But mostly, it is about power and control:

Mr. Tao, the Beijing lawyer, says the government’s new aggressive posture is driven in large measure by a need for control. “State-owned assets, whether in China or abroad, are still state assets,” he said. “But when private entrepreneurs take their money out, it’s gone. It’s no longer something that China can benefit from or the Chinese government can get a handle on.”

And since in any power struggle between Chinese companies and Beijing in general, and Xi Jinping in particular, the latter will always win, the market’s reaction was to violently selloff any big Chinese conglomerate stocks. An early sign of government discomfort with overseas spending was Anbang’s unsuccessful $14 billion bid for Starwood Hotels & Resorts Worldwide Inc. in 2016. Authorities expressed displeasure with the bold move, believing that Anbang had offered too much, according to a person with knowledge of the situation.

Anbang, which had appeared unstoppable in 2014 when it struck a $2 billion deal to buy the U.S. Waldorf Astoria hotel, fell deeper in trouble. This past June, special government investigators looking into economic crimes detained Anbang’s chairman, Wu Xiaohui, who hasn’t appeared in public since.

Separately, in the case of Wanda, regulators acted in the belief the company overpaid in efforts to expand beyond shopping centers and hotels and into entertainment, according to the people with knowledge of the action.

Its largest such acquisition was of Legendary Entertainment, the Hollywood producer and financier behind films including “Jurassic World” and “The Dark Knight.” Wanda spent $3.5 billion to buy Legendary in 2016; In Hollywood, industry insiders widely believed the company paid too much. Legendary said this week that it is well-capitalized, operating normally and able to fund its film and television productions.

As for HNA, recall that it was the stealthy buyer of Anthony Scaramucci’s SkyBridge Capital, another deal which will soon fall under tremendous scrutiny, and which could be unwound in the coming weeks if concerns about conflicts of interest emerge again, only this time not between the US and Russia – especially once the “Russia collusion” story is finally over – but the White House and Beijing.

via http://ift.tt/2vzl7hJ Tyler Durden

The “Little Sunfish,” the swimming robot that TEPCO is using to capture images of the containment vessel in the Unit 3 reactor of the ruined Fukushima power plant, has brought back the goods.

A trove of new images captured in the past few days show what is likely to be melted nuclear fuel from inside the reactor, what Bloomberg describes as a “potential milestone” in the cleanup of one of the worst atomic disasters in history.

The pictures show what looks to be the melted nuclear fuel that caused the worst-ever nuclear disaster when northeastern Japan was hit by a massive earthquake and tsunami in March 2011. If confirmed, these would be the first discovery of the fuel, which is being sought by TEPCO as part of the cleanup effort.

“Tokyo Electric Power Co. Holdings Inc., Japan’s biggest utility, released images on Saturday of mounds of black rock and sand-like substances at the bottom of the No. 3 reactor containment vessel at Fukushima, which is likely to contain melted fuel, according to Takahiro Kimoto, an official at the company. A survey on Friday found black icicles hanging from the above pressure vessel, which was “highly likely” to contain melted fuel. Kimoto noted it would take time to confirm whether this debris contains melted fuel.

 

'The pictures that we have gained will assist us in devising a plan for removing the melted fuel,' Kimoto told reporters Saturday night in Tokyo. 'Taking pictures of how debris scattered inside of the reactor was a big accomplishment.'

 

If confirmed, these pictures would be the first discovery of the fuel that melted during the triple reactor accident at Fukushima six years ago. For Tokyo Electric, which bears most of the cleanup costs, the discovery would help the utility design a way to remove the highly-radioactive material.”

The pictures were taken by the “Little Sunfish,” the Toshiba-designed robot the company sent into the destroyed reactors to explore the inside of the reactor for the first time from July 19. The robot, 30 centimeters (12 inches) long that can swim in the flooded unit, was tasked with surveying the damage inside and also finding the location of corium, which is a mixture of the atomic fuel rods and other structural materials that forms after a meltdown.

“It is important to know the exact locations and the physical, chemical, radiological forms of the corium to develop the necessary engineering defueling plans for the safe removal of the radioactive materials,” said Lake Barrett, a former official at the U.S. Nuclear Regulatory Commission who was involved with the cleanup at the Three Mile Island nuclear power plant in the U.S.

 

“The recent investigation results are significant early signs of progress on the long road ahead.”

Until now, TEPCO hasn’t managed to find the melted fuel, presenting a major obstacle in the cleanup effort, where the removal of the fuel is considered one of the most difficult steps. Sightings of what was believed to be the destroyed fuel in reactors No. 1 and No.2 proved to be inaccurate.

“Similar to the latest findings in the No. 3 reactor, Tepco took photographs in January of what appeared to be black residue covering a grate under the Fukushima Dai-Ichi No. 2 reactor, which was speculated to have been melted fuel. However, a follow-up survey by another Toshiba-designed robot in February failed to confirm the location of any melted fuel in the reactor after it got stuck in debris.

 

A robot designed by Hitachi-GE Nuclear Energy Ltd. also failed to find any melted fuel during its probe of the No. 1 reactor in March.”

The significance of the recent finding “might be evidence that the robots used by TEPCO can now deal with the higher radiation levels, at least for periods of time that allow them to search parts of the reactor that are more likely to contain fuel debris,” M.V. Ramana, professor at the Liu Institute for Global Issues at the University of British Columbia, said by email.

“If some of these fragments can be brought out of the reactor and studied, it would allow nuclear engineers and scientists to better model what happened during the accident.”

According to Bloomberg, because of the high radioactivity levels inside the reactor, only specially designed robots can probe the unit. And the unprecedented nature of the Fukushima disaster means that the utility is pinning its efforts on technology not yet invented to get the melted fuel out of the reactors.

The budget for the cleanup, which is still running behind schedule, has more than doubled to a whopping $188 billion last year. TEPCO has also not been able to decide on what to do with the 777,000 tons of water contaminated with tritium when it was used to cool down the plant’s cores, and has petitioned Japan’s government to allow it to dump some of the water into the Pacific. According to the officials, tritium is not harmful in small doses. It’s believed that the decommissioning of the reactors will cost 8 trillion yen ($72 billion), according to an estimate in December from the Ministry of Economy, Trade and Industry, and take as long as 40 years.

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

Authored by Adam Garrie via The Duran,

Mike Pompeo sounds increasingly unhinged when talking about Russia, Wikileaks and the media.

In a tirade against Russia based news outlets RT and Sputnik, Donald Trump’s CIA Director Mike Pompeo blasted Russia for interfering not only in the 2016 US Presidential election but “the one before that and the one before that”. This would imply that Russia helped install Barack Obama in the White House even after his severely anti-Russian foreign policy became well known.

These statements are blasted by Russia’s Foreign Minister Sergey Lavrov in the following way:

If (Pompeo’s) statements mean that we interfered in the elections in 2008 and 2012 that means that President Obama owes us his victories. I’ll refrain from comment. In my opinion, this crosses the lines of what is reasonable.

