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Authored by Howard Kunstler via Kunstler.com,

Can you see those swans coming in for a landing on Pond USA? They’re not exactly black swans, because you knew they were out there circling, but they’re dark enough against the twilight’s last gleaming to give you the heebie jeebies.

Troubles and portents of more trouble are stacking up as we approach the Ides of March zone of financial turmoil. You must surely surmise that a debt ceiling impact, a Federal Reserve interest rate hike, and the election of a Dutch anti-EU leader all scheduled for that one day are a good start on the greater unravel to follow. Glowering in the spotlight at center stage will be President Donald Trump, designated bag-holder of the Deep State and its myrmidons. And what’s in that bag he’s holding? Just a couple of shit sandwiches and a hair shirt for his journey down the lonely road to exile. But getting rid of Trump would only leave the Deep State with a bigger problem: itself. That is, an economy and a society that can’t be governed by any means.

I think many professional observers-of-the-scene are missing something in this unspooling story: the Deep State is actually becoming more impotent and ineffectual, not omnipotent. Case in point: RussiaGate — come on, let’s finally call it that — the popular idea that Russia hacked the 2016 presidential election. It’s popular because it’s such a convenient excuse for the failure of a corrupt, exhausted, and brain-dead Democratic establishment. But all the exertions of the Deep State to put over this story since last summer were negated this week by two events.

First, there was former NSA Director James Clapper’s appearance on NBC’s Sunday Meet the Press show with Chuck Todd featuring the following interchange:

CHUCK TODD:
Does intelligence exist that can definitively answer the following question, whether there were improper contacts between the Trump campaign and Russian officials?

 

JAMES CLAPPER:
We did not include any evidence in our report, and I say, “our,” that’s N.S.A., F.B.I. and C.I.A., with my office, the Director of National Intelligence, that had anything, that had any reflection of collusion between members of the Trump campaign and the Russians. There was no evidence of that included in our report.

 

CHUCK TODD:
I understand that. But does it exist?

 

JAMES CLAPPER:
Not to my knowledge.

And so what to make of the RussiaGate histrionics served up by CNN, The New York Times, the WashPo, NPR, and sundry tools as Senator Chuck Schumer (D–NY)? What I make of it is a growing civil war in the government itself, and perhaps something arguably like sedition.

Second matter: this week’s release of Wikileaks’ Vault-7 trove of purloined government documents. These seem to suggest that US Intel agencies have acquired the ability to spoof any activity on any sort of computer or program that makes it impossible to track the identity of any hacker and, what’s more, gives US Intel a tool to make any party appear culpable for any given case of hacking — meaning that if so called computer hacking “footprints” had been discovered linking Russia to the Hillary-DNC-Podesta emails, those footprints could have been engineered by US Intel itself… meaning further that any so-called “evidence” of Russian election hacking could not be proven one way or the other.

Now, this might be too fine a point for the RussiaGate partisans, but I don’t see how it fails to moot the issue. The partisans are still finding other ways to propagandize. On Thursday evening, NPR ran a story about Russia breaking a missile agreement with this wrap-up from correspondent David Welna:

WELNA: Still unclear is how President Trump, an admirer of Russian President Vladimir Putin, might respond to Moscow’s defiance. David Welna, NPR News, Washington.

That lapse of newsmanship is the kind of thing that makes me (a still-registered Democrat) want to support the defunding of NPR.

All this hugger-mugger may be further mooted by the financial disorders of Spring 2017. Don’t underestimate the Federal Reserve’s eagerness in sending Trump on the road to political perdition with his shit sandwiches and hair shirt. The Fed’s board of governors knows full well that their interest rate hike could sink even the carefully fabricated Potemkin appearance of a healthy economy. It would also create more dire debt-servicing problems for the US Treasury when and if the debt ceiling problem ever gets resolved. They’re holding a hand grenade in the old USA bunker and they’re getting ready to pull the pin. Just watch.

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In a move that will likely provoke further media, and pundit, fury despite it being a routine act that is concurrent with every change in administration, Attorney General Jeff Sessions has asked all remaining Obama-appointed U.S. Attorneys for their resignation.

