Tag: finance

Submitted by Ingrid Carlqvist via The Gatestone Institute,

In Sweden's last census in which citizens were asked about their religious beliefs, in 1930, fifteen people said that they were Muslims. Since 1975, when Sweden started its transformation from a homogenous, Swedish country into a multicultural and multi-religious one, the number of Muslims has exploded. Now, approximately one million Muslims live here — Sunni, Shia and Ahmadiyya from all the corners of the world — and Mosques are built and planned all over the country.

No one, however, seems to have asked the crucial question upon which Sweden's future depends: Is Islam compatible with democracy?

The Swedish establishment has not grasped that Islam is more than a private religion, and therefore it dismisses all questions about Islam with the argument that Sweden has freedom of religion.

Two facts point to Islam not being compatible with democracy. First, there is no country where Islam is dominant that can be considered a democracy with freedom of speech and equal justice under law. Some point to Malaysia and Indonesia — two countries where flogging and other corporal punishments are meted out, for example, to women showing too much hair or skin, as well as to anyone who makes fun of, questions or criticizes Islam. Others point to Turkey as an example of an "Islamic democracy" — a country which routinely imprisons journalists, political dissidents and random people thought to have "offended" President Erdogan, "Islam" or "the nation."

Second, Muslims in Europe vote collectively. In France, 93% of Muslims voted for the current president, François Hollande, in 2012. In Sweden, the Social Democrats reported that 75% of Swedish Muslims voted for them in the general election of 2006; and studies show that the "red-green" bloc gets 80-90% of the Muslim vote.

It is no secret that democracy can be used to abolish democracy — yet, this crucial issue is completely taboo in Sweden. Politicians, authorities and journalists all see Islam as just another religion. They seem to have no clue that Islam is also a political ideology, a justice system (sharia) and a specific culture that has rules for virtually everything in a person's life: how to dress; who your friends should be; which foot should go first when you enter the bathroom. Granted, not all Muslims follow all these rules, but that does not change the fact that Islam aspires to control every aspect of human life — the very definition of a totalitarian ideology.

While the establishment closes its eyes to the problems that come with a rapidly growing Muslim population in Sweden, ordinary Swedes seem to be growing increasingly upset. Prime Minister Stefan Löfven, however, appears to be at a complete loss as to why this is. He recently told the British newspaper, Financial Times:

"But the more surreal thing is that all the numbers are going in the right direction, but the picture the public have is that the country is now going in the wrong direction. It's not only a question about if they are afraid of the refugee crisis; it's as if everything is going in the wrong direction."

This comment says a lot about how disconnected Prime Minister Löfven is from the reality that ordinary Swedes are facing. The mainstream media withhold information about most of the violence that goes on in, and around, the asylum houses in the country, and it is not very likely that Stefan Löfven reads the alternative media sites; he and others in power have, in unison, dubbed them "hate sites." He obviously has no idea about the anger and despair many Swedes are now feeling. It may have finally begun to dawn on them that Swedish Sweden will soon be lost forever, and in many areas replaced by a Middle Eastern state of affairs where different immigrant groups (mainly Muslims) make war on each other as well as on the Swedes.

While the establishment closes its eyes to the problems that come with a rapidly growing Muslim population in Sweden, ordinary Swedes seem to be growing increasingly upset. Prime Minister Stefan Löfven (right), however, appears to be at a complete loss as to why this is. Pictured at left: The results of rioting in a Stockholm suburb, December 2014.

The people suffering most cruelly in the "New Sweden" are the elderly. The costs of immigration borne by the welfare state have led to a quarter of a million retirees living below the EU poverty line. Meanwhile, the government recently added another 30 billion kronor (about $3.6 billion) to the migration budget. The 70 billion kronor ($8.4 billion) Sweden will spend on asylum seekers in 2016 is more than what the entire police force and justice system cost, more than national defense costs, and twice the amount of child benefits.

Sweden's 9.5 million residents are thus forced to spend 70 billion kronor on letting citizens of other countries come in. In comparison, the United States, with its 320 million residents, spent $1.56 billion on refugees in 2015. The editorial columnist PM Nilsson commented in the business paper, Dagens Industri:

"To understand the scope of the increase in spending, a historic look back can be worthwhile. When the right bloc came to power in 2006, the cost was 8 billion [kronor] a year. In 2014, it had gone up to 24 billion. That summer, then Minister of Finance Anders Borg talked about the increase being the most dramatic shift in the state budget he had ever seen. The year after, 2015, the cost rose to 35 billion, and in 2016, it is projected to rise to 70 billion."

For many years, the politicians managed to fool the Swedish people into thinking that even if immigration presented an initial cost, the immigrants would soon enable the country to turn a profit. Now, more and more research indicates that the asylum seeker immigrants rarely or never find work. The daily newspaper Sydsvenskan reported in February, for example, that 64% of Malmö's immigrants are still unemployed after living in Sweden for ten years. The government openly calculates in its budget that in four years, 980,000 people will be living on either sickness benefits, disability pensions, unemployment benefits, "introduction benefits" or social welfare.

Swedes, who for many years have paid the highest taxes in the world without whining, are now taking to social media to express their anger that their money is going to citizens of other countries. More and more Swedes are choosing to emigrate from Sweden, mainly to the other Nordic countries, but also to Spain, Portugal and Great Britain, where taxes on pensions are considerably less.

But there are worse problems than the economic aspect. A sense of insecurity and fear has gripped the many Swedes who live close to asylum houses. On some level, the government seems to have grasped that danger: in a recent decision to continue maintaining border controls, Interior Minister Anders Ygeman wrote:

"The Swedish Civil Contingencies Agency (Myndigheten för samhällsskydd och beredskap), MSB, makes the assessment that the flow of migrants still brings challenges to upholding security in society, when it comes to the ability to maintain certain important public functions, among other things. Several of these challenges are expected to persist over time. The Police Authority's assessment is still that a serious threat to public order and internal security exists. The Immigration Service still advocates border controls."

Despite these ominous words, politicians still do not seem to understand that many Swedes are already experiencing "a serious threat to public order and internal security." New asylum houses are opening at an alarming pace, against the will of the people living near them. In the Stockholm suburb of Spånga-Tensta, on April 15, local authorities held a public meeting, the purpose of which was to allow local residents to ask the politicians and officials questions about planned housing for 600 migrants — next to a school. The meeting, which was filmed, showed a riotous mood among those gathered there, many shouting that they were going to fight "until their last breath" to keep the plans from materializing.

Some of the comments and questions were:

• "We have seen how many problems there have been at other asylum houses – stabbings, rapes and harassment. How can you guarantee the safety for us citizens? This is going to create a sense of us against them, it's going to create hate! Why these large houses, why not small ones with ten people in each? Why haven't you asked us, the people who live here, if we want this? How will you make this safe for us?"
• "We already have problems at the existing asylum houses. It's irresponsible of you to create a situation where we put our own and our children's health in jeopardy, with people who are not feeling well and are in the wrong environment. Why is this house right next to a school? What is your analysis?"
• "Will Swedes be allowed to live in these houses? Our young people have nowhere to live. You politicians should solve the housing issue for the people already living here, not for all the people in the world."

When the chairman of the meeting, Green Party representative Awad Hersi, of Somali descent, thanked the audience for the questions without giving any answers, the mood approached that of a lynch mob. People shouted: "Answer! Answer our questions! We demand answers!"

Everything points to the so far docile Swedes now having had enough of the irresponsible immigration policy that has been going on for many years, under socialist and conservative governments alike.

People are furious at the wave of rapes that have given Sweden the second-highest rate of rape in the world, after only Lesotho, and that recently forced the Östersund police to issue a warning to women and girls not to go outside alone after dark. People are scared: the number of murders and manslaughters has soared. During the first three months of this year alone, there have been 40 murders and 57 attempted murders, according to statistics compiled by the journalist Elisabeth Höglund.

