Tag: news

Authored by Mac Slavo via SHTFplan.com,

Californians are bailing on the Golden State in droves as the tax burden and housing costs make the price of living unbearable for far too many. Many of those fleeing are the hearty middle-class who are being pushed into poverty by the socialist policies forced on them by the state’s elites.

The trend is a symptom of the state’s housing crunch and the ever increasing taxation. Census Bureau data show California lost just over 138,000 people to domestic migration in the 12 months ended in July 2017. Lower-cost states such as Arizona, Texas, and Nevada are popular destinations for relocating Californians.

Housing costs and the tax burden is far less impactful in pretty much any place outside of California, whose socialist policies drive up poverty and continuously erode the middle class leaving only the extremely wealthy and those in abject poverty.

The surging number of those working in Silicon Valley and still unable to afford adequate housing should be a warning about big government, but it sure doesn’t seem like anyone is taking notice as their taxes continue to rise. As governments creep toward socialism though, poverty becomes the norm, not the exception. Silicon Valley has the highest median income in the nation. But a soaring tax burden and expensive regulations have caused housing prices to increase which has also caused homelessness to surge. –SHTFPlan

“There’s nowhere in the United States that you can find better weather than here,” said Dave Senser, who lives on a fixed income near San Luis Obispo, California, and now plans to move to Las Vegas.

“Rents here are crazy if you can find a place, and they’re going to tax us to death. That’s what it feels like. At least in Nevada, they don’t have a state income tax. And every little bit helps.”

Senser added that he previously lived in the east San Francisco Bay region, and said…

…housing costs and gas prices are “significantly lower in Las Vegas. The government in the state of California isn’t helping people like myself. That’s why people are running out of this state now.”

A USC Dornsife/Los Angeles Times Poll of Californians last fall found that the high cost of living, including housing, was the most important issue facing the state. It also found more than half of Californians wanted to repeal the state’s new gas tax, which raised fees by a whopping 40 percent further burdening those already living paycheck to paycheck.

During the 12-month period that ended in July of 2017, California saw a net loss of just over 138,000 people, while Texas had a net increase of more than 79,000 people. Arizona gained more than 63,000 residents, and Nevada gained more than 38,000.

“You can literally have a lot of buying power for the dollar in Southern Nevada versus Southern California,” said Christopher Bishop, president of the Greater Las Vegas Association of Realtors.

“So it has been a major trend over the year, year and a half, and we’re seeing it increase.”

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Last week on Erik Townsend’s Macrovoices podcast, Jim Grant, storied credit investor and founder of Grant’s Interest Rate Observer, explained the reasoning behind his call that the great secular bond bear market actually began in the aftermath of the UK’s Brexit vote during the summer of 2016 – when Treasury yields touched their all-time lows.

Surprisingly, Grant’s call isn’t rooted in the bold-faced absurdity of Italian junk bonds trading with a zero-handle (although that’s certainly part of it). Rather, Grant explained, a historical analysis reveals that bond yields fluctuate in broad-based multi-generation cycles of different lengths. And given the carte blanche allotted to economics PhDs to “put the cart of asset prices before the horse of enterprise”, the fundamentals are indeed worrisome.

But in this week’s interview, John Mauldin offered a much more sanguine view of the landscape for markets and the global economy.

Beginning with the stock market: The “volocaust” experienced by US markets wasn’t unusual, Mauldin explained. It was the 15 straight months without a 2% correction that was unusual, Mauldin said.

John Mauldin

More corrections will almost certainly follow during the coming months. But absent any signs of a recession, these should be treated as buying opportunities by investors.

Now let’s remember something: The last drawdowns that we had – the corrections if you will – were not the unusual part. They weren’t the odd part. The odd part was 15 months in a row without a 2% correction. Never happened, ever, ever. So that was the odd part.

That should have been what we were all looking at and going “this is scary.” It wasn’t a 5% or 6% correction. The type of correction we just went through was something that we normally get at least once every 12 to 18 months. You get a 5% correction every 90 days, every quarter. So that was the normal, if you will. The not normal was no corrections and just almost straight up.

And we’re going to see probably more corrections. We’re going to see more volatility. But I would argue that any correction we see now, absent indications for a potential recession, are buying opportunities. If you’re a trader you, you know, see things – when they get to the top you raise a little cash, and when they go down some it gets into your buying session. You buy some, you go back in.

Indeed, the market is probably only going to move higher, Mauldin said. Though the US economy is on the cusp of notching the second-longest growth period in its history, few people see a recession in the offing – a view shared by, among others, bond guru Jeff Gundlach.

The US market may in fact be getting a little long in the tooth. I think that’s fair to say. I think sometime this next month, or very shortly, we become the second-longest growth period in history. And it has to go for another year after that to be the longest. And it very well could.

If you’re looking for recession indicators, there just aren’t any. Several of my friends who really track this stuff – I mean they’re obsessed – and one of them has 18 recession indicators. And 17 of them are saying No. Another one has 11 recession indicators. By the way, they’re different. I found it fascinating. And the large preponderance of those are saying No.

These are nine months out – one of the interesting things is there’s only one really good longer-term recession indicator. And that’s the inverted yield curve. And we are nowhere close to an inverted yield curve in the US markets. That means when short-term rates go above long-term rates. And short-term rates have got to go up again, and again, and again. And the Fed is telling us they’re going to do that.

