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Gold and Yen spiked this morning (right before CPI) on the back of Nikkei headlines about preparation being observed for another North Korean missile launch (following overnight news that US officials had confirmed). Now Reuters reports that defense officials have confirmed to Fox News that North Korea is prepping for a new missile launch and gold and yen are bid once again.
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Yesterday was a historic day for the S&P 500: not only did the index close at a new record high, but it was also 269% higher than its “generational lows” of March 2009, surpassing the 266% increase during the 1949 to 1956 bull market, according to Bloomberg calculations.
And while there is no reason to doubt that central bankers – who no longer have anything to lose from blowing the biggest, hopefully last bubble in history – can push this artificial “market” to unprecedented levels, even taking out the top spot of the 1990-2000 market run which saw the S&P rise by over 400%, others are less sanguine, and in recent weeks calls for an imminent correction have become a chorus. After all, it has now been years since there was even a modest drop in the S&P500, resulting in an generation of traders who are unfamiliar with using the sell button (for those asking, one definition of correction vs a crash is that the former follow rich valuations, but only crashes are associated with recessions).
That said, any correction forecast needs two components: When and Why?
Conveniently, Citi has released an analysis looking at these two variables, and notes that while many economic indicators are poor “predictors” of corrections, there are a handful of reliable signals to keep an eye on. Starting with the “why“, the bank writes that there are two things the precede most corrections: i) toppish valuations & waning earnings growth – especially as they impact credit- of which both are amply present currently…
… and more importantly, ii) when central banks pull the plug, as there have been few corrections without preceding hikes.
As a reminder, central banks are pulling the plug as we speak.
So putting this into the bank’s prop model that calculates the odds of a correction, no really…
… Citi finds that odds of a correction in the next 3 months have now risen to more than 45%.
Finally, the bank “helpfully” points out that most correction are associated with a trigger… only in hindsight. Luckily, in retrospect there will have been plenty.
Finally, for those who would rather avoid trigger events and prefer to go with their gut, then just look for irrational exuberance. In a market with over $20 trillion in central bank excess liquidity, it should’t be difficult to find.
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In perhaps the most ironic story of the week (so far), a leaked White House memo to Buzzfeed News reveals that National security advisor H.R. McMaster urged senior government officials to warn agency employees against leaks of both classified and unclassified information.
“For those with access to classified information, a review of the non-disclosure agreement reminds us of the responsibilities that come with access to, and penalties for unauthorized disclosure of, classified information,” the memo, which BuzzFeed obtained and posted, reads.
“However, it is equally important to discuss the importance of protecting controlled unclassified and personally identifiable information from unauthorized public disclosure.”
As The Hill details, McMaster in the memo said the disclosing classified and some unclassified information “causes harm to our Nation and shakes the confidence of the American people.”
“In this era of unprecedented unauthorized disclosures, it is important to take time to review with your workforce their roles and responsibilities in safeguarding United States Government information,” the memo reads.
Coming just days after a leaked memo from Attorney General Jeff Sessions suggested the use of lie detector tests across a wide swathe of staff to root-out leakers, McMasters’ memo leak suggests The White House is still struggling with containment.
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EPA Chief Scott Pruitt has set out to transform the agency he leads to a greater extent than any of Trump’s other cabinet appointees, pledging to end what he dubbed the agency’s “anti-energy agenda” by loosening requirements on carbon emissions and eliminating land use restrictions.
In his first speech to EPA employees, Pruitt laid out his goal of returning the agency to its core focus of protecting the environment while following what he called “the letter of the law.”
Environmentalists vehemently opposed Pruitt’s appointment, depicting him as a climate change denier determined to undermine the EPA’s core mission of protecting the environment.
One of Pruitt’s first targets is a controversial rule on water pollution put in place by the Obama administration that he deemed a “power grab” by environmental regulators.
To better understand why property rights advocates applauded the move, consider the case of fourth-generation farmer John Duarte, who has fought a protracted and costly legal battle with federal regulators over how to till his 450-acre farm in Tehama County, California.