Pompeo’s assertion came after a tirade in which he said that Russia’s current Chief of the General Staff Valery Gerasimov helped develop a ‘propaganda’ strategy which underlies RT and Sputnik’s alleged purpose. Pompeo further asserted that Gerasimov did this in the early 1970s. According to Pompeo:

His (Gerasimov’s) idea was that you can win wars without firing a single shot, with firing a very few shots in ways that are decidedly not militaristic. And that’s what happened

What changes is the cost to effectuate change through cyber and through RT and Sputnik, the news outlets and through other soft means has just really been lowered. It used to be expensive to run an ad on a television station. Now you simply go online and propagate your message, so they have found an effective tool, an easy way to go reach into our systems and into our culture to achieve the outcome they are looking for.

The ludicrousness of this claim can be easily debunked when one learns that General Gerasimov was born in 1955. If one can conservatively say that 1973 was the ‘early 1970s’, this means that Gerasimov developed a communications strategy that relied on the internet being up to 2017 standards when he was 18 years of age. There is simply no logic in Pompeo’s assertions.

This is the same Mike Pompeo who has told some rather strange tall-tales about Wikileak’s founder Julian Assange while simultaneously calming that RT is part of Wikileaks.

In April of 2017, Pompeo stated:

It is time to call out WikiLeaks for what it really is – a non-state hostile intelligence service often abetted by state actors like Russia. In January of this year, our Intelligence Community determined that Russian military intelligence—the GRU—had used WikiLeaks to release data of US victims that the GRU had obtained through cyber operations against the Democratic National Committee. And the report also found that Russia’s primary propaganda outlet, RT, has actively collaborated with WikiLeaks.

He then stated:

No, I am quite confident that had Assange been around in the 1930s and 40s and 50s, he would have found himself on the wrong side of history.

So to recap, the following are Mike Pompeo’s most ludicrous conspiracy theories:

1. Russia’s current Chief of the General Staff invented the concept of RT and Sputnik, one which relies on the power of the internet in 2017, in the early 1970s when he was in his late teens and still in the equivalent of high school.

 

2. Russia interfered in the US elections in 2008, 2012 and 2016, meaning that Russia supported Barack Obama who was the most anti-Russian US President in modern memory, but no one noticed this Russian interference at the time.

 

3. RT collaborates with Wikileaks which is a hostile intelligence agency rather than an on-line publisher.

 

4. Julian Assange, a self-styled free speech advocate and anti-war activist would have supported Hitler in the 1930s and 1940s.

 

5. RT and Sputnik are supported by Russia because they are cheaper than going to war. This is ostensibly a bad thing in Pompeo’s view.

Mike Pompeo seems like less of an intelligence chief than a simplistic conspiracy theories.

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

Ever wondered why so many western elites are so vehemently supportive of mass immigration? Ever question how willfully blind the establishment is to the costs (human and capital) of allowing any- and everyone into the heart of European nations? Well wonder no more…

As a reminder, the world faces decades of depopulation. Our present economic issues began decades ago.  To understand what is happening economically, simply check the headwaters of (de)population (excluding Africa) under way since 1990…the chart below shows the 0-5yr/old population (excluding Africa) vs. the 0-5yr/old population of Africa. 

World 0-5yr/old population change (excluding Africa):

• 1950–>1990 + 234m
• 1990–>2015 <-47m>
• 2015–>2050 <-67m> (UN med. est.)

Africa 0-5yr/old population change:

• 1950–>1990 + 71m
• 1990–>2015 +75m
• 2015–>2050 +95m (UN med. est.)

Population growth is responsible for the majority of GDP growth…so a downturn in population growth matters…particularly when population growth shifts from wealthy or developing nations to the poorest.  I'm not describing something that may happen in the future…I'm describing what has already happened that is continuing to send progressively larger tsunamis swamping the world economy and has the central bankers doing everything and anything to try to sustain the unsustainable.

Which means, as Econimica's Chris Hamilton recently noted, the next business cycle recession will be unending and is very likely to run years into decades and perhaps a century or more.  A declining population already indebted with record debt and zero interest rates will consume less…meaning overcapacity and excess inventories will never be fully cleared before the next downturn…and on and on and on.

But the absence of a growing consumer base isn't just a US issue…this is a global problem.  The annual growth of the 0-64yr/old population of the combined OECD nations (most the EU, US, Canada, Mexico, Chile, Japan, S. Korea, Australia / New Zealand) plus China, Brazil, and Russia show the growth that has driven nearly all economic growth has come to an end…and begins declining from here on. 

And when importers are shrinking, exporters have no one to export to…and on and on and on.  The depopulation we are now facing is not simply a demographic issue that so many believe; the end of growth is the start of the SHTF scenario in which we now find ourselves.  While this situation offers short term nirvana to investors, the economic repercussions are ultimately disastrous.

*  *  *

And so with that as background – and as noted above, a crisis that has been foreseeable on the horizon for years – it appears, based on a recently exposed United Nations report from the year 2000, that the 'new world order' envisioned a 'final solution' to this demographic dilemma of a collapsing consumer base for the west's credit-based economies…

The Population Division of the Department of Economic and Social Affairs (DESA) has released a new report titled ?Replacement Migration: Is it a Solution to Declining and Ageing Populations??. Replacement migration refers to the international migration that a country would need to prevent population decline and population ageing resulting from low fertility and mortality rates.

 

United Nations projections indicate that between 1995 and 2050, the population of Japan and virtually all countries of Europe will most likely decline. In a number of cases, including Estonia, Bulgaria and Italy, countries would lose between one quarter and one third of their population. Population ageing will be pervasive, bringing the median age of population to historically unprecedented high levels. For instance, in Italy, the median age will rise from 41 years in 2000 to 53 years in 2050. The potential support ratio — i.e., the number of persons of working age (15-64 years) per older person — will often be halved, from 4 or 5 to 2.

 

Focusing on these two striking and critical trends, the report examines in detail the case of eight low-fertility countries (France, Germany, Italy, Japan, Republic of Korea, Russian Federation, United Kingdom and United States) and two regions (Europe and the European Union). In each case, alternative scenarios for the period 1995-2050 are considered, highlighting the impact that various levels of immigration would have on population size and population ageing.

