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As predicted, members of the Senate Intelligence Committee came out swinging early today with several questions for acting FBI Director McCabe on whether the Trump administration was actively seeking to impede an investigation into Russian meddling in the 2016 election.  Unfortunately, McCabe’s answers will undoubtedly be somewhat disappointing for Democrats and CNN.

In an early exchange with Senator Marco Rubio, McCabe offered a very succinct answer on alleged White House interference with ongoing FBI investigations:

Rubio:  “Has the dismissal of Mr. Comey in any way impeded, interrupted, stopped, or negatively impacted any of the work, any of the investigations or any ongoing projects at the Federal Bureau of Investigation?”

 

McCabe:  “There has been no effort to impede our investigation to date.”

“You cannot stop the men and women of the FBI from doing the right thing,” McCabe says on if Comey’s firing disrupted ongoing investigations http://pic.twitter.com/PMivNMlmkd

— CBS News (@CBSNews) May 11, 2017

 

Moreover, McCabe went on to confirm that no agents have been removed from the Russia probe and that no one from the White House had contacted him about the ongoing investigation.

*MCCABE SAYS HE’D REFRAIN FROM UPDATING WHITE HOUSE ON PROBE

*MCCABE: ALL AGENTS IN RUSSIA PROBE STILL IN THEIR POSITION

*MCCABE SAYS NO ONE IN WHITE HOUSE HAS SPOKEN TO HIM ABOUT PROBE

Asked whether an independent investigator was necessary, McCabe once again had a very succinct answer:  “No, sir.”

Senator Lankford:  “Is it your impression at this point that the FBI is unable to complete the investigation in a fair and expeditious way because of the removal of Jim Comey?”

 

McCabe:  “Is is my opinion and belief that the FBI will continue to pursue this investigation vigorously and completely.”

 

Senator Lankford:  “Do you need someone to take this away from you and somebody else to do it?”

 

McCabe:  “No, sir.”

Acting FBI Director McCabe: It is my belief that the FBI will continue to pursue the Russia investigation “vigorously and completely” http://pic.twitter.com/CIribAAlef

— The Situation Room (@CNNSitRoom) May 11, 2017

 

Of course, we’re under no illusion that any of this testimony will make one bit of difference in the minds of Chuck Schumer or CNN as the Russians have clearly gotten to McCabe.

via http://ift.tt/2r601oW Tyler Durden

Authored by Soeren Kern via The Gatestone Institute,

• Several months after the New York Times published its hagiography of Shashaa, he was arrested for physically assaulting his third wife, who was hospitalized with a broken nose and shoulder. "The attack was obviously very brutal," a hospital spokesperson said at the time. "What a man does with his wife does not concern the authorities," Shashaa said.
• Spanish High Court Judge Eloy Velasco ordered Shashaa — who lives in a 10,000 square meter (108,000 square foot) mansion in Teulada-Moraira, a small coastal town on Spain's Mediterranean coast, with his four wives and 18 children — to be held in prison without bail.
• Spanish authorities are now investigating the source of Shashaa's wealth. His mosque in Munich was shuttered in October 2015 due to financial difficulties, while the mansion he purchased in Spain in February 2015 is said to be worth more than half a million euros.
• More than two weeks after Shashaa was arrested, the New York Times still has not reported on the fate of its poster boy for Salafist pacifism.

Spanish authorities have arrested a Muslim cleric – whom the New York Times once praised for his efforts to fight radicalization within Germany's Islamic community – for alleged ties to the Islamic State.

Hesham Shashaa (aka Abu Adam), a 46-year-old Egyptian-Palestinian, was detained near Alicante in southeastern Spain on April 26 on charges of aiding the Islamic State, extolling terrorism and promoting Salafi-jihadism.

The Spanish Interior Ministry said that Shashaa had facilitated the travel to Spain of Islamic State jihadists from Syria and Iraq by providing them with money, refuge and fake documents.

Most recently, Shashaa had made arrangements for two jihadists — who are the subjects of international arrest warrants for their membership of the Islamic State — to travel from Turkey to Spain by providing them with false passports.

In addition, Shashaa fraudulently tried to obtain for two jihadists letters of invitation with the aim of facilitating their travel from Egypt to Spain.

