Tag: finance

Submitted by Richard Ebelong via EpicTimes.com,

Let us be clear. We are living, right now, in a time of emotional fear, hysterical anger, illogical demands, and dangerous temptations. In other words, liberty and prosperity are at risk. A decent and tolerant society is threatened. Common principles of humanity are being undermined.

All of this is concentrated and has been brought to a head in the rhetorical clamor and campaign conflagrations of a presidential election year. To try to understand what is going on, a mountain of words have been spoken by serious think tank scholars, by Sunday morning talk show pundits, or by evening television news 15-second “in-depth” interpreters, as well as miles of written commentaries that have been offered in hardcopy or on the online media and blog sites.

Pandering and Plundering Politicians, Left and Right

On the Democrat Party side, how can a corrupt, manipulative, lying, life-long power-lusting insider like Hillary Clinton be taken seriously and to be, seemingly, riding high to her party’s presidential candidate? How can a self-proclaimed “democratic” socialist, who has praised and apologized for communist dictatorships in Latin America and who chose to honeymoon with his bride in the former Soviet Union, arouse the mass enthusiasm of millions who see him as the deliverer of a transformative “political revolution” in America?

On the Republican Party side, how can a bombastic, rude and crude user of government privilege and favoritism for his business interests, like Donald Trump, who speaks most of the time in empty phrases and wrong-headed illogic on numerous economic and social issues, victoriously steamroll through state primaries and garner the support of millions merely because, many of those multitudes say, “he says it like it is”?

How can we explain the fate of the field of other Republican candidates, heralded in the summer of 2015 as the finest group of minds offered by the GOP for the office of the presidency in several decades? As the autumn began, one of them after another, first in the debates and the public opinion polls, and then in the primaries, failed to inspire or distinguish themselves. Each fell victim to voter indifference and then to Donald Trump’s meat grinder. Until, now, hardly any remain standing.

And what of the voters? Facing an uncertain employment future, experiencing seeming stagnant or low wage improvements, disoriented by a changing cultural environment; angered by political promises unfulfilled by those elected to high political office, as well as burdensome taxation and heavy-handed regulation; frustrated by crony “insiders” close to politicians and bureaucrats who “rig the game” for the benefit of special interests while leaving the costs and lost opportunities on the shoulders of ordinary citizens Sam and Sally, who have none of the “pull” to influence things their way, now insist: “We’ve had enough and we’re not going to take it any more.”

Broken Constitutions and Noses to Get What You Want

This is the sentiment and insistence of a sizable number of voters. And if it takes a socialist with utopian dreams dancing in his head, or a boorish billionaire who says he knows how to fix a broken system because he’s been playing it for decades for all its worth, then so be it. Put the “strongman” in charge to shake things up and give the ordinary guy an even break.

If it takes bending the Constitution or tearing down the wealth and position of some, well, those insiders and fat cats, those “establishment” types, have been rigging the rules for as long as can be remembered. So its time someone stuck it to them with some of the same political power, just in “the people’s” direction for a change.

And if some people have to be “roughed up,” if their words need to be shouted down or shut up, again, we’ve had enough of what they have had to say. Of course, who the “we” are and who the “they” are all depends upon who the “you” is.

Are you referring to the radical college professor who calls for some “muscle” to drive away a news reporter covering a campus demonstration against freedom of speech? Or a presidential candidate who gets cheers from his followers when he suggests that a physical altercation against protesters at their meeting is a lot more fun than listening to a boring campaign speech?

What we are witnessing are the latest episodes in the continuing bankruptcy of the modern American political system. These millions of voters all along the political spectrum wrap their frustrations and demands in rhetoric of either restoring or establishing “real” and “true” American values.

Long Down the Road of Lost Liberty

The fact is the original or traditional premises and values of the American system have been eroding away for almost a century, now. Several decades ago, the libertarian social analyst and critic, Garet Garrett, penned an essay with the title, “The Revolution Was.” He pointed out that too many people concerned with the preservation of the American constitutional system of government and a free society failed to appreciate how much of the ideas and institutions for a society of liberty had already been eroded away by forces opposed to its preservation.

We are a lot further along this path today from when Garet Garrett tried to point out how far away from a free society we had already moved. To appreciate this, we must first remind ourselves what are the premises and institutions upon which a free society ultimately stands or falls.

The philosophical foundations were expressed, of course, in the Declaration of Independence, when the authors in 1776 insisted that all men are created equal and are endowed with certain unalienable rights, among which are life, liberty and the pursuit of happiness. And that government is formed among men to secure these rights from their violation by private individuals and groups or from government itself.

To guard against such violations by government, the very political institution meant to secure liberty is formally restrained in how it may use and apply its legitimized use of force in human affairs by constitutional rules. The American Constitution was meant to clearly demarcate the limited and enumerated functions of the federal government, with the additional restraining device of “divided government” between the branches of the federal government and then between the federal government and the duties and responsibilities of the individual state governments.