But that would still mean that long-term rates would have to drop an awful lot. There’s no
reason to think that we’re going to have a recession, absent something happening in Europe – Europe blowing up because of what’s happening in Italy or other places. Or China having some nasty, unexpected event. Which I don’t expect to happen. I think Xi’s got the world pretty much going the way he wants it.

However, Maudlin sees one possible catalyst that could sink the US economy into the next depression – not just a recession, Maudlin emphasizes, but a prolonged period of contraction similar to the Great Depression.

And that, Maudlin argues, is runaway protectionism that leads to a global trade war.

After all, Maudlin explains, the Great Depression was – despite all that talk about buying on margin and the Black Monday – caused by Herbert Hoover’s ill-advised passage of the Smoot-Hawley tariffs.

Trade war, protectionism, if it gets out of hand, that could create a recession. And I am not unconcerned about that. I’ve said for 16–17 years in my writing, the thing that keeps me up the most at night, the thing that really worries me about the future of our economy and our kids and everything, that’s a signal for a depression, not a recession, a depression, is trade wars. Protectionism. Smoot–Hawley.

I mean, you get Herbert Hoover, who didn’t know anything, really, about a lot of the things that he was coming into, not unlike maybe some people would suggest our current president is like – he’s learning on the job. But Herbert Hoover let Smoot–Hawley get through and he signed it. And it was all over for the world. We had a depression. That worries me. In and of itself are these steel tariffs a problem? No. I mean, are some people going to lose their jobs over it because it makes their products too high? Yes.

The steel companies are already at record profits, for gosh sakes. I mean, it’s like, they don’t need any help. But it’s a little bitty market. In the grand scheme of things it’s not that big. And, by the way, under George W., he put steel tariffs in. Steel workers, now, there’s 160,000 of them.

That’s all we’ve got left. And people say, oh, my goodness, all those jobs have left. They’ve gone overseas. And I say, no they haven’t. We are producing more steel today than we have ever produced. It wasn’t the jobs that went to China or Mexico or whatever. It was technology. It’s just silly to think that you can make those jobs come back with tariffs. 80% of the manufacturing jobs that have been lost in the United States have been lost to technology.

The problem, Mauldin explains, is that manufacturing jobs in the US aren’t disappearing because of free trade – they’re disappearing because of technological advancements. So, the irony of the situation is that, by enforcing protectionism, the steel workers whom President Trump is trying to help will instead suffer – just like they did when George W Bush experimented with steel tariffs nearly 20 years ago.

Listen to the rest of the interview below:

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Authored by Nikita Vladimirov via Campus Reform,

At least 24 states have now either introduced or passed legislation defending freedom of speech on public college campuses. 

A total of eight states – Florida, North Carolina, Virginia, Kentucky, Tennessee, Colorado, Utah, and Arizona – have already passed bills into law that designed to protect free expression in higher education, with lawmakers from 16 other states campaigning to pass similar legislation.

Florida was the latest to pass such a measure, with Gov. Rick Scott signing a bill banning “free speech zones” on campuses last week. The legislation also included a “Cause of Action” mandate, allowing individuals to sue universities for violating their “expressive rights.”

Kentucky is the next state that could join the list, as the State Senate recently voted to pass a bill designed to protect the free speech of students and faculty alike. 

“The problem with this free speech area is it’s not even close to a lot of activity on campus,” said Republican State Sen. Will Schroder, sponsor of the bill, according to WEKU. “It really restricts individuals to a certain location.”

Not all of the free speech bills, however, have found the necessary support to successfully navigate the legislative process.

According to the Kansas News Service, the Kansas freedom of expression measure fell just one vote short of passing the State Senate on Thursday, ultimately falling with a 20-20 vote.

“It is our intent – those of us who are voting for this bill – to protect the speech of all students, no matter their race, their color, their creed, their gender identity or their sexual orientation,” Senate President Susan Wagle commented. 

The top Democrat and the Senate Minority Leader Anthony Hensley, however, vocally opposed the legislation, arguing that he “cannot support a bill that softens punishment for hateful harassment.”

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Earlier today, we laid out some of the key expectations and questions ahead of tomorrow’s hawkish FOMC decision, when new Fed chair Jay Powell is virtually guaranteed to raise rates by 25bps, with the only question being whether the FOMC “dots” will rise enough to indicate 4 rate hikes in 2018, or stay at 3, and whether the Fed will change the FOMC day format to add a press conference after every meeting. 

Here, for those who missed it, or are still unsure what to expect, here is a preview of tomorrow’s main event with the help of RanSquawk:

RATE PATH: A 25bps hike to 1.50-1.75% is priced in with over 90% certainty by money markets. More interest will be on how many hikes the FOMC projects in 2018 (currently three), and over its forecast horizon (seven; federal funds futures barely price five over that horizon).

Unlike December 2017, where Kashkari and Evans dissented to lifting rates, BoAML expects the decision to be unanimous in March, given the hawkish rotation of FOMC voters.

HOW MANY HIKES: Consensus is split whether there will be three or four hikes in 2018. Goldman Sachs says recent hawkish remarks by Fed officials suggest a broad shift in the Committee’s outlook towards a faster pace of tightening, and it sees the Fed signalling four rate rises this year, although not in later in the year. Even so, UBS posits the theory that the doves’ forecasts may simply play catch-up – the hawks were always shooting for three/+ hikes – and, accordingly, the dots could just be narrowed at the lower-end of the spectrum, with the median remaining three. Additionally, the impact of fiscal stimulus will filter through later along the forecast horizon. By maintaining the three hikes view, the Fed would have more flexibility to better assess inflation trends and the likely impact of fiscal stimulus in later meetings, leaving the option to add the ‘fourth dot’ in June or September. And even if the Fed kept ‘three dots’ in 2018, it could still play a hawkish card by adding another rate rise to the 2019 profile, where it currently has two hikes pencilled in.