In 2012, the Army Corps of Engineers, working in conjunction with the EPA, accused Duarte of damaging wetland features on his property. He was hit with $30 million in fines and restoration fees.
Duarte’s troubles stemmed from a 2015 provision in the Clean Water Act known as the Waters of the United States rule that was meant to better protect large bodies of water by regulating use of the streams, ponds, and ditches that flow into them. The EPA has used this provision to micromanage private land use.
The agency accused Duarte of mismanaging the wetland areas located on his property, claiming that his four-inch plow furrows created small mountain ranges. They contend Duarte should have obtained a permit before tilling his own land.
“We become peasants where these federal prosecutors can come in like the Sheriff of Nottingham, decide for themselves what they think a family can pay,” Duarte says. “If the federal prosecutors can come on this land with this set of facts, there is no farm in America that is safe from this kind of prosecution.”
Click below for full text, transcript, links, and downloadable versions.
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Unhappy about the 30% decline in Bitcoin (after it has rallied 545% year-to-date), then how about this mystery bubble stock?
It has the same attractive vertical chart pattern…
It's now more expensive than Bitcoin – so that must be good…
But you better hurry, because ity seems that as Bitcoin collapses, so 'investors' are rushing into this mysterly bubble stock…
What is this mystery bubble stock? Simple, see here.
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Berkeley, California was the purported birthplace of the American “Free Speech” movement during the 1960s. But in 2017, it has become singularly associated with liberal oppression. A place where conservative speakers and demonstrators have been confronted with violence and threats, and where the active repression of the doctrinaire has been aided by city and university officials’ troubling willingness to appease and accommodate the left.
But in a surprising and encouraging development, the University of California at Berkeley has revealed that it is ramping up security tonight ahead of a lecture by the Daily Wire founder Ben Shapiro. The Associated Press reports that campus authorities plan to seal off the campus' central hub, Sproul Plaza and enforce a "closed perimeter" around several buildings, including Zellerbach Hall, where Shapiro is scheduled to speak to a sold-out, 1,000-person audience.
Berkeley officers have been authorized to use pepper spray to control violence for the first time in two decades after the city council modified a 1997 ban at an emergency meeting this week, the AP reported. To be sure, Shapiro appeared on campus last year without incident. But that, of course, was before President Donald Trump defeated Hillary Clinton, leading to a country-wide wave of political violence. Until recently, University officials had discouraged conservatives like Anne Coulter from speaking – prompting the cancellation of several events for security reasons – after Antifa protesters violently disrupted an appearance by conservative speaker Milo Yiannopoulos in February, causing $100,000 in damage. Police and UC Berkeley officials were criticized for their reluctance to intervene, giving demonstrators wide latitude to destroy the university’s campus.
This time, Berkeley’s chief of police is taking extra precautions.
“Berkeley city police chief Andrew Greenwood said officers would make "very strong, rapid arrests" of protesters wielding weapons and wearing masks.”
And as the Associated Press plainly states, the significance of this shift in relation to the broader repression of conservative voices cannot be understated.
“The city and campus at UC Berkeley have become a flashpoint for the country's political divisions, drawing extremist groups from the left- and right-wing. Four political demonstrations have turned violent in Berkeley since February, prompting officers to come up with new strategies to control rowdy and sometimes dangerous crowds.”
Even the city’s mayor is acknowledging that the left is also capable of committing violent acts.
"We have seen extremists on the left and right in our city," said Berkeley Mayor Jesse Arreguin, a Democrat who backed the police request to use pepper spray. "We need to make sure violence is not allowed."
Shapiro was invited to speak by campus Republicans, who say the liberal university stifles the voice of conservative speakers.
Shapiro’s speech is the first in a series of conservative speakers. Later this month, Yiannopoulos plans to hold a "Free Speech Week" on campus with a lineup that includes Ann Coulter and Steve Bannon.