The restraining of government was meant to assure that political power remained a servant of the citizenry and their individual rights, and not a threatening master taking away or reducing their liberty. Secondly, federal government in terms of divided responsibility among national, state and local political decision-making was meant to reflect functions needing to be performed at different horizons of importance to the citizens, and to keep government control and decision-making as close to those citizens as those different governmental tasks allowed.

Freedom Needs Habits of the Heart and Mind

But pieces of paper upon which are written the administrative duties and responsibilities of different levels and branches of government is not sufficient in itself to maintain a society of individuals secure and protected in their rights. As the famous French social philosopher, Alexis de Tocqueville, pointed out in his Democracy in America, written after his extended visit to the United States in the 1830s, the free society is more than elections, and legislative procedures, or a written constitution. It is based upon “habits of the heart” and “character of the mind.”

That is, it is dependent upon a wide network of “structures of shared meaning” and values among the members of a society. They must believe in human worth, that is, the dignity of each individual, and a respect for and tolerance of the diversity of men’s dreams, wishes, hopes and values. And most importantly, that each and every individual has a “natural” or inviolable right to their own life, to be lived peacefully and honestly in whatever manner and form that the individual considers most likely to bring him meaning, happiness and fulfillment of the goals and purposes that he sets for himself.

There must be a shared view that human relationships should be based on voluntary consent and mutual agreement. Coercion and physical threat or intimidation in any and all forms should form no part in the patterns of human association and relationship. And that government’s own use of force should be reserved and restricted to its “negative” application, that is, always and only in defensively protecting people’s rights to their life, liberty and honestly acquired property and not any types of violation or weakening of these rights.

There needs to be at least an implicit agreement among the members of such a free society that what a man has honestly and peacefully earned through his mental and physical labors and his voluntary exchanges with others is rightfully his. Accumulated wealth and income, as long as it has been honesty and peacefully acquired, is not a mark of injustice or unfairness or unethical conduct, but rather an indication of the industry, energy, and successful effort in improving an individual’s own circumstances through mutually beneficial production, trade and association with others.

And more broadly, there needs to be a spirit and sense that whatever differences may exist among individuals due to accident of birth or social and historical circumstances, the idea and ideal is that each person is looked at, judged and evaluated as an individual in terms of his distinct qualities, characteristics, talents, abilities and achievements as an human being and not as a member of a collective group. Political and economic individualism should be matched with ethical and social individualism as we look at, interact and treat others in the community of mankind.

These principles and ideals when shared in common, again to use de Tocqueville’s phrases, the “habits of the heart” and “character of the mind,” gives unity to the members of a free society, while at the same time providing the respect, tolerance and “space” for diversities of among men as expressed in their individual and social interactive goals, purposes, ends, values and meanings for life and happiness.

American History an Incomplete Reflection of Its Own Ideals

America, of course, has never fully lived up to this conception of man, society and government. Slavery deprived humanity to millions during the first half of the country’s history; this was followed by legally imposed discrimination laws and practices that contemptuously treated those who were equal citizens of the nation as less than fully human as peaceful associative relationships and economic opportunities were closed to them in the name of explicit and implicit racial inequality.

Government, even in the early days of the nation’s history, never confined itself within the constraint of protecting rights rather than plundering them. Corruption, political special interest pandering, and misuse of the fiscal purse strings resulted in state and federal regulations and favoritism benefiting some at the expense of many others. Tariffs, subsidies, land grants, monopolies, and financial contracts awarding government money to companies undertaking “internal improvements” (public works projects in the more modern language) assured that the peacefully and productively earned income and wealth of many were politically transferred into the hands of those close to and influential over those holding political office.

However Incomplete, American Practice Gave Liberty to Multitudes

But however imperfect and hypocritical in practice, it remained nonetheless the fact that the idea and ideal of political, economic and social individualism were more believed in and implemented in the United States in the nineteenth century and into the 20^th century than anywhere else on the face of the globe.

It generated a spirit of optimism, hope and effort that fostered multitudes to live and experience the fruits of those ideas and ideals to a degree never known before in human history. It gave Americans – even with the contradictions, inconsistencies and corruptions – a higher standard of living and a greater degree of actual individual freedom and opportunity than in any other part of the world.

The older or “classical” liberalism of the nineteenth century had called for the end of these various political privileges and forms of favoritism, that is, to abolish these remaining governmental inconsistences and exceptions. And it called for the social spirit of individualism and free market competition to overcome those attitudes and actions by people in contradiction with a full respect and tolerance of the dignity of men as individuals.

 The Collectivist Counter-Revolution Against Liberty

But before these forces of liberal individualism could complete the liberation of humanity from plunder and prejudice, a counter-revolution emerged, a counter-revolution of new forms of collectivism, statism, and socialism. They rejected the individualist ideal and insisted that the group and the tribe came before the individual human being; that any person’s sense of identity and position in society was determined by and dependent upon into what “social class,” or racial group, or nation-state the individual was born and lived.

Any hardship, disappointment and sense of mistreatment or frustration experienced by an individual was the result of the exploitive, or oppressive, or “socially unjust” actions of those in some other social or racial group or nation-state other than the one to which he belonged.

