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Bernie Sanders Supported Press Crackdowns, Bread Lines, and Castro’s Cult of Personality

Bernie Sanders once boasted Burlington, Vt., You don't need 14 different kinds of bread lines. the city of which he was mayor from 1981 to 1989, was the only American city of 40,000 with a foreign policy. An odd boast considering his clear discomfort discussing international affairs has been the brush Hillary Clinton has used to paint him as a naive dove not fit to serve as Commander-in-Chief.

But as former Reasoner Michael Moynihan has uncovered by digging through troves of hiding-in-plain-sight materials, the democratic socialist senator and Democratic presidential candidate has a history of supporting some very undemocratic initiatives by some very undemocratic socialist regimes.

In an article at The Daily Beast, laid bare are Sanders’ more problematic ventures into international politics, in which The Bern eschewed his more familiar envy of Danish-style social deomocracy, and instead opined that the United States had a great deal to learn from Latin American communist dictatorships.

Moynihan writes that in the 1980s, Sanders was wont to offer a “full-throated defense of the dictatorship in Nicaraguara,” including its crackdowns on a free press:

What “made sense” to Sanders was the Sandinistas’ war against La Prensa, a daily newspaper whose vigorous opposition to the Somoza dictatorship quickly transformed into vigorous opposition of the dictatorship that replaced it. When challenged on the Sandinistas’ incessant censorship, Sanders had a disturbing stock answer: Nicaragua was at war with counterrevolutionary forces, funded by the United States, and wartime occasionally necessitated undemocratic measures. (The Sandinista state censor Nelba Blandon offered a more succinct answer: “They [La Prensa] accused us of suppressing freedom of expression. This was a lie and we could not let them publish it.”)

To underscore his point, Sanders would usually indulge in counterfactual whataboutism: “If we look at our own history, I would ask American citizens to go back to World War II. Does anyone seriously think that President Roosevelt or the United States government [would have] allowed the American Nazi Party the right to demonstrate, or to get on radio and to say this is the way you should go about killing American citizens?” (It’s perhaps worth pointing out that La Prensa never printed tutorials on how to kill Nicaraguans. And it’s also worth pointing out that in 1991, Sanders complained of the “massive censorship of dissent, criticism, debate” by the United States government during the Gulf War.)

Having already written off free expression as a bourgeois capitalist construct, Sanders actually praised what is perhaps the single most vilified optic of economic life in a communist society, bread lines:

When asked about the food shortages provoked by the Sandinistas’ voodoo economic policy, Sanders claimed that bread lines were a sign of a healthy economy, suggesting an equitable distribution of wealth: “It’s funny, sometimes American journalists talk about how bad a country is, that people are lining up for food. That is a good thing! In other countries people don’t line up for food: the rich get the food and the poor starve to death.”

After returning from a trip to Cuba, Sanders declared the Green Mountain State had much to learn from the totalitarian basket case of the Caribbean, not the least of which was the island’s impoverished people’s devotion to a cult of personality:

Sanders had a hunch that Cubans actually appreciated living in a one-party state. “The people we met had an almost religious affection for [Fidel Castro]. The revolution there is far deep and more profound than I understood it to be. It really is a revolution in terms of values.”

Hillary Clinton frequently brags about her foreign policy experience, which can reliably be described as loaded with calamatious failure from which she never learns a thing. For a while it seemed Sanders’ inclination toward non-interventionism made him at least a somewhat attractive alternative for libertarian-leaning voters to Clinton’s uber-hawkishness.

But the yeoman’s work done by Moynihan provides a stark reminder that it wasn’t just Reaganites supporting the actions of ruthless Latin American regimes in the 1980s, it was the ever-authentic cuddly democratic socialist Bernie Sanders, too.

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Abortion Rights Back Before the U.S. Supreme Court This Week

The Supreme Court must go on, despite the death of Justice Antonin Scalia and the controversy surrounding his replacement. And on Wednesday, it will consider a Texas abortion law that opponents say unconstitutionally infringes on abortion access and supporters say was designed to protect women’s health. With states across the country enacting similar laws, the outcome of this case could have huge implications for abortion clinics across America.

The Texas law, passed in 2013, says that abortion-clinic doctors must have an admitting-privileges agreement with a nearby hospital and that clinics must meet the same building standards as surgical centers, even when no surgical abortions are performed there. Since it took effect, the number of legal abortion clinics in the state dwindled from 40 to 19. If the regulations are upheld, at least nine more clinics in Texas are expected to close.

The Center for Reproductive Rights (CRR), a nonprofit legal advocacy group, is leading the Supreme Court challenge on behalf of Texas abortion clinic Whole Woman’s Health. (For more background on the case, see here and here.) It maintains that despite the pro-woman rhetoric of the law’s architects, the real purpose of the regulations is to shutter abortion clinics. As such, it would violate the Supreme Court’s decision in Planned Parenthood v. Casey.

