$6.4 Trillion And Counting – How The Military-Industrial Complex Hijacked The War On Terror

$6.4 Trillion And Counting - How The Military-Industrial Complex Hijacked The War On Terror

Authored by Eric Margolis,

Ike Was Right!

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist.

Now this conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence—economic, political, even spiritual—is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet, we must not fail to comprehend its grave implications. Our toil, resources, and livelihood are all involved. So is the very structure of our society.”

General Dwight D Eisenhower
Farewell address 1961

Congress just passed a near trillion dollar military budget at a time when the United States faces no evident state threats at home or abroad. Ike was right.

Illustrating Ike’s prescient warning, Brown University’s respected Watson Institute just released a major study which found that the so-called ‘wars on terror’ in Iraq, Afghanistan, Syria and Pakistan have cost US taxpayers $6.4 trillion since they began in 2001.

The extensive study found that over 800,000 people have died as a result of these military operations, a third of them civilians. An additional 21 million civilians have been displaced by US military operations. According to the Pentagon, these US wars have so far cost each American taxpayer $7,623 – and that’s a very conservative estimate.

Most of this money has been quietly added to the US national debt of over $23 trillion. Wars on credit hide the true cost and pain from the public.

As General Eisenhower warned, military spending has engulfed the nation.

A trillion annual military budget represents just about half the world’s military expenditures. The Pentagon, which I’ve visited numerous times, is bustling with activity as if the nation was on a permanent war footing.

The combined US intelligence budget of some $80 billion is larger than Russia’s total military budget of $63 billion. US troops, warplanes and naval vessels are stationed around the globe, including, most lately, across Africa. And yet every day the media trumpets new ‘threats’ to the US. Trump is sending more troops to the Mideast while claiming he wants to reduce America’s powerful military footprint there. Our military is always in search of new missions. These operations generate promotions and pay raises, new equipment and a reason for being.

Back in the day, the Republican Party of General Eisenhower was a centrist conservative’s party with a broad world view, dedicated to lower taxes and somewhat smaller government. It was led by the Rockefellers and educated Easterners with a broad world view and respect for tradition.

Today’s Republican Party is a collection of rural interests from flyover country, handmaidens of the military industrial complex and, most important, militant evangelical Christians who see the world through the spectrum of the Old Testament. Israel’s far right has come to dominate American evangelists by selling them a bill of goods about the End of Days and the Messiah’s return. Many of these rubes see Trump as a quasi-religious figure.

Mix the religious cultists – about 25% of the US population – with the farm and Israel lobbies and the mighty military industrial complex and no wonder the United States has veered off into the deep waters of irrationality and crusading ardor. The US can still afford such bizarre behavior thanks to its riches, magic green dollar, endless supply of credit and a poorly educated, apathetic public too besotted by sports and TV sitcoms to understand what’s going on abroad.

All the war party needs is a steady supply of foreign villains (preferably Muslims) who can be occasionally bombed back to the early Islamic age. Americans have largely forgotten George W. Bush’s lurid claims that Iraqi drones of death were poised to shower poisons on the sleeping nation. Even the Soviets never ventured so deep into the sea of absurdity.

The military industrial complex does not care to endanger its gold-plated F-35 stealth aircraft and $13 billion apiece aircraft carriers in a real war against real powers. Instead, the war party likes little wars against weak opponents who can barely shoot back. State-run TV networks thrill to such minor scraps with fancy headlines and martial music. Think of the glorious little wars against Panama, Grenada, Somalia, Iraq, Syria, Afghanistan and Libya. Iran looks next.

The more I listen to his words, the more I like Ike.

Tyler Durden Sun, 01/19/2020 - 23:45

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These States Face Biggest Job Losses From Automation

These States Face Biggest Job Losses From Automation

Aside from the rantings of a small group of eccentric billionaires, humanity is mostly unprepared for the advent of automation and its impact on an economy that is already exhibiting unprecedented levels of wealth concentration among the wealthy. Some have estimated that automation will destroy 800 million jobs over the next ten years.

But if you're trying to plan a career, or a life, that can withstand the transformative impact of automation, a team of researchers at Kempler Industries has analyzed data from the BLS Occupational Employment Statistics and determined the percent of potential job loss in different industries across all 50 US states.

Their findings are broken down in the map below:

The study also breaks job losses down by metropolitan area, with Las Vegas and Orlando taking the top two slots.

In order to create a foundation for this analysis, we looked at the top 170 most "at-risk" occupations, according to the University of Oxford’s "The Future of Employment: How Susceptible are Jobs to Computerisation" study.

When looking at the data, it’s clear that no state is immune to automation. Overall, roughly 41 million, or 28% of all U.S. jobs, are most susceptible to automation. Occupations within the service industry are some of the hardest hit in terms of being at risk for automation, specifically cashiers, retail salespersons and fast food employees.

Tyler Durden Sun, 01/19/2020 - 23:20
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The Military And State Can’t Handle The Trump Truth

The Military And State Can't Handle The Trump Truth

Authored by Larry Johnson via Sic Semper Tyrannis blog,

An excerpt from a soon to be released book, "A Very Stable Genius" (which appeared in Saturday's edition of the Washington Post) apparently was written with the intent of presenting Donald Trump as a crazed, unstable individual.

The authors of this hit job (two Washington Post reporters) clearly relied on Rex Tillerson, Gary Cohn and Jim Mattis as primary sources. But rather than expose Trump as mentally unfit to be President, the authors unwittingly expose their own extreme bias and highlight how the men Trump named to key positions in his administration--Tillerson at State, Cohn at the White House and Mattis at DOD--tried to undermine the President and drug their feet in carrying out Trump's directives.

These men, in my view, are bureaucratic cowards. They should have resigned if they felt so strongly about Trump's violations. But they wanted to hang on to their little pieces of turf.

The piece is introduced with this telling paragraph:

So on July 20, 2017, Mattis invited Trump to the Tank for what he, Tillerson, and Cohn had carefully organized as a tailored tutorial. What happened inside the Tank that day crystallized the commander in chief’s berating, derisive and dismissive manner, foreshadowing decisions such as the one earlier this month that brought the United States to the brink of war with Iran. The Tank meeting was a turning point in Trump’s presidency. Rather than getting him to appreciate America’s traditional role and alliances, Trump began to tune out and eventually push away the experts who believed their duty was to protect the country by restraining his more dangerous impulses.



Yep. Trump's a bad, crazy, deranged individual because he did not want to continue the failed policies of the last 20 years. That's the complaint of these Deep Staters in a nutshell. And Donald Trump, unlike the serpentine politicians that infest Washington, did not speak praise to the faces of these clowns and then backstab them in the press and to other members of his Administration. Nope. He called them out to their face. Can't have that. Telling people off to their faces is just so uncouth. Always better, according to the Swamp creatures, to say one thing to a person's face and then trash the hell out of them when they are not around.

Let's look at the key issues discussed in this brief that put the reporters panties in a knot.

“The post-war international rules-based order is the greatest gift of the greatest generation.” Mattis then gave a 20-minute briefing on the power of the NATO alliance to stabilize Europe and keep the United States safe.

Trump's response should not have surprised these guys if they had paid attention to the campaign:

We should make money off of everything.

”
Trump proceeded to explain that NATO, too, was worthless. U.S. generals were letting the allied member countries get away with murder, he said, and they owed the United States a lot of money after not living up to their promise of paying their dues.
“They’re in arrears,” Trump said, reverting to the language of real estate. He lifted both his arms at his sides in frustration. Then he scolded top officials for the untold millions of dollars he believed they had let slip through their fingers by allowing allies to avoid their obligations.“

Trump was exactly right with regards to NATO. It is an anachronism. The equivalent of maintaining the horse cavalry in the U.S. Army on the eve of World War II. But there is a lot of money and high paying jobs for senior officers to be had. Cannot let that sugar tit dry up.