The authorities have long claimed that lethal violence in Sweden is on the decline, but that is compared to a record-breaking year, 1989, when mass immigration to Sweden was already in full swing. If one instead were to compare the present to the 1950s and 1960s, when Sweden was still a homogenous country, the number of murders and manslaughters has doubled. Recently, the Swedish National Council for Crime Prevention (Brottsförebyggande rådet), BRÅ, had to admit that lethal violence did, in fact, increase in 2015, when 112 people were killed — 25 more than the year before. It was also revealed that the kind of lethal violence that has gone down was run-of-the-mill drunken homicides committed by Swedes, while the number of gangster-style hits carried out by immigrants has gone up dramatically. Improved trauma care for wounded victims also helps keep the number of murders and manslaughters down.

A recent poll showed that 53% of Swedes now think immigration is the most important issue facing the country. The change from 2015 is dramatic — last year, only 27% said that immigration was most important. Another poll showed that 70% of Swedes feel that the amount of immigration to Sweden is too high. This is the fourth year in a row that skepticism about the magnitude of immigration has increased.

More and more people also seem to worry about the future of Sweden as a democracy with an increasing number of Muslims — through continued immigration as well as Muslim women having significantly more children than Swedish women do.

As statistics on religious beliefs are no longer kept, no one knows exactly how many Muslims are in Sweden. Last year, a poll showed that Swedes believe 17% of the population is Muslim, while the actual number, according to the polling institute Ipsos Mori, may be more like 5%. The company does not account for how it arrived at this number, and it is in all likelihood much too low. Ipsos Mori probably counted how many members Muslim congregations and organizations have, but as Islam is also a culture, and the country is equally affected by the Muslims who do not actively practice their faith, yet live according to Islamic culture.

In 2012, the Swedish alternative newspaper, Dispatch International, calculated how many Muslims were registered residents of Sweden at that time, based on the Swedish name registry. The number the paper arrived at was 574,000, plus or minus 20,000. For obvious reasons, illegals and asylum seekers were not included. The actual number may therefore have been much higher.

Since then, close to 300,000 people have sought asylum in Sweden. Not all of them have had their applications approved, but despite that, very few actually leave Sweden. The Immigration Service told Gatestone Institute that only 9,700 people were deported last year. Most asylum seekers are Muslim, which means that the number of Muslims in Sweden is fast approaching one million, or 10% of the population.

In his book Slavery, Terrorism and Islam: The Historical Roots and Contemporary Threat, published in 2005, Dr. Peter Hammond describes what has always happened throughout history when the number of Muslims in a country increases. Admittedly generalities, Hammond outlines the following:

• As long as the Muslims make up about 1%, they are generally considered a peace-loving minority who do not bother anyone.
• At 2-3%, some start proselytizing to other minorities and disgruntled groups, especially in prison and among street gangs.
• At 5%, Muslims have an unreasonably large influence relative to their share of the population. Many demand halal slaughtered meat, and have been pushing the food industry to produce and sell it. They have also started to work toward the government giving them autonomy under sharia law. Hammond writes that the goal of Islam is not to convert the whole world, but rather, to establish sharia law all over the world.
• When Muslims reach 10%, historically, lawlessness increases. Some start to complain about their situation, start riots and car fires, and threaten people they feel insult Islam.
• At 20%, violent riots erupt, jihadi militia groups are formed, people are murdered, and churches and synagogues are set ablaze.
• When the Muslims reach 40% of the population, there are widespread massacres, constant terror attacks and militia warfare.
• At 60%, there is the possibility of uninhibited persecution of non-Muslims, sporadic ethnic cleansing, possible genocide, implementation of sharia law and jizya (the tax for "protection" that unbelievers must pay).
• When there are 80% Muslims in the country, they have taken control of the government apparatus and are, as in, for instance, Syria, Afghanistan, Pakistan and Iraq, committing violence in the name of Islam or political power.
• When 100% are Muslims, the peace in the house of Islam is supposed to come — hence the claim that Islam is the "religion of peace."

Hammond also writes that in many countries, such as France, Belgium, Great Britain and Sweden, most of the Muslim population lives in Islamic enclaves — and apparently prefer not to be assimilated into a Western society. This detachment strengthens the group internally, allowing them to exercise greater power than their share of the population might indicate.

Hammond's description of the 10%-limit accurately describes Sweden. In the so-called exclusion areas, there are car torchings every day, and riots occur in the cities. (To name but a few examples, there were serious riots in Malmö 2008, Gothenburg 2009, Stockholm 2013, and Norrköping and Växjö 2015.) Sometimes, the unrest starts after a local Muslim has been arrested or shot by the police. Muslim leaders then immediately say they sympathize with their people's reaction. During the Husby riots in 2013, Rami Al-Khamisi of the youth organization "Megafonen" wrote: "We can see why people are reacting this way."

The artist Lars Vilks, who drew the Muslim prophet Muhammed as a roundabout dog, has been the target of several assassination attempts, and now lives under round-the-clock police protection.

Yet, almost no one in Sweden is willing to speak of these problems and how it all fits together. For months, Gatestone Institute has called politicians, civil servants, organizations and various minority groups, to ask how they feel about Islam in Sweden. Do they think Islam is compatible with democracy, freedom of speech and legal equality — and if so, in what way or what way not?

The questions seemed to provoke anger as well as fear. Some of the people we called said they were angry at the mere questions, but assured the callers that Islam poses no problem whatsoever for Sweden. Others appeared frightened and refused to answer altogether. In the hopes of getting at least some honest answers, we presented ourselves as ordinary, concerned Swedes. Countless people hung up the phone, and in general, many answers pointed to an abysmal ignorance about what Islam is, what consequences the Islamization of a country might have, or how much trouble Sweden really is in. The country appears totally unprepared for what lies ahead.

via http://ift.tt/1Uc8rRs Tyler Durden

Donald Trump's intention to build a wall along the southern border of the United States is well known, and the presumptive Republican presidential nominee has even released his plan on how the US would be able to make Mexico pay for it.

One thing that won't change whether Trump builds a wall or not, is the intense violence and a lack of job opportunities that act as catalysts to drive scores of immigrants to the US border. What has changed, however, is the time frame by which immigrants plan to take their chance. As a Trump presidency becomes more and more of a possibility, immigrants believe that if there ever was a time to try and get across the border to the United States, that time is now – before Trump has a chance to act on his words.

From the Washington Post

Although the overall number of migrants apprehended along the border this year has not yet reached the proportions of the 2014 flood of Central Americans, some believe that could happen, with a summer surge before the presidential election in November.

 

“We’re definitely on track to catch up to it, which is not a good thing,” said Chris Cabrera, a Border Patrol agent and union representative here. “The political climate has a lot to do with it.”

 

The upcoming presidential election marks a fork in the road for U.S. immigration policy: A Democratic victory could lead to more unauthorized immigrants getting permits to work and live in the United States. Trump has vowed to build the giant border wall, deport millions of undocumented immigrants and block remittances. Intense violence and a lack of job opportunities are the driving forces behind the Central American migration, and critics say those problems will continue to push people northward regardless of whether there is a bigger wall. For some of the migrants, sooner seems more appealing than later.

 

Trump “says he wants to build a wall. They want to get over before he builds it,” said Mario Saucedo Mendoza, who works at the Senda de Vida migrant shelter in Reynosa, the Mexican city across the border from McAllen. “He’s said these things, and people are trying to get in front of him, they are trying to cross now.”

As rumors of Obama providing amnesty to illegal immigrants hit in 2014, the number of immigrants detained trying to cross the border jumped to 347,085, led by the "Northern Triangle" countries of El Salvador, Honduras and Guatemala, whose immigration hit a high water mark in 2014. While apprehensions from US authorities dipped in 2015, when coupled with detentions by Mexican authorities the total was still 332,430. So far in 2016, the numbers are rising again, and shelters that are used as overflow capacity when detainee centers are full are seeing tremendous amounts of immigrants.