In that 1992 case—viewed by some as the case that “made a mess of abortion rights” in America—the Supreme Court held that states cannot pass “unnecessary health regulations” with the “purpose or effect of presenting a substantial obstacle to a woman seeking an abortion.” This sort of “undue burden,” the Court held, would represent a violation of the right to an abortion affirmed under Roe v. Wade.

“When the court holds oral arguments in Whole Woman’s Health v. Hellerstedt this week,” notes Nina Martin at Mother Jones, “the signs that protesters wave and the chants they chant will likely focus on Roe, but the outcome of the case will hinge on how justices interpret Planned Parenthood v. Casey.”

Liberal Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor, and Elena Kagan are all expected to be sympathetic to CRR and the abortion clinics. Meanwhile, Chief Justice John Roberts and Justices Samuel Alito and Clarence Thomas are expected to side with the state.

That means that Justice Anthony Kennedy will be need to be persuaded to CRR’s side for it to be victorious. And how Kennedy will go is uncertain. He’s one of two current Justices, along with Thomas, to have heard Planned Parenthood v. Casey. In that case, Pennsylvania abortion regulations related to informed consent, a 24-hour waiting period, and parental notification for minors were upheld while a section requiring married women to attest that their husbands knew about the abortion was struck down.

Justices Thomas, Scalia, Byron White, and William Rehnquist favored upholding all of the regulations. But Kennedy joined liberal justices Harry Blackmun and John Paul Stevens and fellow moderates Sandra Day O’Connor and David Souter in favor of striking down the spousal notification rule.

Yet many interpreted the plurality opinion from Kennedy, O’Conner, and Souter as support for upholding judicial precedent, not necessarily belief that the precedent set by Roe was right. In many respects, their opinion “took Roe v. Wade apart, starting with its foundation, the trimester framework,” writes Martin.

Under Roe, states were almost completely banned from regulating abortion during the first trimester. They had more flexibility to pass laws protecting a woman’s health in the second trimester, and they could prohibit most abortions in the third. In contrast, Casey declared, “[T]he State has legitimate interests from the outset of pregnancy in protecting the health of the woman and the life of the fetus that may become a child.” Instead of the trimester approach, Casey established viability—the point at which the fetus can survive outside the womb—as the new reference point for determining whether an abortion law was valid or not. (When Roe was decided, fetuses weren’t considered viable until 28 weeks, or the third trimester; by 1992, medical advances had pushed the line to around 24 weeks.) Before viability, Casey said, states could only try to persuade a woman not to have an abortion; laws that made it difficult or impossible for her to act on her decision did not pass muster. After viability, though, states could restrict abortions pretty much however they liked.

More significantly, Casey also rejected Roe’s “strict scrutiny” test for evaluating abortion restrictions—a test that had stymied most state efforts to regulate the procedure—replacing it with the looser “undue burden” standard, which Justice O’Connor had proposed in dissents to earlier abortion rulings. An undue burden was defined as any law that had “the purpose or effect of placing a substantial obstacle in the path of a woman seeking an abortion.” Importantly for the pending Texas abortion case, this reasoning applied to medical rules as well as other restrictions: Although “the State may enact regulations to further the health or safety of a woman seeking an abortion,” the court held, “unnecessary health regulations that have the purpose or effect of presenting a substantial obstacle to a woman seeking an abortion impose an undue burden.” Still, the court reiterated, just because a law had “the incidental effect of making it more difficult or more expensive to procure an abortion” wasn’t enough to invalidate it.

Justice Kennedy was not among the justices (Scalia, Thomas, and Alito) who spoke out against an unsigned 2014 order that temporarily blocked the Texas regulations.

The last big Supreme Court decision on abortion was in 2007, when the Court upheld a federal ban on intact dilation and extraction procedures, more commonly known as “partial birth abortion.” In this case, Kennedy sided with Scalia, Alito, Roberts, and Thomas in support of the ban.

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Electric Car War Sends Lithium Prices Sky High

Submitted by James Stafford via OilPrice.com,

With lithium prices skyrocketing beyond wildest expectations, talk heating up about acquisitions and mergers in this space and a fast-brewing war among electric car rivals, it’s no wonder everyone’s bullish on this golden commodity that promises to become the ‘’new gasoline”.

Moreover, land grabs, rising price predictions, and expectations of a major demand spike are leaping out of the shadows of a pending energy revolution and a new technology-driven resource era.

For once, we have agreement across the board on a commodity: Demand for lithium will continue to rise throughout the year–and beyond–spurred by the rise of battery mega/gigafactories and a burgeoning energy storage business that will change the way we live.

That’s why Goldman Sachs calls lithium the “new gasoline”. It’s also why The Economist calls it “the world’s hottest commodity”, and talks about a “global scramble to secure supplies of lithium by the world’s largest battery producers, and by end-users such as carmakers.”

In fact, as the Economist notes, the price of 99%-pure lithium carbonate imported to China more than doubled in the two months to the end of December—putting it at a whopping $13,000 per ton.