Morgan Stanley is far more lukewarm, and it expects that at the current rate of tightening, there will be a flat-to-inverted yield curve, which together with continued balance sheet runoff and tighter financial conditions, will warrant close examination of how much further the FOMC wants to push rates in this cycle. Thereafter, in early 2019, fiscal stimulus will push a very late-cycle economy to new heights Morgan Stanley believes, leading the Fed to hike two additional times—in March and June. The bank predicts that the midpoint of the target range will be near neutral (at 2.625%), at which point believes the hiking cycle will end.

Goldman meanwhile writes that while its own forecast is that the FOMC will deliver four hikes both this year and next year, it expects a more measured increase in the dots next Wednesday, as shown in the chart below.

As Goldman’s Jan Hatzius calculates, by his count—which factors in Yellen’s departure—four members would have to boost their projections above the December median (of three hikes) for the March SEP to show a four-hike baseline in 2018. Six individuals projected a three-hike 2018 pace at the December meeting (i.e. just one hike below four), and given the upbeat public remarks and encouraging data, Goldman believes such an increase is indeed likely, and also expects the 2020 median dot to increase, but by less than half of a hike.

Meanwhile, BofA’s baseline forecast is for the median dot to stick at three hikes for 2018 (2.125%), move up to three hikes in 2019 and hold at 1.5 hikes in 2020, leaving rates at 3.25% at end of 2020, and expects the long-term dot to shift up slightly to 2.875%.

* * *

SO WILL IT BE 3 OR 4 HIKES IN 2018? the 2018 median was 2.125% for the December 2017 dot plot. For this rate to increase 25bp, four of the dots at or below the median would have to shift to 2.375%. In other words, for the median path in 2018 to move to 4 hikes the dot plot would need at a minimum all but one participant currently at 3 hikes to move to 4.

The following table illustrates just what it might take.

 

FORECASTS: Growth projections will likely be nudged up in 2018 and 2019 on the back of fiscal stimulus. And this will be likely be accompanied by a lower unemployment rate (but not necessarily a lower NAIRU rate) and slight upward revisions to the Fed’s PCE/core PCE view, Pantheon Macro says.

* * *

ECONOMIC PROJECTIONS: Financial conditions remain easy, but are broadly unchanged since the FOMC put together its last round of projections in December, with easing from moderately higher stocks and a weaker dollar almost fully offset by higher Treasury yields. As such, THE FOMC has little impetus to change its forecasts due to financial conditions. However, Morgan Stanley expects that policymakers will incorporate additional upside from fiscal policy into their March growth projections, with tax reform and fiscal spending packages having been finalized after the last projections were put together in early December. As Chair Powell noted in his congressional testimony, “my personal outlook for the economy has strengthened since December.” Indeed, other policymakers have expressed optimism about the economic outlook as well. Governor Brainard, for example, indicated that “[m]any of the forces that acted as headwinds to U.S. growth and weighed on policy in previous years are generating tailwinds currently.” On fiscal policy, Brainard noted: “.. on top of [December’s tax legislation], the recently agreed-to budget deal is likely to raise federal spending by around 0.4 percent of GDP in each of the next two years.” Fiscal impetus of such a  magnitude easily poses upside risk to December’s GDP growth forecasts for 2018 and 2019 (more heavily weighted toward 2018). Meanwhile, with inflation data unfolding in line with expectations, financial conditions roughly unchanged in December, and the assumption that any added fiscal stimulus comes with growth in productivity (dampening the inflationary effects of faster growth), Morgan Stanley sees no need for the FOMC median forecast for core inflation to be revised at this meeting. The bank’s projected changes in the March Econ Projections table is below.

FEDSPEAK: Recent Fedspeak has raised hopes of an upward revision to the rate path; Trump’s fiscal stimulus plan, as well as nascent signs of inflation (wage growth has firmed, headline CPI is above 2.0%, though both core CPI and core PCE lag, PPI hints at inflation pressures) has seen dovish FOMC members like Brainard and Bostic (both voters) talk-up a higher trajectory, while centrist Dudley (voter) said four rate rises this year is consistent with gradual normalisation. Chair Powell struck a balanced tone at his recent dual-testimony to lawmakers; he retained the optionality of four hikes via an optimistic assessment of the economic outlook – commenting that recent data has increased his confidence that inflation will rise. He noted that “we” (implying the Committee) are not currently seeing strong evidence for a decisive move higher in wages. That view was ultimately corroborated by the latest earnings data in the Employment Situation Report, which saw the YY rate of wage growth ease back slightly following January’s upwards spike.