According to the Spanish Interior Ministry, Shashaa has also been charged with disseminating Islamic State propaganda:

"The detainee took advantage of his privileged position within the Islamic Community of the province of Alicante to spread content extolling attacks committed by the terrorist organization Islamic State and cruelly disparaging their victims. In addition, he used social networks as a tool to generate hate by publishing videos in which terrorist leaders indoctrinate their followers to engage in violent jihad."

Jijona, in Alicante Province, Spain. (Image source: Getty Images)

On April 29, Spanish High Court Judge Eloy Velasco ordered Shashaa — who lives in a 10,000 square meter (108,000 square foot) mansion in Teulada-Moraira, a small coastal town on Spain's Mediterranean coast, with his four wives and 18 children — to be held in prison without bail. Velasco ruled that Shashaa was a flight risk and that there was a danger he would repeat his criminal behavior (reiteración delictiva).

Shashaa settled in Spain in 2012, shortly after the New York Times published a glowing profile of his moderation while he was an imam at the Darul Quran mosque in Munich, Germany. The story, entitled "Munich Imam Strives to Dilute the Elixir of Radical Islam," stated:

"A growing number of imams in Europe and the Middle East have denounced suicide missions and terrorist acts. Many of these imams, however, still view Al-Qaeda, the Taliban or Hamas as legitimate resistance movements, while Mr. Shashaa openly declares that they are violating the tenets of Islam.

 

"He travels to mosques and madrasas throughout Europe, as well as the Middle East and Pakistan, telling young Muslims that fighting against American troops and other forces is a violation of their religion. He condemns militant recruiters in his sermons, urges worshipers at Friday Prayer to call the police if they hear about plans for an attack and readily talks with law enforcement officials about the reasons for radicalization and the best way to combat it."

In an interview with the Times, Shashaa portrayed himself as a pacifist:

"They [the militants] use the religion for their personal aims and declare war on Jews and Christians, but I want people to follow what Islam really says. We cannot just sit down and let other people hijack our religion."

The Times also quoted a senior German security official, who said:

"We know that he speaks and works against terrorist groups like Al-Qaeda or the Taliban, and that is important. He is the only example of someone who is doing it in this way here in Germany, and in this sense he is effective."

Shashaa told the Times that he ended up in Germany after he lost his briefcase there on a 2000 stopover while on his way to Britain from Romania, where he had been living. "Everything was gone, the papers, the money," he said. "So I thought it was God's will that I should stay here."

Several months after the New York Times published its hagiography of Shashaa, he was arrested for physically assaulting his third wife, who was hospitalized with a broken nose and shoulder. "The attack was obviously very brutal," a hospital spokesperson said at the time.

The woman, a Syrian, told police that she had wanted to live a more Western lifestyle; she wanted to find a job and stop wearing the hijab. Shashaa refused. After the woman called police, Shashaa refused to let them in. "What a man does with his wife does not concern the authorities," he said. Shashaa was arrested and then released.

During a raid on Shashaa's mosque in Munich, police found copies of a book — Women in the Shade of Islam — which has been banned in Germany because of its calls for violence against women. Shashaa defended his possession of the book: "I need to know what is in these books. How else will I know how to argue with recruiters?"

Spanish authorities believe Shashaa moved to Spain to evade German law enforcement, which had become increasingly suspicious of his activities. Die Zeit reported:

"In 2012, German intelligence called him a Salafist: He opposed a pluralistic society, repeatedly stated that a woman should not leave the house without her husband's permission, and during the Gaza War in 2009 preached a sermon that disparaged Jews. He wants a theocracy, which would be inconsistent with the separation of powers, the rule of law and the parliamentary system. He posted several videos with extremist content. According to the 2012 intelligence findings, his claims to have distanced himself from extremism were deemed 'questionable.'"

Shashaa, who does not speak Spanish, said he moved to Spain to establish a "center for cultural understanding." Through an interpreter, Shashaa told a Spanish newspaper that "spreading culture is the best way to end prejudice and to promote tolerance." He said that his cultural center would operate under the premise of "openness and integration" and that its doors would be "open to the whole world." He added that the walls of the center "must be made of glass so that everyone can see how we are and what is going on in there." Shashaa also insisted that "fundamentalism is a disease we must eradicate."

Spanish authorities are now investigating the source of Shashaa's wealth. His mosque in Munich was shuttered in October 2015 due to financial difficulties, while the mansion he purchased in Spain in February 2015 is said to be worth more than half a million euros.