This spring, the numbers appear to be rising again. The figures on Central Americans detained in Mexico are above 2014 levels. The Sacred Heart Catholic Church shelter in McAllen, which opened in June 2014 amid the surge and has since taken in more than 35,000 people, has seen days this month with more than 200 migrant arrivals, something that has never previously happened. Sister Norma Pimentel, executive director of Catholic Charities of the Rio Grande Valley, said that the Border Patrol sends migrants when it has run out of space in centers where the detainees are held before proceeding to immigration court.

 

“This is overflow,” she said, as Central American children played with donated toys and their parents chose from piles of secondhand clothes, arranged by gender and size. “This year, specifically this month and this couple of weeks, our numbers have increased a lot.

 

“The families are arriving because it’s impossible to live in their home countries,” she added. “They know their child runs a high risk of being killed, of being kidnapped, of being taken away, and they’ve seen this happen to other people, so they figure out: We have to go.”

Of course, to escape imminent danger, families aren't really concerned if there is the threat of a wall or not, they're going to try and get to a place where they are safe, and that means the United States. Also, not all Trump supporters agree with the idea of a wall, such as former mayor of Rio Grande City and current Republican candidate for congress Ruben Villarreal, who points out that all the talk is just causing an influx of new immigrants.

Yenis Constancia Viuda de Cruz, a 26-year-old mother of three whose husband was slain by Salvadoran gang members in 2010, decided to flee out of fear that gangs were trying to recruit her eldest son, 9-year-old Pablo José. With a plan to reunite with her mother, who lives in Silver Spring, Md., Viuda de Cruz paid $2,800 in fees to smugglers and bribes to Mexican officials to reach the United States, she said. Like other migrants apprehended by the Border Patrol, she was made to wear a black ankle bracelet with a blinking light, so authorities could track her movements before an immigration court date in Maryland, during which she would plead for asylum.

 

“My children were in danger,” she said before leaving on a bus for Maryland. “People say, ‘Why don’t you go to another country?’ There isn’t another country where you can provide something better for your children, where you won’t get harmed. The only one is the United States.”

 

Ruben Villarreal, a Republican candidate for Congress, former mayor of Rio Grande City and Trump supporter, called the wall idea a “12th-century technical solution to a 21st-century problem.”

 

“There’s no such thing as a fence that’s impenetrable,” he said. And all the talk of it is “causing a draw” of people.

 

The migrant attitude is “hurry, hurry, hurry, get there,” he said. The campaign trail talk “is going to encourage people from here to November.”

* * *

Of course the social and economic issues motivating immigrants to try and make it into the United States certainly won't be solved by a wall, but right now Trump is on a roll and has struck a chord with many American's who have been left behind by years of central planner failures and now need to scapegoat immigrants as a reason the economy is a disaster. We expect the rhetoric to continue, and if Trump does get into office he probably will build the Wall as he said he was going to do – and as usual, nothing will be actually solved.

via http://ift.tt/1XXEkTJ Tyler Durden

Last September (when bitcoin was trading at $230) we said that “As China Scrambles To Enforce Capital Controls, This Is Great News For Bitcoin” and that it is only a matter of time before Chinese buyers figure out that in a world in which the freeflow of capital out of China is increasingly more suppressed and where physical gold is actively being stored in China but is next to impossible to get it out of the country, it is only a matter of time before bitcoin explodes as China’s bubble berserk population scrambles to buy.

One month ago, we showed a chart according to which it was almost time for the bitcoin breakout, in “Is Bitcoin About To Soar?” At the time bitcoin was trading in the low $400s.

Then, just yesterday, something snapped, and as we reported “Bitcoin Surges To 2016 Highs On Rising Chinese Demand.”

It is unclear if that something is fears about an imminent round of Chinese devaluation following Friday’s dramatic move higher in the US Dollar, something we also hinted at on Friday afternoon…

CNY will be interesting on Sunday night

— zerohedge (@zerohedge) May 27, 2016

… or simply because China’s $30 trillion in deposits had finally found the most efficient way to get their funds out of the country.

Whatever the reason, moments ago – as we expected – bitcoin finally broke out of its long-term range, and was trading at $520 moments ago on Coinbase…

… the highest price it has hit since the summer of 2014.

 

What is the reason for this dramatic move higher? It appears to be China, because moments ago Bitcoin traded in CNY on the Huobi exchange soared as high as 3820, or over $580, imply a massive local-demand driven arb to the US price of $520:

It looks like the Chinese have finally awoken to bitcoin, just as we expected them to last September, when the price of bitcoin was over 50% lower.

With bitcoin now 100% higher than when we first said China would send it soaring,and 15% higher in the past two days, why do we remain in the bullish camp? Simple: China has $30 trillion in deposits – which concerns about devaluations will make very “flighty” while the market cap of bitcoin is under $8 billion. If Chinese depositors have finally figured out to use bitcoin to get their funds out of the country, watch out BTC shorts.

via http://ift.tt/1Uc6ftg Tyler Durden

Outspoken author and fund manager Nassim Taleb gave his first commencement speech at the American University in Beirut, offering advice on judging success, the importance of self-respect, what greed and fear can teach, the uselessness of nonsense, and the importance of having skin the game with every decision one makes…

This is the first commencement I have ever attended (I did not attend my own graduation). Further, I have to figure out how lecture you on success when I do not feel successful yet –and it is not a false modesty.

Success as a Fragile Construction

For I have a single definition of success: you look in the mirror every evening, and wonder if you disappoint the person you were at 18, right before the age when people start getting corrupted by life. Let him or her be the only judge; not your reputation, not your wealth, not your standing in the community, not the decorations on your lapel. If you do not feel ashamed, you are successful. All other definitions of success are modern constructions; fragile modern constructions.

The Ancient Greeks’ main definition of success was to have had a heroic death. But as we live in a less martial world, even in Lebanon, we can adapt our definition of success as having taken a heroic route for the benefits of the collective, as narrowly or broadly defined collective as you wish. So long as all you do is not all for you: secret societies used to have a rule for uomo d’onore: you do something for yourself and something for your other members. And virtue is inseparable from courage. Like the courage to do something unpopular. Take risks for the benefit of others; it doesn’t have to be humanity, it can be helping say Beirut Madinati or the local municipality. The more micro, the less abstract, the better.

Success requires absence of fragility. I’ve seen billionaires terrified of journalists, wealthy people who felt crushed because their brother in law got very rich, academics with Nobel who were scared of comments on the web. The higher you go, the worse the fall. For almost all people I’ve met, external success came with increased fragility and a heightened state of insecurity. The worst are those "former something" types with 4 page CVs who, after leaving office, and addicted to the attention of servile bureaucrats, find themselves discarded: as if you went home one evening to discover that someone suddenly emptied your house of all its furniture.

But self-respect is robust –that’s the approach of the Stoic school, which incidentally was a Phoenician movement. (If someone wonders who are the Stoics I’d say Buddhists with an attitude problem, imagine someone both very Lebanese and Buddhist). I’ve seen robust people in my village Amioun who were proud of being local citizens involved in their tribe; they go to bed proud and wake up happy. Or Russian mathematicians who, during the difficult post-Soviet transition period, were proud of making $200 a month and do work that is appreciated by twenty people –and considered that showing one’s decorations –or accepting awards –were a sign of weakness and lack of confidence in one’s contributions. And, believe it or not, some wealthy people are robust –but you just don’t hear about them because they are not socialites, live next door, and drink Arak baladi not Veuve Cliquot.

Personal History

Now a bit of my own history. Don’t tell anyone, but all the stuff you think comes from deep philosophical reflection is dressed up: it all comes from an ineradicable gambling instinct –just imagine a compulsive gambler playing high priest. People don’t like to believe it: my education came from trading and risk taking with some help from school.