Individual responsibility was replaced by group status and privilege. Rights were not something unalienable and belonging to individuals; instead, “rights” were “entitlements” belonging to members of a categorized group, and for the provision of which individuals in other groups were obligated to provide and supply.

The idea of a common humanity among all men as individuals was slowly but surely replaced with the notion of group “identities” based upon which the individual’s sense of self-esteem or social position and belonging was dependent.

Politics and the political process was not a restrained and limited institutional method for finding the most effective and efficient ways of delineating, protecting and enforcing the individual rights of each citizen to their life, liberty and honestly acquired property. Instead, politics and the political process was conceived as the arena in which the power of the government was captured and used to “redress grievances” by using legal force to redistribute wealth, reorder social and other status positions of privilege and favor for the benefit of “deserving” groups in place of “undeserving” groups.

Freedoms Curtailed for Controlled Entitlement

Freedom of speech and the press, the right of peaceful assembly and association were no longer considered the avenues through which each individual’s right to express, share, debate and manifest his ideas and ideals was guaranteed by limiting government’s ability to interfere with such peaceful acts and interactions.

Instead, freedom of speech and the press and freedom of association came to be considered tools of intellectual and ideological control and exploitation by the “powerful” against the social, racial or gender “under-privileged.” And as such, the spoken and written word and any forms and types of permitted association had to be modified, molded and controlled to assure collective social, racial and gender equity and balanced access and privilege through governmental regulation and planning.

Collectivist “Rights” Through Political Action

The individual was, now, portrayed as too weak and inconsequential to find his own way to betterment and happiness in such a setting of social, racial and gender oppression. Personal liberty and free association in the marketplace and other voluntary settings were declared to be “illusionary” notions of freedom.

“True” freedom and opportunity could only come through the advancement of the social, racial and gender group to which one belonged in a political competition for entitlement “rights.” In this circumstance, each group had to have leaders and leaderships that expressed and represented the “real” and “just” interests of the group for which they claimed the right, duty and responsibility to speak and act.

This road from political, economic and social individualism to collectivist identity and privilege through group competition for political power is what has brought us to our current political crisis as captured in this year’s presidential campaign.

Your job security is uncertain? Your income has not increased the way you had wished and desired? Your social status and acceptance by others has not matched your expectations and personal sense of deservedness? The ideas you want accepted by others and the actions and attitudes you want others to follow and express have not materialized?

Then the task is to use the government to give you what you want, and to force and compel others in society to conform to your vision of the good, right and just. If mouths have to be shut when you consider them to be speaking evil or “hurtful” words, if people must be coerced to act in the way you want them to, if wealth and opportunities of life must be redistributed by government’s police power so you and others in our group may have what you consider that which you rightful deserve, then so be it. That is the means and methods of “true” democracy, since if you and your group do not use government to get what you want, some other groups will do so at your expense.

This is the new America system: a democratic politics of power, plunder and privilege in a perpetual social conflict of social classes, racial groups and gender identities. It is a system in which the individual seems weak, small and powerless; and needing “leaders” who will use politics to bring them to the social, economic, racial and gender “promised lands” that are laid before the constituent-voters, if only this or that political candidate is elected to set the world right for the benefit of a coalition of collective groups who want certain things and to which they are told they are entitled.

This the outcome of the journey from liberal individualism to political collectivism that has placed before us Hillary Clinton, Bernie Sanders, Donald Trump and a cast of other remaining candidates who sometimes speak the language of liberty but do so interwoven with inconsistencies and contradictions that leave the message of freedom with no fully principled spokesman in this year’s race to the White House.

The path back to and forward towards liberty, therefore, will have to be journeyed far beyond the outcome of this November’s election.

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

Sweden is too generous for its own good as the country most beloved by Bernie Sanders is pressured by huge migrant flows. As Bloomberg reports, when it comes to wealth, health and hospitality, Sweden has few rivals. But the same qualities that make the country a beacon of hope for the world’s huddled masses are straining it at the seams.

To see how close to the limit a record inflow of refugees is pushing Swedish generosity, visit Halmstad, a 14th century gateway to the North Sea known for its pristine beaches and golf courses. With no vacant apartments, the welcome wagon here is a double row of shabby, stifling trailers hauled in to house the overflow from the nearby Arena Hotel. There, almost 400 asylum seekers from Syria, Afghanistan and beyond live four to a room, all but forbidden from working until their claims are adjudicated. The process can take years.

Men with little to do but sleep and smoke crowd the lobby as kids careen down corridors on bikes. The sports bar, once busy with locals, is now a halal dining hall, the outdoor pool fenced-off and abandoned. It’s a scene increasingly common across Sweden, which welcomed 163,000 refugees last year alone, or about 1.6 percent of its population, a ratio equivalent to 5.1 million in the U.S.

Three years after Sweden and its Nordic neighbors were declared “The Next Supermodel” of fiscal prudence by The Economist, the welfare system pioneered in Stockholm is starting to buckle under the weight of Europe’s biggest migration wave since World War II.