Sarah Isgur Flores, Director of Public Affairs at the Department of Justice, released the following statement:

“As was the case in prior transitions, many of the United States Attorneys nominated by the previous administration already have left the Department of Justice. The Attorney General has now asked the remaining 46 presidentially appointed U.S. Attorneys to tender their resignations in order to ensure a uniform transition. Until the new U.S. Attorneys are confirmed, the dedicated career prosecutors in our U.S. Attorney’s Offices will continue the great work of the Department in investigating, prosecuting, and deterring the most violent offenders.”

Today’s decision, long-overdue accoring to many, comes less than two months after then President-elect Trump said on January 18 he would allow U.S. attorneys appointed by President Barack Obama to remain in their roles for the time being.  Before the announcement, officials in several U.S. attorneys’ offices told The Huffington Post they had received no guidance from the incoming administration on whether they were expected to resign when Trump became president. 

“Currently serving U.S. Attorneys and U.S. Marshals were informed today that they are able to stay in place after January 20th while the process for identifying and confirming successors is further determined,” Wyn Hornbuckle, a DOJ spokesman, said in a statement. The Executive Office for United States Attorneys informed the officials of the decision, he said.

As a reminder, it is standard practice for a new president to appoint his own U.S. attorneys, who are political appointees.

In retrospect, this decision should perhaps have been taken earlier, especially in the context of the constant pushback Trump’s immigration EO – both original and revised – has received by various Obama-appointed Attorneys in the past month.

The bottom line, however, is that what Sessions has done, is considered standard operating procedure, and if anything Trump was late making the announcement.

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In his first public appearance since his wife's catastrophic loss in the presidential election, former President Bill Clinton appears to have gone off-script once again warning repeatedly against "us versus them" thinking that he said has become such an active part of politics in America, in the Brexit vote, in the Philippines and throughout Europe.

Coming from the former leader of the party that seemingly stands for nothing but identity politics and divisive thinking, the irony is not lost on us, but of course, Mr. Clinton's perspective on who is responsible for the "them against us" politics is different. As Politico reports, during a speech that was the keynote at an event hosted by the Brookings Institution honoring the late Israeli Prime Minister Yitzhak Rabin, Clinton opined…

"People who claim to want the nation-state are actually trying to have a pan-national movement to institutionalize separatism and division within borders all over the world."

 

"It’s like we’re all having an identity crisis at once — and it is an inevitable consequence of the economic and social changes that have occurred at an increasingly rapid pace."

 

…

 

"The whole history of humankind is basically the definition of who is us and who is them, and the question of whether we should all live under the same set of rules."

 

People "have found more political success and met the deep psychic needs people have had to feel that their identity requires them to be juxtaposed against someone else."

Finally, reflecting on comments from his old friend Rabin's tough-minded approach to finding ways to work and live together is what’s needed, Clinton said…

"If you got that, in every age and time, the challenges we face can be resolved in a way to keep us going forward, instead of taking us to the edge of our destruction."

In other words, "can't we all just get along?" – judging by the various cohorts that the Democrats have carved the nation into, we suspect not. Just ask Mika.

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Via MauldinEconomics.com,

I’ve written about this before, but there are 10 million American males between the age of 24 and 64 who have literally dropped out of the workforce. It means that they have given up on finding a job or are simply not looking.

But, focusing on just one subset among those who are 24–64, we see that white working-class males’ labor force participation rate has dropped to 59%.

The Economist has created something called a Forgotten Men Index, which shows the gap between white working-class men in particular and all men in general.

I bring this data up because white working-class men have become the focus of much current political discussion. The participation numbers are similar or worse for other racial categories except for Asians.

Among the 10 million men not in the workforce—men who are not even looking for a job—57% of the Caucasian population between 21 and 55 collect disability benefits, which means they can get Medicaid benefits and cheap narcotics.

Opioid addiction has become rampant in 50-something men.

This Isn’t New

For the first time in the last 250 years of history, we are watching the probable longevity rates within a demographic segment of the population fall. That specific demographic is working men in their 50s, and the main causes of early death in this cohort are alcohol, drug abuse, and suicide.