The men at around the table also tried to thwart Trump on Iran:

He wanted out of the Iran nuclear deal that President Obama had struck in 2015, which called for Iran to reduce its uranium stockpile and cut its nuclear program.


It’s the worst deal in history!” Trump declared.


“Well, actually . . .,” Tillerson interjected.


“I don’t want to hear it,” Trump said, cutting off the secretary of state before he could explain some of the benefits of the agreement.

“They’re cheating. They’re building. We’re getting out of it. I keep telling you, I keep giving you time, and you keep delaying me. I want out of it.”


Here again Trump never hid his intent with respect to Obama's Iran deal. So why the surprise on the part of Mattis and Tillerson?

Next up, Afghanistan:

Trump erupted to revive another frequent complaint: the war in Afghanistan, which was now America’s longest war. He demanded an explanation for why the United States hadn’t won in Afghanistan yet, now 16 years after the nation began fighting there in the wake of the 9/11 terrorist attacks. Trump unleashed his disdain, calling Afghanistan a “loser war.”

That phrase hung in the air and disgusted not only the military leaders at the table but also the men and women in uniform sitting along the back wall behind their principals. They all were sworn to obey their commander in chief’s commands, and here he was calling the war they had been fighting a loser war.



“You’re all losers,” Trump said. “You don’t know how to win anymore.”


You may not like the tone, but Trump's position was not new nor should it have been unexpected. To his credit he called out the Generals to their face. And he was factually correct. We defeated the Japanese and German armies in four years. Here we are entering our 19th year of a meaningless war in Afghanistan and all we have to show are losses of hundreds of millions of dollars and the deaths and maiming of thousands of U.S. military personnel. Damn straight Mr. President. We've been pouring U.S. taxpayer dollars down an open sewer that masquerades as a country. For what purpose?

Then we get this "pity party":

They stunned nearly everyone in the room, and some vowed that they would never repeat them. Indeed, they have not been reported until now.


“I wouldn’t go to war with you people,” Trump told the assembled brass.
Addressing the room, the commander in chief barked, “You’re a bunch of dopes and babies.”


For a president known for verbiage he euphemistically called “locker room talk,” this was the gravest insult he could have delivered to these people, in this sacred space. The flag officers in the room were shocked. Some staff began looking down at their papers, rearranging folders, almost wishing themselves out of the room. A few considered walking out. They tried not to reveal their revulsion on their faces, but questions raced through their minds.

“How does the commander in chief say that?” one thought. “What would our worst adversaries think if they knew he said this?”


Grab the damn fainting couch. Trump told the assembled military leaders who had presided over a military stalemate in Afghanistan and the rise of ISIS as "losers." Not a one of them had the balls to stand up, tell him to his face he was wrong and offer their resignation. Nope.

They preferred to endure such abuse in order to keep their jobs. Pathetic.

This excerpt in the Washington Post tells the reader more about the corruption of the Deep State and their mindset than it does about Trump's so-called mental state. Trump acted no differently in front of these senior officers and diplomats than he did on the campaign trail.

He was honest. That is something the liars in Washington cannot stomach.

Tyler Durden Sun, 01/19/2020 - 22:55
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In “Spectacular” Jail Break, 75 Prisoners Including 6 Contract Killers Flee Paraguay Jail Through Tunnel

In "Spectacular" Jail Break, 75 Prisoners Including 6 Contract Killers Flee Paraguay Jail Through Tunnel

Someone has been watching too many reruns of The Shawshenk Redemption.

In a dramatic prison escape that would make both Andy Dufresne and El Chapo proud, no less than 75 prisoners, all members of a violent Brazilian gang - one of South America's most notorious - which also included six contract killers, launched what Bloomberg called a "spectacular jail break" in Paraguay.

The Pedro Juan Caballero city jail entrance on Jan. 19 after dozens of inmates escaped; Photo: AP.

According to the newspaper ABC, the prisoners pulled a page out of one of Stephen King's most popular stories, and fled through a large tunnel.

Or maybe they didn't, because as the country's Interior Minister Euclides Acevedo told the TV station Telefuturo, the tunnel, which started in a cell and ended outside the prison walls, may have been a decoy to mask the fact that most of the escapees simply walked out of the main door. And as an indication of the sheer chaos and corruption in Latin America's penal system, investigators believe some of the former inmates may even have left the prison in previous days.

The escaped prisoners were members of the drug gang First Command of the Capital, known as PCC, Justice Minister Cecilia Perez told Telefuturo; the gang, sporting more than 10,000 members, is one of Brazil’s largest criminal organizations. The PCC dominates the drug trade and prisons in Sao Paulo and in recent years has expanded its operations into other countries including Paraguay; in 2012, the group unleashed a wave of violence that included more than 200 murders in protest of the election of Fernando Haddad as Sao Paulo’s mayor.

After the escape, no less than five prison guards were arrested and the head of the prison - who was conveniently on holiday at the time - as been fired, news channel NPY reported.

That said, if Andy Dufresne's historic jailbreak was indeed the inspiration for the escape, then the Paraguay version appears to have been the work of rank amateurs: as Bloomberg notes, the tunnel was the work of days if not weeks, as the amount of soil shifted could not have passed unnoticed and was easily visible from the prison corridor, Perez explained as television images showed dozens of bags of soil piled up in a cell.

Clothes are seen in a tunnel entrance where inmates escaped from Pedro Juan Caballero city jail. Source: AP

Yet even if this particular escape was more luck than skill, we are confident the same group will have ample opportunity to show off its capabilities in the near future. According to InSight Crime, which investigates organized crime in Latin America, the PCC has also been blamed for several large heists including the biggest armed robbery in Paraguay’s history, in which the headquarters of security company Prosegur in Ciudad del Este was attacked by a gunmen who broke in using long tunnels and walked away with $40 million in an assault that was carried out with a wide array of weapons, including AK 47s, C4 explosives, infrared weapons, snipers and even anti-aircraft guns and a helicopter. We described that particular robbery in April 2017 in "In "Spectacular Heist" Dozens Of Heavily-Armed Robbers Steal $40 Million From Paraguay Vault."

In 2017, the Wall Street Journal reported that the PCC was trying to recruit members of Colombia’s FARC rebel group for their expertise in heavy weaponry.

Tyler Durden Sun, 01/19/2020 - 22:30

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Puerto Ricans Find Warehouse Full of Emergency Supplies From Hurricane Maria

Puerto Ricans Find Warehouse Full of Emergency Supplies From Hurricane Maria

Submitted by The Organic Prepper

Back in 2017, when the island territory was devastated by Hurricane Maria, loads of emergency supplies were sent to help residents who lost power, many for as long as a year after. But…those supplies were never distributed. Instead, water, food, and cots were stashed away in a warehouse ever since. Watch the video below, which has rightly gone viral.

Residents in Ponce, a city in the southern part of Puerto Rico, discovered the stash of supplies and blogger Lorenzo Delgado posted the video footage above. People broke into the building after Puerto Rico was hit by a powerful earthquake last week.

With anger spreading in the U.S. territory after video of the event in Ponce appeared on Facebook, Gov. Wanda Vázquez quickly fired the director of the island’s emergency management agency.

The governor said she had ordered an investigation after learning the emergency supplies had been piled in the warehouse since Hurricane Maria battered Puerto Rico in September 2017.

Vázquez said inaction by the fired official, Carlos Acevedo, was unacceptable.