Even dovish politicians concede the pace of refugee spending, which is on track to surpass that for national defense in Sweden for the first time this year, can’t be sustained without revisions to a social contract based on high taxes, cradle-to-grave entitlements, tight regulation and AAA credit.

Few know the perils and promise of Scandinavian welfare better than Aida Hadzialic. She fled Yugoslavia with her family at the age of five and settled in Halmstad, where she served as deputy mayor before being named Sweden's minister for secondary education in 2014. And what worries her most is the viability of a model that literally saved her life.

“If we don’t make the changes needed to maintain trust that our tax money goes to the right thing, people may start wondering if it’s worth paying,” said Hadzialic, 29. "Then we’d create a new gap between people. That’s not the Swedish model, that’s not the Sweden we know.”

It’s a debate raging across the European Union as the human tide of mainly Muslims adds to crises eating away at the bloc’s cohesion and encouraging extremist parties. Even in Sweden, where centrists have ruled for decades, discontent is on the rise. Polls show backing for the governing Social Democrats hovering near the 50-year low of 24 percent it reached in January, while support for the anti-immigrant Sweden Democrats has risen five points since the 2014 election to 18 percent.

Investors have already registered their alarm.

As the inflow of refugees peaked late last year, the yield bond-buyers demand to hold Swedish debt over that of Germany, the European benchmark, surged to a nine-month high. Though that spread has narrowed, the government has warned that outlays for migration will further squeeze the $110 billion national budget. Ethnic tensions are adding to the strain, with a rash of fires and threats of mob attacks at refugee centers across the country.

For most Swedish citizens, though, there’s little question their welfare state — as much an anathema for U.S. conservatives such as Donald Trump as an inspiration for left-wingers like Bernie Sanders — is worth protecting.

Today, Swedes can consider themselves among the luckiest people on Earth. At 82, their life expectancy is two years longer than Americans’ and their net disposable income, $29,185 per household, exceeds the U.K., France and Japan. What they lose with a top income tax rate of about 60 percent, they gain back with free, high-quality hospitals and schools, a vast program of subsidies for childcare and housing, and some of the world’s safest and most modern cities.

But providers of public services say they can’t keep those standards up if refugees, the vast majority young and male, keep coming.

Building new housing for immigrants at a time when half a million Swedes are waiting eight years on average for rent-controlled apartments around Stockholm is becoming a flash point, said Joakim Ruist, an economist at Gothenburg University. The only “logical” way to stimulate new construction is to lift price controls so developers have more incentive to build, a move that won’t be popular with voters, he said.

“No modern welfare state has had an inflow of refugees per capita that’s equivalent to Sweden’s," Ruist said. "We’ve gone past the breaking point for the housing situation.”

Fearing a public backlash over housing and handouts, which can be worth $28,000 a year for a single mother of two, almost what the average American worker earns, Sweden is trying to walk back its open-door policy. Citing an "unsustainable" pace of arrivals, Prime Minister Stefan Loefven has re-imposed border controls and pledged to step up deportations of rejected asylees. Family reunifications are also being drastically curtailed.

Until recently, there was little question Sweden, with debt far below the European average at less than half of gross domestic product, had the resources to successfully integrate its newcomers. Hadzialic, the schools minister, and Hanif Bali, an IT entrepreneur and member of parliament for the Moderate Party, are living proof of that.

But like Hadzialic, Bali, who arrived from Iran without parents as a toddler in the 1990s, is starting to think his adopted homeland may just be too generous for its own good.

“If we don’t act soon we’ll have a large group of refugees who won’t be able to enter the labor market,” said Bali, 28.

Just the thought of being a burden on society makes Hasan al-Bundok sigh.

The 45-year-old lawyer fled Syria’s war in search of a better future, first to Turkey, then across the Mediterranean to Greece and eventually Halmstad. The plan was to find a job, establish a home and then send for his wife and four children back home. But that was nine months ago and he’s still languishing in legal limbo at the Arena Hotel.

"In my country, I’d wake up at six o’clock, have breakfast with my children and go to court,” Bundok said. “But here, I’m like an animal, just eating and sleeping. I don’t want to be a second-class citizen. I want to work.”

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

Submitted by Pepe Escobar via SputnikNews.com,

It’s spy thriller stuff; no one is talking. But there are indications Russia would not announce a partial withdrawal from Syria right before the Geneva negotiations ramp up unless a grand bargain with Washington had been struck.

 

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

The farcical American welfare-state has a new posterchild. Meet Florida-resident Nicholas Jackson, who tried to purchase a brand new $60,000 BMW X-6 SUV with his Electronic Benefits Transfer (EBT) card…

That's not what Food Stamps are for!!

But, as New York Daily News' Sasha Goldstein explains, after failing to use his us-taxpayer-funded credit card to buy the high-end German luxury car, he decided to steal it…but was caught when he ran out of gas (according to police).

 

Nicholas Jackson, 36, showed up to a Pompano Beach dealership with little in the way of currency and was sent away, the Martin County Sheriff’s Office said. But the next day, the business was burglarized, and the owner found the $60,000 BMW X-6 and 60 sets of keys missing, police said.