 

Major findings of this report include:

• In the next 50 years, the populations of most developed countries are projected to become smaller and older as a result of low fertility and increased longevity. In contrast, the population of the United States is projected to increase by almost a quarter. Among the countries studied in the report, Italy is projected to register the largest population decline in relative terms, losing 28 per cent of its population between 1995 and 2050, according to the United Nations medium variant projections. The population of the European Union, which in 1995 was larger than that of the United States by 105 million, in 2050, will become smaller by 18 million.
• Population decline is inevitable in the absence of replacement migration. Fertility may rebound in the coming decades, but few believe that it will recover sufficiently in most countries to reach replacement level in the foreseeable future.
• Some immigration is needed to prevent population decline in all countries and regions examined in the report. However, the level of immigration in relation to past experience varies greatly. For the European Union, a continuation of the immigration levels observed in the 1990s would roughly suffice to prevent total population from declining, while for Europe as a whole, immigration would need to double. The Republic of Korea would need a relatively modest net inflow of migrants — a major change, however, for a country which has been a net sender until now. Italy and Japan would need to register notable increases in net immigration. In contrast, France, the United Kingdom and the United States would be able to maintain their total population with fewer immigrants than observed in recent years.
• The numbers of immigrants needed to prevent the decline of the total population are considerably larger than those envisioned by the United Nations projections. The only exception is the United States.
• The numbers of immigrants needed to prevent declines in the working- age population are larger than those needed to prevent declines in total population. In some cases, such as the Republic of Korea, France, the United Kingdom or the United States, they are several times larger. If such flows were to occur, post-1995 immigrants and their descendants would represent a strikingly large share of the total population in 2050 — between 30 and 39 per cent in the case of Japan, Germany and Italy.
• Relative to their population size, Italy and Germany would need the largest number of migrants to maintain the size of their working-age populations. Italy would require 6,500 migrants per million inhabitants annually and Germany, 6,000. The United States would require the smallest number — 1,300 migrants per million inhabitants per year.
• The levels of migration needed to prevent population ageing are many times larger than the migration streams needed to prevent population decline. Maintaining potential support ratios would in all cases entail volumes of immigration entirely out of line with both past experience and reasonable expectations.
• In the absence of immigration, the potential support ratios could be maintained at current levels by increasing the upper limit of the working-age population to roughly 75 years of age.
• The new challenges of declining and ageing populations will require a comprehensive reassessment of many established policies and programmes, with a long-term perspective. Critical issues that need to be addressed include: (a) the appropriate ages for retirement; (b) the levels, types and nature of retirement and health care benefits for the elderly; (c) labour force participation; (d) the assessed amounts of contributions from workers and employers to support retirement and health care benefits for the elderly population; and (e) policies and programmes relating to international migration, in particular, replacement migration and the integration of large numbers of recent migrants and their descendants.

The problem with this cunning plan to immigrant-ize western nations to backfill the domestic demographic decline is that the immigrants – as a whole – are a drag on growth (via politically-correct benefits, extra policing, and border enforcements) as opposed to the economy-improving growth dynamos that the United Nations assumed any sentient-credit-consuming-being would be in the year 2000.

Even the world's richest man is starting to get the joke that the new world order's cunning plan is not working…

Europe will be devastated by African refugees if they don’t “make it more difficult for Africans to reach the continent,” and the solution lies in European nations committing billions of taxpayer money towards overseas aid.

According to Gates, the combination of explosive population growth in Africa combined with Europe’s notoriously generous open-border migrant welfare programs – as illustrated by the ‘German attitude to refugees’ have incentivised migrants to flood into Europe.

“On the one hand you want to demonstrate generosity and take in refugees, but the more generous you are, the more word gets around about this – which in turn motivates more people to leave Africa.”

 

While Germany has been one of the pioneers of the open door policy, it cannot “take in the huge, massive number of people who are wanting to make their way to Europe.”

 

Thus Gates advised European nations to take action in order to make it “more difficult for Africans to reach the continent via the current transit routes.”
 

–Bill Gates

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Authored by David Stockman via LewRockwell.com,

We frequently hear people say they have nothing to hide – so surrendering privacy and constitutional rights to the Surveillance State may not be such a big deal if it helps catch a terrorist or two. But with each passing day in the RussiaGate drama we are learning that this superficial exoneration is dangerously beside the point.

We are referring here to the unrelenting witch hunt that has been unleashed by Imperial Washington against the legitimately elected President of the United States, Donald J. Trump. This campaign of lies, leaks and Russophobia is the handiwork of Obama’s top national security advisors, who blatantly misused Washington’s surveillance apparatus to discredit Trump and to effectively nullify America’s democratic process.

That is, constitutional protections and liberties were systematically breached, but not simply to intimidate, hush or lock up citizens one by one as per the standard totalitarian modus operandi. Instead, what has happened is that the entire public debate has been hijacked by the shadowy forces of the Deep State and their partisan and media collaborators.

The enabling culprits are Obama’s last CIA director, John Brennan, his national security advisor Susan Rice and UN Ambassador Samantha Power. There is now mounting evidence that it was they who illegally “unmasked” NSA intercepts from Trump Tower; they who confected the Russian meddling narrative from behind the protective moat of classified intelligence; and they who orchestrated a systematic campaign of leaks and phony intelligence reports during the presidential transition—-all designed to delegitimize Trump before he even took the oath of office.

So all three of them should be locked­up—-that’s for sure. But the more urgent solution would be to unlock and make public all the innuendo, surmises, assessments, half-truths and boilerplate intelligence chatter on which the entire false narrative about Russian meddling and collusion is based.

Stated differently, without the nation’s massive intelligence apparatus and absurd system of secrecy and classified information to hide behind, the RussiaGate witch hunt would have never gotten off the ground.

In truth, as we will essay below, there is no there, there. So what this new chapter in McCarthyite hysteria actually demonstrates is that the Imperial City’s far-flung, 17-agency, $75 billion Intelligence Behemoth is a plenary threat not just to individual liberty, but to the very constitutional democracy on which the latter depends.

To appreciate the severity of the threat, it is necessary to recognize that the post-9/11 Deep State has lowered a double whammy on our system. That is, it unconstitutionally collects the entirety of all internet based communications of America’s 325 million citizen, while at the same time it has effectively disenfranchised 98% of the 535 members of the House and Senate who have been elected to represent them.

Accordingly, behind the Surveillance State’s vast wall of secrecy and so-called “classified” information, there operates a Dark Government that is unaccountable to the public and largely unconstrained by normal constitutional limits, which the Patriot Act and secret FISA courts have more or less suspended.

In the realm of this Dark Government, the heart of American democracy—-the US Congress—has been completely usurped. Almost everything behind the secrecy wall is off limits to the rank and file. Only a handful of intelligence committee members and the House and Senate leadership gets sworn into the classified intelligence.

Yet just consider the hideous asymmetry of this arrangement. The so-called “Gang of Eight,” comprising the heads of the intelligence oversight committees and their respective party leadership, gets orally briefed in a secure “vault”, where they can’t take notes or carry-out any documents.

Moreover, this select handful of legislators consists of the incessantly mobilized and frazzled potentates of Capitol Hill who are always knee-deep in a thousand other distractions—-including a heavy quotient of politicking, fund-raising, and campaign trail excursions.

On the inside of the Surveillance State wall, by contrast, there are 600,000 employees or contractors with “top secret” security clearances alone; and more than 4 million total operatives who spend night and days feasting on the $75 billion Intelligence Community (IC) budget and carrying out projects and missions designed to justify their existence and keep the budgetary gravy train flowing.