But what you might not know is that this playing field is fast becoming a battlefield that has huge names such as Apple, Google and start-up Faraday Future throwing down for electric car market share and even reportedly gaming to see who can steal the best engineers.

Apple has now come out of the closet with plans for its own electric car by 2019, putting it on a direct collision course with Tesla. And Google, too, is pushing fast into this arena with its self-driving car project through its Alphabet holding company.

Then we have the Faraday Future start-up—backed by Chinese billionaire Jia Yueting–which has charged onto this scene with plans for a new $1-billion factory in Las Vegas, and is hoping to produce its first car next year already.

Ensuring the best engineers for all these rival projects opens up a second front line in the war. They’ve all been at each other’s recruitment throats for months, stealing each other’s prized staff.

And when the wave of megafactories starts pumping out batteries—with the first slated to come online as soon as next year–we could need up to 100,000 tons of new lithium carbonate by 2021. It’s an amount of lithium we just don’t have right now.

The war is definitely on, and lithium prices are the immediate and long-term beneficiary. It all depends on batteries, so it all depends on lithium.

The Lithium Oligopoly Ends Here, In Nevada

This is where the lithium oligopoly ends. It's where new entrants to the lithium mining game step in to forge a very lucrative future.

Right now, lithium isn't even traded as a commodity; rather, it is managed through an oligopoly of three or four major global suppliers who have managed supply and demand for decades. That's why everything is priced on a contract basis.

This year could see that change, which makes it a prime time to get in on lithium.

"The few major suppliers who have so far been responsible for all lithium supply and demand are not going to be able to meet new demand. This is why 2016 will be a very interesting year for anyone with the foresight to see the end of this oligopoly and the potential decoupling of lithium from other commodities," Dr. Andy Robinson, COO of Pure Energy Minerals (OTMKTS:HMGLF), told Oilprice.com.

Producers are now working quickly to stake their claims and position themselves strategically to become key suppliers.

So far, so good. Pure Energy, for one, is the only player in Nevada that has managed a conditional agreement with a company building the world’s largest battery factory, which is located only four hours from Pure Energy’s proposed mine.

There has been other movement in this space as well–broader, global movement that gives us even more reason to be bullish on lithium.

The fourth quarter of 2015 and the beginning of this year have seen a lot of talk about Australia's mining giant Rio Tinto considering entering the hot lithium space.

A Major Long-Term Game

This is an energy revolution that is still in its early days, but it’s such a hot commodity right now that chances to get in on the long-term game are narrowing by the day. And Nevada—ground zero in this revolution–is already raking in the benefits because it is the only U.S. state that both produces lithium and holds vast new resource potential.

In 2013 alone, Nevada doubled lithium production capacity, according to the USGS–and that is just the tip of the iceberg given all of the new exploration going on and the fast and furious land-grabbing.

The next wave of battery factories are expected to increase global battery capacity by some 150% by 2020. Within this prediction, electric vehicles will have a projected 20-30% compounded annual growth rate through 2025, so the demand for lithium appears endless.

Some say the lithium market is already at a supply deficit, and the rising prices make new projects even more attractive.

The lithium oligopoly is already a dinosaur, and new lithium projects on highly prospective land forwarded by companies with lower market caps and strong management are what investors will be looking for.

The brine is the place to be, and right now Pure Energy has the only brine resource in North America. It is also directly adjacent to the only producing lithium mine in North America, Albermarle Silver Peak Mine (NYSE:ALB). Lithium sourced from brine, or salty water, is the most cost-effective out there because it is easier and cheaper to extract.

There are billions of reasons to be bullish on lithium, and bullish on Nevada. Goldman Sachs gets it. Not only will lithium feed massive portable energy storage applications, but it will be a "key enabler of the electric car revolution and replace gasoline as the primary source of transportation fuel.”

This commodity that isn't yet a commodity in trading terms is about to break free from the oligopoly. Get there first.

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The Oil Price Ceiling Has Been Set: “Above $40 And We Start Pumping Again”

Last week we reported that in what has been Saudi Arabia’s biggest victory to date in its war against U.S. oil and gas producers, both Whiting Petroleum, which is North Dakota’s largest oil producer, and Continental Resources would indefinitely suspend fracking operations for the foreseeable future. The reason was simple: oil prices are too low to make incremental drilling and pumping profitable, and instead most shale companies are now entering hibernation, limiting cash outlays in the form of dividends and capex spending, in hopes of weathering the crude oil storm, which has already gone on far longer than even the most pessimistic mainstream pundits expected it would.

Which, of course, is the right response: as the saying goes the cure for low oil prices is low oil prices, and as more shale companies halt drilling, exploring and production, the 3 mmb/d oversupplied oil market will slowly return to equilibrium.

There is logically a flipside to that as well: as those companies which have recently mothballed operations either voluntarily or because they had to when they went bankrupt when oil was at $30, return to market the previously oversupplied market condition will promptly return as well, thereby pressuring oil lower yet again.