Cops later caught up to Jackson in Palm City, some 70 miles north of Pompano, where authorities say he drove until the car ran out of gas. They also found the BMW with the gas tank on empty.

Jackson got a ride to the Martin County Jail, where he’s charged with grand theft auto and held on $20,000 bond.

*  *  *

Of course, in this new socialist norm in which we live, the Bernie-ites will defend the arrogance and ignorance of Jackson since why should he not 'take' from the rich? It's only fair!

via Zero Hedge http://ift.tt/25e1vMH Tyler Durden

Unfortunately for the establishment, the ongoing acts of sponsoreds civil disobedience are not creating the groundswell of anti-Trump terror they had hoped would bring down the anti-establishmentarian. In fact things have gone so far that even Arizona cops questioned their safety among Soros' puppet-protesters. As African-American police officer Brandon Tatum exclaims, the profane-language-using demonstrators "were the most hateful, evil people he has ever seen."

As EndingTheFed.com reports, Brandon Tatum, an officer in the Tucson Police Department, shared a video Saturday night giving his perspective on Donald Trump’s campaign rally in Tucson, Arizona — and the disruptive protesters who hurled obscenities at the Republican candidate.

As he explains, Tatum says that as a black man, he did not feel unsafe around Trump’s supporters but was ready to fight protesters in self-defense. He calls them the most hateful, evil people he has ever seen. The demonstrators, who he recalls chanting the phrase “Black lives matter,” used profane language and gestures, leading a mother to cover her child’s ears.

One protester, he recounts, got beat up, but Tatum says that the man instigated a fight either by spitting on or assaulting a rally attendee. He hopes that his message makes it into the news so that typical CNN coverage of just the retaliation against the agitator doesn’t become the prevailing narrative about the rally.

As for Trump himself, Tatum says he went to the rally to decide for himself what he thought of the candidate rather than trusting someone else’s word. He states that he gained respect for the businessman and didn’t hear anything bigoted from his stump speech. “His character’s a lot different than what you would perceive it to be in the media,” he says.

* * *

Once more the tried and tested efforts of the 'management' to disrupt the democratic process in favor of their wealth-maintaining status quo is suffering unintended consequences are everywhere amid the blowback from these organized protests.

via Zero Hedge http://ift.tt/1Vs8cGH Tyler Durden

Submitted by Adam Taggart via PeakProsperity.com,

 

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

On Saturday, Donald Trump made the rounds in Arizona, rallying supporters with his trademark, off-the-cuff stump speech.

At this juncture, the billionaire has become something of a master when it comes to feeling out crowds. He shows up, takes the stage, and proceeds to deliver various riffs on the same set of amorphous themes depending on what he thinks any one particular set of supporters wants to hear. There’s the customary mention of protesters (“Bernie people”), the obligatory jabs at GOP rivals (“lyin’, lyin’ Ted”), an insult or three for the media (“crazy Megyn”), a poke at the establishment bear (“Mitt’s a chokin’ dog”), a brief mention of trade (“we make terrible deals”), a promise on immigration (“we’re gonna build a big beautiful wall”), and of course, a thundering reiteration of a promise that, at its heart, has absolutely no meaning whatsoever (“make America great again”).

And it works. Like a damn charm.

In fact, it works so well that you wouldn’t know anyone else was even running – Republican or Democrat. If you watched CNN on Saturday there were a couple of brief moments where a Bernie Sanders rally appeared on screen and other than that… nothing. It was a Trumpfest from morning to night.

But even as it appears increasingly likely that the billionaire will get to 1,237 delegates by July thus obviating the need for a contentious convention in Cleveland, the GOP is holding out hope that the establishment can still steal the nomination from the frontrunner.

Trump has threatened warned of “riots” if he’s robbed, but the party probably doesn’t care. Keeping Trump from getting the nomination is the only thing that matters at this point. For those interested in more granular detail on how the establishment may still be able to stop the Trump juggernaut, see here and here. For those interested in a simpler, visual explanation, see the following three helpful flowcharts from Reuters and The New York Times, respectively.

via Zero Hedge http://ift.tt/1o01ycY Tyler Durden

Submitted by Mark St. Cyr

What’s The Frequency Janet?

Once again, in spectacular fashion, the financial “markets” have miraculously rebounded from the aptly moniker’d “Bullard Bottom” and without pause has traversed in a near vertical assent to recapture the levels where all the uncertainties began. In other words, after all the gyrations over the last 14+ months we are once again only back to the levels (as scored by the U.S. financial markets e.g., Dow, S&P, et al) where the Fed stood confidently in their economic policy acumen.

Remember those confident proclamations during that time? (paraphrasing) “The economy has recovered quite admirably as to allow the QE (quantitative easing) program to end.” That was a good one, no? Remember what happened next? Nothing, as in the “markets” basically went nowhere up, nor down for months on end.

Sure there were some great headlines made of this path to nowhere as the market screamed sideways in a pattern much like a cardiac reading with blips and spikes that allowed headlines such as “New Never Before Seen In The History Of Mankind Highs!” on a near weekly basis. Yet, although those headlines were true, all they did was mask the fragile, ever deteriorating economy those “meters” were hooked to.