What other FOMC participants have said recently about the number of hikes this year:

• Boston FRB President Rosengren (3/9/18): To keep the economy on a sustainable path, I expect that it will be appropriate to remove monetary policy accommodation at a regular but gradual pace – and perhaps a bit faster than the three, one-quarter point increases envisioned for this year in the assessment of appropriate policy from the December 2017 FOMC meeting.
• Philly FRB President Harker (2/8/18): I still have penciled in two because I’d like to see us slightly overshoot our 2% inflation target, but I think there are some risks to the upside, where I would be open to three going forward.
• Dallas FRB President Kaplan (2/2/18): I’ve said that I think the base case for 2018 should be three removals of accommodation, and we’ll see—it could be more than that, we’ll have to see.
• NY FRB President Dudley (1/18/18): The forecast that the FOMC wrote down in December, in the December SEP, where the median was three rate hikes in 2018 seems like a very reasonable type of forecast…it could be more.
• NY FRB President Dudley (3/1/18): If you were to go to four 25 basis point rate hikes, I’d think it would still be gradual.
• Atlanta FRB President Bostic (3/7/18): According to Bloomberg, Bostic said that in December he was expecting two rate hikes this year, but has moved to three.

* * *

NAME THAT DOT:  As noted above, the greatest uncertainty is how many hikes take place in 2018, and that we would need to see four FOMC officials move from the three- to four-hike camp for that to happen. Based on BofA calculations, the most likely members in the three-hike camp in December were Yellen, Powell, Kaplan, Dudley, Williams and Quarles. The risk is that Quarles and Dudley move to the four-hike camp, but Kaplan will likely stay at three hikes. It is a close call for Powell and Williams. While the median forecast would therefore stay at 2.125%, the mean will move higher by just over half a hike, but with risks of a bigger gain.

POWELL PRESSER: It is hard to judge how Powell will handle his first press conference, but if his recent testimonies are anything to go by, he will deliver “an optimistic and positive tone” according to BofA. He will likely sound optimistic on the outlook, where headwinds are becoming tailwinds, BNP Paribas believes, while Deutsche Bank says that he may go further and say that risks are now shifting towards an overheating economy. That optimism will require a  degree of hawkishness to justify, especially in the likely scenario that rate forecasts are raised. But Powell will still likely try and achieve a balance. There is an outside chance Powell will be quizzed on whether he intends to hold a post-meeting press conference after every rate decision, to which he might respond that it is a consideration; SGH Macro says this will convey a message that ‘every meeting is live’.

BofA expects Powell to field the following questions:

1. Are long-run growth prospects improving? He will likely suggest the risks are increasingly skewed in that direction, but that it is prudent to wait for more evidence, emphasizing productivity and labor force expansion.
2. How important are financial conditions? He may note that recent measures have revealed tightening with some signs of funding stress. It will be interesting to see how he links this back to monetary policy.
3. Will the Fed allow inflation to overshoot the target? He will emphasize the symmetry of the inflation target, but likely offer little information about the alternative monetary policy frameworks that are under discussion.
4. Will the FOMC move to a press conference at every meeting? BofA expects him to suggest it is under discussion without committing.

While it may not be directly touched upon in the presser, a key point of focus for the rates market will be any discussion around the tightening of financial conditions since the last Fed rate hike. Equities remain below their late January peak, credit spreads are wider, and the 3m LIBOR-OIS spread has blown out since the December FOMC meeting. However, BofA expects the Fed will not sound particularly concerned about the recent tightening in conditions, noting some contraction is to be expected with higher policy rates and a shrinking Fed balance sheet. The Fed would likely be much more concerned about the tightening in financial conditions and rise in LIBOR if it appears to more directly spill over into broader corporate borrowing/investment activity or begins to wane on consumer or business confidence. In other words, until stocks tumble because of the spike in Libor/L-OIS, the Fed will not lift a finger.

* * *

MARKET REACTION: Lifting rates may see a modest rally along the front of the curve, BoAML says; and Rabobank adds that if inflation doesn’t materialise in the medium/longer-run, a curve inversion could be on the cards. A steeper curve will require the Fed to raise expectations of the terminal rate by notching up its long-term rate forecast, which could see underperformance in the five-year sector, BoAML says; the bank sees the 2s5s curve steepening, and the 5s30s flattening. Either way, BoAML – who has been more positive on the USD than the street – sees the risks skewed towards USD-bullishness. In a hawkish scenario, Barclays has recommended short NZDUSD to take advantage of the monetary policy divergence theme between the Fed and what is likely to be a dovish RBNZ (whose rate announcement follows the Fed’s on Wednesday). Refraining from raising the long-run rate view too aggressively (or at all) may be a recipe for risk assets to perform well, but not the USD given concerns about the toxic mix of both easy monetary and fiscal policy (SocGen).

* * *

FOMC REDLINE: What will the Fed say? We leave readers with two blackline FOMC statement previews, one from Morgan Stanley and one from Goldman Sachs, laying out where the two banks expect to see changes to the Fed language.  What is interesting is that while both banks expect a modest walk back of the current economic conditions – especially in housing – while leaving the rest of the statement unchanged, they still expect a 25 bps hike. 

First, here is Morgan Stanley:

And here is Goldman’s preview:

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Authored by Eric Peters via EricPetersAutos.com,

One of the reasons for liking old cars is they don’t try to parent you. The new stuff won’t quit trying to.

The 2018 VW Golf GTI I am reviewing this week, for instance. When you put the transmission in Reverse, the radio’s volume’s is peremptorily turned down – apparently because someone decided it wasn’t saaaaaaaaaaaaaaaaaaaaaaaaaaafe to back up while listening to the radio.

One can almost see the liver-spotted hand of your mother-in-law adjusting the volume control knob. Many new cars have this “feature” – not just new VWs.