The question is at what “breakeven” price does it make sense for US shale companies to return. As Reuters reports, less than a year ago major shale firms were saying they needed oil above $60 a barrel to produce more; however in just one year this number has changed and quite drastically at that.

We hinted at this three weeks ago in an article which many readers had a hostile reaction to: specifically we warned of “Another Leg Lower In Oil Coming After Many Producers Found To Have Far Lower Breakevens.” As we reported then, “what many thought would be the “breaking” price point for virtually every shale play has just been lowered, and quite dramatically at that. It also means that algos and traders who had reflexively bought any dip below $30 on expectations this is close to the “sweet spot” and where the Saudis would relent, will have to drop their support levels by as much as a third.”

Today Reuters confirms that this assessment was stpo on with a report that some shale companies say they will settle for far less in deciding whether to crank up output after the worst oil price crash in a generation.

Among the companies which are prepared to flip the on switch at a moment’s notice are Continental Resources led by billionaire wildcatter Harold Hamm, which said it is prepared to increase capital spending if U.S. crude reaches the low- to mid-$40s range, allowing it to boost 2017 production by more than 10 percent, chief financial official John Hart said last week.

Then there is rival Whiting Petroleum which may have stopped fracking new wells, added it but would “consider completing some of these wells” if oil reached $40 to $45 a barrel, Chairman and CEO Jim Volker told analysts. Less than a year ago, when the company was still in spending mode, Volker said it might deploy more rigs if U.S. crude hit $70.”

EOG Chairman Bill Thomas did not say what price would spur EOG to boost output this year, but said it had a “premium inventory” of 3,200 well locations that can yield returns of 30 percent or more with oil at $40.

Apache Corp , forecasts its output will drop by as much as 11 percent this year, but said it would probably manage to match 2015 North American production if oil averaged $45 this year.

The reason for the plunging breakeven price? The same one we suggested on February 3: surging, rapid efficiency improvement which “have turned U.S. shale, initially seen by rivals as a marginal, high cost sector, into a major player – and a thorn in the side of big OPEC producers.”

To be sure, while many had expected low oil prices to curb output, virtually nobody had predicted that even a modest jump in oil ($40 is just $7 from here) would lead to a major portion of US shale going back on line.

The threat of a shale rebound is “putting a cap on oil prices,” said John Kilduff, partner at Again Capital LLC. “If there’s some bullish outlook for demand or the economy, they will try to get ahead of the curve and increase production even sooner.”

Which in turn will force the Saudis to immediately retaliate, breach all amusing “production freezes”, and double down their efforts to crush shale.

In fact, some producers have already began hedging future production, with prices for 2017 oil trading at near $45 a barrel, which could put a floor under any future production cuts.

Another risk factor for all those hoping the modest rebound in oil will persist is the record backlog of wells that have already been drilled but wait to get fractured to keep oil trapped in shale rocks flowing. There were 945 such wells in North Dakota compared to 585 in mid-2014, when prices peaked, according to the latest available data from the Department of Mineral Resources. Their numbers are growing as firms like Whiting keep drilling, but hold off with fracking.

Reuters’ summary:

Their latest comments highlight the industry’s remarkable resilience, but also serve as a warning to rivals and traders: a retreat in U.S. oil production that would help ease global oversupply and let prices recover may prove shorter than some may have expected.

Our observation three weeks ago was practically identical: since Saudi Arabia had expected that its FX reserve outflow would last only temporarily using $40-50 breakevens, it will have to sell many more US reserves (either TSYs or stocks) to fund the cash shortfall which will persist for far longer until oil catches down to the lowest cost US producers.

What this means is that for the Saudis to declare victory they will have to unleash a sharp downward oil spike that lasts long to put as many marginal producers out of business as possible.

As we said: “In short: the oil price war is about to enter its far more vicious, and far more lethal phase, and while it is unclear who ultimately wins, whether it is Shale or the Saudis, the loser is clear: anyone who bought into bets of an imminent oil bounce.”

But the real punchline has nothing to do with breakeven prices and efficiency and everything to do with balance sheets, because if and when the mass default wave finally hits and hundreds of U.S. corporations undergo debt-for-equity exchanges in which the bondholders end up with the equity keys, then the all-in production costs (AIPCs) will be drastically cut even lower as there will be no interest expense left to cover with operational cash flow proceeds.

As such, the stunning outcome may well be one in which U.S. shale turns Saudi’s “marginal producer” war on its head, and unleashes a massive oversupply spike, one which slowly at first then very fast, leads to the Saudi exhaustion of its FX reserves, until it is Saudi Arabia which itself is pushed out of the low-cost production bracket and is instead forced to deal with far less palatable outcomes such as social insurrection and revolution, as its already precarious welfare state fights for survival in a world in which government oil revenues have trickled to a halt.