“There are thousands of people who have made sacrifices to help those in the south, and it is unforgivable that resources were kept in the warehouse,” the governor said…

…The mayor of Ponce, María Meléndez, said he had not known about the warehouse and its contents.

“This is outrageous,” she said. “Everyone knows what us mayors went through after Hurricane Maria to try and get help to our cities and how we’ve worked these weeks to provide basic supplies to people affected by earthquakes. Those involved owe us an explanation.” (source)

The White House was criticized for a lackluster response.

You may recall that in the aftermath of Hurricane Maria, President Trump was harshly criticized for not sending sufficient aid to the hard-hit island. But it appears that much of the aid that was dispensed was never given to the people who needed it the most. It’s interesting to note that President Trump is currently under fire for restrictions placed on billions of dollars of aid that were just approved to help Puerto Ricans recover from a recent earthquake, citing corruption in the Puerto Rican government.

Even as pressure has mounted for him to release emergency assistance, the president has maintained his assertions that the money will not be well spent. On Wednesday, the White House budget office made clear how those assertions had shaped relief.

To gain access to $8.2 billion in recovery money and $8.3 billion in disaster prevention funds, Puerto Rico will have to submit budget plans to its federally mandated fiscal control board, which will track where the money goes. It will also have to bolster its property registration database…

…the fiscal control board is viewed in Puerto Rico as unaccountable to the people. And Puerto Rican officials are not inclined to tell workers they will be paid less than the minimum wage. With regard to the property and deed registrations, Puerto Ricans have long used informal ownership records.

The restriction relating to the electrical grid may just be a practical one: Congress has already appropriated a separate tranche of money specifically for the electrical grid, though it has yet to be allocated. (source)

Given the fact that all this aid was hidden in a warehouse while people struggled for two years, it’s difficult to dispute that the new funds could likewise be misused.

Commenting on the news, Donald Trump, Jr., "I look forward to the Wall to wall coverage of this now that we found out @realDonaldTrump was right all along."

He probably shouldn't hold his breath.

Tyler Durden Sun, 01/19/2020 - 22:05

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The Biggest Stock Market “Melt Up” In U.S. History Has Pushed Stock Prices To The More Overvalued Levels Ever

Over the past several months, we have witnessed one of the greatest stock market rallies in American history.  The S&P 500 has gone 70 days in a row without a 1 percent loss, and most weeks we have seen one daily surge after another.  If stock prices were exploding because the underlying U.S. economy was performing extremely well, we would have reason to celebrate.  Unfortunately, that is not the case at all.  In fact, last week I shared 12 signs that the economy is actually slowing down substantially.  Instead, this stock market “melt up” is being largely fueled by reckless intervention by the Federal Reserve.  The Fed’s balance sheet has been ballooning once again, and investors know that stock prices tend to go up significantly when that is happening.  So right now Wall Street is in the midst of a raucous party, and everything will be wonderful as long as stock prices continue to move in the right direction.

Unfortunately, no stock market rally lasts forever, and a day of reckoning is coming.  At this point, stock prices have become so absurd that even the New York Times is saying that we should “worry” about what is ahead.

We also witnessed dramatic stock market “melt ups” prior to the stock market crash of 1929, prior to the bursting of the dotcom bubble, and prior to the financial crisis of 2008.

If you are not familiar with the term “melt up”, here is a pretty good definition from Investopedia

A melt up is a dramatic and unexpected improvement in the investment performance of an asset class, driven partly by a stampede of investors who don’t want to miss out on its rise, rather than by fundamental improvements in the economy. Gains that a melt up creates are considered to be unreliable indications of the direction the market is ultimately headed. Melt ups often precede melt downs.

That definition accurately describes what we are witnessing on Wall Street right now.  There has been so much euphoria, and of course many of the wild-eyed optimists seem to think that it can last indefinitely.

But how much higher can stock prices possibly go?  After all, they are already the most overvalued that they have ever been in all of U.S. history.

A very simple way to judge whether stock prices are overvalued or undervalued is to look at the price-to-sales ratio for the S&P 500 as a whole.  During the best of times, it should be somewhere between 1.0 and 1.5, but thanks to the absurd rally that Wall Street has been enjoying the price-to-sales ratio for the S&P 500 has now been pushed above 2.4.  If you would like to see what this looks like for yourself, just check out this chart from Zero Hedge.

Stock prices should have never, ever gotten to this point without sufficient underlying sales to justify such high valuations.  If the S&P 500 were to fall 50 percent from the current level, that would put us at a point that is relatively “normal” for good economic times.

But of course our financial markets would not be able to handle a 50 percent decline in stock prices because the system is so highly leveraged.  It would be a disaster unlike anything we have seen before, and so the Federal Reserve feels as though there is no other alternative other than to continue to pump up this absolutely absurd bubble.

Another very simple indicator that shows that stocks are now more overvalued than ever before is “the Buffett Indicator”.  As Harry Dent has pointed out, the ratio of total market capitalization to U.S. GDP has never been higher than it is currently.  You can see this for yourself by looking at this chart.  The stock market would have to fall by a third just to get back to the ridiculous level we witnessed just prior to the financial crisis of 2008.  We truly are in unprecedented territory, and every other stock market bubble of this nature in our entire history has ended very, very badly.

If you want to blame someone for getting us into such a precarious position, you should blame the Federal Reserve.  And at this point, even Fed officials are acknowledging what is going on.  For example, just check out what Dallas Fed President Robert Kaplan recently said

It was at the very least, a little refreshing to hear Dallas Fed President Robert Kaplan openly talked about this in an interview Wednesday. Although he did couch it in terms that implied it was a matter of some concern to him. But, of course, he went on to say, “we’ve done what we need to do up until now.”

“My own view is it’s having some effect on risk assets,” Kaplan said. “It’s a derivative of QE when we buy bills and we inject more liquidity; it affects risk assets. This is why I say growth in the balance sheet is not free. There is a cost to it.”

The Fed is desperately trying to keep control of interest rates, but in the process they are creating ideal conditions for a stock market crash.

As 2019 rolled to an end, even Wolf Richter admitted that “there has never been a better setup” for a major market meltdown…

In my decades of looking at the stock market, there has never been a better setup. Exuberance is pandemic and sky-high. And even after today’s dip, the S&P 500 is up nearly 29% for the year, and the Nasdaq 35%, despite lackluster growth in the global economy, where many of the S&P 500 companies are getting the majority of their revenues.

Mega-weight in the indices, Apple, is a good example: shares soared 84% in the year, though its revenues ticked up only 2%. This is not a growth story. This is an exuberance story where nothing that happens in reality – such as lacking revenue growth – matters, as we’re now told by enthusiastic crowds everywhere.

Meanwhile, the real economy has just continued to deteriorate.

While stock prices were soaring in December, U.S. freight volume was actually plummeting

Shipment volume in the US by truck, rail, air, and barge plunged 7.9% in December 2019 compared to a year earlier, according to the Cass Freight Index for Shipments. It was the 13th month in a row of year-over-year declines, and the steepest year-over-year decline since November 2009, during the Financial Crisis

As I have warned so many times, stock prices have become completely divorced from economic reality, and this is setting us up for a major financial crisis.

But for the moment, the party continues to roll on and the wild-eyes optimists are telling us that this is just the beginning of a golden new age of prosperity.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

The post The Biggest Stock Market “Melt Up” In U.S. History Has Pushed Stock Prices To The More Overvalued Levels Ever appeared first on The Economic Collapse.

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India’s Half-Finished “Ghost Towns” Leave Middle Class In Crisis

India's Half-Finished "Ghost Towns" Leave Middle Class In Crisis

If you thought the American housing market was a mess during the immediate aftermath of the collapse, wait until you read about what's going in India.