According to an activist who spoke with the San Francisco Chronicle, there is no official counter protest planned for the Shapiro event.
"'There is no counterprotest planned for Ben Shapiro,’ said Meleiza Figueroa, a doctoral student at UC Berkeley whose protest cred dates back to the Occupy movement in 2011, when campus police struck her in the ribs with a nightstick as she linked arms with peaceful students hoping to set up tents."
Still, as the Chronicle points out, Antifa doesn’t always “check in” before showing up.
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Did you see yesterday’s noble attempt by Sen. Rand Paul (R-Kentucky) to actually debate the authorizations for use of military force that provide legal cover for America’s seven ongoing wars? Did you note the shockingly successful move by Rep. Justin Amash (R-Mich.) Tuesday to block Attorney General Jeff Sessions’ re-expansion of the evil practice of civil asset forfeiture? I am scheduled to interview both libertarian-leaning legislators today about their exertions between 2-4 p.m. ET, while guest-hosting SiriusXM Insight channel 121’s Tell Me Everything With John Fugelsang.
Also on the docket are The Atlantic‘s Emily Yoffe, author of a much-praised (including here) three-part series (one, two, three) on problematic campus rape policies, and Bloomberg View foreign policy columnist Eli Lake, who will discuss the much-neglected anniversary of Sept. 14.
You can call in to heckle at 877 974-7487.
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Today’s lesson in “branding in an era of instant outrage”: If you are perceived as a “tech bro,” tread very carefully.
Yesterday, Fast Company introduced the world to a couple of former Google employees who are developing what appears to be a logical tech upgrade to the old vending machine. Here’s how Fast Company‘s writer describes what it does:
[It] sets up five-foot-wide pantry boxes filled with non-perishable items you might pick up at a convenience store. An app will allow you to unlock the box and cameras powered with computer vision will register what you’ve picked up, automatically charging your credit card. The entire process happens without a person actually manning the “store.”
If an average young American saw one of these during a trip to a Japan, they’d probably take a picture of it and post in Instagram and talk about how adorable it is. “They have vending machines for everything!” they might say.
But the two guys behind the company decided to call their innovation “Bodega,” after the small neighborhood stores in cities like New York and Los Angeles, and somehow all hell broke loose.
Part of the problem was with the way Fast Company reported on Bodega:
Two ex-Googlers want to make bodegas and mom-and-pop corner stores obsolete https://t.co/FLaYGdwmFr http://pic.twitter.com/pqkWJ40xdW
— Fast Company (@FastCompany) September 13, 2017
It’s the story, not the company, that pushes the idea that this vending machine is a threat to mom-and-pop shops. The founders merely present their tool as a convenience for places like offices, gyms, and dorms.
It’s true that if such a machine is placed in an apartment building, it could occasionally save somebody a trip to the nearby store. But even if these little pantries are extremely responsive in adjusting to the residents’ needs, there is absolutely no way they’re going to replace a bodega in most communities. It’s simply not possible.
But few actually took the time question the assumption presented by Fast Company and instead decided to be angry on Twitter, accusing the Bodega bros of facilitating gentrification and cultural appropriation and trying to destroy small businesses. And that allowed other media sites—like Teen Vogue here—to piggyback with lazy “here are some angry tweets” journalism.
So let’s state what should have been immediately obvious to anybody who stopped and looked at this thing for a moment: These “Bodega” machines are more likely to show up in the offices of Teen Vogue than in a community where lower-income or working-class minorities walk to their corner stores.
I should know. I live in one of those very communities here in Mid-City Los Angeles. I’m the minority in my own primarily Latino and African-American neighborhood. The bodega a couple blocks over is run by an Indian family (so please stifle the screams of “cultural appropriation”). This is a neighborhood of houses, small apartment buildings, and quadplexes, so there are very few places in my neighborhood where these machines would work the way the company’s founders envision at all. And that holds true for huge swathes of the Los Angeles area. The Daily Beast‘s Spencer Ackerman claimed on Twitter that such machines might create “food deserts.” Well, their deployment in my neighborhood would not lead to a food desert. It would lead to Bodega losing money.