It’s incredibly obnoxious. More so because it’s not your mother-in-law and you can’t slap her liver-spotted hand down or – better – hit the unlock button and tell the old bag to get out now if she can’t mind her own business.

Speaking of door locks…

They are just as peremptory. Some can be programmed not to be – but the default is uber peremptory. As soon as you get in and close the door, it locks. All locks. Some cars are incredibly aggressive about allowing access to the car, denying the owner access to the trunk or rear cargo area unless he very deliberately unlocks the locks, which the car slammed shut without him having asked it to.

Again, for saaaaaaaaaaaaaaaaaaaaaaafety.

The latest BMW vehicles will countermand your decision to inch the car backward with the door open – by taking the transmission out of gear and pestering you with a cloying chime that sounds kind of like this: Brrrrring! Brrrrring! Brrrrring!

Sometimes, backing up with the door open makes sound sense. You get a better idea of where the curb is and also the distance remaining between the back of your car and the car your backing up toward using your own two eyes – which have greater depth perception and peripheral vision than any fish-eye camera.

But BMW wants you to use the camera instead. No, check that. BMW insists you use the camera.  The car will not let you back up with the door cracked. The nanny cannot be told off.

There is no Off button.

And that’s the rub.

It’s one thing – an acceptable thing – for a car company to include a feature it thinks may be helpful. This isn’t a bad thing. It’s another thing when the feature isn’t wanted – and you can’t countermand the “help.”

This is, however, the new Nudge way of doing things. The mother-in-law you can’t make shut up or kick to the curb.

Busybody-ism.

Which didn’t used to be the American cultural norm. You can watch sitcoms from the ‘60s to confirm this. Some readers may remember the annoying next-door neighbor in the series, Bewitched. Gladys Kravitz. She was an object of ridicule then. Today, she’s in your dashboard – and touted as the most marvelous thing since hot and cold indoor plumbing. Speaking of which. One wonders how long it will be before you’re only allowed to turn the Hot up so high – and no higher? Probably with a cloying jingle warning you it’s not saaaaaaaaaaaaaaaaaaaaaaaafe to take a shower so hot.

We are not far away from that, actually.

All washing machines now lock themselves up as soon as you start the cycle. It is not possible to add something to the wash, as was routine practice for decades. Apparently, a child went for a swim and its parent wasn’t parenting – so now we are all parented.

This is why cars have back-up cameras now, incidentally. A handful of negligent parents didn’t parent their kids – backed up over their kids, whom they’d lost track of – and now we are all parented.

More examples:

Most new Toyotas will not allow you to disengage the traction control unless you first come to a complete stop – which is extremely unhelpful if it’s blizzarding outside and the roads are slick and the very last thing you want to do is come to a complete stop as this often makes it exceedingly difficult to get moving again. Once more, there is no way to countermand the dashboard nanny.

It knows best – and it insists.

The Lane Keep Assist systems now standard in probably half the new cars on the market and soon to be standard in every car as automated car technology further infiltrates – object if you do not signal prior to making a lane change. Even if there is no reason – other than mindless obedience to a pointless protocol – to signal. For instance, the absence of any traffic in the vicinity. Not everyone lives in a busy city. Some live in the country, and sometimes, you are the only car on the road.

Signaling in that event is kind of like knocking on the door to the bathroom in your own house when you know there’s no one in the house except yourself.   

The Lane Keep Assist, however, insists.

If you don’t signal and try to change lanes, motors connected to the steering gear will countersteer to try to prevent you from changing lanes. You have to fight the computer’s determination to prevent your lane change. This is actually far more dangerous – far less saaaaaaaaaaaaaaaaaaaaaaaaafe – than not signaling a lane change when there’s no traffic around.

But nevermind.

You are supposed to use your signal – no matter the relevance of signaling.

Old cars – those made prior to early 2000s – are largely free of all this stuff. Those made prior to the ’90s are completely free of this stuff. Driving one of those cars is an almost startling experience, if you only have experience with newer cars. You are in charge – of everything. The car simply does as it’s told.

Mrs. Kravitz would have a conniption fit.

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Across three months, 381 Saudis were hauled in and locked up at the Ritz-Carlton, which boasts 492 rooms, 52 acres of land, and 62,000 feet of conference space. Many left quickly.

Prince Alwaleed bin Talal’s stay was among the longest. The prince says he was kept in Room 628, a 4,575-square-foot royal suite, and now in his first interview since being released, one of the world’s richest men opens up to  Bloomberg TV’s Erik Schatzker about his confinement by the Saudi government, and the ‘secret deal’ that enabled his freedom…

I saw Alwaleed in late October, the week before he became a prisoner of the state. We spent an evening at his desert camp chatting about the financial markets and U.S. politics, watching a soccer match on TV, taking a walk through the sands, and eating a late dinner in the cool midnight air. Seven weeks after his release, in mid-March, I returned to the kingdom. Alwaleed had decided to break his silence and grant me an interview on  Bloomberg Television.

We recorded the interview on a makeshift set in Alwaleed’s apartment on the 67th floor of Riyadh’s Kingdom Tower. Walking in, I wondered how candid he could be. Would he be forthcoming about life inside the Ritz-Carlton? If he’d been harmed, would he admit it? Had he been forced to accept a devil’s bargain to win his release? Would he be credible? What if the government had threatened him? Would I be able to tell?