I was lucky to have a background closer to that of a classical Mediterranean or a Medieval European than a modern citizen. For I was born in a library –my parents had an account at Librarie Antoine in Bab Ed Driss and a big library. They bought more books than they could read so they were happy someone was reading the books for them. Also my father knew every erudite person in Lebanon, particularly historians. So we often had Jesuit priests at dinner and because of their multidisciplinary erudition they were the only role models for me: my idea of education is to have professors just to eat with them and ask them questions. So I valued erudition over intelligence –and still do. I initially wanted to be a writer and philosopher; one needs to read tons of books for that –you had no edge if your knowledge was limited to the Lebanese Baccalaureat program. So I skipped school most days and, starting at age 14, started reading voraciously. Later I discovered an inability to concentrate on subjects others imposed on me. I separated school for credentials and reading for one’s edification.

First Break

I drifted a bit with no focus, and remained on page 8 of the Great Lebanese Novel until the age of 23 (my novel was advancing one page per year). Then I got a break on the day when at Wharton I accidentally discovered probability theory and became obsessed with it. But, as I said it did not come from lofty philosophizing and scientific hunger, only from the thrills and hormonal flush one gets while taking risks in the markets. A friend had told me about complex financial derivatives and I decided to make a career in them. It was a combination of trading and complex mathematics. The field was new and uncharted. But they were very, very difficult mathematically.

Greed and fear are teachers. I was like people with addictions who have a below average intelligence but were capable of the most ingenious tricks to procure their drugs. When there was risk on the line, suddenly a second brain in me manifested itself and these theorems became interesting. When there is fire, you will run faster than in any competition. Then I became dumb again when there was no real action. Furthermore, as a trader the mathematics we used was adapted to our problem, like a glove, unlike academics with a theory looking for some application. Applying math to practical problems was another business altogether; it meant a deep understanding of the problem before putting the equations on it. So I found getting a doctorate after 12 years in quantitative finance much, much easier than getting simpler degrees.

I discovered along the way that the economists and social scientists were almost always applying the wrong math to the problems, what became later the theme of The Black Swan. Their statistical tools were not just wrong, they were outrageously wrong –they still are. Their methods underestimated "tail events", those rare but consequential jumps. They were too arrogant to accept it. This discovery allowed me to achieve financial independence in my twenties, after the crash of 1987.

So I felt I had something to say in the way we used probability, and how we think about, and manage uncertainty. Probability is the logic of science and philosophy; it touches on many subjects: theology, philosophy, psychology, science, and the more mundane risk engineering –incidentally probability was born in the Levant in the 8th Century as 3elm el musadafat, used to decrypt messages. So the past thirty years for me have been flaneuring across subjects, bothering people along the way, pulling pranks on people who take themselves seriously. You take a medical paper and ask some scientist full of himself how he interprets the "p-value"; the author will be terrorized.

The International Association of Name Droppers

The second break came to me when the crisis of 2008 happened and felt vindicated and made another bundle putting my neck on the line. But fame came with the crisis and I discovered that I hated fame, famous people, caviar, champagne, complicated food, expensive wine and, mostly wine commentators. I like mezze with local Arak baladi, including squid in its ink (sabbidej), no less no more, and wealthy people tend to have their preferences dictated by a system meant to milk them.

My own preferences became obvious to me when after a dinner in a Michelin 3 stars with stuffy and boring rich people, I stopped by Nick’s pizza for a $6.95 dish and I haven’t had a Michelin meal since, or anything with complex names. I am particularly allergic to people who like themselves to be surrounded by famous people, the IAND (International Association of Name Droppers). So, after about a year in the limelight I went back to the seclusion of my library (in Amioun or near NY), and started a new career as a researcher doing technical work. When I read my bio I always feel it is that of another person: it describes what I did not what I am doing and would like to do.

On Advice and Skin in the Game

I am just describing my life. I hesitate to give advice because every major single piece of advice I was given turned out to be wrong and I am glad I didn’t follow them. I was told to focus and I never did. I was told to never procrastinate and I waited 20 years for The Black Swan and it sold 3 million copies. I was told to avoid putting fictional characters in my books and I did put in Nero Tulip and Fat Tony because I got bored otherwise. I was told to not insult the New York Times and the Wall Street Journal; the more I insulted them the nicer they were to me and the more they solicited Op-Eds. I was told to avoid lifting weights for a back pain and became a weightlifter: never had a back problem since.

If I had to relive my life I would be even more stubborn and uncompromising than I have been.

One should never do anything without skin in the game. If you give advice, you need to be exposed to losses from it. It is an extension to the silver rule. So I will tell you what tricks I employ.

Do not read the newspapers, or follow the news in any way or form. To be convinced, try reading last years’ newspaper. It doesn’t mean ignore the news; it means that you go from the events to the news, not the other way around.

 

If something is nonsense, you say it and say it loud. You will be harmed a little but will be antifragile – in the long run people who need to trust you will trust you.

 

When I was still an obscure author, I walked out of a studio Bloomberg Radio during an interview because the interviewer was saying nonsense. Three years later Bloomberg Magazine did a cover story on me. Every economist on the planet hates me (except of course those of AUB).

 

I’ve suffered two smear campaigns, and encouraged by the most courageous Lebanese ever since Hannibal, Ralph Nader, I took reputational risks by exposing large evil corporations such as Monsanto, and suffered a smear campaign for it.

 

Treat the doorman with a bit more respect than the big boss.

 

If something is boring, avoid it –save taxes and visits to the mother in law. Why? Because your biology is the best nonsense detector; use it to navigate your life.

The No-Nos

There are a lot of such rules in my books, so for now let me finish with a maxim. The following are no-nos:

Muscles without strength,

friendship without trust,

opinion without risk,

change without aesthetics,

age without values,

food without nourishment,

power without fairness,

facts without rigor,

degrees without erudition,

militarism without fortitude,

progress without civilization,

complication without depth,

fluency without content,

and, most of all, religion without tolerance.

via http://ift.tt/1qSFVNo Tyler Durden

What chance does Bernie stand against this…

 

 

Source: Politico

via http://ift.tt/24dLiUn Tyler Durden

Authored by Henry Hazlitt via The Mises Institute,

From time to time over the last thirty years, after I have talked or written about some new restriction on human liberty in the economic field, some new attack on private enterprise, I have been asked in person or received a letter asking, "What can I do" — to fight the inflationist or socialist trend? Other writers or lecturers, I find, are often asked the same question. 

The answer is seldom an easy one. For it depends on the circumstances and ability of the questioner — who may be a businessman, a housewife, a student, informed or not, intelligent or not, articulate or not. And the answer must vary with these presumed circumstances.

The general answer is easier than the particular answer. So here I want to write about the task now confronting all libertarians considered collectively.

This task has become tremendous, and seems to grow greater every day. A few nations that have already gone completely communist, like Soviet Russia and its satellites, try, as a result of sad experience, to draw back a little from complete centralization, and experiment with one or two quasi-capitalistic techniques; but the world's prevailing drift — in more than 100 out of the 107 nations and mini-nations that are now members of the International Monetary Fund — is in the direction of increasing socialism and controls.

The task of the tiny minority that is trying to combat this socialistic drift seems nearly hopeless. The war must be fought on a thousand fronts, and the true libertarians are grossly outnumbered on practically all these fronts.

In a thousand fields the welfarists, statists, socialists, and interventionists are daily driving for more restrictions on individual liberty; and the libertarians must combat them. But few of us individually have the time, energy, and special knowledge to be able to do this in more than a handful of subjects.

One of our gravest problems is that we find ourselves confronting armies of bureaucrats already controlling us, and with a vested interest in keeping and expanding the controls they were hired to enforce.

A Growing Bureaucracy

Let me try to give you some idea of the size and extent of this bureaucracy in the United States. The Hoover Commission found in 1954 that the Federal government embraced no fewer than 2,133 different functioning agencies, bureaus, departments, and divisions. I do not know what the exact count would be today, but the known multiplicity of Great Society agencies would justify our rounding out that figure at least to 2,200.

We do know [in 1968] that the full-time permanent employees in the Federal government now number about 2,615,000.

And we know, to take a few specific examples, that of these bureaucrats 15,400 administer the programs of the Department of Housing and Urban Development, 100,000 the programs (including Social Security) of the Department of Health, Education, and Welfare, and 154,000 the programs of the Veterans Administration.