What happens to the price of oil then is unclear, but what will need to happen before we get to that point is very clear: oil will have to trade far, far lower from its current price.

And even if it doesn’t, we now have the oil price ceiling bogey: any time a barrel of crude approaches $40, watch as the “marginal” producers do just that, and resume production on very short notice.

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

This Is How Bad It’s Got In Latin America’s Socialist Utopia

Socialism works so well that this Venezuelan man was caught smuggling… not drugs, not guns…

But food – powdered milk!!!

Source: @Jenn_Abrams

Coming to a Sanders-sponsored America near you soon.

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

Hugh Hewitt: Of Course I’d Vote for Trump Over Hillary

In recent weeks, all sorts of Republicans and conservatives who always/only vote Republican have been ratcheting up their vitriol against the GOP frontrunner for the party’s presidential nomination, Donald Trump.

Whether it’s National Review‘s editors attacking Trump for being soft on immigration—they called his plan to forcibly remove 12 million people from America “a poorly disguised amnesty”!—or rival Marco Rubio making dick jokes over the weekend—there’s no shortage of Republicans who have vowed never to vote for Trump. Over weekend, #dumptrump and #nevertrump even trended on the Twitter, mostly emanating from right-wing circles.

Because, you know, Trump is simply not conservative enough: Like all the other remaining GOP candidates, he’s anti-abortion, anti-Muslim, pro-war, anti-Apple, pro-torture (when it’s for the right reasons), wants to screw with the Constitution (in a totally different way than, say Ted Cruz, who wants Supreme Court justices to be subject to recall votes) and on and on. But didn’t you hear!?!? Trump said nice things about Planned Parenthood, specifically that the contraceptives they hand out and gyn exams they do for women with federal dollars aren’t pure evil. What a fake conservative, even if he is right about Mexicans!

Radio show host and Republican activist Hugh Hewitt, a conservative of impeccable standing (and one who has been insulted by The Donald), is already saying what I suspect many more will say after Super Tuesday: Of course he is going to vote for Trump if and when the billionaire is running against Hillary Clinton.

If Trump is the nominee I will support him for six reasons.

The first three are the existing and probable two additional Supreme Court nominations he will get to make. Judges Diane Sykes and Bill Pryor are two fine judges that Trump has mentioned as possible nominees and he made the right commitment on religious liberty to me on stage Thursday night. He won’t screw these up. More precisely, it is a lock that Clinton would screw them up and at least a fighting chance he wouldn’t.

Fourth, Trump’s an honest-to-God builder and he will rebuild the Navy, which must be done. Soon.

Fifth, Vladimir Putin and Xi Jinping will at least think twice before crossing him.

And, finally, sixth: Donald’s daughter and Svengali Ivanka is a smart, smart, smart lady with an extraordinary intellect and influence on her father. We get the GOP’s own Valerie Jarrett, only this one with a sense of America’s role in the world and the same resolve to succeed as Jarrett possesses.

Mexico’s Oil Giant Posts Record $32 Billion Loss, Cuts Crude Price Forecast To $25

For a long time, the impact of the collapsing Petrodollar was concentrated almost entirely on African and Mid-east oil exporting nations, of which none has been impacted more perhaps that ground zero itself, Saudi Arabia, which has seen a record surge in its budget deficit as a result of collapsing oil revenue – the result of its ongoing war with the U.S. oil and gas sector and low cost “marginal” producers around the globe. Then slowly, the commodity woes spread to supposedly unshakable, developet nations, such as Norway and Canada, both of which are currently troubled by the impact of plunging crude prices on state revenues and downstream budgets.

Today, another country exposed just how troubled its energy sector has become when Mexico’s largest, state-owned company, Petroleos Mexicanos also known as Pemex, announced not only its 13th consecutive quarterly loss amounting to $9.3 billion, 44% bigger than the previous year, as revenue tumbled by 28% to $15.8 billion, but also a gargantuan $32 billion annual loss and at the same time announced it would slash capex spending to preserve cash and optionality for a future which suddenly looks very bleak.

In a budget report issued today, Pemex also pledged to meet the government’s request that it trim its 2016 budget by 100 billion pesos ($5.5 billion). Pemex will cut as much as $3.6 billion in spending by delaying projects, including expensive offshore wells, Jose Antonio Gonzalez Anaya, the company’s CEO, said in a conference call with investors. Pemex will pursue partners for any future deepwater development, Gonzalez Anaya said.

The report follows an announcement by the state of Mexico to cut back on its lifeline to the troubled oil giant when on February 17 it said it plans to cut 100 billion pesos ($5.5 billion) from the oil giant’s budget in a move aimed at stemming the depreciation of the peso and limiting inflation in Latin America’s second-largest economy amid the slump in international crude prices.

As Bloomberg reports, Pemex lost about $32 billion in all of 2015 as oil prices plunged and the company’s crude output fell for an 11th straight year, according to a financial report released Monday. Pemex hasn’t recorded a profit since 2012. The company had more than $87 billion in debt at the conclusion of the third quarter and owes an estimated $7 billion to service providers.