The following is an excerpted version of our conversation, lightly edited for clarity…

Alwaleed’s detention was more mysterious than most. Of all the princes who were brought in, he alone hadn’t served in the Saudi government, where kickbacks are considered common. And unlike other businessmen, he wasn’t a government contractor and so couldn’t have overbilled the state. He made most of his wealth transparently, in real estate and as an investor in public markets.

Erik Schatzker: Why were you arrested in the first place?

Prince Alwaleed: Well, I would not use the word “arrested,” because we were invited to the king’s house and then asked to go to the Ritz-Carlton. So it was done with honor and dignity, and our prestige was maintained. Not only me; everybody else.

So the word “arrest” is fair to use for those who did commit a crime, admit their guilt?

Exactly. And reached a settlement with the government. But in my case, you know, it’s very much different.

So were there never any charges? Were you ever accused of anything?

There were no charges. Because I have a fiduciary responsibility to my shareholders in Kingdom Holding, to my friends in Saudi Arabia, and to the world community, because we have international investments all over the place, it’s very important to say that there was zero accusation and zero guilt.

You’ve described the whole ordeal as a misunderstanding. A misunderstanding over what?

When I say misunderstanding, it’s because I believe I shouldn’t have been there. Now that I’ve left, I would say that I’ve been vindicated. Yet I have to acknowledge to you, for the first time, that yes, we do have with the government a confirmed understanding, going forward.

What does that mean?

It is very confidential. I cannot get into that. But there is a confirmed understanding between the kingdom of Saudi Arabia and me personally.

Does that require you to do certain things?

Not necessarily. I cannot get into that, because it is confidential and secret between me and the government. But rest assured that this does not really handcuff me.

What did the government want from you?

I will not get into the discussions that took place between me and representatives of the government.

They must have wanted something.

I read what was written, that they wanted a chunk of A or B or C of what I have. This was all rumors.

According to one report, it was $6 billion.

I read $6 billion, I read more than that and less than that.

Did it cost you anything to leave? Did you have to pay the government any money, did you have to hand over any land, did you have to surrender any shares?

When I say it’s a confidential and secret agreement, an arrangement based on a confirmed understanding between me and the government of Saudi Arabia, you have to respect that.

I’m a Saudi citizen. But I’m also a member of the royal family. The king is my uncle. Mohammed bin Salman is my cousin. So my interest is in maintaining the relationship between us and keeping it unscratched.

You maintain your innocence. You say you didn’t sign a settlement acknowledging guilt and that you’re different.

We signed something, yes, a confirmed understanding. Some others may call it a settlement. I don’t call it a settlement, because settlement to me is an acknowledgment you’ve done something wrong.

You realize, of course, how important it is to be candid and honest with me about this, because the circle of knowledge is too wide. If a different story emerges, your credibility will suffer.

Sure.

So everything you’ve told me is 100 percent true?

I have a confirmed understanding with the government, and it’s ongoing. I’ll elaborate on that: It’s an ongoing process with the government.

…

I need to clear my name, No. 1, and to clear up a lot of the lies. For example, when they said that I was tortured, I was sent to a prison, you know, during my 83 days in the Ritz-Carlton hotel. All these were lies. I stayed there the whole time. I was never tortured.

So you were not harmed or mistreated in any way?

Not one iota.

You’re certain that nobody else who was at the Ritz-Carlton suffered anything akin to abuse, torture, wasn’t even roughed up?

Maybe someone tried to run away or do something crazy. Maybe he was put down and controlled. Maybe. But for sure there was nothing you could call systematic torturing.

Were you allowed to talk to other detainees?

No. No two people in the Ritz-Carlton could talk to each other. Even in my case. I did not see anyone. I did not talk to anyone.

…

I’m a nationalist. I’m patriotic. I believe in my country. So I’m not going to have this, this irritation that happened to me create a vendetta and turn me against my uncle, my cousin, my nation, and my people.

Prince Mohammed has a grand plan for the transformation of the Saudi economy and Saudi society. Do you remain supportive?

His vision took a lot of my ideas, but he multiplied them. I had the sovereign wealth fund idea, I talked about Aramco going public. Women’s rights, women competing in society, women driving, all of these things I called for.

He’s establishing a new era in Saudi Arabia. Any person who does not support what Mohammed bin Salman is doing right now, I say, is a traitor.

*  *  *

Continue reading here…

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By Priceonomics

Ranking the Places with the Most (and Least) Fast Food in America

Close to a quarter of adults in American eat fast food *every single day*. The popularity of the drive-through window is a good indicator that we like to eat on the go, or at least that we are too busy to stop for a meal. It’s not surprising then, that fast food restaurants are in every city in America. 

However, people and their tastes vary from place-to-place, and some fast food restaurants are more popular than others. So what are the most popular fast food joints? More importantly, which states and cities have the most and least fast food restaurants per capita? 

We analyzed data from Priceonomics customer Datafiniti, a data company that maintains a database of restaurants, to see where fast food restaurants were located (and where they weren’t). Then, by sorting the data geographically and adjusting for population size, we can see what areas of the country have the highest concentration of fast food restaurants.

When it comes to the highest concentrations of fast food restaurants per capita, Central and Southern states dominate. Eight of the top ten states for most fast food restaurants per capita are in the South with Alabama in the number one spot. The states with the fewest fast-food restaurants per capita are mainly in the Northeast with Vermont, New Jersey, and New York taking the top three spots.

Cities with the most fast-food restaurants per capita, on the other hand, were spread more evenly throughout the country with Orlando, Cincinnati, and Las Vegas in the top three spots. Cities with the fewest fast-food restaurants per capita are mainly concentrated in California and the Northeast with New York at number one, and four California cities in the top ten.