Shrinking workforce participation is not a recent trend; I’ve written about it plenty. It has been happening since the ’60s, through every administration and every tax reform. It seems that with every major technological advance, a certain portion of the working population doesn’t find a way forward to take advantage of the next set of opportunities.

Let me pull a few random quotes from Nicholas Eberstadt’s powerful book Men Without Work. These are just a few of the almost 40 pages that I copied and made notes on from his 200-page book. I could literally write a whole letter just focusing on what I think are important quotes.

The work rate has improved since 2014, but it would be unwise to exaggerate that turnaround. As of early 2016, our adult work rate was still at its lowest level in three decades. If our nation’s work rate today were back to its start-of-the-century highs, approximately 10 million more Americans would currently have paying jobs.

Here, then, is the underlying contradiction of economic life in America’s second Gilded Age: A period of what might at best be described as indifferent economic growth has somehow produced markedly more wealth for its wealth-holders and markedly less work for its workers. This paradox may help explain a number of otherwise perplexing features of our time, such as the steep drop in popular satisfaction with the direction of the country, the increasing attraction of extremist voices in electoral politics, and why overwhelming majorities continue to tell public opinion pollsters, year after year, that our ever-richer America is still stuck in a recession….

All of these assessments draw upon data on labor market dynamics: job openings, new hires, “quit ratios,” unemployment filings and the like. And all those data are informative—as far as they go. But they miss also something, a big something: the deterioration of work rates for American men…

Between 1948 and 2015, the work rate for U.S. men twenty and older fell from 85.8 percent to 68.2 percent. Thus the proportion of American men twenty and older without paid work more than doubled, from 14 percent to almost 32 percent. Granted, the work rate for adult men in 2015 was over a percentage point higher than 2010 (its all-time low). But purportedly “near full employment” conditions notwithstanding, the work rate for the twenty-plus male was more than a fifth lower in 2015 than in 1948.

It’s Happening All Across the Board

Recent data over the last number of years have begun to show that it is not just the American male who is struggling. The participation rate of female workers is beginning to decline as well.

The trend in the workplace has not been our friend. And any reasonable analysis suggests that in the future, the rate at which jobs are being lost to new technologies is only going to double and triple.

This is one of the central problems facing society today, not just in the US but all across the developed world.

Do you think the trends will be any different in Europe, England, Japan, or China? Those countries will all have their own ways of dealing with this problem, of course, but as I’ve shared before, technology is going to put a strain on the number of jobs available to people without specific technical expertise.

via http://ift.tt/2m9oRAJ Tyler Durden

Earlier this week, when we discussed Peter Navarro’s jarring op-ed in the WSJ in which he alleged that the persistent US trade deficit “would put US national security in jeopardy”, we said that “a better question than what is Navarro’s purpose by writing it, is why he is writing it, and does his use of a public forum like the WSJ mean that there is friction between him and Trump camp, especially since in recent weeks it appears that a core pillar of Trump’s trade policies, namely the border adjustability, appear to no longer be on the docket of actionable items.”

As it turns out, that was precisely the correct question, because as the FT reports, “a civil war has broken out within the White House over trade, leading to what one official called “a fiery meeting” in the Oval Office pitting economic nationalists close to Donald Trump against pro-trade moderates from Wall Street.”

More notably, the person at the center of this “civil war” is none other than Navarro, who as we expected is now said to be losing influence, and as a result he resorted to using the WSJ as a means to appeal directly to the general public. It may have been a prudent gamble: the WSJ op-ed may have helped Navarro salvage some of his credibility with Trump, according to the FT:

The officials and people dealing with the White House said Mr Navarro appeared to be losing influence in recent weeks. But during the recent Oval Office fight, Mr Trump appeared to side with the economic nationalists, one official said.

Facing off the “hardline group” of Navarro, and other “nationalists” such as Steve Bannon, is a a “faction” led by former Goldman COO Gary Cohn, a career globalist, who leads Mr Trump’s National Economic Council.