Rapid economic growth and the government's gradual economic liberalization have caused the ranks to India's middle class to boom. The emerging Hindu middle class is already reshaping Indian society: Prime Minister Narendra Modi owes his electoral victories to this group, and his reform agenda was designed with the goal of sheparding even more of the country's 1.4 billion citizens into the higher income bracket.

Modi's first term included several important reforms, including simplifying India's byzantine tax system and instituting a simplified system for taxing goods and services (though some argue that it must still be simplified further. He's also helped modernize the country's bankruptcy laws.

But as the country's growing wealth has sparked a flight from India's crowded urban slums to its more spacious suburbs, they're struggling with a shortage of homes, a shortage that has been made even more intense thanks to roughly half a million apartments that have been sitting unfinished for years.

Across the country, outside major cities like New Delhi and Mumbai, hundreds of developments have been stranded by developers, many of which have declared bankruptcy, or simply run out of money to finish the projects, according to the Wall Street Journal.

India's banks, already saddled with bad loans, are refusing to lend any more money to the developers. As a result, millions of Indians who put up their life savings as a down payment on a new, yet-to-be-built apartment have essentially been left bereft, with no money and nowhere to live.

Most are now making ends meet by cutting out any and all luxuries, and relying on friends and family, as they wait to see if the apartments they paid for will ever be finished.

Delhi has the largest number of apartments delayed by more than three years, but the problem is nearly universal across India's cities and emerging suburbs.

Here's a brief recounting of how India got to this point: market liberalizations that began in the early 2000s prompted a crush of developers and consumers all borrowing money either to build homes or to buy them.

But unfortunately, India's stodgy system of local regulations hadn't been liberalized enough, and many developers quickly racked up unanticipated delays thanks to difficulty in securing government clearances. Others had trouble hiring enough skilled workers to build the apartment complexes.

As a result, the number of buildings that are taking five or even ten years to build has skyrocketed.

One woman who spoke with WSJ poured her savings into a new apartment ten years ago. But the development was halted a few years after construction started, and she has no recourse for retrieving her savings.

Jonaki Ray took a loan to buy an apartment in 2009 that has tied up her life savings for more than a decade. To pay for her mortgage, and an apartment she has rented in the meantime, she stopped splurging on things like vacations abroad and a new car.

Ms. Ray has finally been given the keys to the unit, but still has no plans to move in. She has to finish the interiors on her own, and she is worried about safety as no one else on her floor has moved in.

"There is this thing looming over me and I don’t know what is going to happen,” she said. "It’s always there at the back of my head."

These half-built "Ghost towns" now dot the outskirts of India's cities, creating an outrageous blight on the landscape.

Wish Town, a development in the New Delhi suburb of Noida, encapsulates the plight of middle-class Indians who sank their life savings into

The construction workers are long gone, the site’s cement factory and cranes have stopped working. Signs mark aborted projects: a "Sports Field" is still a cauliflower patch, the "Social Club" a shell of a building.

Construction stopped in 2016 when the developer couldn’t pay its debt. Only about half of the 40,000 apartments that were to house close to 200,000 people have been finished and handed over to their buyers. Those who have moved in complain that the golf club, gyms, pools, retail spaces and restaurants advertised by its developer, Jaypee Group have largely yet to be built.

Modi regularly riffs on India's housing crisis and the plight of those who have lost their savings. But it's unclear what, if anything, his government plans to do about it.

One data provider used by WSJ put the total value of all the delayed developments at $50 billion, 10x the number from five years ago. 

The question now is: Will Modi commit the enormous resources necessary for a bailout? Or risk alienating the base that just handed him a second term in office?

Whatever happens, the crisis is just one of the myriad reasons why international investors are beginning to lose faith in Modi's India.

Tyler Durden Sun, 01/19/2020 - 21:40

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Peter Schiff: “I Just Lost All The Bitcoin I Have Ever Owned”

Peter Schiff: "I Just Lost All The Bitcoin I Have Ever Owned"

Authored by Alex Cohen via CoinTelegraph.com,

On Jan. 19, famous crypto skeptic and gold bug Peter Schiff claimed on Twitter that he has lost access to his Bitcoin wallet and that his password is no longer valid.

image courtesy of CoinTelegraph

Schiff added that his BTC is now intrinsically worthless and has no market value. He also added that:

“I knew owning Bitcoin was a bad idea, I just never realized it was this bad!”

Getting to the bottom of the issue

After Schiff tweeted about his loss, the crypto community was quick to jump to the rescue. For example, co-founder and partner at Morgan Creek Digital Anthony Pompliano responding by asking if he forgot his password, to which Schiff has responded that, “My wallet forgot my password.”

Pompliano then asked Schiff to email him directly:

“The software just executes the commands that humans give it. It can’t ‘forget’ anything. Email me and I’ll try to help you recover the lost Bitcoin.”

However it looks like the BTC may indeed be gone for good, as Schiff responded:

“Eric Voorhees set up the wallet for me and even he thinks there is nothing I can do. But you're welcome to try if you have any ideas.”

BTC price skepticism

Schiff is known for being an outspoken critic of cryptocurrencies. Just before the New Year, he claimed that unlike every other asset class, BTC was not rising toward the end of the calendar year.

In late November, Schiff claimed in a Twitter debate that the price of BTC would drop to $1,000 to “complete the pattern.”

Tyler Durden Sun, 01/19/2020 - 21:15

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“Reality Is Officially Here”: Nobody Buying Homes In Greenwich Is Paying Top Dollar Anymore

"Reality Is Officially Here": Nobody Buying Homes In Greenwich Is Paying Top Dollar Anymore

Today in optimistic real estate news...

...almost all housing in Greenwich is now selling for discounts to the sticker price. 90% of single family deals that closed in the fourth quarter were for less than what the seller was asking, according to Bloomberg. This marks the biggest percentage of deals dating back to mid 2017.

The average discount to the asking price was 9.6%, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

But the best news is that the price cuts didn't do much to improve sales, which fell by 12% from a year earlier to 117. However, they did contribute to a decline in Greenwich's listings - the biggest decline since Q1 2017 - as owners refused to discount their properties. 

Jonathan Miller, president of Miller Samuel said: “Reality is officially here. We’re getting to a point where they have to decide: Do they want to ever sell, or do they want to withdraw?”

Homeowners in the area are adjusting to the climate where even wealthy buyers have become sensitive to price. Wall Street bonuses have been on the decline and shoppers are showing less interest in oversized estates far from transit and retail. New tax laws that limit deductions have also acted as a headwind for the area.

Dealmaking hasn't increased in any of the last five quarters, but low mortgage rates still have buyers on the prowl for value. Contracts at the end of the year pricked up slightly, which could suggest a stronger Q1 on its way. As of Dec. 31, there were 74 transactions pending, which is up 54% from the year prior. 

David Haffenreffer, manager of the Greenwich office of Houlihan Lawrence: “At the right price there’s always an audience.” 

“People are recognizing there are deals to be had,” he continued.

One section of town, north of the Merritt Parkway, saw deals jump 54%. The area is replete with sprawling estates set back from "winding two lane roads". It was the largest increase for any neighborhood, but was the area where the buyers also got the largest discounts. 

The neighborhood was also home to the biggest sale of the quarter, after the owners of an estate took a 45% haircut from a price they paid in 2010. The estate sold once belonged to Mel Gibson and sold last month for $13.25 million after being on the market for seven years. 

Tyler Durden Sun, 01/19/2020 - 20:55

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Hedge Fund CIO: Once All Investing Becomes Passive, Then The Information Contained In Market Prices Will Be Meaningless

Hedge Fund CIO: Once All Investing Becomes Passive, Then The Information Contained In Market Prices Will Be Meaningless

Submitted by Eric Peters, CIO of One River Asset Management

Looking

“I look at historical relationships that appear to no longer operate as before,” said the investor. “I look at measures of valuation that are stretched to levels rarely seen,” he continued.