Meanwhile, more than two weeks after Shashaa was arrested, the New York Times still has not reported on the fate of its poster boy for Salafist pacifism.

via http://ift.tt/2poIiM6 Tyler Durden

Via The Daily Bell

 

The President is very much a figurehead – he wields no real power whatsoever. He is apparently chosen by the government, but the qualities he is required to display are not those of leadership but those of finely judged outrage. For this reason the President is always a controversial choice, always an infuriating but fascinating character. His job is not to wield power but to draw attention away from it.

An orange sash is what the President of the Galaxy traditionally wears.

On those criteria Zaphod Beeblebrox is one of the most successful Presidents the Galaxy has ever had.

That is a quote from the novel The Hitchhiker’s Guide to the Galaxy, and it is quite prophetic, right down to the orange sash, though Trump prefers to wear it on his head.

The Distractor in Cheif is clearly meant to take attention away from the actual workings of government and focus it on the silly things he says, the people he fires, Russia, and how rich and elite his family is.

He is outraged all right. And all the focus will stay on that outrage.

He’s even got people to start watching cable again! And when citizens watch cable, citizens are properly programmed.

Trump does it all. He inspires fiery passions in the opposition and his followers alike. He is impossible not to comment on. If you think the government is corrupt, there are 100 examples all referring to Trump, and nothing else.If you want to believe America is great again, just look at the examples Trump has given! Ah but really Americans are ignorant and haughty–just look at the leader they elected! All conversation involving power, the American government, the good, the bad, the corruption, the strength; Trump represents them all, and there is no reason to look elsewhere.

If you want to believe America is great again, just look at the examples Trump has given!Ah but really Americans are ignorant and haughty–just look at the leader they elected! All conversation involving power, the American government, the good, the bad, the corruption, the strength; Trump represents them all, and there is no reason to look elsewhere.

Ah but really Americans are ignorant and haughty–just look at the leader they elected!All conversation involving power, the American government, the good, the bad, the corruption, the strength; Trump represents them all, and there is no reason to look elsewhere.

All conversation involving power, the American government, the good, the bad, the corruption, the strength; Trump represents them all, and there is no reason to look elsewhere. No reason to dig deeper, to research and find the true rivers of power.

Trump is the great and powerful Oz, pay no attention to the man behind the curtain.

Anyone who is capable of getting themselves made President should on no account be allowed to do the job.

The Hitchhiker’s Guide to the Galaxy is a hilarious recap of all the issues with bureaucracy and centralized power. The archetypes of government workers are perfectly displayed as you find out the galaxy is pretty much run just like the Earth… unfortunately.

Sure, the Earth was destroyed to make a galactic bypass just minutes before new technology was created which made bypasses obsolete, but it’s not like we didn’t have a chance to protest!

After all, the plans for the demolition had been on display on Alpha Centauri for 50 years. Humans all had the proper chance at the proper time to petition the government not to destroy the Earth.

What do you mean you’ve never been to Alpha Centauri? For heaven’s sake mankind, it’s only four light years away you know. I’m sorry, but if you can’t be bothered to take an interest in local affairs that’s your own lookout.”

via http://ift.tt/2pDjkVk TDB

We noted yesterday that the recent trend of increased volumes into Eurodollar future out-months was 'odd'…

But the sudden surge in interest in Eurodollar calls (vs puts) suggests more than just a few prop bets are being placed on the fact that The Fed does not hike rates in June.

As Bloomberg notes, preliminary futures open interest data for Wednesday shows steep increases in several Jun17 eurodollar call strikes, consistent with view that Fed won't hike in June amid tightening FRA/OIS spread. However, these options bets have largely gone unnoticed as futures-market-implied odds (which the majority of investors are shown) of a June hike have been steady at around 80% for a week.

A second consecutive drop in 3-month dollar Libor setting Wednesday prompted a flurry of dovish Fed bets and waves of buying across Jun17 eurodollar futures.

And furthermore, the Fed Fund Futures curve has flattened dramatically – signalling lost faith in The Fed's hiking trajectory…

And while these bets are being placed – against a June rate hike, the LIBOR-OIS spread – traditionally a signal of bank credit risk, has collapsed back to historic norms.

 

One probable explanation for this is the gusher of bank funding availability that the world's central banks (and even more so China) has unleashed. Nowhere is that more evident than in the total decoupling between "easing" financial conditions, and "tightening" monetary policy…

Despite two rate hikes, Goldman's financial conditions index has improived to its 'easiest' in 8 months – thanks to the world's policy-makers fungible money spigot to keep the dream of reflation alive (as evidenced in the chart above by the S&P 500).