But what is just as important, is that if the FT is right, then allegations that Trump has “sold out” to his Goldman advisors may be premature: in fact, if anything, Trump appears to be playing off one camp, the “nationalists”, against its polar opposite, the “Goldman globalists”:

The battle over trade is emblematic of a broader fight on economic policy within the Trump’s administration. It comes ahead of a visit to Washington next week by Ms Merkel, the German chancellor, and amid preparations for a meeting of G20 finance ministers in Germany next week at which allies’ concerns over protectionism are likely to be high on the agenda.

While the White House was non-committal, providing the FT with the following brief statement:

“Gary Cohn and Peter Navarro are both valued members of the president’s economic team. They are working together to enact the president’s economic agenda, protect American workers and grow American businesses.”

… the “globalists” led by Cohn and others “have seized on Mr Navarro’s public comments — and widespread criticism by economists of his stand on trade deficits and other matters — to try and sideline him.”

That has led to discussions over moving Mr Navarro and the new National Trade Council he leads out of the White House and to the Commerce Department, headed by another Wall Street veteran, Wilbur Ross.

And, if the FT is correct, it appears that the Goldman-led faction is winning:

Cohn has also been featuring more prominently in discussions over the renegotiation of the North American Free Trade Agreement with Canada and Mexico, one of Mr Trump’s top trade priorities. After a meeting with Mr Cohn and other White House officials on Thursday, Mexico’s foreign minister, Luis Videgaray, said the goal was to wrap up talks quickly and by the end of this year. That contradicted Mr Ross, who has called for deeper and potentially longer talks that could drag well into next year.

Cohn’s sidelining of Navarro has only picked up recently, and in an attempt to alienate him from Trump, he has become “an increasingly isolated figure in the administration. He has been operating with a very small staff out of an office in the Old Executive Office Building adjacent to the White House while Mr Cohn, who has been adding staff to his NEC base inside the president’s residence itself.”

Meanwhile, Cohn has been beefing up his staffing ranks with more, like-minded “globalist” supporters, such as Andrew Quinn, a former trade official who served as a senior negotiator during the Obama administration’s push for a Trans-Pacific Partnership with Japan and 10 other countries. In other words, someone who is desperate for much more, not less, global trade alliances. The White House last month announced Mr Quinn would serve on the NEC as a “special assistant to the president” for international trade. Quinn’s appointment led to an outburst from Breitbart, which labelled the career official an “enemy within” the Trump administration earlier this month.

The bottom line, however, is that the fate of Trump’s trade policies may rest in the fate of Navarro, and to a lesser extent Bannon: the two are the last bastion to push for Trump’s initial protectionist policies; should they fade, it will be the policies of “Goldman” that end up being enacted. As the FT further notes, “Mr Navarro’s apparent sidelining have been helped ease some foreign officials’ concerns about the prospects of the Trump administration acting on campaign threats to raise tariffs and take other aggressive steps that could lead to a trade war.“

“The situation is less worrying than it was two months ago because [Mr] Navarro seems to be more and more marginalised,” said one European official. “His influence seems to be diminishing quickly.”

And while Navarro’s ultimate fate remains unclear, a new, and more interesting “civl war” may emerge should he lose all influence: American trade unions vs “Goldman Sachs.”

Thea Lee, a top trade official at the AFL-CIO, the US’s largest union, and a member of the president’s recently-appointed manufacturing council, said Mr Trump appeared to be bending to the growing influence of the administration’s Wall Street veterans and walking away from his campaign promise for a fresh approach to trade.

 

“At the moment it appears that the Wall Street wing of the Trump administration is winning this battle and the Wall Street wing is in favour of the status quo in terms of US trade policy,” Ms Lee said.

In retrospect, those who said Trump will ultimately do Wall Street’s bidding, may have been correct all along.

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With oil’s recent somnolent, low-vol levitation at their back, the number of hedge funds and other speculators who were soothed by the gradual move higher and betting on the success of OPEC reflationary strategy, had recently grown to an all time high, as seen in the chart below showing the number of long net-spec positions in the combined oil futures market.