If we want to look at the rate at which parts of this bureaucracy have been growing, let us take the Department of Agriculture. In 1929, before the U. S. government started crop controls and price supports on an extensive scale, there were 24,000 employees in that Department. Today, counting part-time workers, there are 120,000, five times as many, all of them with a vital economic interest — to wit, their own jobs — in proving that the particular controls they were hired to formulate and enforce should be continued and expanded.

What chance does the individual businessman, the occasional disinterested professor of economics, or columnist or editorial writer, have in arguing against the policies and actions of this 120,000-man army, even if he has had time to learn the detailed facts of a particular issue? His criticisms are either ignored or drowned out in the organized counterstatements.

This is only one example out of scores. A few of us may suspect that there is much unjustified or foolish expenditure in the U. S. Social Security program, or that the unfunded liabilities already undertaken by the program (one authoritative estimate of these exceeds a trillion dollars) may prove to be unpayable without a gross monetary inflation. A handful of us may suspect that the whole principle of compulsory government old-age and survivor's insurance is open to question. But there are nearly 100,000 full-time permanent employees in the Department of Health, Education, and Welfare to dismiss all such fears as foolish, and to insist that we are still not doing nearly enough for our older citizens, our sick, and our widows and orphans.

And then there are the millions of those who are already on the receiving end of these payments, who have come to consider them as an earned right, who of course find them inadequate, and who are outraged at the slightest suggestion of a critical reexamination of the subject. The political pressure for constant extension and increase of these benefits is almost irresistible.

And even if there weren't whole armies of government economists, statisticians, and administrators to answer him, the lone disinterested critic, who hopes to have his criticism heard and respected by other disinterested and thoughtful people, finds himself compelled to keep up with appalling mountains of detail.

Too Many Cases to Follow

The National Labor Relations Board, for example, hands down hundreds of decisions every year in passing on "unfair" labor practices. In the fiscal year 1967 it passed on 803 cases "contested as to the law and the facts." Most of these decisions are strongly biased in favor of the labor unions; many of them pervert the intention of the Taft-Hartley Act that they ostensibly enforce; and in some of them the board arrogates to itself powers that go far beyond those granted by the act. The texts of many of these decisions are very long in their statement of facts or alleged facts and of the Board's conclusions. Yet how is the individual economist or editor to keep abreast of the decisions and to comment informedly and intelligently on those that involve an important principle or public interest?

Or take again such major agencies as the Federal Trade Commission, the Securities and Exchange Commission, the Internal Revenue Service, the Interstate Commerce Commission, the Food and Drug Administration, the Federal Communications Commission. All these agencies engage in quasi-legislative, quasi-judicial, and administrative functions. They issue rules and regulations, grant licenses, issue cease and-desist orders, award damages, and compel individuals and corporations to do or refrain from many things. They often combine the functions of legislators, prosecutors, judges, juries, and bureaucrats. Their decisions are not always based solely on existing law and yet when they inflict injury on corporations or individuals, or deprive them of constitutional liberties and legal rights, appeal to the courts is often difficult, costly, or impossible.

Once again, how can the individual economist, student of government, journalist, or anyone interested in defending or preserving liberty, hope to keep abreast of this Niagara of decisions, regulations, and administrative laws? He may sometimes consider himself lucky to be able to master in many months the facts concerning even one of these decisions.

Professor Sylvester Petro of New York University has written a full book on the Kohler strike and another full book on the Kingsport strike, and the public lessons to be learned from them. Professor Martin Anderson has specialized in the follies of urban renewal programs. But how many are there among us libertarians who are willing to — or have the time to — do this specialized and microscopic but indispensable research?

In July 1967, the Federal Communications Commission handed down an extremely harmful decision ordering the American Telephone & Telegraph Company to lower its interstate rates — which were already 20 percent lower than in 1940, though the general price level since that time had gone up 163 percent. In order to write a single editorial or column on this (and to feel confident he had his facts straight), a conscientious journalist had to study, among other material, the text of the decision. That decision consisted of 114 single spaced typewritten pages.

… and Schemes for Reform

We libertarians have our work cut out for us.

In order to indicate further the dimensions of this work, it is not merely the organized bureaucracy that the libertarian has to answer; it is the individual private zealots. A day never passes without some ardent reformer or group of reformers suggesting some new government intervention, some new statist scheme to fill some alleged "need" or relieve some alleged distress. They accompany their scheme by citing statistics that supposedly prove the need or the distress that they want the taxpayers to relieve. So it comes about that the reputed "experts" on relief, unemployment insurance, social security, medicare, subsidized housing, foreign aid, and the like are precisely the people who are advocating more relief, unemployment insurance, social security, medicare, subsidized housing, foreign aid, and all the rest.

Let us come to some of the lessons we must draw from all this.

Specialists for the Defense

We libertarians cannot content ourselves merely with repeating pious generalities about liberty, free enterprise, and limited government. To assert and repeat these general principles is absolutely necessary, of course, either as prologue or conclusion. But if we hope to be individually or collectively effective, we must individually master a great deal of detailed knowledge, and make ourselves specialists in one or two lines, so that we can show how our libertarian principles apply in special fields, and so that we can convincingly dispute the proponents of statist schemes for public housing, farm subsidies, increased relief, bigger social security benefits, bigger Medicare, guaranteed incomes, bigger government spending, bigger taxation, especially more progressive income taxation, higher tariffs or import quotas, restrictions or penalties on foreign investment and foreign travel, price controls, wage controls, rent controls, interest rate controls, more laws for so-called "consumer protection," and still tighter regulations and restrictions on business everywhere.

This means, among other things, that libertarians must form and maintain organizations not only to promote their broad principles, but to promote these principles in special fields.

We need not fear that too many of these specialized organizations will be formed. The real danger is the opposite. The private libertarian organizations in the United States are probably outnumbered ten to one by communist, socialist, statist, and other left-wing organizations that have shown themselves to be only too effective.

And I am sorry to report that almost none of the old-line business associations that I am acquainted with are as effective as they could be. It is not merely that they have been timorous or silent where they should have spoken out, or even that they have unwisely compromised. Recently, for fear of being called ultraconservative or reactionary, they have been supporting measures harmful to the very interests they were formed to protect. Several of them, for example, have come out in favor of the Administration's proposed tax increase on corporations, because they were afraid to say that the Administration ought rather to slash its profligate welfare spending.

The sad fact is that today most of the heads of big businesses in America have become so confused or intimidated that, so far from carrying the argument to the enemy, they fail to defend themselves adequately even when attacked. The pharmaceutical industry, subjected since 1962 to a discriminatory law that applies questionable and dangerous legal principles that the government has not yet dared to apply in other fields, has been too timid to state its own case effectively. And the automobile makers, attacked by a single zealot for turning out cars "Unsafe at Any Speed," handled the matter with an incredible combination of neglect and ineptitude that brought down on their heads legislation harmful not only to the industry but to the driving public.

The Timidity of Businessmen

It is impossible to tell today where the growing anti-business sentiment in Washington, plus the itch for more government control, is going to strike next. Only within the last few months Congress, with little debate, allowed itself to be stampeded into a dubious extension of Federal power over intrastate meat sales. When this article appears, or shortly after, Congress may have passed a Federal "truth-in-lending" law, forcing lenders to calculate and state interest rates the way Federal bureaucrats want them calculated and stated. There is also pending an Administration bill in which government bureaucrats are to prescribe "standards" telling just how surgical devices like bone pins and catheters and even artificial eyes are to be made.

And a few weeks ago the President suddenly announced that he was prohibiting American business from making further direct investments in Europe, that he was restricting them elsewhere, and that he would ask Congress to pass some law restricting Americans from traveling to Europe. Instead of raising a storm of protest against these unprecedented invasions of our liberties, most newspapers and businessmen deplored their "necessity" and hoped they would be only "temporary."

The very existence of the business timidity that allows these things to happen is evidence that government controls and power are already excessive.