So this is not a story about gentrification or “evil tech bros” at all. Nevertheless, CEO and co-founder of Bodega Paul McDonald had to go on the internet to apologize for the fact that people were just reflexively outraged for no reason. No, McDonald says, they’re not trying to put corner stores out of business:
Corner stores have been fixtures of their neighborhoods for generations. They stock thousands of items, far more than we could ever fit on a few shelves. Their owners know what products to carry and in many cases who buys what. And they’re run by people who in addition to selling everything from toilet paper to milk also offer an integral human connection to their patrons that our automated storefronts never will.
We want to bring commerce to places where commerce currently doesn’t exist. Rather than take away jobs, we hope Bodega will help create them. We see a future where anyone can own and operate a Bodega — delivering relevant items and a great retail experience to places no corner store would ever open.
If automation ever replaces mom-and-pop stores in poor neighborhoods, that’ll be because it’s able to offer more goods more cheaply and more conveniently than the stores do, not because it offers less. And that would be to the benefit of these communities and the poor people who live in them, not their detriment.
Enough with this paranoia about Silicon Valley tech guys plotting to deprive poor people of goods. If one of these upgrading vending machines shows up at my neighborhood gym—part of a corporate chain that is priced cheaply enough that working-class folks can join up—I’ll definitely check it out. Especially if they stock it with cashews.
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Authored by Stephen Punwasi via BetterDwelling.com,
Mainland Chinese buyers have become a dominant force in real estate markets across the world. The Chinese government crackdown on outflows earlier this year severely throttled that money.
While this money has been throttled, it’s still appearing in certain markets, most notably the United States.
We wanted to know how exactly this is still happens, so we connected with Dr. Joseph Wang – a Bitcoin and Chinese capital outflow expert.
Hong Kong-based Dr. Joseph Wang is an OG of monitoring China’s capital flows and Bitcoin. He currently serves as Chief Science Officer at BitQuant, a fintech that specializes in technologies for the upcoming China yuan renminbi equities option market, as well as options and futures for digital currencies. He previously served as Vice President of Quantitative Research for JP Morgan, the sixth largest bank in the world – whose CEO is now an outspoken critic of the cryptocurrency. He’s got a ton of street cred, but even more important – he monitors China’s capital outflows to seek business opportunities.
Wang knows first hand that Bitcoin isn’t very popular for evading China’s capital controls. Two years ago he started a company designed to specifically facilitate this.
“The trouble is there are too many ways of moving money out of China,” Wang explains. “It turns out that Bitcoin was not competitive two years ago.”
Basically, there’s cheaper and faster ways to circumvent capital controls that he later explains.
“Also, it turns out that Bitcoin transactions are extremely traceable which eliminates it has a means of moving money that someone would do in secret.” Wang continued to explain.
“The big use that we are using for bitcoin is EB-5 visas to the United States.”
For those that don’t know, the EB-5 visa is a millionaire investment scheme, where investors put US$1 million towards a project that creates jobs, in exchange for a US Visa. In 2014, it was estimated that 9,128 EB-5 visas were issued to Chinese nationals. Interesting considering capital controls have a limit of US$50,000 per year. So these 9,128 people either started moving money out of China 20 years ago to participate in the visa program, or they’re circumventing capital controls.
It’s well known that the Chinese government has set up shop in local bitcoin exchanges to “monitor compliance” with anti-money laundering laws.
“The fact that bitcoin can be traceable is in fact a good thing for both the Chinese and US governments.” Says Wang.
“One reason that the Chinese government is not particularly negative about bitcoin is that the net impact for bitcoin by capital controls is zero or maybe even positive. Bitcoin is very, very heavily used by Russians to move cash *into* China to buy Chinese goods.”