This means, according to Bloomberg's Mark Cudmore, that The Fed’s room to tighten is being underappreciated.

The market adjustment, when it comes, will be felt more in the front end than the long end of the U.S. rates curve.

 

Rates markets are only pricing one-and-a-half more hikes in 2017. That seems reasonable in the blinkered context that inflation shows little sign of accelerating out of control. However, monetary policy analysis needs to be updated.

 

Amid an excess of global liquidity, inflation is being dominated by macro factors. Commodity prices and technological innovations, rather than marginal short-term interest rate adjustments, are top-most in people’s minds.

 

The last two Fed rate hikes had no sustained tightening impact. In fact, financial conditions in the U.S. are the loosest they have been in almost three years, and approaching the extreme of the historical range going back 27 years.

 

 

This suggests that the Fed has plenty of room to tighten policy. Why wouldn’t they take steps to normalize while they can get away with it?

 

Ignoring the fact that this yet again argues for a rethink of inflation targeting and using short-term interest rates as the primary policy tool, it’s important investors don’t misinterpret the rationale and implications of any tightening.

 

The next Fed moves won’t be driven by accelerating growth or runaway inflation, so the yield curve shouldn’t steepen. But a subsequently flatter yield curve shouldn’t be read as signifying a policy misstep.

 

This is just the way of the future. There is extremely abundant liquidity globally due to the expansion of central bank balance sheets. While that’s the case, old economic analysis frameworks are outdated and inadequate.

Which confirms what Morgan Stanley wrote,

Along with record high stocks, credit spreads at the tights since 2014, the broad dollar index continuing to hold little changed about 3% below the high hit in December, and longer-end yields remaining slightly lower year to date, historically low volatility across asset classes adds to a picture of very easy broad financial conditions. So does all the money in the short end helping keep CP yields and LIBOR lower as fed funds rate expectations have been moving up.

 

So the capitulation in pricing of a future reversal in the persistent LIBOR-OIS tightening trend in the past few months accelerated and had a large impact on swap spreads on top of more swapped issuance of corporate bonds by banks. The spot LIBOR-OIS spread fell another 0 7 by to 14 bp, another low since before the first Fed rate hike in 2015 after a 20 by drop in the past two months. That's not far now from the 9bp average from 2004 through the first half of 2007 (before getting as high as 364bp on October 10. 2008. maybe the single most extreme financial market price of the whole crisis). The forward LIBOR-OIS spread to June fell to 14.8bp. down from 15.8bp Tuesday and 19.4bp Friday mostly giving up on any near-term widening. The LIBOR part of that was reflected in the Jun 17 eurodollar futures contract rallying 2bp to 1.265%, down from 1.305% Friday, even as Jul 17 fed funds futures held steady at 1.11%. pricing an 83% chance of a June rate hike, up from 1.095% Friday. Never mind seeing a transmission from the fed funds rate to broad financial conditions in impacts on stocks, long-end yields, the dollar. et al., if higher fed funds rate expectations struggle to even get traction in raising short-term market interest rates.

Which translated into english implies The Fed has lost control of the transmission mechanism of its operations, just as we noted Goldman concerned about, which brings up another question:

If the Fed retains its ability to steer financial conditions, why have financial conditions eased recently despite ongoing hikes? The answer is that Fed policy—especially Fed policy communicated around FOMC meetings—only accounts for a relatively small part of the ups and downs of financial conditions. And other developments such as the sharp pickup in global growth have been helpful for US financial conditions by boosting risk assets while keeping the US dollar from appreciating sharply in response to higher short-term interest rates. While it is difficult to say whether future non-monetary policy shocks will be positive or negative for US financial conditions, our finding that the impact of Fed policy on financial conditions remains (at least) similar to the longer-term average suggests that Fed officials should be able to achieve their goals for financial conditions by moving the funds rate if they try hard enough.

 

Fed Policy Retains Sizable Impact

What Goldman really meant to say is that the Fed's 50 bps in rate hikes since December have been drowned and offset by the trillions in new credit created out of China. That credit expansion is now ending however, and China's credit impulse has tumbled into negative territory (but that's a different topic).

Going back to Goldman, Hatzius adds that "we find that the sensitivity of financial conditions to monetary policy shocks has been quite high recently, at least when we identify these shocks using bond market moves around FOMC meetings. This suggests that the easing of financial conditions is due to other factors, most obviously the improved global environment, not reduced traction of monetary policy."