McDonald’s (the second largest fast-food chain) is in every major city in America. Orlando, FL and Las Vegas, NV have the most McDonald’s per capita at 20.9 and 13.9 restaurants per 100k residents respectively.

***

To start, we will look at which fast food restaurants are most popular in the country. For this analysis we take the number of restaurants in each fast food chain and divide by the total number of restaurants in the dataset, giving the percent of total listings for each chain

From this list, we see that just two restaurants, Subway at 18.5% of listings and McDonald’s at 11.3% of listings, account for over a quarter of fast food restaurants in this dataset! At a distant third is Burger King at 5.7% of listings. Rounding out the top twenty is Whataburger at 0.6% of listings, which is surprising considering their locations are only in ten states.

Of course, looking at the numbers for the nation as a whole doesn’t really give insight into what is going on in any one place. As many of us know, fast food is more popular in some areas, and less popular in others. 

Next, let’s look to see where fast food restaurants are most popular on a regional scale.

The Central region, at 4.5 fast food restaurants per 10K residents, has the highest number of fast food restaurants per capita. The South is close behind with 4.4. The Eastern region has the fewest with just 2.5 fast food restaurants per 10K residents.

Now that we know what regions have the most fast food let’s look at individual states.

Southern states have the highest fast food count per capita with the top spot going to Alabama at 6.3 restaurants per 10K residents. The only non-southern states in the top ten are Nebraska at 5.4 and Indiana at 5.0, both in the Central region. As for the states with the fewest fast food restaurants per capita, most are from the Eastern region with Vermont having the fewest fast food restaurants per capita at 1.9 per 10K residents. Mississippi made a surprise appearance with just 2.1 fast food restaurants per 10K residents.

If you are interested to see where your state falls, the full list is as follows:

Increasing resolution even more, now we look at major cities with the most fast food restaurants per capita. Here, we have only included the top 100 cities by population to look at major cities specifically.

At the city scale, regional differences start to fizzle out, and local preferences start to show through. Tourist spots like Orlando and Las Vegas have lots of fast food restaurants, taking the number one and three spots respectively. New York City has the fewest fast food restaurants per person, and California cities like Los Angeles, San Francisco, and Oakland don’t have much fast food either.

We just looked at major cities in America, but what about smaller cities? When including smaller cities, the number of restaurants per capita goes much higher. For this analysis, we only used cities where there are 50 or more fast food restaurants, so we avoid looking at very small towns with only a few restaurants.

Again, this list is dominated by Southern cities, with Katy, TX taking the top spot with a whopping 62.5 fast food restaurants per 10K residents. In the distant second, with just 43.9 is Naples, FL. Just two cities are outside the South with Traverse City, MI at 36.8 and Littleton, CO at 30.0. 

Let’s take a moment to look more closely at the second largest fast food chain in America, McDonald’s, and just how prevalent it is. Note for the chart below we are now looking at the number of McDonald’s per 100K residents.

Orlando, FL tops the list at 20.9 fast food restaurants per 100K residents with two other major cities in Florida, Miami at 13.0 and Tampa at 9.3, making it in the top ten. We also see that McDonald’s is popular nationwide with Las Vegas, NV at 13.9, Minneapolis, MN at 10.4, and Buffalo, NY at 9.7 also making the list. For cities with the fewest McDonald’s per capita, five of the top ten are in California, with Ventura, CA taking the top spot at just 0.4.

***

As you can see, you can find fast food spread across the nation with restaurants in every major city in America. Southern and Central states are the place to go if you love fast food, and head to the East or out West if you don’t. Southern cities have abundant options for fast food, particularly in Florida, and head to California if you don’t want to eat on the go. As for McDonald’s, it appears that this major restaurant chain has spread to every corner of America. Head to California if you don’t like the golden arches, and head basically anywhere else if you do.

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Shortly after Congressman Michael McCaul told reporters that investigators had uncovered surveillance footage of a possible suspect in the Austin bombings, authorities are reporting an explosion in Southwest Austin.

ATCEMS tweeted after 7 pm Tuesday that officials were responding to Brodie Lane and West Slaughter Lane.

 

Multiple assets from #ATCEMS @austinfiredept @Austin_Police responding Brodie Ln/W Slaughter Ln (1902) reported explosion with reports of one patient injured. Unknown severity of injuries at this time. Avoid the area and expect closures. More to follow.

— ATCEMS (@ATCEMS) March 21, 2018

 

 

FINAL W William Cannon Dr / W Us 290 Hwy (2348) auto vs motorcycle collision. #ATCEMSMedics transported ~50s male St David’s South Austin Medical Center with critical life threatening injuries. EMS clear the scene. Possible closures and delays. No further information available.

— ATCEMS (@ATCEMS) March 20, 2018

 

Officials said a male in his 30s was transferred to St. David’s South Austin with potentially serious injuries that are not expected to be life threatening. No other people were injured, according to KVUE.

Authorities said there may be a second device at another location in South Austin.

 

BREAKING: Authorities tell me that they think there is a second device at location in South Austin based on preliminary information

— Tony Plohetski (@tplohetski) March 21, 2018

 

This is the sixth bombing in the Austin area since March 2. So far, two people have been killed; four have been seriously wounded.

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New York Congressman Tom Suozzi (D) is taking heat for suggesting that a room full of voters may need to take up arms against the Trump administration if he doesn’t folow the law.