For example, in the National Security Agency (NSA) there is a subsidiary entity called TAO (Targeted Access Operations) with a budget of several billions and more than 1,000 employees. The latter predominately consist of high-powered civilian and military hackers, computer geeks, intelligence analysts, targeting specialists, computer hardware and software designers and electrical engineers—-whose job it is to do exactly what Russia is being accused of.

Namely, to hack and electronically infiltrate the communications and operations of nearly every government on the planet, and most especially those of IC designated enemies and adversaries such as Russia and Iran.Indeed, TAOs motto says it all:

“Your data is our data, your equipment is our equipment ­ anytime, any place, by any legal means.”

In any given 24-hour day, the TAO hacks and deposits more disinformation and malware into its targeted foreign networks than all the low level Russian probes that were intercepted by NSA during the entire Presidential campaign.

In other words, Washington is the mother of all hackers and cyber-warfare operations, and what Russia and other nations do is only a small potatoes version of the same. Yet the overwhelming share of these digital cloak and dagger operation by all sides is a huge waste of national resources; and most especially it is of no value at all to the safety of the American people.

That because Russia, China and Iran—-the principal targets of the IC’s massive surveillance and cyber warfare activities—are no threats whatsoever to America’s security.

Iran has zero military capacity to attack the American homeland, and the claim that it is the leading sponsor of terrorism is pure bunkum. That hoary claim has been concocted by the Washington neocons and the Netanyahu political machine—both of which need demonized enemies in order to nurture the public fears on which their power is based.

Likewise, Russia has one 40-year old smoke-belching aircraft carry and a fleet of rowboats—–neither of which are capable of launching an assault on the New Jersey shores. True, it does have about 1,00o nuclear warheads; but where is the evidence that cool-hand Vlad is contemplating national suicide by using them against the US or Europe?

The purported Chinese threat is even more ludicrous. Notwithstanding the fertile imaginations of the Deep State fear-mongers who believe the South China Sea is actually an American Lake, the Red Suzerains of Beijing know fully well that without the continuous custom of Wal-Mart and Amazon warehouses, the Red Ponzi would collapse in a heartbeat. And that they would be hung by angry mobs from the CCTV (China Central Television) Tower shortly thereafter.

In fact, we don’t need the $75 billion Surveillance State to deal with the Taliban, the jihadist warlords of Somalia or any of the warring Sunni vs. Shiite (Houthis) parties of Yemen, either. They do not threaten America’s security in the slightest.

Nor did the government of Khadafy in Libya after he turned in his nukes. Likewise, the Assad regime has never, ever threatened to harm America—-despite the non-stop vilification from Washington.

At most, Washington needs modest local and theatre level capacity to monitor the fading remnants of the Islamic State—-a temporary scourge in the mostly the impoverished Sunni villages of the Upper Euphrates, which would not even exist in the first place had it not been fostered and armed with the weapons the US Army left behind in the fiasco of Iraq.

So consider the contrafactual. In the absence of a vast Warfare State apparatus and associated Surveillance State wall of secrecy what would RussiaGate amount to?

The answer is straight-forward: It was nothing more than a politically motivated plot orchestrated by former CIA director Brennan to undermine the Presidential campaign of a rambunctious outsider. That is, the Donald was unschooled in the groupthink of the Imperial City and had enough common sense to realize that Putin is not our enemy, that NATO is obsolete, that regime change has been a fiasco and that foreign policy should be based on homeland security first, not the perpetuation of an American Empire abroad.

Those inchoate impulses were the Donald’s original sin, and it was unverified and self-serving “intelligence” from the Latvian security service—-of all things—- that provided the pretext for Brennan to launch the Deep State’s own version of jihad against Trump.

What this dubious intelligence did was to finger Vlad Putin himself and that was crucial. It permitted Brennan to puff-up the evidence of run-of-the-mill cyber intrusions by the Russian security services—-or even unconnected Russian hackers and profiteers— into a sweeping but phony narrative about an attack on American democracy with Putin at the very center.

As Scott Ritter—- the weapons expert who blew the whistle on the IC’s trumped up claims about Saddam’s WMDs—-succinctly explained in a recent article, Brennan proceeded to turn a dubious molehill into a vertiable mountain:

According to reporting from the Washington Post, sometime during this period, CIA Director John Brennan gained access to a sensitive intelligence report from a foreign intelligence service. This service claimed to have technically penetrated the inner circle of Russian leadership to the extent that it could give voice to the words of Russian President Vladimir Putin as he articulated Russia’s objectives regarding the 2016 U.S. Presidential election — to defeat Hillary Clinton and help elect Donald Trump, her Republican opponent. This intelligence was briefed to President Barack Obama and a handful of his closest advisors in early August, with strict instructions that it not be further disseminated.

 

The explosive nature of this intelligence report, both in terms of its sourcing and content, served to drive the investigation of Russian meddling in the American electoral process by the U.S. intelligence community. The problem, however, was that it wasn’t the U.S. intelligence community, per se, undertaking this investigation, but rather (according to the Washington Post) a task force composed of “several dozen analysts from the CIA, NSA and FBI,” hand­picked by the CIA director and set up at the CIA Headquarters who “functioned as a sealed compartment, its work hidden from the rest of the intelligence community.”

 

The result was a closed­circle of analysts who operated in complete isolation from the rest of the U.S. intelligence community. The premise of their work — that Vladimir Putin personally directed Russian meddling in the U.S. Presidential election to tip the balance in favor of Donald Trump — was never questioned in any meaningful fashion, despite its sourcing to a single intelligence report from a foreign service.

 

President Obama ordered the U.S. intelligence community to undertake a comprehensive review of Russian electoral meddling. As a result, intelligence analysts began to reexamine old intelligence reports based upon the premise of Putin’s direct involvement, allowing a deeply disturbing picture to be created of a comprehensive Russian campaign to undermine the American electoral process.

Here’s the thing. Vlad didn’t do it. The only interference in the electoral process that he has been associated with is with respect to what Imperial Washington did next door while he was basking in glory at the Sochi Olympics in February 2014.

To wit, the violent coup on the streets of Kiev was organized by agents and organs of the US government; overthrew a constitutionally elected President who had decided to make an economic and security deal with Russia rather than Europe and NATO in keeping with Ukraine’s economic propinquity to the former and its 700- years of history as an integral part of Greater Russia; and which imposed a new government, hand-picked by the Obama State Department, which was dominated by Ukrainian nationalists and neo-Nazis who were demonstrably hostile to the Russian speaking populations of Crimea and the Donbas region of eastern Ukraine.

Stated differently, Imperial Washington is the world champion meddler in other peoples’ politics and elections.

Since the CIA sponsored coup against the Mosaddegh government in Iran in 1953, it has sponsored more than eighty incidents ranging from election bag money to military coups.

By contrast, the putative Russian attack on American democracy consists of three specific accusations—all of which are readily refutable.

In the first place, Podesta’s password was “password” and could have been hacked by any fat guy, or not, on any computer plugged into the worldwide web anywhere.