“These adjustments do not weaken Pemex, they strengthen it,” Gonzalez Anaya said on the call, but that promise sounded hollow especially after the CEO also said on the call that while the company is not facing a solvency crisis, it is facing short-term financial difficulties, prompting some to wonder just what skeleton will come out of the closet if the oil price remains as low as it has been. He also added that the company is now looking for alternative ways to fund refining operations. It is unclear what the non-alternative way is but we assume it has to do with issuing more debt, an avenue which may be closed for the time being.

But the scariest news not only for Mexico’s largest company, but for the energy sector in general, was Pemex’ announcement that it was slashing its oil price forecast by 50% from $50 to $25/bbl…

… a price which if realized will mean that all those who have been buying energy ETFs in hopes ot timing the oil bottom will end up with another round of big, fat, oily donuts, because unlike Pemex no U.S. shale company has the explicit backing of the US government. At least not yet.

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“The GOP Is On The Verge Of A Meltdown”: Senior Republicans Threaten To Vote For Hillary

With Donald Trump set for a yuuge victory in tomorrow's Super Tuesday slugfest – oddsmakers see 80% chance of Trump being the nominee – tensions are mounting dramatically within the Republican establishment. As The FT reports, many mainstream Republicans believe Mr Trump would struggle to beat Hillary Clinton and are urgently rallying around their man Rubio with some senior Republicans saying privately that they might consider voting for Mrs Clinton if Mr Trump were to end up as their party nominee as one conservative commentator exclaimed "we are on the verge of a real meltdown in the Republican party."

Trump's lead in the polls over his GOP nominee 'peers' continues to grow…

Source: RealClearPolitics

As The FT reports, while Mr Rubio and Mr Trump ramp up their attacks on each other ahead of the March 1 primaries, Republican grandees and lawmakers are turning to the Florida senator as they become increasingly worried that the property tycoon could lock up the GOP presidential nomination within three weeks.

They fear that a victory for Mr Trump could fatally fracture the party and prevent them from winning the White House in November.

Many mainstream Republicans believe Mr Trump would struggle to beat Hillary Clinton, the clear Democratic frontrunner after her resounding victory over Bernie Sanders in South Carolina on Saturday, given the comments he has made about Hispanics, Muslims, women, disabled people and people who have criticised his campaign.

But, as the following chart shows, it's far too close to call…

Source: RealClearPolitics

The FT goes on to note that Mr Trump on Sunday issued a thinly-veiled warning that he would consider running as an independent.

“The Republican Establishment has been pushing for lightweight Senator Marco Rubio to say anything to “hit” Trump. I signed the pledge-careful,” he tweeted, a reference to a pledge that all candidates signed to back the party’s eventual nominee.

As panic is setting in within The GOP…

“We are on the verge of a real meltdown in the Republican party,” Hugh Hewitt, the influential conservative radio talk-show host told ABC television on Sunday.

Some senior Republicans have said privately that they might consider voting for Mrs Clinton if Mr Trump were to end up as their party nominee. “You’ll see a lot of Republicans do that,” Christine Whitman, the former New Jersey governor who previously compared Mr Trump to Hitler, told the New Jersey Star-Ledger.

“We don’t want to. But I know I won’t vote for Trump.”

But none other than Rupert Murdoch chimed in at the craziness and infighting…

Both "establishment" Republicans and Trump need to cool it and close ranks to fight real enemy. Trump, Rubio, Kasich could all win general.

— Rupert Murdoch (@rupertmurdoch) February 28, 2016

And now the neocons are declaring war on Trump (as The Intercept notes)…

Donald Trump’s runaway success in the GOP primaries so far is setting off alarm bells among neoconservatives who are worried he will not pursue the same bellicose foreign policy that has dominated Republican thinking for decades.

Neoconservative historian Robert Kagan — one of the prime intellectual backers of the Iraq war and an advocate for Syrian intervention — announced in the Washington Post last week that if Trump secures the nomination “the only choice will be to vote for Hillary Clinton.”

Max Boot, an unrepentant supporter of the Iraq war, wrote in the Weekly Standard that a “Trump presidency would represent the death knell of America as a great power,” citing, among other things, Trump’s objection to a large American troop presence in South Korea.

Trump has done much to trigger the scorn of neocon pundits. He denounced the Iraq war as a mistake based on Bush administration lies, just prior to scoring a sizable victory in the South Carolina GOP primary. In last week’s contentious GOP presidential debate, he defended the concept of neutrality in the Israeli-Palestinian conflict, which is utterly taboo on the neocon right. “It serves no purpose to say you have a good guy and a bad guy,” he said, pledging to take a neutral position in negotiating peace.