What form will this monetary tightening "shock" take place? "

Our best (though uncertain) answer is that the committee will need to deliver 50-75bp more hikes per year than priced in the forwards to stabilize the economy at full employment. This is roughly consistent with our current funds rate call that we will see an average of 3-4 hikes per year through the end of 2019, compared with market pricing of just over 1 hike."

Of course, if Goldman is wrong and the Fed has no intention of sending risk assets into a tailspin with a monetary policy "shock", then there is no saying just how much further the combined effort of China's gargantuan, if cooling, credit expansion, coupled with the "dovishly" hiking Fed can take stocks. However, by now it is becoming clear to even the most resentful permabulls – and even Goldman  – that the longer the Fed delays the day of reckoning out of pure fear of the unknown, the greater the chaos and loss in asset values when the Fed no longer has the luxury of picking when to pull the switch.

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

Background.

The Sun claims that CNN has released new footage of last month’s Syrian chemical incident … and strongly implies that the Syrian government was responsible.

Washington’s Blog asked MIT rocket scientist and chemical weapons expert Theodore Postol^* what he thought of the footage.

Postol replied:

I agree that the footage is harrowing. However none of it is new and none of it proves that the Syrian government was the perpetrator of a nerve agent attack.

 

As such, this article merely falls into the category of propaganda.

 

The kindest alternative description of the article is that it might instead be yet another example of bad reporting that mixes ill-considered assumptions with facts that may or may not be relevant to its conclusions.

 

This kind of reporting could actually be encouraging such attacks.

 

If there was a false flag nerve agent attack, this tells the perpetrators that when they engage in the murder of children they can build a stronger false case against the Syrian government and thereby increase their chances of creating political pressure on the US Government to intervene militarily on their behalf.

 

If people are sickened by the inhumanity of these events, they might want to consider alternative explanations of who might be responsible for the immoralities we are seeing.

* Postol is  professor emeritus of science, technology, and national security policy at MIT.  Postol’s main expertise is in ballistic missiles. He has a substantial background in air dispersal, including how toxic plumes move in the air. Postol has taught courses on weapons of mass destruction – including chemical and biological threats – at MIT.  Before joining MIT, Postol worked as an analyst at the Office of Technology Assessment, as a science and policy adviser to the chief of naval operations, and as a researcher at Argonne National Laboratory.  He also helped build a program at Stanford University to train mid-career scientists to study weapons technology in relation to defense and arms control policy. Postol is a highly-decorated scientist, receiving the Leo Szilard Prize from the American Physical Society, the Hilliard Roderick Prize from the American Association for the Advancement of Science, and the Richard L. Garwin Award from the Federation of American Scientists.

via http://ift.tt/2qXYF2n George Washington

President Trump sat down with The Economist last week to talk trade, immigration, taxes, and health care and the transcript is chock-full of ‘Trumpisms’ that should not go unnoticed.  Here are just a few of our favorite exchanges:

On NAFTA, apparently ‘big’ is not an appropriate adjective to describe the renegotiation that will take place…‘massive’ and/or ‘huge’ are far better descriptors:

It sounds like you’re imagining a pretty big renegotiation of NAFTA. What would a fair NAFTA look like?

Big isn’t a good enough word. Massive.

 

Huge?

It’s got to be. It’s got to be.

 

What would it look like? What would a fair NAFTA look like?

No, it’s gotta be. Otherwise we’re terminating NAFTA.

 

Some people think this is a negotiating tactic—that you say very dramatic things but actually you would settle for some very small changes. Is that right?

 No, it’s not, really not a negotiation. It’s really not. No, will I settle for less than I go in with? Yes, I mean who wouldn’t? Nobody, you know, I always use the word flexibility, I have flexibility. [Goes off the record.] [Our] relationship with China is long. Of course by China standards, it’s very short [laughter], you know when I’m with [Xi Jinping], because he’s great, when I’m with him, he’s a great guy. He was telling me, you know they go back 8,000 years, we have 1776 is like modern history. They consider 1776 like yesterday and they, you know, go back a long time. They talk about the different wars, it was very interesting. We got along great. So I told them, I said, “We have a problem and we’re going to solve that problem.” But he wants to help us solve that problem.

On the discussion of the new tax plan we discover that Trump coined the phrase “priming the pump.”