 

Moreover, Julian Assange of Wikileaks, who makes a living disclosing the truth, not propagating lies as does the IC, says it did not come from Russian state agents; and that it was in fact leaked, not hacked, by disgruntled Democrat insiders.

 

In any event, if it had actually been hacked by either Russian agents or the proverbial fat guy, there would be a digital imprint stored in NSA’s vast server farms. The fact that it hasn’t leaked amidst all the rest of the anti-Russian innuendo and intelligence hearsay proves beyond much doubt that no such record exists and no such Russian intrusion ever happened.

 

As for the DNC emails, the smoking gun there still smolders in plain sight. The FBI apparently never even took custody of the DNC computer—–farming out the job to an outfit named Crowdstrike. Alas, the latter is a DNC contractor and wannabe silicon valley IPO run by some fanatical Russian ex-pats looking for fame and fortune. It’s no wonder they didn’t want the FBI second guessing their conclusions.

 

Finally, there is the Latvian “intelligence” morsel about Putin’s personal direction of the election meddling campaign. If the Donald had any common sense he would declassify said report forthwith.

 

But never mind. It surely doesn’t exist anyway—-or it too would have leaked long ago.

And that’s all she wrote. The rest is pure spin leaked by Trump’s enemies in the Deep State and canonized by its collaborators in the main stream media.

Unfortunately, the Donald doesn’t seem to recognize that he is actually President. If he did, he would have the Justice Department launch a prosecution against the faithless officials—-Brennan, Rice and Power—-who concocted the whole RussiaGate defamation in the first place.

via http://ift.tt/2uN6TfK Tyler Durden

Contrary to popular perception, not all of the money approved as part of the federal government’s emergency effort to save the American financial system in the fall of 2008 went to the big banks. Some of it – nearly $10 billion, all told – went to support the government’s “hardest hit” program, meant to help forestall foreclosures in 18 states.

And unsurprisingly, nearly a decade after the program was signed into law, government investigators are finding that much of this money was squandered by state governments. Money initially earmarked to help troubled homeowners struggling with underwater mortgages was instead spent on demolitions meant to boost prices of surrounding homes and help ward off crime in city neighborhoods. Except the money was often squandered by state governments, disproportionately robbing poor citizens in cities like Detroit of a program meant to save them from homelessness.

As the Detroit Metro Times reports, Detroit's decade-long wave of tax and mortgage foreclosures has wiped out large swaths of the city's neighborhoods as Wayne County continues to seize thousands of occupied homes a year. The city's neediest homeowners were supposed to receive federal assistance to save their homes as part of the Treasury Department's seven-year-old Hardest Hit Fund. But the State of Michigan squandered its money by adopting unnecessarily stringent requirements — according to a scathing audit issued in January by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

In 2010, Michigan originally received nearly $500 million to provide loans to eligible homeowners who were facing tax or mortgage foreclosure. But the program, called Step Forward Michigan, rejected funding for about 5,000 Detroiters, while assisting more than 2,000 homeowners who earned at least $70,000 a year. That number eventually swelled to $761 million, and of that amount, half was committed to demolitions.

As a result, more than 80 percent of Detroiters making $30,000 or less a year were denied assistance to save their homes from tax or mortgage foreclosure. By contrast, the other 17 states with Hardest Hit Funds rejected 53 percent of homeowners making less than $30,000.

"Michigan and Ohio are among the states that have the most TARP dollars set aside, but also have some of the highest percentage of people turned down for the Hardest Hit Fund," the audit reads.”

SIGTARP said Michigan's high rejection rate "raises questions about whether these programs are as effective and efficient as they can be to reach those people who are the hardest hit." But perhaps even more galling than the state government’s decision to turn away needy homeowners, is how Michigan instead became the first state in 2013 to demolish homes using money intended to save them.

As the paper explains, the idea was that demolitions would revitalize neighborhoods by increasing the property values of surrounding houses, attracting new homeowners, and reducing crime rates.

The plan was only marginally successful: A report commissioned by the Skillman Foundation and Rock Ventures found that each demolition in Detroit increased the value of adjacent homes by only 4.2 percent. Since 2013, Detroit has razed more than 10,000 blighted and abandoned houses using the federal funds. But in its criticism of Michigan’s program, the Treasury Department investigators didn’t focus on its effectiveness, or the unconscionable notion that Michigan decided to destroy homes instead of saving homeowners from being put out on the street.

Instead, Michigan and several other states’ decision to use the money for demolitions has come under fire because the federal government created no rules or controls to prevent fraud, waste, and abuse, according to a 2016 SIGTARP investigation.

Their negligence allowed the program to be riddled with waste and fraud, as contractors started raising their bids, and the bidding process for demolitions has become rife with bid-rigging and other tactics for fraud and abuse that were once famously associated with the American mafia. Soaring demolition costs in the state caught the attention of federal investigators, and now the Detroit Land Bank's handling of the demolitions has become the subject of an ongoing federal grand jury investigation.

“The investigation found that demolition programs are ‘vulnerable to the risk of unfair competitive practices such as bid rigging, contract steering, and other closed door contracting processes’ because the "Treasury conducts no oversight" and therefore cannot determine whether the cost of demolition is ‘necessary and reasonable.’

The SIGTARP report added that "the vulnerability of the Hardest Hit Fund to fraud, waste, and abuse significantly increased with blight elimination, which Treasury could have mitigated, but did not."

 

In a report to Congress in April, a federal inspector slammed the state of Michigan for "skyrocketing demolition costs," indicating that the average price to raze a house had increased 90 percent, from $9,266 to $17,643 by the second quarter of 2016.

 

The Detroit Land Bank's handling of the demolitions has become the subject of an ongoing federal grand jury investigation. The Land Bank declined to comment for this story.”

Foreclosure experts question why Michigan, one of the states hardest hit by the Great Recession, would prioritize demolition over foreclosure prevention. Over the past decade, more than one in three homes in Detroit, a total of about 140,000, have been foreclosed because of unpaid taxes or mortgage defaults. Yet, requirements for the TARP relief program, a program that most homeowners probably aren’t even aware of, have been incredibly strict.

"Many of the houses now being demolished could have been saved if there wasn't a lack of preventing foreclosures," says Jerry Paffendorf, co-founder and CEO of Loveland Technologies, a Detroit-based property and mapping company. "If you don't prevent foreclosures, you're going to have more houses to demolish."

Michigan’s eligibility requirements were unusually strict, according to the report. For example, the state declines assistance to homeowners whose income was not cut by at least 20 percent, unlike other states that don’t require a specific pay reduction to be eligible. Michigan also denies funding to homeowners whose unemployment benefits ran out more than a year ago.

"The Michigan requirement does not reward a responsible worker whose paycheck was cut more than one year ago and has exhausted unemployment benefits, savings, family help, or low-paying part-time work to pay their mortgage," SIGTARP wrote in January 2017.