So when the price of oil unexpectedly tumbled on Wednesday, then continued to slide over the next two days, many were wondering if this sharp reversal in prices would unleash a margin-call driven liquidation scramble.

pictured: WTI longs if this sell-off continues https://t.co/iqpjgW98gD cc: @PrometheusAM http://pic.twitter.com/eKbaMC7ShL

— Movement Capital (@movement_cap) March 8, 2017

For now, while the selling has persisted, it has been largely orderly and no major “flushes” lower have been observed following the sharp move on Wednesday. Furthermore, until we get the latest CFTC data later on Friday it will be impossible to determine if the record long overhang had dropped (or perhaps increased further), however what we do know is that according to ICE and CME data, a record number of options contracts traded on Thursday, as Bloomberg reports. The total includes contracts referencing Brent and WTI, and also shows
a surge in bullish bets that the former will reach $70 a barrel by September.

While it is possible that the spike in option trading is to hedge existing, predominantly long positions, thus preventing a wholesale sell-off, it is just as likely that the momentum chasers simply rushed to “buy the dip”, thus becoming even more exposed, this time with leverage and theta, to continued downside risk.

In total, options equivalent to to than 800
million barrels of crude oil exchange hands yesterday, an amount that is well more than half the total outstanding net long spec positions.

According to Bloomberg, Thursday marked the second time in a matter of months that options trading in the oil market has soared. In late November, investors rushed to make bets that prices would rise as OPEC hammered out its deal to cut production. After both Brent and WTI this week fell the most in more than a year, traders again sought to profit from market gyrations by “buying the dip” only instead of buying the underlying, they rushed into its derivative with substantial leverage, hoping for a prompt bounce.

They may be disappointed… at least the bulls that is, Because the surge in option trading occurred as Brent volatility rebounded to a two-month high and the bearish skew surged.

Furthermore, as Bloomberg notes ten WTI options contracts saw more than 10,000 lots traded on Thursday, with five betting on higher prices and five: on lower, which suggests that at this moment the market appears split as to which way oil moves next. That said, by far the most active contracts signalled further optimism in higher prices: according to Bloomberg, September Brent contracts were among the most active, with record call volumes on bets that prices would hit $60 and $70 a barrel.

The move toward longer-dated contracts comes as investors seek cheap protection against price swings after the next OPEC meeting in Vienna on May 25, according to Nick Williams, a commodity futures broker at GF Financial Markets Ltd.

Meanwhile, while the number of contracts betting on $70 a barrel Brent crude by September rose by about 10,000 lots Thursday, other bullish bets declined.

Brent $60 calls for both June and July saw open interest slip in spite of bumper trading. Traders are likely adjusting their expectations about when a re-balancing will arrive, said Jesper Dannesboe, senior commodity strategist at Societe Generale SA in London.

Needless to say, the expectations is “further down the road.”

“The bullish structures may have moved their maturities longer, that would mean they’re starting to feel less confident about a near-term bullish story,” said Dannesboe. “If OPEC compliance stays high and global demand stays pretty strong, the re-balancing is going to happen.”

Unless, of course, demand has been vastly overestimated, in which case there will be no rebalancing, and this time the losses for the bulls will be that much greater.

How this trade plays out is anyone’s guess, but at least the option surge explains why both OPEC and hedge funds are not only “colluding” as the WSJ reported earlier this week, but that they are all on the same page, and this time thanks to the decay of calls, there is a particular sense of urgency; should the long-awaited rebalancing, and price rebound, not materialize, the next selloff when it hits, will be far worse.

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Authored by Daniel Drew via Dark-Bid.com,

As the market meanders its way through a post-earnings, pre-Fed no man's land, I couldn't help but wonder if this was a unique aimlessness or a seasonal pattern.

The market is partly driven by quarterly earnings cycles, and one has to wonder, "Does the earnings hype always live up to expectations?" Not only do individual stocks move up and down around earnings announcements, but the entire market exhibits certain behavior as well.

As earnings season approaches, volatility picks up along with investors' expectations, and stocks rise in the first month of the quarter. After earnings season ends, reality sets in and stocks underperform, much like they are doing now. If an investor had only been long the S&P 500 in the first month of the quarter since 1990, they would be up 150%. Anyone buying in the 3rd month of the quarter only gained 50%.

In financial markets, hope is more profitable than reality.

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