With Trump’s ascendancy, it’s possible that the parties will re-orient their views on war and peace, with Trump moving the GOP to a more dovish direction and Clinton moving the Democrats towards greater support for war.

via Zero Hedge http://ift.tt/1QGYfP6 Tyler Durden

Where the puck will be

[Editor’s note: This letter was penned by Tim Price, London-based wealth manager and author of Price Value International.]

“My interest is in the future because I am going to spend the rest of my life there.” – Charles Kettering.

Perhaps the most extraordinary and important presentation you will ever see can be found on YouTube, here. Dr Albert A Bartlett, Professor Emeritus at the Department of Physics at the University of Colorado at Boulder, shares his observations about the power of the exponential function – what happens when the supply of anything grows, and compounds, at a fixed rate over time. As Dr Bartlett warns,

“The greatest shortcoming of the human race is our inability to understand the exponential function.”

Here is an example from the world of bacteria.

“Bacteria grow by division so that 1 bacterium becomes 2, the 2 divide to give 4, the 4 divide to give 8, etc. Consider a hypothetical strain of bacteria for which this division time is 1 minute. The number of bacteria thus grows exponentially with a doubling time of 1 minute. One bacterium is put in a bottle at 11:00 a.m. and it is observed that the bottle is full of bacteria at 12:00 noon. Here is a simple example of exponential growth in a finite environment. This is mathematically identical to the case of the exponentially growing consumption of our finite resources of fossil fuels. Keep this in mind as you ponder three questions about the bacteria:

1) When was the bottle half full? Answer: 11:59 a.m.
2) If you were an average bacterium in the bottle, at what time would you first realize that you were running out of space? Answer: There is no unique answer to this question, so let’s ask, “At 11:55 a.m., when the bottle is only 3% filled and is 97% open space, would you perceive that there was a problem? Some years ago someone wrote a letter to a Boulder newspaper to say that there was no problem with population growth in Boulder Valley. The reason given was that there was 15 times as much open space as had already been developed. When one thinks of the bacteria in the bottle one sees that the time in Boulder Valley is 4 minutes before noon!Suppose that at 11:58 a.m. some farsighted bacteria realize that they are running out of space and consequently, with a great expenditure of effort and funds, they launch a search for new bottles. They look offshore on the outer continental shelf and in the Arctic, and at 11:59 a.m. they discover three new empty bottles. Great sighs of relief come from all the worried bacteria, because this magnificent discovery is three times the number of bottles that had hitherto been known. The discovery quadruples the total space resource known to the bacteria. Surely this will solve the

problem so that the bacteria can be self-sufficient in space. The bacterial “Project Independence” must now have achieved its goal.

3) How long can the bacterial growth continue if the total space resources are quadrupled? Answer: Two more minutes.”

As Dr. Bartlett also observes,

“We must realize that growth is but an adolescent phase of life which stops when physical maturity is reached. If growth continues in the period of maturity it is called obesity or cancer..”

Satyajit Das, in his latest book ‘The Age of Stagnation’, goes on to develop the thesis that our economic obsession, perpetual growth, is now an unattainable goal. One reason it is unattainable is because for the last several decades, economic activity and growth have been increasingly driven by financialization and borrowing to finance consumption and investment. By 2007, $5 of new debt was necessary to create an additional $1 of American economic activity – a fivefold increase from the 1950s. We are now drowning in debt.

There can only be three outcomes by way of resolving the debt crisis. One is for government to engineer sufficient economic growth to service the debt. In the euro zone, that outcome may be unachievable. One is to repudiate, restructure or ‘jubilee’ the debt – not easy, given that one government’s liability is another investor’s asset. The third way is the time-honoured governmental solution: official, state sanctioned inflationism – which is presumably what the (failed) policy of QE has always been about. Now that over $5 trillion of sovereign debt (with credit risk rising, not falling) trades with a negative yield, we can fairly overlook bonds as an investible asset class.

But we have to invest in something. We are also, courtesy of QE, now drowning in money and, as Josh Brown nicely points out, much else besides. In his book ‘Tomorrow’s Gold’, Marc Faber uses the analogy of a large, flat bowl perched on top of the earth. At its base, investors surround the bowl. A continuous supply of fresh water (money) flows into the bowl, controlled by the world’s central bankers. The bowl will lean whichever way investors tilt it. “..The direction of the overflow will depend on the bias of investors, which in turn can be manipulated by opinion leaders, the media, analysts, strategists, politicians and economists.” If we can anticipate where the “water” will flow, we can try to emulate as investors the sporting success of Wayne Gretzky – we can skate to where the puck will be, not to where it has been (which is what investors do by benchmarking themselves to equity indices, which reflect yesterday’s winners rather than tomorrow’s).

The map below, courtesy of the OECD, shows plausibly where the puck might be headed.

Growth of the Asian middle class; forecast: next 20 years

Screen Shot 2016-02-29 at 15.41.29

(Source: OECD)

The US middle class population is expected to be largely static – reasonably so, since it represents a mature economy. Ditto that of Europe. The middle class populations of South America and Africa are forecast to grow somewhat, albeit from a very low base.