And while the Metro Times doesn’t bother asking why Michigan would favor contractors over poor urban homeowners, for anyone familiar with how statewide political campaigns are financed, the answer should be obvious. State contractors are often major donors to politicians. So, is it any surprise that politicians would favor their benefactors over a handful of voters?
 

via http://ift.tt/2vzj0u2 Tyler Durden

Authored by Jeffrey Snider via Alhambra Investment Partners,

Well, that clears that up. In case you missed it, back on June 27 Mario Draghi triggered the latest declared BOND ROUT!!! with what was characterized as a very upbeat economic assessment for Europe. And if things are moving forward there, they just have to be everywhere else.

It came off as “hawkish” in the sense that if real acceleration is at hand, ECB normalization of first QE then interest rates can’t be that far behind. The closer we are to the first part, closer is the second. Bonds sold off, and the collective mainstream imagination ran wild.

In truth, Draghi wasn’t “hawkish” at all, nor was he all that upbeat. The media, primarily, saw what it wanted and connected dots that it had created. As for the economy, he merely stated that it was progressing. Why that was particularly important was never stated, especially since Mario Draghi always says the economy is progressing. Out of his mouth, it never is otherwise.

More important than all that, however, the ECB chief was left to try to describe the current state of our central money problem, without recognizing it yet as just that. The economy may or may not be meaningfully improved, but inflation, the economy’s chief monetary indicator along with bond rates, will not behave. For Draghi’s speech, it was characterized as a contradiction.

Following the latest policy meeting, the mainstream believes Draghi is now “dovish.” Gone is the certainty with which the world seemed to be moving toward a better place, replaced with caution and apprehension. Many ascribe this apparent 180 degree shift as a policymaker not wanting to upset markets. If bonds sold off in a rout after his last speech, he must have noticed and reacted with a more soothing posture this time.

None of that is actually going on, of course. Draghi was no more “hawkish” in late June as he isn’t now “dovish” in mid-July. At both times he was consistently confused. Today, he came as close as might be ever expected to stating that as a fact outright:

There really isn’t any convincing sign of a pickup in inflation.

As some reports noted, he stated that same thing several times with slightly different wording. The problem continues to be an absence of all the things required to make money become inflation – starting with wage growth. Without that, can the economy really be improving?

The answer is no, and even an economist like Mario Draghi knows it. In that respect, the European economy is as stuck as the US economy. When friendly outlets like the New York Times notice this lacking vital component, it cannot be as something of a trivial difference:

Central banking increasingly looks like an act of faith.

Mario Draghi, the president of the European Central Bank, and his Bank of Japan counterpart, Haruhiko Kuroda, have spent trillions of euros and yen without generating as much inflation as they want. Yet they have little choice but to insist their policies will eventually work.

The eurozone is finally experiencing a robust recovery and the only things lacking are a pickup in wages and inflation, Mr. Draghi said on Thursday.

Is it really a “robust recovery” without a pickup in wages and household income? Mr. Kuroda can answer that question best with Japan’s experience stuck for a quarter century in, of all things, Japanification. The essence of that permanent stagnation is the lack of income and wage growth, the lagging behind of households that policymakers can’t for some reason see as the most important economic element.

Work equals recovery, and with more work comes more wages. Anything else is just the shifting of numbers, the economy flying erratically like a rocket without its tail fins.

Europe’s economy is booming, except it’s not. Mario Draghi is hawkish, except he’s not. If there is one thing policymakers, media, and regular folks in all these places are starting to really understand, it’s that something important continues to be missing. They may not yet know what it is, so the focus on inflation (and the bond market) is good in that “we” are finally starting to ask the right questions.

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

In the latest Sunday Start report from Morgan Stanley’s Andrew Sheets, the bank’s chief cross-asset strategist looks at the current state of the market – “the S&P 500, Russell 2000 and NASDAQ have hit all-time highs. Volatility has plunged back down near all-time lows. Credit is tighter and yields have been stable” – and asks the same question posed by virtually everyone else in recent weeks : “what rattles this market. What breaks the egg?“

Sheets, like the bank’s equity research team (which recall believes the current market is a rerun of 1999 and sees up to another 30% surge in stocks) remains optimistic saying that “risks don’t warrant a defensive view yet”, and adds that “with longs concentrated in DM equities and EM fixed income”… “no one wants to be that complacent investor at the highs, and good times are always the best time to think about what can go wrong.” 

On the other hand, Sheets highlights one rising risk, namely his “high conviction that markets have passed the point where bad data can be offset with promises of further easing. But so far this doesn’t matter, because growth in 2017 has been surprisingly good. Our economists see 2Q global GDP at 4.3%Q, the highest reading since 4Q10. Weaker growth will crack the egg, but we’re not seeing it yet.“

A second risk mentioned by the X-asset strategist: “valuations and earnings. High stock valuations and strong earnings can be OK (see the early 1960s and late 1990s). High valuations and poor earnings is trouble. A disappointing 2Q earnings season would be a clear catalyst to push the market lower. But there are a few reasons why we don’t think that happens.“

A third risk is that inflation, largely benign and disappointing in recent months, returns: “for now, soft inflation is giving DM central banks cover to keep real rates deeply negative. This won’t last forever; our economists forecast the trough in US core PCE in September, inflation in Japan and the eurozone to pick up materially in 1H18 and China.”

Risk number 4 to Sheets: aggressiveness. “Growth with easy money is a cocktail for all manner of problems, from ill-advised M&A, to excessive bond issuance, to extended investor positioning. All are potential egg-crackers.” But again (and you may sense a theme here) Morgan Stanley don’t think they’re negatives yet: “M&A volumes in the US and Europe are still only half the 2007 peak. US credit has yet to show strains from oversupply (although we remain cautious, seeing poor risk/reward). Our prime brokerage team tells me that hedge fund net positioning remains near its 10-year average. We’re watching all these closely.”

Which brings us to the biggest concern for the bank which recently beat Goldman Sachs in FICC revenue for the second straight quarter: politics, in general, and the debt ceiling in particular.

One reason why we may not be seeing more aggressiveness is our final risk – politics. Multiple failures in the US to pass healthcare legislation, despite single-party control, raise questions about a whole host of other issues, from the debt ceiling, to the budget, to taxes. Meanwhile, news reports suggest that the ongoing probe by Special Counsel Robert Mueller is widening.

Finally, here is what Sheets – along with many others, including the T-Bill market – believes is the biggest immediate risk to the market:

The debt ceiling worries us most, given that action may need to be taken within as little as seven weeks. But on the other issues, we’re more relaxed. The Senate’s Healthcare bill had an approval rating of 17%, so we doubt its failure would be a hit to consumer confidence. The Special Counsel’s investigation, whatever the outcome, will likely take considerable time. Our economic baseline was already cautious with regard to fiscal stimulus, a long-held view of our policy team. And while tax cuts could boost the market temporarily, they could also lead to a more hawkish Fed, a classic ‘be careful what you wish for.’