Another part of your overall plan, the tax reform plan. Is it OK if that tax plan increases the deficit? Ronald Reagan’s tax reform didn’t.

 Well, it actually did. But, but it’s called priming the pump. You know, if you don’t do that, you’re never going to bring your taxes down. Now, if we get the health-care [bill through Congress], this is why, you know a lot of people said, “Why isn’t he going with taxes first, that’s his wheelhouse?” Well, hey look, I convinced many people over the last two weeks, believe me, many Congressmen, to go with it. And they’re great people, but one of the great things about getting health care is that we will be saving, I mean anywhere from $400bn to $900bn.

 

But beyond that it’s OK if the tax plan increases the deficit?

 It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?

 

Yes.

 We have to prime the pump.

 

Priming the pump?

 Yeah, have you heard it?

 

Yes.

 Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.

 

It’s…

Yeah, what you have to do is you have to put something in before you can get something out.

Meanwhile, CNN will be even more eager to track down Trump’s taxes after he seemingly admitted to taking deductions for “birds flying across America.”

But the biggest winners from this tax cut, right now, look as though they will be the very wealthiest Americans.

Well, I don’t believe that. Because they’re losing all of their deductions, I can tell you.

 

But something like eliminating the estate tax.

I get more deductions, I mean I can tell you this, I get more deductions, they have deductions for birds flying across America, they have deductions for everything. There are more deductions…now you’re going to get an interest deduction, and a charitable deduction. But we’re not going to have all this nonsense that they have right now that complicates things and makes it…you know when we put out that one page, I said, we should really put out a, you know, a big thing, and then I looked at the one page, honestly it’s pretty well covered. Hard to believe.

On the merits of a VAT Tax:

Would you consider a VAT for the United States?

Well the concept of VAT I really like. But let me give you the bad news. I don’t think it can be sold in this country because we’re used to an income tax, we’re used to a…people are used to this tax, whether they like it or don’t like, they’re used to this tax. I fully understand because I have a lot of property in the UK. And it’s, sort of, not a bad tax. And every time I pay it, they end up sending it back to me. In fact, my accountant is always saying…

 

That’s a good tax.

 No, it’s really not so bad. Like, I own Turnberry in Scotland. And every time I pay they say, “Yes sir, you pay it now but you get it back next year.” I said, “What kind of tax is this, I like this tax.” But the VAT is…I like it, I like it a lot, in a lot of ways. I don’t mean because of, you know, getting it back, you don’t get all of it back, but you get a lot of it back. But I like a VAT. I don’t think it can be sold in this country, I think it’s too much of a shock to this system. I can tell you if we had a VAT it would make dealing with Mexico very much easier. Because it could neutralise. And I really mean that. Part of the problem with NAFTA, the day they signed it, it was a defective deal. Because Mexico has almost a 17% VAT tax and it’s very much of a hidden tax, people don’t see it. So, but these guys, instead of renegotiating the following week…many years ago, how old is that? 35?

On Healthcare, we’ll never know what brand/model of car was used to describe cheap inurance plans but we did learn that Trump is friends with key executives at the major insurers…“you know, the head people.”

One of the things that was so different about your campaign message compared to other Republicans was, you said things like “I want everyone to be covered”.

We’re not going to let people die on the streets.

 

Look, Obamacare was a disaster. Under Obamacare, you get your doctor; that was a lie. You get your plan; that was a lie. With us, you get your doctor. You get your plan. With us you’ll get hundreds and hundreds of plans. You know, one of the insurance companies, one of the big ones came to see me yesterday. They’re so anxious to start going crazy and you know it’s going to be like life insurance. People that buy life insurance they’re inundated with carriers. All different plans. That’s what this is going to be like. And I said to them, “What do you think the good plans are going to look like?” He said, “Mr President, we’re going to have so many plans. We’re going to have the low version, the high version”, he used the word Cadillac. I won’t tell you what car he used for the low version because I don’t want you to write it because they happen to be friends of mine, you know, the head people. [Goes off the record.]

On Immigration:

Do you want to curb legal immigration?

Oh sure, you know, I want to stop illegal immigration.

 

And what about legal immigration? Do you want to cut the number of immigrants?