"I look at corporate share buybacks as the only meaningful inflow. I look at outflows from retail investors and the flags that this raises."

"Then I look at the fact that global interest rates have never been negative like this. I look at the working population and it has never before aged and shrunk like this."

"And I look at the world and just don’t know how anyone can be certain of anything."

* * *

Anecdote:

"Start with what we know for sure,” said Big Foot, creeping quietly through global markets, trackers desperate to front-run his every step.

"If 100% of all investing is passive, then the information contained in market prices is meaningless,” continued the CEO of one of the industry’s largest investment firms.  In 2009, assets in actively-managed mutual funds were 3x those of index-based funds/ETFs. In August 2019, US index-based fund/ETF assets surpassed actively managed assets. That trend continues.

With each incremental dollar that moves from active to passive management, roughly five more cents flow into equities (active managers hold 5% cash buffers while passive funds generally do not).

"We also know that if 100% of equity is taken private, then public markets would cease to exist." The average institutional portfolio holds a 25% allocation in alternative investments. Of that allocation, private equity investments have surged to 25% of the assets, up from 18% in 2018. Private equity funds have $1.5trln in dry powder that will fail to pay fees unless their managers buy equity, which continues to appreciate.

US equity market capitalization is $35tlrn, a record 1.55x America’s $22.3trln annual GDP. “But what we do not know for sure is whether there comes a point well before 100% of all investing is done passively, or before all public equity is taken private, that the market price becomes meaningless,” said Big Foot.

You see, in a world where all investing is passive, how much would an incremental $1bln inflow move market prices up? How about a $1bln outflow? The price moves would become utterly extraordinary in such a world. And in a world where all public equity is taken private, PE managers would surely mark their holdings steadily higher, to ever more extreme multiples.

"Nor do we know whether we have already reached that point." 

Tyler Durden Sun, 01/19/2020 - 20:33

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One Dead As Speeding Tesla “Crashes And Bursts Into Flames” In California Intersection Saturday Night

One Dead As Speeding Tesla "Crashes And Bursts Into Flames" In California Intersection Saturday Night

No sooner do we report that the NHTSA is considering a petition to investigate 500,000 Teslas for unintended acceleration, than another Tesla driver winds up dead.

Police are in the middle of investigating what is being called a "single vehicle crash" involving a Tesla that "crashed and burst into flames" in Pleasanton, California.

The driver of the vehicle was killed, according to ABC 7. His identity has not yet been released.

The crash was reported on Saturday night at about 6pm local time at the intersection of West Las Positas Boulevard and Hacienda Drive.

The Tesla was going southbound and lost control near the intersection. It then crashed into a sign outside of an apartment complex before catching on fire. 

The intersection was closed for several hours on Saturday night as a result of the crash. 

"The car was going so fast, it actually took out a street signal," the on-the-scene reporter says in her coverage. 

Your move, NHTSA.  

We will update this story as more information becomes available. 

You can watch the news coverage of the event from the ABC feed here:

Tyler Durden Sun, 01/19/2020 - 20:10

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California’s Anti-Self-Employment Law Is Already Crushing Freelancers

California's Anti-Self-Employment Law Is Already Crushing Freelancers

Authored by Andrew Moran via LibertyNation.com,

In 1971, Isaac Asimov wrote an extraordinary novel, The Gods Themselves, about a machine that generates unlimited energy for free, defying the fundamental economic principle known as scarcity. It is later learned that the Electron Pump is originating from a hole in space that connects parallel universes. Doomsday is nigh as it is discovered that galaxies will soon be destroyed and that the sun will metastasize into a supernova. The crux of the story is comparable to what is transpiring in California.

State lawmakers possess an infinite source of good intentions, using the eternal supply to pave roads to hell. Wielding the power of this limitless benevolence and munificence, politicians are regulating the lives of citizens while eviscerating their existence in the process. If this is goodwill, then we can only imagine what the state is capable of when it desires to ruin you or your business.

The Gig Is Up

In September, California’s Democratic governor Gavin Newsom signed into law AB-5, which requires most companies to reclassify freelancers and contingent workers as full-time employees. Doing this means such individuals would be eligible for a guaranteed $12–$13 state minimum wage, benefits, and protections under California’s immense code of employment laws. It went into effect on January 1.

“As one of the strongest economies in the world, California is now setting the global standard for worker protections for other states and countries to follow,” said Assemblywoman Lorena Gonzalez (D), the author of the bill, in a statement.

AB-5 was lauded by organized labor, but it turns out that laborers are not enthusiastic about it.

The law impacts about two-thirds of the state’s two million independent contractors; it does exempt many white-collar professionals, including architects, attorneys, doctors, and realtors. But childcare specialists, nurses, writers, and janitors are not afforded the same luxury. Truck drivers received a last-minute exemption after weeks of contentious battles, but they reportedly fled the state before the country bellowed "Auld Lang Syne." As for the truckers who stayed behind, the California Trucking Association claims it is receiving calls from individuals who are leaving the state.

Freelance writers may be the next ones to wave goodbye to California. Moving forward, freelancers are limited to thirty-five submissions annually per client. As any writer will attest, it can be easy to reach this quota when you are submitting content to media firms, leaving you on a never-ending hunt for more companies that will accept your prose on the existential crisis in the age of deconstruction.

Decline in Clients and Projects

Just weeks after AB-5 became law, Vox Media announced that hundreds of freelance writers, primarily sports contributors for its SBNation.com website, would be given the pink slip. The irony behind this corporate decision is that Vox endorsed the bill and celebrated its passing. Now Vox is replacing them with twenty new full- and part-time staff members.

When Gonzalez was confronted with this on Twitter, she tweeted:

These were never good jobs. No one has ever suggested that, even freelancers. We will continue to work on this next year.

She further dismissed complaints, urging everyone to “educate” themselves on the benefits of AB-5.

One Twitter user summarized the thoughts of the many affected by this law: “Wow, you really suck at this.”

CNBC spoke with Jeremiah LaBrash, who earns half of his annual income from freelancing. Based in Los Angeles, the freelance cartoonist noticed the decline in potential clients and projects. When LaBrash submitted proposals to media companies, these employers turned him down when they learned he is from California. He told the business news network:

I’ve had them hire me and then come back and say they’re no longer interested. All of a sudden, someone I’ve never talked to says, “We’ve decided not to move forward.” I’ve never had that happen before this year.

My savings are stagnant. I really can’t look into buying a house. The housing market here is hard already.

Once again, the paternalistic central planners strive to make the decisions for adults. They failed to comprehend that a lot of freelancers enjoy being independent professionals, setting their own hours, and opting for freedom rather than a nine-to-five structure. The bill is marketed as a safety net, but the question is: what good is a safety net if you do not have any work?

Leave California or Bust!

When first reporting on the bill, Kelli Ballard at Liberty Nation wrote that the historic motto had been “California or bust!.” After years of big government encroachment, Ballard posits that it is now “Leave California or bust!.” It may not be that simple. The biggest concern is that other blue states will eventually adopt similar legislation to combat the $1 trillion national gig economy, proving that there is no escaping bad economics.

Tyler Durden Sun, 01/19/2020 - 19:50
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McConnell “Kill Switch” Rule Will Shut Down Impeachment If Dems Get Wild

McConnell "Kill Switch" Rule Will Shut Down Impeachment If Dems Get Wild

Unfortunately for Senate Majority Leader Mitch McConnell, too many moderate Republicans have sided with Democrats in insisting that the impeachment trial proceed. If the shoe was on the other foot, and McConnell was able to win over more conservative and moderate Democrats, President Trump's legal team would be able to easily win a vote to dismiss at the outset of the trial, effectively ending it before it could really begin.