Why are the heads of big business in America so timid? That is a long story, but I will suggest a few reasons: (1) They may be entirely or largely dependent on government war contracts. (2) They never know when or on what grounds they will be held guilty of violating the antitrust laws. (3) They never know when or on what grounds the National Labor Relations Board will hold them guilty of unfair labor practices. (4) They never know when their personal income tax returns will be hostilely examined, and they are certainly not confident that such an examination, and its findings, will be entirely independent of whether they have been personally friendly or hostile to the Administration in power.

It will be noticed that the governmental actions or laws of which businessmen stand in fear are actions or laws that leave a great deal to administrative discretion. Discretionary administrative law should be reduced to a minimum; it breeds bribery and corruption, and is always potentially blackmail or blackjack law.

A Confusion of Interests

Libertarians are learning to their sorrow that big businessmen cannot necessarily be relied upon to be their allies in the battle against extension of governmental encroachments. The reasons are many. Sometimes businessmen will advocate tariffs, import quotas, subsidies, and restrictions of competition, because they think, rightly or wrongly, that these government interventions will be in their personal interest, or in the interest of their companies, and are not concerned whether or not they may be at the expense of the general public. More often, I think, businessmen advocate these interventions because they are honestly confused, because they just don't realize what the actual consequences will be of the particular measures they propose, or perceive the cumulative debilitating effects of growing restrictions of human liberty.

Perhaps most often of all, however, businessmen today acquiesce in new government controls out of sheer timidity.

A generation ago, in his pessimistic book, Capitalism, Socialism and Democracy (1942), the late Joseph A. Schumpeter maintained the thesis that "in the capitalistic system there is a tendency toward self-destruction." And as one evidence of this he cited the "cowardice" of big businessmen when facing direct attack:

They talk and plead — or hire people to do it for them; they snatch at every chance of compromise; they are ever ready to give in; they never put up a fight under the flag of their own ideals and interests — in this country there was no real resistance anywhere against the imposition of crushing financial burdens during the last decade or against labor legislation incompatible with the effective management of industry.

So much for the formidable problems facing dedicated libertarians. They find it extremely difficult to defend particular firms and industries from harassment or persecution when those industries will not adequately or competently defend themselves. Yet division of labor is both possible and desirable in the defense of liberty as it is in other fields. And many of us, who have neither the time nor the specialized knowledge to analyze particular industries or special complex problems, can be nonetheless effective in the libertarian cause by hammering incessantly on some single principle or point until it is driven home.

Basic Principles upon Which Libertarians May Rely

Is there any single principle or point on which libertarians could most effectively concentrate? Let us look, and we may end by finding several.

One simple truth that could be endlessly reiterated, and effectively applied to nine-tenths of the statist proposals now being put forward or enacted in such profusion, is that the government has nothing to give to anybody that it doesn't first take from somebody else. In other words, all its relief and subsidy schemes are merely ways of robbing Peter to support Paul.

Thus, it can be pointed out that the modern welfare state is merely a complicated arrangement by which nobody pays for the education of his own children, but everybody pays for the education of everybody else's children; by which nobody pays his own medical bills, but everybody pays everybody else's medical bills; by which nobody provides for his own old-age security, but everybody pays for everybody else's old-age security; and so on. Bastiat, with uncanny clairvoyance, exposed the illusive character of all these welfare schemes more than a century ago in his aphorism: "The State is the great fiction by which everybody tries to live at the expense of everybody else."

Another way of showing what is wrong with all the state handout schemes is to keep pointing out that you can't get a quart out of a pint jug. Or, as the state giveaway programs must all be paid for out of taxation, with each new scheme proposed the libertarian can ask, "Instead of what?33 Thus, if it is proposed to spend another $1 billion on getting a man to the moon or developing a supersonic commercial plane, it may be pointed out that this $1 billion, taken in taxation, will not then be able to meet a million personal needs or wants of the millions of taxpayers from whom it is to be taken.

Of course, some champions of ever-greater governmental power and spending recognize this very well, and like Professor J. K. Galbraith, for instance, they invent the theory that the taxpayers, left to themselves, spend the money they have earned very foolishly, on all sorts of trivialities and rubbish, and that only the bureaucrats, by first seizing it from them, will know how to spend it wisely.

Knowing the Consequences

Another very important principle to which the libertarian can constantly appeal is to ask the statists to consider the secondary and longrun consequences of their proposals as well as merely their intended direct and immediate consequences. The statists will sometimes admit quite freely, for example, that they have nothing to give to anybody that they must not first take from somebody else. They will admit that they must rob Peter to pay Paul. But their argument is that they are seizing only from rich Peter to support poor Paul. As President Johnson once put it quite frankly in a speech on January 15, 1964: "We are going to try to take all of the money that we think is unnecessarily being spent and take it from the 'haves' and give it to the 'have nots' that need it so much."

Those who have the habit of considering long-run consequences will recognize that all these programs for sharing-the-wealth and guaranteeing incomes must reduce incentives at both ends of the economic scale. They must reduce the incentives both of those who are capable of earning a high income, but find it taken away from them, and those who are capable of earning at least a moderate income, but find themselves supplied with the necessities of life without working.

This vital consideration of incentives is almost systematically overlooked in the proposals of agitators for more and bigger government welfare schemes. We should all rightly be concerned with the plight of the poor and unfortunate. But the hard two-part question that any plan for relieving poverty must answer is: How can we mitigate the penalties of failure and misfortune without undermining the incentives to effort and success} Most of our would-be reformers and humanitarians simply ignore the second half of this problem. And when those of us who advocate freedom of enterprise are compelled to reject one of these specious "antipoverty" schemes after another on the ground that it will undermine these incentives and in the long run produce more evil than good, we are accused by the demagogues and the thoughtless of being "negative" and stony-hearted obstructionists. But the libertarian must have the strength not to be intimidated by this.

Finally, the libertarian who wishes to hammer in a few general principles can repeatedly appeal to the enormous advantages of liberty as compared with coercion. But he, too, will have influence and perform his duty properly only if he has arrived at his principles through careful study and thought. 'The common people of England," once wrote Adam Smith, "are very jealous of their liberty, but like the common people of most other countries have never rightly understood in what it consists." To arrive at the proper concept and definition of liberty is difficult, not easy. But this is a subject too big to be developed further here.

Legal and Political Aspects

So far, I have talked as if the libertarian's study, thought, and argument need be confined solely to the field of economics. But, of course, liberty cannot be enlarged or preserved unless its necessity is understood in many other fields—and most notably in law and in politics.

We have to ask, for example, whether liberty, economic progress, and political stability can be preserved if we continue to allow the people on relief — the people who are mainly or solely supported by the government and who live at the expense of the taxpayers — to exercise the franchise. The great liberals of the nineteenth and early twentieth centuries expressed the most serious misgivings on this point. John Stuart Mill, writing in his Representative Government in 1861, did not equivocate: "I regard it as required by first principles that the receipt of parish relief should be a preemptory disqualification for the franchise. He who cannot by his labor suffice for his own support has no claim to the privilege of helping himself to the money of others." And A. V. Dicey, the eminent British jurist, writing in 1914, also raised the question whether it is wise to allow the recipients of poor relief to retain the right to join in the election of a member of Parliament.

An Honest Currency and an End to Inflation

This brings me, finally, to one more single issue on which all those libertarians who lack the time or background for specialized study can effectively concentrate. This is in demanding that the government provide an honest currency, and that it stop inflating. This issue has the inherent advantage that it can be made clear and simple because fundamentally it is clear and simple. All inflation is government-made. All inflation is the result of increasing the quantity of money and credit; and the cure is simply to halt the increase.

If libertarians lose on the inflation issue, they are threatened with the loss of every other issue. If libertarians could win the inflation issue, they could come close to winning everything else. If they could succeed in halting the increase in the quantity of money, it would be because they could halt the chronic deficits that force this increase. If they could halt these chronic deficits, it would be because they had halted the rapid increase in welfare spending and all the socialistic schemes that are dependent on welfare spending. If they could halt the constant increase in spending, they could halt the constant increase in government power.