Oh legal, no, no, no. I want people to come into the country legally. No, legally? No. I want people to come in legally. But I want people to come in on merit. I want to go to a merit-based system. Actually two countries that have very strong systems are Australia and Canada. And I like those systems very much, they’re very strong, they’re very good, I like them very much. We’re going to a much more merit-based system. But I absolutely want talented people coming in, I want people that are going to love our country coming in, I want people that are going to contribute to our country coming in. We want a provision at the right time, we want people that are coming in and will commit to not getting…not receiving any form of subsidy to live in our country for at least a five-year period.

On releasing his tax returns, Trump says that he may release them after he’s out of office because he’s “very proud of them actually.  I did a good job.”

Mr President, can I just try you on a deal-making question? If you do need Democratic support for your tax plan, your ideal tax plan, and the price of that the Democrats say is for you to release your tax returns, would you do that?

 I don’t know. That’s a very interesting question. I doubt it. I doubt it. Because they’re not going to…nobody cares about my tax return except for the reporters. Oh, at some point I’ll release them. Maybe I’ll release them after I’m finished because I’m very proud of them actually. I did a good job.

via http://ift.tt/2q6WHvq Tyler Durden

One month ago, in his latest letter to clients, Horseman Capital’s Russell Clark revealed a new “investing” strategy using ETF flows as a catalyst for positioning and bets.

Citing the transition from active to passive as a catalyst that makes markets increasingly more inefficient, something One River’s Eric Peters noted in a recent weekly note, Clark repeated a lament made by many short sellers, stating that there “are complaints from some quarters about it being harder to short sell as flows of money push up stocks.”

So what is his new shorting philosophy? This is how he explained it, using his biggest short at the moment, retail REITs:

The biggest short sector in the fund are REITs. In the US, they are mainly retail REITs, and there are two reasons for this. One is that we have guaranteed sellers in the Japanese US Reit fund. The other reason is the appalling performance of the major tenants. However, as an aside, I like them as a short area as they have the highest exposure to ETFs of any sector.

 

Bloomberg allows you to find the biggest ETFs and open ended funds which are invested in US Real Estate Sector. The top 28 funds have total assets of 187bn USD, of which 13.3bn USD invested in Simon Property Group, that is 24% of Simon’s market cap. However, Real Estate passive funds are not the only passive fund invested in Simon. When all passive funds weights are added together I get over 50% of Simon Property Group shareholders are passive. I wonder who will become the buyer if all these funds start to see redemptions if there are some problems in US commercial real estate?

His conclusion:

The long bull market in passive investment has made them wilfully blind to the liquidity risk that they are running. Passive investments are concentrated in the US market…

And, if Eric Peters is right, “when these markets do finally have a correction there will be no bid for many of these stocks”, so all Clark has done is tighten the universe of ETF unwinds from the entire market to a market sector or subset of stocks, in this case the retail REIT space.

What was most interesting about the new Horseman approach, however, was that it combines fundamentals – in this case the declining purchasing power of the US consumer and the secular shift to online buying – with market inefficiency in the form of ETF flows that have pushed stock prices ever higher from their “fair value” in anticipation of an eventual sharp move lower as ETF inflows finally reverse. That said, it was not immediately clear what the catalyst for this reversal in ETF flows would be.

In any case, we said one month ago that one can repeat the exercise for all other sectors, and stocks, that have a substantial exposure to ETFs, and slowly but surely the shorts will start to accumulate, putting further pressure on sectors and stocks that have been abnormally influenced by passive flows, until finally the money flow support breaks, leading to a crack in the current market topology, potentially followed by the next market correction, or worse.

Now, courtesy of Goldman, we have the full breakdown of the most and least concentrated sector ETFs. As the chart below show, the five most concentrated ETFs currently, on both a relative in terms of current weighing of the Top 3 stocks, and absolute (in therms of overall weight of the top 3 names) basis, are the Consumer Discretionary (XLY), Info Tech (XLK), Financials (XLF), Energy (XLE) and Utilities (XLU), all of which have never seen a greater relative weighing of their top 3 companies. On the other end are the Healthcare (XLV) and Industrials (XLI) ETFs.

For those who think the logic behind the Horseman ETF (out)flow-based trading strategy works, the best trade would be to go short all the most heavily weighted ETF constituent stocks, while shorting the least concentrated ones, in creating a relatively low-risk pair-trade ahead of the next “August 2015” ETFlash Crash, which is absolutely assured to take place again, the only question is when, and who to keep the trade on with the lowest possible negative carry.

via http://ift.tt/2qw4MLp Tyler Durden