Bitcoin in China is also a little different from the rest of the world, since the People’s Bank of China (PBoC) got involved. The PBoC met with local Bitcoin exchanges this year, and shortly after the exchanges halted the ability to withdraw coins – some for up to four months. Withdrawals now have daily limits, can only be withdrawn in yuan, and must be approved by the exchange. So much for being an anonymous, stateless currency in China.
You can withdraw in a foreign country however, since it doesn’t impact China’s capital reserves. Officially the government frowns on it, but that’s a problem for the country it is withdrawn in to solve. The only thing is, there’s much cheaper ways to circumvent capital controls.
Turns out Bitcoin presents more risk to individuals compared to China’s homegrown solution to circumventing capital controls – hot money brokers. These are financial experts that specialize in assisting with the evasion of local capital controls. According to Wang, “fake invoicing” is the most popular method. He goes on to explain “There are a dozen ways of moving money, but it basically involves buying something (art, insurance, whatever), Moving it across the border and selling it.”
“There are a dozen ways of moving money, but it basically involves buying something (art, insurance, whatever), Moving it across the border and selling it.”
— Dr. Joseph Wang
Hot money brokers are substantially cheaper than using Bitcoin exchanges. Wang estimates current fees to be in the range of 0.1% to 0.2%, compared to the lowest Bitcoin exchange fees at 0.2% on the deposit and withdrawal. This makes fees at hot money brokers as low as $1,000 per million dollars, much lower than the $4,000 in fees you would pay to use Bitcoin. While hot money brokers are basically money laundering, it appears to be a widely known and accepted business across Mainland China.
Beijing has an interesting way of dealing with capital outflows. While they closely monitor many methods, they don’t actively pursue shutting them down. They often watch from afar, and if capital reserves aren’t impacted, or their reputation isn’t damaged, they allow them to continue. The PBoC announced they were going to deploy a massive anti-money laundering framework, designed to further halt capital outflows. We’ll have to see if they were serious, or if this was just to win reputation points with international countries.
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Trump’s base woke up to a fairly surprising flip-flop this morning from the White House on DACA and the infamous, beautiful border wall which was discussed repeatedly on the campaign trail throughout 2016. It all started when Chuck Schumer and Nancy Pelosi released the following statement after their White House dinner with the President last night:
“We had a very productive meeting at the White House with the President. The discussion focused on DACA. We agreed to enshrine the protections of DACA into law quickly, and to work out a package of border security, excluding the wall, that’s acceptable to both sides.”
That statement was followed up by a tweet storm (we covered it here) from the President this morning which seemingly revealed his complete support for DACA and referred to ‘The Wall’ as a “renovation of old and existing fences and walls” rather than the “physically imposing” yet “aesthetically pleasing” structure that he repeatedly promised his supporters.
The apparent flip flop by the President resulted in an immediate backlash from some of his most vocal supporters with Ann Coulter wondering aloud over twitter, “at this point, who DOESN’T want Trump impeached?”
“Put a fork in Trump, he’s dead.” https://t.co/xEu5lwhmqO
— Ann Coulter (@AnnCoulter) September 14, 2017
At this point, who DOESN’T want Trump impeached? https://t.co/g1mMhmm8ng
— Ann Coulter (@AnnCoulter) September 14, 2017
Meanwhile, former Congressman and nationally syndicated radio host Joe Walsh blasted Trump for getting “screwed by Chuck and Nancy.”
No wall.
DACA enshrined.Trump didn’t make a deal w Chuck and Nancy. Trump got screwed by Chuck and Nancy.
Trump just screwed his base.
— Joe Walsh (@WalshFreedom) September 14, 2017
NONE of this is a surprise. I voted 4 Trump knowing he wasn’t a Conservative & knowing he had no core.
I voted 4 the wall & against amnesty
— Joe Walsh (@WalshFreedom) September 14, 2017
And, not surprisingly, Trump’s former Chief Strategist Steve Bannon took direct aim at the White House with a series of negative headlines.
So what say you? Clever, calculated move by a President just looking for small policy achievements or did Trump just destroy his base and cement his fate as a one-term President?
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