The devaluation of the British pound a few months ago, though it may shake the whole world currency system to its foundations, may as an offset have the longer effect of helping the libertarian cause. It exposes as never before the bankruptcy of the Welfare State. It exposes the fragility and complete undependability of the paper-gold international monetary system under which the world has been operating for the last twenty years. There is hardly one of the hundred or more currencies in the International Monetary Fund, that has not been devalued at least once since the I.M.F. opened its doors for business. There is not a single currency unit that does not buy less today than when the Fund started.

The dollar, to which practically every other currency is tied in the present system, is now in the gravest peril. If liberty is to be preserved,the world must eventually get back to a full gold standard system in which each major country's currency unit must be convertible into gold on demand, by anybody who holds it, without discrimination. I am aware that some technical defects can be pointed out in the gold standard, but it has one virtue that more than outweighs them all. It is not, like paper money, subject to the day-to-day whims of the politicians; it cannot be printed or otherwise manipulated by the politicians; it frees the individual holder from that form of swindling or expropriation by the politicians; it is an essential safeguard for the preservation, not only of the value of the currency unit itself, but of human liberty. Every libertarian should support it.

I have one last word. In whatever field he specializes, or on whatever principle or issue he elects to take his stand, the libertarian must take a stand. He cannot afford to do or say nothing. I have only to remind you of the eloquent call to battle on the final page of Ludwig von Mises's great book on Socialism:

Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping toward destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the real historical struggle, the decisive battle into which our epoch has plunged us.

via http://ift.tt/1qSz5Hr Tyler Durden

Courtesy of BofA, Michael Hartnett, this is where we are now, or as the author puts it, “The Nut”:

• 2016 total returns YTD are gold 15.0%, commodities 14.0%, bonds 5.9%, stocks 1.7%, and for the US dollar -3.3%.
• Note how a “barbell” of inflation assets (e.g. commodities, energy, Petrobras) and deflation assets (e.g. bonds, utilities, Facebook) simultaneously outperforming.
• We believe “positioning” & “policy” are driving “grind higher”: in a world full of bearish investors & desperate central bankers “pain trade” for risk assets is up.
• But cyclical upside modest in a world where deflation from tech disruption, aging demographics, excess debt thwarting stimulus of astonishingly low interest rates.
• And excess asset valuations (driven by ZIRP & NIRP) mean GDP/EPS upgrades required for big upside; we don’t see it, but cautious positioning limits downside.
• Our AA thus continues to anticipate volatile, single-digit asset returns, and remains skewed toward long volatility, long gold, long stocks>bonds, long DM>EM, long IG>HY, long Main Street, short Wall Street.
• And barbell strategies recommended (e.g. long Best of Breed stocks & long EM debt) in anticipation of inflationary policy shifts to fight a War on Inequality.

All that is in the past however, with the last trading days of May coming up in the coming week for all those who wish to “sell in May and go away”, because as we look at the future, Hartnett points out that June is the “event risk month” with FOMC on 15th, BoJ on 16th & UK BREXIT referendum on 23rd.

More importantly, the BofA strategist also lays out the key breakout and breakdown catalysts, as well as the bullish and bearish “trades of the unexpected”:

In the run-up to June, financial markets continue to be trapped within multi-month trading ranges: GT5 1.2-1.8%, DXY 92-100, ACWI 380-440, SPX 1850-2100, VIX 12-20. So what are the catalysts & “trades of the unexpected” should risk assets finally breakout or breakdown?

Breakout bull catalysts:

• Bear capitulation: consensus is bearish, FMS cash levels high, our Global Flow Trading Rule once again super-close to a “buy-signal” (and unlike in January, this time we are closer to “ceiling” rather than “floor” of the trading range in risk).
• Strong macro: if recovery in credit & commodity markets (oil>$50b, US & European high-yield bonds close to all-time highs) & stonking April US new home sales followed by rising PMI’s (e.g. US ISM>53) & retail sales, then investors can return to bullish narrative of “higher rates & rising EPS” (Chart 2).
• Helicopters: BoJ in Japan, Riksbank in Sweden, SNB in Switzerland hint at future use of “helicopter money”.

Bull Trades of the Unexpected:

New highs in S&P500 and, more important, US high yield (H0A0) best played via selling calls on gold or shorting VIX futures; best contrarian risk-on trades (based on FMS) are long UK, Japan, banks (see Chart 3), tech & industrial

Should Japan go “all-in” by announcing a permanent increase in the money stock to finance fiscal stimulus traders should play the weaker Japanese yen via long TPX, short KOSPI, long inflation assets e.g. TIPS but not EM given likely resumption of China renminbi depreciation fears (and CNH depreciating once again – Chart 4).

* * *

What about on the bearish side? Here are BofA’s breakdown bear catalysts:

• China: renewed renminbi depreciation validated by sub-50 China May PMI indicating that China’s Q1 stimulus has failed (note BofAML’s China-ACT index, our gauge of Chinese activity decelerated in April).
• Fed hates Profits: Fed in June is more hawkish than expected despite weak global profit growth (trailing 12m = -8% YoY); overvalued asset prices forced to correct.
• Politics: rising political risk premia as electorates demand more extremist policies cause volatility tremors, already witnessed this year in the British pound & more recently the Mexican peso, to become more frequent and stronger; the symbolism of BREXIT, a vote for regime change in the absence of recession, would force risk premia dramatically higher.

* * *

Bear Trades of the Unexpected:

• Trading a hawkish Fed will depend on the reaction of yield curve: flatter yield curve = deflation trades = long defensives, short EM equities & resources; a hawkish Fed is US dollar positive and boosts long Main Street, short Wall Street trades, e.g. long KRX, short XBD.
• Should the UK vote for BREXIT our European strategists expect GBPUSD to sell off to 1.25 and the FTSE index to fall 15%; in addition, long gold, short peripheral European debt/banks, would work as investors discount FX wars & euro breakup.

via http://ift.tt/20OVcv0 Tyler Durden

Donald Trump is good for the markets, and good for the US Dollar.  Donald Trump – is net positive for FX.  The reason why, is very simple.  Readers of Splitting Pennies would have come to this conclusion on their own.  Love or hate Trump, he’s not a politician.  Some say, he’s worse than a politician.  But he’s not a career politician.  The Dud-Fag act (The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203, H.R. 4173; commonly referred to as Dud-Fag) put a choke hold on the budding FX market in USA.  While the regulations stopped rampant fraud, they also extinguished legitimate FX businesses, leaving an FX black hole in USA.  And so it’s no wonder that less than half of US listed public companies hedge their FX exposure.  But what’s a few billion off the balance sheet of a public company to investors, it’s not even a ’rounding error.’  Checkout the latest disaster from PVH.  Critics of Trump, they are both mostly establishment trash, and brainwashed TV watchers who will believe anything the MSM tells them.  And Trump clearly, does not have the support of the mainstream establishment.  Trump doesn’t know what is a Bilderberg meeting (probably now he does, but the point is that he didn’t spend the last 20 years attending these meetings).

Let’s address the trust fund baby issue.  Trump was given substantial wealth by his father.  But so were millions of other trust fund babies, and Trump’s 4 siblings.  That’s right – Donald Trump is the fourth of five children.  It was “The Donald” who took what his father had, and created an Empire.  Many children of wealth in Trump’s generation, they didn’t do it.  So this nonsense about how Trump inherited his wealth, it’s a very misguided and unintelligent attack.  It’s very misleading.  He did inherit wealth, but he works very hard, and took a dollar and turned it into ten, and in the process went bankrupt a few times.  He has guts!  And primarily, Trump was in one of the top most difficult businesses in America – Real Estate.  

The problem with America, Inc. is not that it’s run like a business, it’s run like a bad business with an unlimited budget.  The government isn’t responsible – and the better word to use, LIABLE – like in private business.  There’s no gun to their head, like in the private sector.  Trump can’t solve all these government problems, but having the leader of the executive branch being from the private sector, a self-made billionaire who understands the markets – it’s the only first step to even consider solving the problem of the collapsing US government.  Without a Trump win, we’ll probably see USA breakup into regional countries as explained in this book “The Nine Nations of America”.   