Incidentally, we agree with Sheets that the debt ceiling is fast emerging as the biggest downside risk catalyst, and one which has a tangible date: mid-to-late September. In light of the dire state of political discourse in Washington, and Trump’s inability to form a political compromise, it is no surprise why the October 19, 2017 T-Bill yield spiked in recent days…

… and why the October 19, 2017 Bill Spread has blown out….

… as more traders begin to grasp what a failure to pass the debt ceiling, if only temporarily, would mean for the US.

* * *

Andrew Sheets full note is below:

What Breaks the Egg?

 

I didn’t win the 4th of July egg-toss, and never really came close. Our egg cracked easily, which couldn’t be a worse analogy for markets over the last three weeks if I tried. The S&P 500, Russell 2000 and NASDAQ have hit all-time highs. Volatility has plunged back down near all-time lows. Credit is tighter and yields have been stable. So what rattles this market? What breaks the egg?

 

We remain constructive, with longs concentrated in DM equities and EM fixed income. But no one wants to be that complacent investor at the highs, and good times are always the best time to think about what can go wrong. What follows is where we see risks, and why we don’t think they warrant a defensive view (yet).

 

Let’s start with growth. I believe, with high conviction, that markets have passed the point where bad data can be offset with promises of further easing. But so far this doesn’t matter, because growth in 2017 has been surprisingly good. Our economists see 2Q global GDP at 4.3%Q, the highest reading since 4Q10. Weaker growth will crack the egg, but we’re not seeing it yet.

 

This brings us to a second risk: valuations and earnings. High stock valuations and strong earnings can be OK (see the early 1960s and late 1990s). High valuations and poor earnings is trouble. A disappointing 2Q earnings season would be a clear catalyst to push the market lower. But there are a few reasons why we don’t think that happens.

 

First, strong 2Q global GDP should be a tailwind to revenue. And where that growth has been most disappointing (the US), a weak dollar should provide a tailwind. My colleague, Graham Secker, has specific concerns in places like European cyclicals, where inflows have been high, a stronger EUR is a challenge and early earnings misses have been punished. But broadly, we see earnings as more likely to be a positive than negative global catalyst this year.

 

Strong global growth usually means policy tightening, another candidate to break the egg. But for now, soft inflation is giving DM central banks cover to keep real rates deeply negative. This won’t last forever; our economists forecast the trough in US core PCE in September, inflation in Japan and the eurozone to pick up materially in 1H18 and China CPI to climb steadily over the next 12 months. Our base case is that rising inflation is next year’s problem, but markets could react sooner than we expect. We’re watching this closely.

 

Strong growth and easy policy, of course, present another risk: aggressiveness. Growth with easy money is a cocktail for all manner of problems, from ill-advised M&A, to excessive bond issuance, to extended investor positioning. All are potential egg-crackers. But again (and you may sense a theme here) we don’t think they’re negatives yet.

 

M&A volumes in the US and Europe are still only half the 2007 peak. US credit has yet to show strains from oversupply (although we remain cautious, seeing poor risk/reward). Our prime brokerage team tells me that hedge fund net positioning remains near its 10-year average. We’re watching all these closely.

 

One reason why we may not be seeing more aggressiveness is our final risk – politics. Multiple failures in the US to pass healthcare legislation, despite single-party control, raise questions about a whole host of other issues, from the debt ceiling, to the budget, to taxes. Meanwhile, news reports suggest that the ongoing probe by Special Counsel Robert Mueller is widening.

 

The debt ceiling worries us most, given that action may need to be taken within as little as seven weeks. But on the other issues, we’re more relaxed. The Senate’s Healthcare bill had an approval rating of 17%, so  we doubt its failure would be a hit to consumer confidence. The Special Counsel’s investigation, whatever the outcome, will likely take considerable time. Our economic baseline was already cautious with regard to fiscal stimulus, a long-held view of our policy team. And while tax cuts could boost the market temporarily, they could also lead to a more hawkish Fed, a classic ‘be careful what you wish for’ per my colleague Michael Wilson.

 

Weaker growth, disappointing earnings, hawkish policy, over-aggressiveness and political mistakes are all candidates to break the current tranquility. We like long EURAUD as a combined hedge against tighter policy or weaker growth than we otherwise expect. Our rates strategists like owning long-dated US vs. EU duration, given attractive risk/reward heading into a debt ceiling fight. Against that, we’d maintain a positive overall stance, with longs concentrated in DM equities and EM fixed income.

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

Having been quite for almost 24 hours following his tweetstorm yesterday, President Trump is once again active on his Twitter account.

First, seemingly making a jab at the special counsel’s Russia investigation – following Chuck Schumer’s admission that Democrats didn’t lose because of the Russians – Trump scoffed at the “phony Russian Witch Hunt”…

As the phony Russian Witch Hunt continues, two groups are laughing at this excuse for a lost election taking hold, Democrats and Russians!

— Donald J. Trump (@realDonaldTrump) July 23, 2017

But then turned his ire towards some in his own party…

It’s very sad that Republicans, even some that were carried over the line on my back, do very little to protect their President.

— Donald J. Trump (@realDonaldTrump) July 23, 2017

 

While a little less aggressive than yesterday’s rage, the president is no less direct in his implication.

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

Via TheMindUnleashed.com,

Few have put their lives on the line as journalist Benjamin Fulford has done. Going from the peak of his journalistic career, a massive salary and access to almost any door he wanted open, the former Asia-Pacific Bureau Chief of Forbes Magazine stepped away in disagreement of massive censoring and has since started reporting on geopolitical events that certain “elites” wish he would not. Blowing the whistle on a wide variety of topics, including 9/11 and Fukushima, Fulford has drawn the attention of many around the world and has even survived 5 assassination attempts.

The Mind Unleashed was fortunate to be able to interview Mr. Fulford.

1. What is your education and journalistic background Benjamin? 

My educational background is varied. I went to grade school in Mexico and Canada and studied in Spanish and English. My high school was in French. When I was 17 I went to the Amazon and studied under a Shipibo shaman on the banks of the Ucuyali river in Northern Peru.

My university education was Sophia University in Tokyo and the University of British Columbia in Vancouver, Canada. My degree is in Asian studies with a China area specialty. However, since I took about 10 years worth of undergraduate courses I think of myself as a generalist.

2. You also speak multiple languages, yes? 

Yes. Native or near native in English, Japanese, French and Spanish. Conversational ability in Mandarin and the various romance languages.

3. Being with such a well known media company (Forbes), what caused you to leave your job? 

There were many reasons but mainly it had to do with censorship. When Citibank was kicked out of Japan because they were caught money laundering for crime gangs, Forbes would not run the story even though my sources were Finance Ministry officials speaking on the record.

The final straw was when they asked me to do a story about a computer virus software company. I went to the Philippines to visit their laboratories and while there I went to visit the creator of the “I love you” virus that caused billions of dollars worth of damage. He claimed the anti-virus company paid him to make the virus.

I thought I had a big scoop but my editors refused to run the story because they thought I was becoming “unreliable.” Then Mr. Nakagawa, the business manager in Japan told me the real reason the story was cancelled was because the head of the anti-virus company paid Steve Forbes $500,000 to kill my story. That was the last straw for me.