The one thing that never changed during that whole period? The implied fortitude of resolve that the Fed would indeed strike the path towards normalization of monetary policy and begin raising interest rates away from the zero bound. After all, it was implied at near infinitum: The economy had shown great signs of improvement. e.g., employment at near “full” status and others.

So, with that “mission accomplished” narrative as the wind beneath their wings the table was surely set that in September of 2015 the Fed would indeed raise rates. Remember what happened next?

Ah yes: China. It seemed just like any prudent U.S. investor or market aficionado might infer; a rate hike here means trouble there. After all, did anyone not understand just how interconnected these “markets” are with currency funded carry trades and more? Oh yes, sorry, it seems the Fed either forgot or, never realized the obvious inherent risk and consequences. The result?

The U.S. financial markets fell is such a spectacular, as well as, cascading manner that for the first time in the history of the markets all three of the prominent futures markets were halted. Only after stick save inspired shenanigans as those delivered by CNBC™ fame Jim Cramer and his now infamous “Is that a pencil in your pocket or a note from Tim Cook?” reveal did the markets seemingly recover and stabilize.

Then, reality once again set in as the markets collectively held its breath near those lows as it awaited the Fed’s implied: “You’ve been warned we’re going to raise rates.” Then, as the markets reacted to this implied “fortitude” and drifted lower back towards that “bottom.” The Fed with all its proclamations for faith in forward guidance and clarity did the exact opposite and punted. The result?

Once again in a near vertical assent the markets screamed upwards with barely a respite to recapture the same levels where it all began – again.

Now nearly a year later the Fed stood poised to do what it said it would. i.e., raise rates. (Talk about mulligans!) So, with data points in hand which the Fed proclaimed proved their well placed guided hand of interventionism monetary policy had worked effectively, they once again reiterated that they indeed were going to raise rates – and this time they did. The result?

Once again in a near carbon copy of the previous selloff the markets lunged downward in a fashion resembling a luge sled on a one way course. And how and where did the “markets” once again seem to find a stopping point? You guessed it: the “Bullard Bottom.”

And why this level appears so aptly named is for the fact that once again it was non other than St. Louis Fed president James Bullard who took to the airwaves and threw a Fed narrative over the decline of prices in oil. Result? (Need I say for I think you are seeing the pattern here.) The decline halted precisely at the level that bears his moniker. But the similarities don’t stop there.

Just like in Aug/Sept of 2015 as the markets began to once again rollover there was an announcement on February 12th. But this time it was not by a Fed official. No, this announcement came from non-other than one of the Fed’s too big to fail recipient’s of the financial crisis J.P. Morgan Chase™ as its CEO Jamie Dimon announced he was buying 500,000 shares or some $26 million in stock of JPM. It seemed the market took that as “with confidence like that – we should be on board also!” and just like the prior the markets were off to the races skyward. After all, if a bank CEO is buying it surely must be a good time to buy also, right? And so they did.

So, one would garner such a display of “confidence” would give the Fed the necessary backbone as to follow through on what they’ve implied through their rate hike projections via the Dot Plots. After all, the economic measures they state over ,and over, and over again as their “touch stones” of economic health as well as measurement (i.e., jobs, inflation, etc., etc.) are all within the tolerant values that define “success.” Surely they would continue on their path to monetary normalization. Guess what? Hint: Nope.

Not only did the Fed punt once again. Both the metrics and language of the press release, as well as, the presser itself given by Fed Chair Janet Yellen was so convoluted, obtuse, as well as defensive even many of her staunchest defenders or cheerleaders couldn’t make heads or tails out of what should be easily and readily addressable answers.

Dot plot projections that implied 4 rate hikes now imply 2, which to even the most casual Fed observer now more likely means – zero. All that great data that was used for a “data dependent” Fed? Sorry, no data for you. Well; data that represents the U.S. that is.

You should now infer that all “data” is “international.” i.e., what’s happening elsewhere supersedes data the Fed keeps repeating its mandated to oversee and foster. (e.g., U.S. employment and inflation.) Again, even some of the most lenient critics of the Fed were themselves struck by the fact that the once stated goals which the Fed communicates ad nauseam as desired levels for policy normalization once again decided inaction – as action. When in fact these levels have been either hit or, are within meaningful “mission accomplished” parameters. And when it came to answering about the Fed’s credibility issue? Well, see here for yourself.

All I’ll state for those still confused about Fed policy is the following: When in doubt – just move the goal posts. Problem solved. In theory anyways. However, isn’t that all that all that economics truly is? e.g., Theory.

However, you know what is no longer theory nor a “data” point that’s fungible? What level the U.S. financial markets are currently trading at.

To now dismiss Fed policy causation as “correlation theory” is laughable. The markets are now so intertwined and Fed dependent the observation of whether correlation is causality has been rendered moot. Without the Fed – there is no market. That’s now a proven fact. Period.

Everything, Every market, every stock, every currency, is correlated and dependent of its very existence or viability as former Dallas Fed president Richard Fisher once implied: on a “diminutive woman” to play Atlas.