But prtisan rancor aimed at the president and his allies in Congress remains at an all-time high. Even as Democrats bash the president for allegedly putting politics above doing what's right for the country, they are proceeding with the impeachment charade, despite being doomed from the start.

After a frenetic holiday weekend of dealmaking, McConnell is apparently nearly finished drafting the rules of engagement for the impeachment trial.

According to a leak that was picked up by Axios and Brietbart, among others, McConnell is still planning to include a "kill switch" in the impeachment trial rules that would allow the president's legal team to call for a dismissal if Democrats try to violate the rules or engage in any "shenanigans."

The provision will allow Trump's team to quickly push for a summary judgment or dismissal at any time. It comes after some Senators tried - and failed - to change the Senate rules to dismiss the charges because of Pelosi's decision to delay transferring the articles of impeachment.

According to Breitbart, if McConnell succeeds in including the kill switch, he will have outmaneuvered Democrats and proved once again that he's a better leader than Pelosi. Even though a few moderates tentatively sided with the Democrats and insisted there should be a trial, Republicans still have the upper hand - because the minute the Dems start to push the envelope, the moderate Republicans will return to vote with McConnell to dismiss.

The Republican leadership and President Trump himself have assented - and at times even welcomed - a trial. At this point, the American people have already seen the transcript of Trump's July call with his Ukrainian counterpart, they've been told that the aid was eventually released, and even heard it from Zelensky himself that there was no quid pro quo involving opening an investigation into the Bidens.

And now, if the Dems try to do something extreme like include even more alleged "bombshells" from Lev Parnas or anyone else outside the framework for the trial, McConnell will be able to shut them down. 

"If Schiff or the Democrats try anything untoward like they did in the House, the president and the Senate have the option to shut the whole thing down and blow it all up on them. That means Republicans hold the upper hand, and should things get crazy—while there are not currently enough votes to dismiss the trial or outright off the bat acquit Trump—after Democrat partisan gamesmanship there likely would be enough votes to dismiss the whole thing."

Meanwhile, as the two sides battle over whether witnesses will be called, at least one of the lawyers who will be pleading Trump's case to the Senate - Harvard's Alan Dershowitz - told the Hill that he plans to argue that the articles of impeachment are invalid because they don't include truly impeachable offenses, which would justify a Senate vote to end the matter.

But will Democrats see it that way? We're not so sure.

So far, at least, the Dems and their supporters in the press have tried to imbue the proceedings with a dramatic flair. The media lapped it up when Cheryl Johnson, a black woman and the clerk of the House, delivered the articles of impeachment against President Trump on Martin Luther King Jr.'s real birthday.

Most of these reports neglected to point out that the entire impeachment process will mostly be managed by Adam Schiff and Jerry Nadler, two old white men.

At least if McConnell has his way, the Dems will mostly be limited to transparent and ham-fisted melodrama. There's plenty of evidence that the public's perception of the president has been very little affected by the whole circus. If anything, the Dems excoriations of the president and his team have soured the public against them.

Even though Democratic strategists bet the farm that impeachment would help them defeat Trump in 2020.

Tyler Durden Sun, 01/19/2020 - 19:30
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JPMorgan: Maybe We Were Wrong About The Main Reason To Be Bullish In 2020

JPMorgan: Maybe We Were Wrong About The Main Reason To Be Bullish In 2020

Readers will recall for much of 2019 we highlighted what we said was the market's biggest paradox: one where the higher the market rose, the more money investors would pull out of equities, and allocate to bonds.

It culminated last June when , even as the S&P hit new all time highs, outflows over the last 6 months in dollar terms surpassed the previous record observed over any prior 6-month period.

Since then the market moved relentlessly higher hitting new record highs, buoyed in great part by the Fed's announcement of repo liquidity injections at first, and subsequently by the return of POMO, as a result of the NY Fed's monthly monetization of $60BN in T-Bills. And yet the paradox remained: investors continued to pull money out of equities and allocated it to bond and money market funds.

This lack of retail euphoria promptly was used by the major banks, most notably JPMorgan, as one of the catalysts behind the bank's bullish outlook for 2020, with the bank arguing back in November that 2020 is likely to be the year of Great Rotation II, in a repeat of 2013 the year of Great Rotation I, which saw a sharp acceleration in equity fund buying and sharp deceleration in bond fund buying by retail investors globally.

There is just one problem: despite the market's continued meltup, this has so far failed to materialize, and as JPM derivatives strategist Nick Panagirtzoglou writes in his latest Flows and Liquidity report, "is the flow picture over the past few weeks consistent with the Great Rotation II thesis? The answer is not yet" because whether one looks at YTD fund flows or the flows over the past month or two, the picture is of continued strong flows into bond funds and of only modestly positive flows into equity funds.

Why are the early January fund flows number important? Because as the JPM strategist explains, "January flows have added importance especially in years where a big flow shift is expected to take place. This is because January is typically a month when retail investors make their asset allocations for the whole year. Indeed, empirically there is a significant positive relationship between the full year equity fund vs. the January flow.... And during the previous Great Rotation year of 2013 when we had a big positive equity fund flow shift of the one we anticipate for this year, January saw a high share of almost 20% of the yearly equity fund inflow, i.e. much higher than its proportional 1/12 share."

This, as Panigirtzoglou notes, "implies that the final fund flow numbers of weekly and monthly reporting funds for the month of January, which we are going to get in the second half of February, will be important in gauging whether the Great Rotation thesis is tracking or not for this year."

Alas, as shown in the chart above, the trend so far is hardly a ringing endorsement of a second Great Rotation out of bonds and into stocks despite the market making new all time highs on a daily basis.

This in turn has prompted JPM to ask, just two months after positing its "Great Rotation II" thesis, that it may well be wrong about a great fund reallocation out of bonds and into stocks, and if that is the case what then, or as Panigirtzoglou humbly puts it, "what could make the Great Rotation thesis failing to materialize this year?"

To answer this question the derivatives expert says he needs to think about the factors for and against the Great Rotation thesis. In terms of the supporting factors, he had mentioned three main factors in our previous publication of November 22nd. This is what JPM said then:

  • 1) Historical patterns based on previous year’s equity/bond performance and on previous year’s extremity in equity and bond fund flows, pointed to a big change in fund flows this year - at least according to JPM if not this website which has argued for years that the biggest buyer of stocks is not retail or institutional investors but corporate buybacks -  with more than reversal of last year’s equity fund selling and collapse in last year’s record high bond fund buying. In particular, JPM had argued that in terms of equity fund flows 2018 looked more like 2011 or 2015, as they were all equity correction years. As a result, 2019 looked more like 2012 or 2016, and 2020 is likely to look more like 2013 or 2017. In other words, the cautious stance of retail investors in 2019 was likely in response to 2018's equity market correction and given 2019 was a strong year for equities driven by bullish institutional investors, then retail investors should turn big buyers of equity funds in 2020.

  • 2) An improving macro picture. Further signs of an improvement in the global industry cycle into 2020 should also encourage a rotation from bond funds to equity funds. The upward trajectory in orders and inventories since the flash PMIs of October 24th has been so far underpinning this improving macro picture. Next week’s flash PMIs will be important in gauging whether this improvement trend continues.
     
  • 3) The third supporting factor JPM had mentioned is the global yield backdrop across asset classes. Following last year’s rate cuts by central banks, cash and bonds yield significantly less than before and significantly less than equities. So in the absence of negative surprises it would be difficult for retail investors or other asset allocators to ignore the yield advantage of equities and not accept ever higher equity weightings.