However, it was a very scary thing to give up that regular fat monthly paycheck and the prestigious name card that opened so many doors. I can understand why many corporate journalists put up with censorship and control just so they can keep up their lifestyles.

4. You’ve stated that the Japanese royal family showed you evidence that 9/11 was an inside job and that this was sort of your big “wake up call.” Can you elaborate on that a bit?

I was planning to publish a book exposing the corruption in Japan. The day after I sent the first two chapters to my agent I got a call from Kaoru Nakamaru, a cousin of Emperor Hirohito who told me “I know a lot about the dark side of Japan but I understand nothing about the dark side of the West.” We met and she asked me not to publish the book because that is not what I really wanted to do in my heart. Then she gave me a 9/11 video.

My thought at the time was “this is one of those anti-semitic conspiracy videos I read about in the New York Times.” I was thus reluctant to even look at it. However, when I did, it really opened my eyes and set me on a path of intensive research into the historical truth of false flags over the ages.

5. You wrote a book about 9/11, correct?

Yes I did and it was a best seller in Japan. Here is the link.

6. You’ve also been very vocal about Fukishima being an intentional crime against humanity . Can you please elaborate on that?

First of all the Japanese authorities were warned in advance of March 11, 2011 by an Australian government agent going by the code name Richard Sorge (now Alexander Romanov) that a 500 kiloton nuclear weapon stolen from the Russian submarine Kursk in 2000 had been smuggled into Japan for the purpose of nuclear terror against that country. Sorge also told me and I wrote about it.

Sorge was a drug smuggler into Japan for over 20 years and went to the authorities when a nuclear weapon was sent together with his usual drug shipment.

The bomb was first taken to former Prime Minister Yasuhiro Nakasone’s property in Hinodecho in Western Tokyo. It was then taken to the North Korean citizen’s association building.

Later, according to Takamasa Kawase of Japanese military intelligence, the bomb was taken aboard the deep sea drilling ship Chikyu.

Local news reports confirm the Chikyu was drilling deep into the seabed at the exact epicenters of the Fukushima earthquake prior to March 11, 2011 (or 311 as they call it in Japan).

After the Tsunami and nuclear attack on Japan, a Christian Pastor by the name of Paolo Izumi was approached by a member of the Japanese self defense forces who said he was part of a 15 member crew that dismantled the bomb into 5 smaller nuclear devices and that these were drilled into the seabed by the Chikyu prior to 311. He thought at the time he was paricipating in earthquake research.

After the terrorist attack, his colleagues were all murdered so he sought shelter from his Pastor. The person is now being protected under the witness protection program and is willing to testify in public about what happened.

There is a lot more to this so please do a news search to see my previous articles on the subject. [Editor’s note: Benjamin asked that this book be read and shared by viewers of this interview.]

7. So this is some sort of global elite that have helped to orchestrate 9/11 and Fukushima? 

The forensic trail of evidence led to Peter Hanz Kolvenbach, the former head of the Jesuits and the P2 Freemason lodge in Italy. These people are aiming for a fascist world government under their control.

8. You were the first journalist (to my knowledge) to publicly write about what is known as the global collateral accounts. Can you explain what these accounts are and some of their history, well as their intended purpose? 

Again that would require a book on its own. The short version is that since Roman times the West sent gold and silver to Asia in exchange for silk, ceramics and spices. This meant that about 85% of the world’s precious metals ended up in Asia, mostly under the control of various Asian royal dynasties.

This gold was used to back up the Bretton Woods system. However, when the West broke its promises to have a Marshal plan for the whole world and only applied it to the G7 countries under their control, the gold was cut off.

The US thus ran out of gold in the early 1970’s which led to the Nixon shock when the US dollar was taken off the gold standard and put on the oil standard.

The petrodollar standard is now being replaced once again with a gold standard but the process is not complete and there is a continuing stand off between the West, who have the Euro, US Dollar and Yen printing presses and the Asians, who have the gold.

9. In August of 2011, you wrote about a meeting that took place off the coast of Monaco between a man named Neil Keenan and 57 financial representatives from various countries around the world. What was that meeting about and why was it so important?

Basically an alliance was formed with backing from US military white hats to try to take control of the global financial system away from the elite Western bloodline families I refer to as the Khazarian mafia.

10. So essentially, there is a large international alliance that is opposing a one world order?

They are not opposed to a world united by friendship and the rule of law. They are opposed to a world fascist dictatorship controlled by Satan worshiping elite bloodlines.

The anti-Russian hysteria on the part of the Khazarians is due to the fact they were kicked out of Russia and Russia is now undergoing a big Christian revival.

11. What are some sources that you receive your intelligence from? 

My sources are many and varied but include people in the P2 Freemason lodge, the FSB, the NSA, the Gnostic Illuminati, the CIA, US military Intelligence, the various Japanese crime gangs, Asian secret societies, Japanese military intelligence, the North Koreans, etc.

I have been a reporter here for 30 years which means I have developed a comprehensive set of contacts.

12. So there are many people within the intelligence community around the world who are working quietly and are also part of this international alliance seeking to end the corruptive power systems of our world?

Yes indeed there is.

13. You’ve stated that you’ve had 5 attempts at your life. Clearly, “they” don’t like that you’re putting out such revealing information on a weekly basis.

The five murder attempts include:

Being poisoned in Italy by Vincenzo Mazzara, a cavalier of the teutonic knights and a senior member of the P2 freemason lodge.

An attempt to shoot me by Japanese gangsters in Sakhalin, Russia.

Multiple attempts to murder me in Osaka by Japanese gangsters paid to do so by Rothschild Agent Michael Greenberg

An attempted attack with a heart attack inducing electronic device on a subway in Tokyo.

Being stabbed with a poison needle by Mutsuaki Okubo, a North Korean agent.

14. Some people say that you’re disinformation because certain things have not come to pass that you’ve written about. However, many things have. Can you talk about some of those big events that have?

When people accuse me of being a disinformation agent they are basically calling me a liar which is slander.

What has happened is that my sources have told me certain things are going to happen and they do not always happen as my sources told me they would. In such cases, I was quoting my sources and they were wrong. For example, senior CIA sources kept insisting to me that Joe Biden would be President but it turned out to be Donald Trump.

However, some of my sources accurately predicted events like the Lehman Shock, the overthrow of the Muslim Brotherhood government in Egypt, the Fukushima nuclear terror attack on Japan, etc.

15. So essentially, good things are happening despite a lack of media attention on it? 

Good things are definitely happening and that is obvious for all to see. Only 6% of Americans trust the mainstream media which means they have killed themselves with their constant lies and cover ups.

16. Any other messages you’d like to share with the world or anyone in particular?

Yes, the process of creating and distributing money is the process of deciding what humanity does in the future. This process should be a transparently run public utility not a private monopoly in the hands of gangsters. We are fighting to free humanity from a horrific regime of babylonian debt slavery and we are winning.

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