And exactly where are these markets once again? Hint: Right where it all began. Where the Fed declared “mission accomplished” twice before when they announced QE was over, and where rate hikes were warranted. So, what happens at this third rendition? Is three times a charm? Who knows. All we can do is wait, see, and hope everyone is on the same wavelength the Fed Chair states it’s on as well.

It’s also quite possible we now have two new concrete “data” points or metrics far more impervious to movement which have supplanted the once Congressional mandated “data” points current Fed watchers once looked upon as “gospel.” Those data points?

Policy action or inaction is dependent on either a break of the “Bullard Bottom” (i.e. 1800ish SPX, 15,500ish Dow) or surge back to “fortitude central” (i.e. 2050ish SPX and 17,500ish Dow) where we once again stand, and await what monetary dictate the Fed will deliver next. The only issue now is…

Is the Fed still on the same page? Reading from the same playbook? Or, even on the same wavelength as the markets? And probably more importantly: with all the missteps and confusing commentary emanating from the Fed – will the “market” continue to respond as it always has? (Look to the EBC and BoJ decisions of late for clues)

Right now it’s anyone’s guess. And in my opinion, there’s no one guessing more about what to do next – than the Fed itself.

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

Two weeks ago, before first the ECB first and then, the Fed, unleashed two massive dovish surprises, we warned – citing JPMorgan – that the most painful part of the short squeeze “may be yet to come.”

As a reminder, this is what JPM said on March 5:

The covering of short equity positions continued over the past week. The short interest in US equity futures declined over the past week.  But its level remains very negative suggesting there is room for further short covering. The short interest on SPY, the biggest equity ETF, at 4.75% stands below its recent peak of 5.43% but it remains elevated vs. its level of 3.54% at the start of the year. Equity ETFs have not yet seen any significant inflows, suggesting that ETF investors have done little in actively reversing the almost $30bn of equity ETFs sold over the previous two months. CTAs, which have been partly responsible for this year’s selloff, are still short equities and they have only covered a third of the short position they opened in January. In contrast, Discretionary Macro hedge funds, Equity L/S, risk parity funds and balanced mutual funds, appear to be modestly long equities, so they are currently benefitting from the equity rally.

Actually, if one uses the latest Goldman Sachs data, this is not at all true because those long positions which benefited from the market surge were more than offset by pair-trade shorts which soared even more and wiped out all gains.

We won’t cry for hedge funds, however, and instead are much more interested in what current and future flows will look like.

According to the same JPM team which expected a continuation of the short squeeze half a month ago, as a result of central banks once again pandering to stock markets with the Fed shocking even the “Liesmans” of the world by going full dove even as the Fed has already met its labor and inflation mandates, the move has led to a significant “impact on investors’ sentiment and behavior is evident in flows. ETFs, a universe almost equally shared between retail and institutional investors in terms of ownership, saw another big inflow this week meaning that three quarters of the previous selling of equity ETFs during January and February has been reversed over the past three weeks.”

What is more notable from JPM’s note, is that CTAs – one of the most important marginal price setter on the way down when only CTAs were profitable at the expense of all other hedge funds, continued to cover their loss-making short equity exposures. By JPM’s equity beta measure, CTAs appear to have fully covered their shorts as shown below.

But while CTAs may be out, the short base in US equity futures remained elevated as of last Tuesday, March 15th, a day before the FOMC meeting,  perhaps held by money managers outside CTAs.

JPM also suggests that there was even more short covering in the post-FOMC period not covered by the chart above, which certainly has collapsed the net short exposure but JPM believes that “given the size of the shorts as of last Tuesday, we doubt that the negative net spec position on US equity futures has been fully covered by this week. In total, by looking at Figure 1 and Chart A16 together, we conclude that the short covering phase that started a month ago is very advanced” but, as JPM hedges “it is not yet fully completed.”

That may be, but a far bigger catalyst for fund flows in the coming days is the end of corporate buybacks for the next 6 weeks as DB warned on Saturday morning:

… a warning which is especially poignant when one considers that BofA’s “smart money” clients have now been selling stocks for 7 consecutive weeks, leading Bank of America to admit the bitter truth that “clients don’t believe the rally, continue to sell US stocks.”

So why would anyone else, unless pressured by a short squeeze, buy… especially when as the central banks explicitly admitted, absent more liquidity support the market is set to tumble. A short squeeze, which as JPM admits, is almost over.

Finally, a major driver of market upside this past week was Quad Witching, the S&P rebal and OpEx, which as JPM’s head quant Marko Kolanovic warned last week, may now catalyze near-term weakness: “in the next week, we could see some downward pressure as the impact of option hedging is reversed. Historically, we have found that the market develops positive momentum during the 3rd week of the month (when there is a call imbalance), and this often reverses during the 4th week of the month.”

But what may ultimately determine the direction of market may also be the most boring one of all: Q1 earnings, which begin in earnest on Momdah, and are expected to be the worst since the financial crisis.

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

To say that the last seven days have been tumultuous in Brazil would be a laughable understatement.