What about the factors against Great Rotation (which as regular readers may recall, we said would not happen around the time JPM made its "contrarian" call, for the simple reason that there is little impetus to keep selling bonds).

Here, JPM says that "the main risk or impediment" to its Great Rotation thesis stemmed from already elevated retail investor equity positions (as a reminder, earlier today we noted that virtually every investor class is now all-in stocks) that need to rise beyond previous equity cycle peaks for the Great Rotation thesis to play out this year. This impediment, JPM adds, "looks even bigger at the moment following the equity rally over the past two months."

To illustrate this "challenge" to getting his key thesis for 202 right, Panigirtzoglou updates his position proxies for retail investors to incorporate more recent price and flow information including the last week's release of quarterly reported fund flows for Q3 2019. This is how he explains the key indicator he is watching:

The retail investor position proxy is the share of equities in US domiciled or worldwide fund universe of equity, bond, hybrid and money market funds. The equity share in the fund universe is proxied by the AUM of equity funds plus the equity holdings of hybrid funds divided by the sum of the AUM of equity, bond, hybrid and money market funds. This share could
be considered as a proxy of how overweight equities retail investors are.

This proxy is shown in Figure 4 for funds domiciled in the US since 1996 and funds domiciled worldwide since 2005. This equity fund share, extrapolated to January 16th by the dots, looks even more elevated after the equity rally of the past few months and currently stands at record high levels for funds domiciled worldwide and very close to record high levels for funds domiciled in the US. Said otherwise, this confirms what we said earlier, namely that retail investors are indeed "all in" US stocks to a never before seen degree.

Another key metric to assess retail investors’ positioning is based on the NYSE Net Debit balance as a proxy for US individual investor leverage. In contrast to hedge funds who can get leverage more easily or cheaply via options and futures (and of course, repos, as we discussed extensively), individuals rely more on Federal Reserve Regulation T. This regulation, which governs customer cash accounts and the amount of credit that brokerage firms and dealers may extend to customers for the purchase of securities, stipulates that one can borrow up to 50% of the purchase price of securities that can be purchased on margin. This is known as the “initial margin”. NYSE rules also require equity in an account to be at least 25% of the securities market value, i.e., the "maintenance margin."

Figure 6 shows this NYSE Net Debit balance calculated as the difference between margin debit balance minus the sum of total credit balances (cash account credit +margin account credit). This leverage proxy has been rising steeply over 2016-2017, and hit a record high of 1.5% in May 2018. Curiously, despite what Figure 4 above shows, this metric has declined significantly since then and the latest reading for November 2019 stands close to those seen previously at the end of 2016.

 

In other words, and contradicting the prior observations, the previous extremity in US individual investor leverage seen in Q2 2018 has been largely unwound. But, as the JPM strategist notes, "what is more striking in Figure 6 is that this metric declined last year despite strong equity market performance. This again shows how unwilling US retail investors were last year to leverage their equity bets." This unwillingness likely indicates that leveraged US retail investors feel that their equity exposures and leverage are already elevated and are thus reluctant to add even with the equity market at historical highs. Incidentally, and this is not JPM but ZH talking, not adding when stocks are at all time highs is precisely what investors should be doing - instead of selling low and buying high as the dumb money has historically done, in this case we see the opposite, or what some may call, perfectly logical, reasonable behavior. It's also why JPM is stumped...

In any case, back to the JPMorgan argument, which sees in this "unusual deleveraging" in NYSE margin accounts in a strong equity year, coupled with the "unusual selling" of equity funds and the record high buying of almost $1tr of bond funds last year, the possibility that retail investors are more motivated by rebalancing rather than responding to long term momentum. Once again, this is merely a way for JPM to feign shock that instead of unleashing animal spirits, a market all time highs is now nothing more than a logical signal for most investors to sell.

Well, if this is indeed the case, then Panigirtzoglou concludes that retail investors would be unwilling to accept even higher equity weighting from here "and our Great Rotation thesis would fail to materialize."

Oops... because as the title summarizes, this is just a way for one of JPM's most respected strategists to admit that just maybe he was wrong about the main argument for him to turn bullish on stocks in 2020.

* * *

So what would the implications be if the Great Rotation fails to materialize this year, according to JPM? As a reminder, the largest US bank had argued at the end of last year that retail flows would be crucial in determining the 2020 demand/supply balance for both equities and bonds. So if the Great Rotation fails to materialize this year, the implications would be important for both equities and bonds. For equities the implication would be that the equity market would remain at the mercy of institutional investors, which, as noted earlier are already all in, and have little room to push the equity market higher from here and instead leave it vulnerable to negative surprises.

In other words, in the absence of significant retail inflows, the equity market would be range bound rather than trending up. That, of course, ignores the elephant in the room: the Fed's injections of roughly $100BN in liquidity between repos and QE4 each month. But since JPM also happens to be the biggest recipient of such Fed intervention, it is understandable why the bank would rather not discuss what the real reason for the stock surge in late 2019 and early 2020 has been.

As for bonds, the implication would be that the bond market would remain supported, producing at least coupon-like returns "and yield curves would fail to steepen by as much as we envisaged for this year."

In all, as Panigirtzoglou summarizes, while he continues to believe that the Great Rotation still "has a decent chance of happening this year", he admits that "the fund flow picture is not yet consistent with this thesis"... and is 100%  consistent with our own thesis set forth in late November 2019, according to which JPM is dead wrong and that retail investors are now fully inert elements in a market dominated by the Fed and buybacks, and that what they do has absolutely no bearing - and has zero predictive insight - on the market.

Tyler Durden Sun, 01/19/2020 - 19:20

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The Ugly Truth About How Much Americans Have Been Spied On By The Gov’t Since 2001

The Ugly Truth About How Much Americans Have Been Spied On By The Gov't Since 2001

Authored by B.N.Frank via ActivistPost.com,

We’ve all heard about at least some of this before.  Thanks to Full Measure for producing this new segment reminding us about why this should tick us off. Independent journalist Sharyl Attkisson also provides an update about her own computer intrusion by the U.S. government in this video.

We begin with an examination of one of the worst abuses of government power that could happen in our society - Illegal spying on U.S. citizens.

Amid findings about egregious violations by our intelligence community, there’s a criminal investigation. And the court that approves surveillance on U.S. citizens has instructed the FBI to implement new safeguards as of this week. As our intelligence agencies face what may be their biggest scrutiny in decades, we examine how we got here.

Our examination of government surveillance controversies begins in 2001. Under FBI Director Robert Mueller, new rules were imposed to address FBI abuses.

FBI Agents had repeatedly gotten caught submitting false information to the Foreign Intelligence Surveillance Court to justify wiretapping or spying on U.S. citizens.

Unfortunately, increasing surveillance on non-consenting Americans by a variety of entities seems to be the new norm thanks to new and unsafe technology being forcibly installed throughout our communities (see 1234567) and even on our homes

Tyler Durden Sun, 01/19/2020 - 18:50
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Nadler Demands “All Witnesses Must Be Heard, Except Hunter Biden”, Chuck Todd Defends Parnas’ “Evidence”

Nadler Demands "All Witnesses Must Be Heard, Except Hunter Biden", Chuck Todd Defends Parnas' "Evidence"

NBC's Chuck Todd reconfirmed his role in the 'resistance' this weekend as he clashed with Senator David Perdue (R- G.A.) on Sunday over the upcoming impeachment trial and whether Lev Parnas should testify.

Perdue told Todd on NBC's "Meet the Press" that Parnas, a colleague of President Trump's attorney, Rudy Giuliani, shouldn't testify because his testimony would be considered "second-hand information."

"This is a distraction," Perdue said.