“I mean, this is where the Second Amendment comes in quite frankly, because you know, what if the president was to ignore the courts? What would you do? What would we do?” said Suozzi during a Q&A session last week with constituents on Long Island. 

“It’s really a matter of putting public pressure on the president,” he added. 

Following his comment, a constituent asked him what the Second Amendment was. 

“The Second Amendment is the right to bear arms,” said Suozzi. “That’s why we have it.”

Suozzi’s comment comes a month after he co-wrote a virtue-signaling article with Rep. Peter King entitled “Do the right thing on gun laws” following the Parkland massacre. 

“Too often the National Rifle Association’s response is “more guns.” That’s nonsense. Americans already own 300 million guns,” the article reads. 

In response to Suozzi’s comments, Republican Congressional Committee spokesman Chris Martin said “When resistance and obstruction don’t work out, Tom Suozzi proposes violence,” adding “He’s completely out of touch.” 

Suozzi’s spokesperson denied he was calling for “armed insurrection” against Trump (he was just telling the audience that the 2nd amendment would come into play if Trump ignores the courts).

“Taking a page from such great Americans as Thomas Jefferson, James Madison and Alexander Hamilton, Congressman Suozzi explained why our founding fathers created the Second Amendment as a way for citizens to fight back against a tyrannical government that does not follow the rule of law,” senior adviser Kim Devlin said in a Monday statement to Fox News.

Devlin added: “To suggest his comments meant anything else or that he was advocating for an armed insurrection against the existing president is both irresponsible and ridiculous.”

Suozzi made the comment about the Second Amendment when a constituent asked him a question about Trump and the United States’ “constitutional system of checks and balances.”-Fox News

That sure sounds exactly like every pro-Second Amendment conservative’s argument against Democrats who want gun control, but what do we know. 

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Authored by Mark Perry via AEI.org,

S&P Dow Jones Indices, the “de facto scorekeeper of the active versus passive investing debate,” recently released its SPIVA U.S. Year-End 2017 report (see other reports here for Europe, Latin America, Canada, Australia, India, Japan, etc.).

Here’s an overview of the SPIVA Scorecard:

There is nothing novel about the index versus active debate. It has been a contentious subject for decades, and there are few strong believers on both sides, with the vast majority of market participants falling somewhere in between. Since its first publication 16 years ago, the SPIVA Scorecard has served as the de-facto-scorekeeper of the active versus passive debate. For more than a decade, we have heard passionate arguments from believers in both camps when headline numbers have deviated from their beliefs.

And here are some highlights of the 2017 SPIVA US Scorecard (bold added):

During the one-year period, the percentage of managers outperforming their respective benchmarks noticeably increased in categories like Mid-Cap Growth and Small-Cap Growth Funds, compared to results from six months prior. Over the one-year period, 63.08% of large-cap managers, 44.41% of mid-cap managers, and 47.70% of small-cap managers underperformed the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, respectively (see table above).

While results over the short term were favorable, the majority of active equity funds underperformed over the longer-term investment horizons. Over the five-year period, 84.23% of large-cap managers, 85.06% of mid-cap managers, and 91.17% of small-cap managers lagged their respective benchmarks (see table).

Similarly, over the 15-year investment horizon, 92.33% of large-cap managers, 94.81% of mid-cap managers, and 95.73% of small-cap managers failed to outperform on a relative basis (see red highlight in table).

MP: Stated differently, over the last 15 years from 2002 to 2017, only one in 13 large-cap managers, only one in 19 mid-cap managers, and one in 23 small-cap managers were able to outperform their benchmark index.

So it is possible for some active fund managers to “beat the market” over various time horizons, although there’s no guarantee that they will continue to do so in the future. And the percentage of active managers who do beat the market is usually pretty small – fewer than 8% in most of the cases above over the last 15 years; and they may not sustain that performance in the future. For many investors, the ability to invest in low-cost, passive, unmanaged index funds and outperform 92% of high-fee, highly paid, professional active fund managers seems like a no-brainer, especially considering it requires no research or time trying to find the active managers who beat the market in the past and might do so in the future.

Here’s an analogy, perhaps it’s not perfect: Suppose you could be guaranteed to score in the 95th percentile on the LSAT, MCAT, GRE, or GMAT exam without studying for even one minute. Wouldn’t that be appealing to most people compared to the alternative of spending a lot of time studying and probably getting a lower score?

If I can out-perform 95% of active managers with a Vanguard or Fidelity index fund for almost free (.04% expense ratio), that choice to me seems easy: go with index investing. As Bethany McLean wrote in Fortune “Building a portfolio around index funds isn’t really settling for the average. It’s just refusing to believe in magic.”

Here’s a golf analogy from Burton Malkiel:

It’s true that when you buy an index fund, you give up the chance to boast at the golf course that you picked the best performing stock or mutual fund. That’s why some critics claim that indexing relegates your results to mediocrity. In fact, you are virtually guaranteed to do better than average. It’s like going out on the golf course and shooting every round at par. How many golfers can do better than that? Index funds provide a simple low-cost solution to your investing problems.

And extending the index investing-golf analogy, you can be a “scratch golfer” without even having to practice, buy expensive golf clubs, or take lessons from pros, and you also get the additional benefit of paying much lower green fees (or private club fees) than most golfers who do practice incessantly, invest in the best golf equipment and take private lessons! Sign me up for that deal!

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