The country – which is on the fast track to “banana republic” status – plunged into chaos this week after a Sao Paulo state judge said a decision on the arrest of former President Luiz Inácio Lula da Silva should fall to federal judge Sergio Moro, the firebrand “rockstar” leading the prolonged car wash probe into corruption tied to Petrobras.

Sensing that Lula’s detention was imminent, embattled President Dilma Rousseff sought to save her mentor by offering him a ministerial position which would effectively make him immune from prosecution – at least in the near term. Lula still has legions of supporters in the country, but the millions upon millions who want to see the Rousseff government ousted saw through the President’s gambit immediately. And so did Moro, who tapped the President’s phone and subsequently released several dozen recordings, at least one of which appears to prove that she did indeed offer Lula the cabinet position to shield him from legal trouble. Cue the street protests.

Lula was sworn in during a farce of a ceremony which not even the PMDB bothered to attend and meanwhile, a committee was assembled to push forward with impeachment proceedings for Rousseff. A series of legal maneuvers from both sides set off a kind of “will he be minister or will he not” seesaw until finally, on Friday evening, Supreme Court judge Gilmar Mendes blocked Lula’s Lula’s appointment.

“Tensions also grew between the government and the federal police after Eugênio Aragão, justice minister, threatened to remove federal police teams from investigations, including the task force investigating corruption at Petrobras,” FT wrote on Sunday. “If there is even a hint that information has been leaked from one of our agents, the whole team will be changed and I don’t need proof — the federal police is under our supervision,” Mr Aragão told Folha over the weekend.

“Justice Gilmar Mendes’s ruling bars Mr. da Silva, who was sworn in Thursday as Ms. Rousseff’s chief of staff, from serving in the cabinet until a panel of Supreme Court justices makes a final ruling following an appeal by the government,” WSJ wrote, adding that “As a private citizen, Mr. da Silva, who is under investigation in the corruption case, can be tried in any court.”

In other words, Moro is now free to arrest him.

“Formally, Judge Moro could issue the arrest warrant,” Ivar Hartmann, a law professor at Getúlio Vargas Foundation in Rio de Janeiro told The Journal. “I don’t know if he will, but he could.”

Yes “he could” and if he does, you’ll likely see more BRL strength. As we’ve documented extensively this month, the BRL is now trading pretty much exclusively on Lula, as his fate is seen as a proxy for whether Rousseff will ultimately be forced from office. The market apparently believes that anything would be better than the current political arrangement when it comes to shoring up the country’s flagging economy which last year plunged into what might as well be a depression. Here’s a look at how the currency is trading Lula news flow:

Of course Brazil’s problems aren’t going to be fixed if Lula and Rousseff are kicked to the curb. On the political front, 26% of Congress faces active criminal investigations. On the economic front, we could rattle off any number of data points but really, this is all you need to know:

So while the market may be forward looking, the BRL rallies that invariably accompany any and all bad news for Lula are not just premature, they’re ludicrous. In fact, in order for the country’s structural problems to dissipate, the currency needs to shoulder some of the burden. Goldman has more on why “the last thing Brazil needs now is to go back to BRL over-valuation.”

*  *  *

From Goldman

Brazilian asset prices repriced significantly since late February on the back of a number of developments in the political and judicial spheres that were perceived as having significantly increased the probability of a near-term political transition.

Due to a combination of external factors and a number of domestic events the BRL was the best-performing currency across the EM universe in the year through March 17. In the process, the BRL moved back into over-valuation territory, something that in our assessment is at odds with the current extremely debilitated macroeconomic picture and highly uncertain political backdrop.

Part of the asset price rally observed during the first two weeks of March reversed on March 14-16, with Brazilian asset prices selling off with the appointment of former president Lula da Silva as Chief of Staff of the Rousseff administration (Exhibit 1). This was perceived by the market as having reduced the probability of a near-term political transition, and as having increased the probability of a shift back to heterodox policies. However, new “car-wash” investigation developments, spontaneous mid-week street protests, and a dovish FOMC surprise, were met by rallying markets towards the end of the week (March 17-18).

Due to a combination of external factors and a number of domestic events related to the car-wash judicial probe into corruption, sentiment towards the BRL improved significantly despite still-high implied and realized volatility.

We have long argued that given the very weak domestic macro fundamentals, namely, high domestic inflation, very deep and prolonged recession (Exhibits 7 and 8), and lingering political risk and uncertainty, the economy would benefit from a currency that is noticeably cheap to fair-value for a while.

Hence, we are of the view that the central bank could and should be more assertive in reducing the still very large US$108bn stock of Dollar-swaps, in order to prevent further currency appreciation. That is, leaning against the wind of currency appreciation would be fully justified by the current weak macro fundamentals (2-year-long, deep economic contraction).

In summary, to increase the efficiency of the macro adjustment and lessen the output/employment loss of the required rebalancing, the authorities should restrain BRL/USD appreciation below 3.70, in order not to short-circuit the ongoing expenditure switch, and to cement the current account adjustment.

via Zero Hedge http://ift.tt/1R8dS6O Tyler Durden