Trump can make America, Inc. profitable.  He understands finance, he understands markets.  On the record, he’s a terrible investor.  His portfolio looks like Bono’s – the majority of investments he’s made in hedge funds and other alternative investments have been net losers.  But that’s often what being a billionaire means – you do business with someone, and you buy 10,000 copies of their book.  You invest in their Ostrich farm.  Do you really believe that McDonalds is going to make Big Macs with Ostrich meat?  Of course not.  It’s just good business.  

Trump understands the most critical aspect of Forex, as quoted:

These people are crazy, this is the United States government. First of all, you never have to default because you print the money. I hate to tell you, OK. So there never is a default.

Yes – that’s right.  The Fed can print US Dollars and pay off the debt, in one moment.  We’ve said this in articles – it’s the most important Forex fact that’s misinterpreted and misunderstood.  Why does Donald Trump understand this – but no other candidate does?  Because he never held a government position in his life.  This qualifies him – more than anything else – to be President of what has become effectively the world’s largest corporation – The US Government, which exists as it does – in cooperation with the largest and most powerful bank in the world, the Federal Reserve Bank.  

It takes someone like a Paul Volcker, a Richard Nixon – to really create markets.  Donald Trump is that character.  He understands what it means to be a leader.  A leader is not someone who blah blah blah – a leader is someone who acts, and is liable for all the fallout.  Sun Tzu says, good general make any decision quickly, bad general decide on which decision is better.  Now, let’s not give the egomaniac any special praise.  It was his business that made him who he is.  It was necessary for him to survive in his business, to be like this, to have a strong ‘tank like’ character.  Secondly, Trump has had a lot of business ‘busts’ – like Trump University.  His track record is not squeaky clean.  He’s had some shady business partners, which the media says are ‘mob ties.’  So what?  Do we shut down the stock markets because criminals have stock accounts?  

Trump is good for FX.  Under Trump’s presidency, we could see the Fed raise rates substantially, which would cause the US Dollar to rise.  We can see further deregulation of markets, which can see an explosion of FX and money returning to USA now hiding and waiting offshore in various jurisdictions.  Once again, America could be the place where investors choose to setup shop and do business.  Currently, Wall St. is not number one – like it was in the 90s.  Now there’s London, Hong Kong, Singapore, Australia, and even little New Zealand competing.  The reason for the growth of places like Singapore, London, and Sydney in the last 10 years, it’s been only due to one problem:  the US Government has put a ‘closed for business’ sign on the door.  Even US Citizens are renouncing their citizenship in record numbers.  There’s an American diaspora – for those who can afford – Americans are leaving USA for foreign enclaves.  And they are being replaced by unskilled illegals who don’t speak English.  This is mostly caused by US government policy, and the dud-fag regulations, FATCA, the Patriot Act and its successors, and others.  Trump can reverse that trend.

Personal Authors note & disclosure:

Personally, as a US Citizen, I don’t vote.  The idea of voting is noble, but the practicality of the system we have in America now, voting is a complete fraud.  Not voting, is also voting.  By the way, the only real way to stop a system that doesn’t work – stop using it.  The only reason any politician is able to wreak havoc with our system is because people support them, people vote.  After being in Palm Beach County on the ground in 2000 and seeing the voter fraud, the chads, the people who voted for Gore but their voting receipt said ‘Thank you for voting for George Bush,’ and watching the machine descend on the blue haired residents – finally to recount the votes to see that Gore had more votes, only to be disallowed by Gore himself as President Pro Tempore of the Senate; after seeing all this ridiculous circus- and finally learning the Bush controlled company “Diebold” that makes the electronic voting machines… The idea of ‘voting’ is just offensive for me.  By the way, something like 30% of Americans don’t vote.  To contrast with Europe, when they have a referendum, they have 90% + turnouts.  If it’s important referedum, they can have 99% voter turnout.  Anyway, it’s in other circumstances unprofessional to use personal opinions, stories, or references in an article which should be objective and present the facts.  But because Trump is involved in a political election, if this information wasn’t disclosed, then it would be attacked as being a pro-Trump plant.  I have no involvement in politics AT ALL except insofar as understanding and analyzing Geo-politics involved in the Forex markets.  Forex traders need to be geo political experts, often.  When Trump first was here on the political scene, I didn’t think he’d have a chance to even get on the ballot.  I said that if he’s on the ballot, I’d go vote for him, for the first time in my life.  My father voted for Ross Perot, and I remember then the similar reasoning, which I still believe holds true.  I’ve dealt with many high level government workers and bankers & HNWI for my Forex business, and I can see the differences in their thinking – so independently I have a good contrast/compare which has nothing to do with Trump.  The point here is that Trump in the white house, it’s good for business, it’s a net positive for America, and it’s net positive for FX.  It’s irrelevant, Trump’s personality quirks, manner of speaking, personal life, or other nuances.  Yes, probably, there will be knee jerk reactions to change as there always is, for example if the Fed hikes rates the market will crash, but that’s a good thing – it’s just shaking out QE money, and putting the economy back on a ‘real’ track based on the real economy, not artifical QE.  

via http://ift.tt/1NUXCqB globalintelhub

There's no masking the facts. As Reuters reports, one Chinese factory is expecting Donald Trump to beat his likely U.S. presidential rival Hilary Clinton in the popularity stakes…"I think in 2016 this mask will completely sell out," said factory manager Jacky Chen, indicating a Trump mask.

At the Jinhua Partytime Latex Art and Crafts Factory, a Halloween and party supply business that produces thousands of rubber and plastic masks of everyone from Osama Bin Laden to Spiderman, Reuters reports that masks of Donald Trump and Democratic frontrunner Hillary Clinton faces are being churned out.

Sales of the two expected presidential candidates are at about half a million each but the factory management believes Trump will eventually run out the winner.

The firm was already beginning to stockpile the de facto Republican candidate's mask, he said.

China has largely refrained from responding to Trump's barbs, but Finance Minister Lou Jiwei described him as "an irrational type" in an interview in April.

Such issues are far removed from the Trump mask production line at the factory in Zhejiang province, south of Shanghai.

Asked if he knew whose face he was making, 43-year-old worker Liu Dahua told reporters: "It's the president of the U.S., right?".

But don't forget…

See full slideshow here…

via http://ift.tt/1U3wqm9 Tyler Durden

The United States Tax Code remains as one of the most complicated legal doctrines in the history of the States, in spite of widespread calls for simplification. 

 

And while politicians have sought to sway the average American voter with promises of lower marginal tax brackets, the American small business owner remains one of the hardest hit.

 

This happens, by and large, because a lot SMBs are established as either LLCs or a form of partnership; they can be a lot easier to manage.  LLCs default to Partnership tax status, which puts the onus of income on the individual rather than the company. 

 

Generally, when a person takes income through their W2 the company that’s paying them – the employer – will pay a significant portion of the social security and income tax.  Not so with Partnership taxation: because all income flows through to the “owners”, aka the partners, they’re left with the entire burden themselves.

 

That burden is passed on by way of the “Self Employment Tax” – and it can be around 15% of all income, pre-deduction, and no margins are applied to it.

 

Awkwardly, this is something that’s easily remedied – though it hasn’t ever been addressed.  Waiving the self-employment tax for anyone earning less than, say, $50,000 would squarely put small business owners – people who are already fighting an uphill battle – in a much better position, tax wise.

 

Because little changes like this could so easily alter the landscapes of – and lives of – small business owners, we have to wonder if the politicians re-writing the tax code understand it – and understand the pains of the normal person.  Something as small as this could offset the increases in insurance costs we’ve all seen under Obamacare, not to mention the landscape of business funding – as it would free up more capital for business growth and the hiring of more people.

Fundist

via http://ift.tt/1TP8dUD Fundist