But if the OECD is correct, the middle class population of Asia is forecast to explode – from roughly 500 million people today to something like 3 billion people over the next two decades. If this comes to pass it will constitute the greatest creation of wealth in human history.

So owning the shares of businesses catering to that emerging middle class is a plausible investment thesis – especially if the shares of those businesses can be bought at attractive prices.

The good news is that they can.

The chart below shows the respective price / book ratios for the S&P 500 Equity Index (in red) and for the MSCI Asia Pacific Index (in blue) over the last eight years.

Price / book ratio for the S&P 500 Index (red) and the MSCI Asia Pacific Index (blue), 2007-2015

Screen Shot 2016-02-29 at 15.44.16

(Source: Bloomberg LLP)

Whereas the US equity market has seen its price / book ratio virtually double since the Global Financial Crisis, the price / book ratio for Asia remains at close to its post-Lehman lows. Given the anticipated growth in wealth there over the longer term, that looks like an opportunity.

So it should come as no surprise that within our globally unconstrained ‘value’ equity fund, Asia accounts for roughly 60% of its holdings (other than China, where we currently have no exposure). And our single largest (pan-Asian) fund holding has the following metrics:

Average price / earnings: 8 Price / book: 0.8x
Historic return on equity: 17% Average yield: 4.4%

You can either buy an expensive market like that of the US (where the Shiller p/e stands at 25 times versus a long run average of 16) and where future growth may well disappoint, or you can buy high quality businesses in an inexpensive market – like that of Asia – with realistic expectations of high growth over the medium term, allied with the sort of compelling ‘value’ metrics shown above. But it’s hardly a fair fight.

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Previewing The Winners And Losers From Today’s MSCI Rebalance

As MSCI reported on February 11, today is the day when the previously announced quarterly rebalancing will take place, one which Credit Suisse estimates will see approximately $7.8bn gross trading in DM and $1.2bn in Emerging Markets.

As a reminder, this is how MSCI previewed today’s torrid end of today activity:

MSCI Global Standard Indexes: Thirteen securities will be added to and ten securities will be deleted from the MSCI ACWI Index. In the MSCI World Index, the three largest additions measured by full company market capitalization will be Jardine Matheson (Hong Kong), Worldpay Group (United Kingdom), and Waste Connections (USA). The two additions to the MSCI Emerging Markets Index will be Axis Bank (India) and Sibanye Gold (South Africa).
MSCI Global Small Cap Indexes: There will be eight additions to and 35 deletions from the MSCI ACWI Small Cap Index.
MSCI Global Investable Market Indexes: There will be three additions to and 27 deletions from the MSCI ACWI IMI.
MSCI Global All Cap Indexes: There will be two additions to and five deletions from the MSCI World All Cap Index.
MSCI Global Value and Growth Indexes: The three largest additions to the MSCI ACWI Value Index measured by full company market capitalization will be Jardine Matheson (Hong Kong), Axis Bank (India) and Mid-America Apartment (USA), while the three largest additions to the MSCI ACWI Growth Index measured by full company market capitalization will be Worldpay Group (United Kingdom), Waste Connections (USA) and Genmab (Denmark).
MSCI Frontier Markets Indexes: There will be one addition to and no deletions from the MSCI Frontier Markets Index.
MSCI Global Islamic Indexes: Twenty-eight securities will be added to and 32 securities will be deleted from the MSCI ACWI Islamic Index. The three largest additions to the MSCI ACWI Islamic Index measured by full company market capitalization will be Tencent Holdings Li (CN), Kraft Heinz Co (USA) and Innuit (USA). There will be three additions to and two deletions from the MSCI Gulf Cooperation Council (GCC) Countries ex Saudi Arabia IMI Islamic Index.
MSCI US Equity Indexes: There will be no securities added to and four securities deleted from the MSCI US Large Cap 300 Index. The three largest deletions from the MSCI US Large Cap 300 Index will be Continental Resources, Marathon Oil Corp. and Freeport McMoRan B.
- Four securities will be added to and 14 securities will be deleted from the MSCI US Mid Cap 450 Index. The three largest additions to the MSCI US Mid Cap 450 Index will be Continental Resources, Marathon Oil Corp. and Freeport McMoRan B.
- Fourteen securities will be added to and no securities will be deleted from the MSCI US Small Cap 1750 Index. The three largest additions to the MSCI US Small Cap 1750 Index will be Diamond Offshore Drill, Pandora Media and Huntsman Corp.
MSCI China A Indexes: There will be thirteen additions to and nine deletions from the MSCI China A Index. The largest additions to the MSCI China A Index will be Jiangsu Shagang Co A, Beijing Xinwei Telecom A and Jiangsu Sanyou Group A. There will be nine additions to and twelve deletions from the MSCI China A Small Cap Index.

To make it simpler for US traders, here courtesy of Credit Suisse is the list of the top North American buys:

And the biggest North American sales:

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