"This a person that's been indicted. Right now, he's out on bail. He's been meeting with the House Intel Committee. If the House felt like this information was pertinent, I would think they would have included him."

Todd fired back and said:

"How is it second hand? He was in Ukraine. He was doing the bidding," adding that Parnas has key "material evidence that might help connect some dots."

Perdue responded by saying Parnas is trying "to get his sentence reduced."

Perdue defended Trump's actions in Ukraine by indicating the administration was concerned about corruption involving an American citizen. He also rejected a suggestion by Todd that Trump was close to Parnas.

Parnas made the rounds on the mainstream media last week, stopping by none other than the Rachel Maddow Show Wednesday night to claim that he was sent to Ukraine at the order of Rudy Guiliani and Trump to uncover dirt on Joe Biden's son, Hunter Biden.

The schizophrenia is astonishing.

  • In October of 2019, European businessman, Lev Parnas, who claimed to have “explosive information about corruption involving Hillary Clinton and Joe Biden”, was arrested at Dulles airport on “campaign finance violations.”

  • And, now, just three months later, Parnas is dropping impeachment bombshells on Trump.

The interview came the same day the impeachment articles were delivered to the Senate.

Separately on Sunday, Nadler spoke with Brennan on CBS's "Face the Nation" that "in any trial, all relevant witnesses must be heard," except, Nadler added, for Hunter Biden, who should not be a witness in the impeachment trial because he does not know the allegations against the president.

So - to clarify the left's position on witnesses:

  • Parnas - who is at best a secondary witness and worst desperate for a deal to avoid prison - should be a witness "as he can connect the dots;"

  • but Hunter Biden - who is absolutely at the center of the whole debacle with regard corruption and Trump's decisions - shouldn't be a witness because "he has no knowledge of the accusations."

Once again the Dems ties themselves in circles after Pelosi slow-played the process - despite exclaiming how critical and urgent it was.

Senator Lindsey Graham (R- S.C.) held nothing back in his disgust at the political "malarkey" under way. In an interview with "Fox News Sunday" anchor Chris Wallace, graham blasted that House Speaker Nancy Pelosi (D- C.A.) had "orchestrated the trial of holy hell" against the president next week.

Graham said from day one, Pelosi and Democrats waged war against Trump.

"You took 48 days to impeach this president," he told Wallace.

"You did not allow him to call any witnesses. He could not have a lawyer present during the House Intel Committee. This has been a partisan railroad job. And you're asking for fairness in the Senate? You violated every norm of what we do."

Graham ended the interview by saying once the impeachment trial is over, the nation can start healing.

"This has been a political hit job. This is political revenge. What they're doing to the presidency is a danger to the institution itself," he warned.

The impeachment trial starts Tuesday, and this will be one of the most crucial moments of the Trump presidency as the Democrats have gone all-in.

Trump tweeted last week: "I JUST GOT IMPEACHED FOR MAKING A PERFECT PHONE CALL!"

Trump's legal team said Saturday the impeachment trial is "a dangerous attack on the right of the American people to freely choose their president."

"This is a brazen and unlawful attempt to overturn the results of the 2016 election and interfere with the 2020 election, now just months away," the legal team stated.

And one can't help but feel the Trump legal team and Graham are right when the schizophrenic blinkered perspectives of the House managers' media appearances (and liberal media acquiescence) is considered.  

Tyler Durden Sun, 01/19/2020 - 18:30
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Eric Peters: Peter Navarro Was Right – Tariffs Have Spurred Growth, Not Hampered It

Eric Peters: Peter Navarro Was Right - Tariffs Have Spurred Growth, Not Hampered It

Submitted by Eric Peters, CIO of One River Asset Management

“Conventional economic models ignore how Trump’s tariffs boost investment and national security,” wrote Peter Navarro, the President’s Director of Trade and Manufacturing Policy.

His Jan 13th WSJ opinion piece, like most things Navarro publishes, provide real insight into Trump policy/thinking. But Navarro is an annoying hothead, so most people dismiss him.

I’ve condensed his piece: “Critics of Trump’s transformational trade policies continue to insist that the tariffs are hindering rather than helping the boom. Yet with each new tariff the economy remains robust, wages continue to rise, and inflation stays muted (while the economic losses for China continue to grow).

Tariffs have spurred growth, not hampered it. Why have the gloom-and-doom forecasters been so wrong? The errors come from flaws in traditional economic models. Anti-tariff analysts typically rely on static "partial equilibrium" models. While a tariff on steel might boost employment in that industry, for example, the price of steel would rise for car makers downstream, which would then suffer lower production and fewer jobs.

Each tariff shrinks total employment, depresses wages, and increases inflation—or at least that’s how these forecasts typically go. Yet what is missing from these forecasts is a 'general equilibrium' analysis of tariffs, which would assess the whole economy, with a concomitant 'dynamic scoring' of their effects, to account for the new investment tariffs induce. Over time this tariff-induced investment, along with lower taxes and sensible deregulation, will boost growth and job creation. Higher domestic production will also help offset any price hikes from the tariffs.

Trump’s imposition of actual tariffs has made the threat of tariffs more credible, and a variety of tariff threats have borne robust results. In addition to missing the upside of supporting American industries, critics overlook the ways the US has suffered under open trade. Expanded trade with China in the 2000s contributed to the loss of tens of thousands of American factories and millions of manufacturing jobs and the hollowing out of many communities. What followed was an associated rise in the rates of divorce, drug addiction, crime, depression and death, particularly among blue-collar men no longer able to support their families at a decent wage.

The national-security externalities associated with Trump trade policy may be even more consequential. A case in point is the tariffs being used as leverage to defend America’s technological crown jewels from being forcibly transferred to Chinese companies—from artificial intelligence, robotics and autonomous vehicles to quantum computing and blockchain. These industries comprise the core of the next generation of weapons systems needed to repel threats from rivals like China, Russia and Iran.

One must ask the anti-tariff forecasters: Where are the benefits of a freer and more secure American homeland counted in your models? An honest, modern analysis of the Trump tariffs would acknowledge the widespread market distortions that currently disadvantage American workers, parse the complex ways tariffs affect trade partners’ behavior, appropriately discount short-term price impacts, and dynamically score the many long-term positive effects.

Tyler Durden Sun, 01/19/2020 - 18:10

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After Hilarious ‘Where’s Putin?’ Moment, Little Progress Made At Berlin Peace Conference On Libya

After Hilarious 'Where's Putin?' Moment, Little Progress Made At Berlin Peace Conference On Libya

Little was expected to come out of Sunday's Germany-hosted Libya peace conference, given several prior ceasefires have failed, and also given Gen. Khalifa Haftar sees his Libyan National Army (LNA) as having the military upper hand on the ground as his offensive against the GNA in Tripoli under Fayez al-Serraj continues. 

Predictably, Haftar balked at signing so much as a temporary truce in Berlin, but instead a mere 'ceasefire committee' has been established to reach a pause in fighting. To gain a sense of just how little was accomplished as world leaders — including Erdogan, Putin, Macron, Merkel, British Prime Minister Boris Johnson, and US Secretary of State Mike Pompeo  gathered in Berlin, one might note these lines from a Bloomberg brief post mortem: "Neither Sarraj nor Haftar were in the room for the summit on Sunday, and organizers were careful to ensure they did not cross paths in Berlin. Instead they were holed up for some of the day at separate hotels in the city."

However, world leaders did agree in theory to renew their commitment to a UN arms embargo on all sides of the Libya conflict — though this looks also immediately shaky as well given Turkish parliament recently approved sending military aid and troops to defend Tripoli's GNA, not to mention Syrian mercenaries being shipped into the war. Of course, the moment one side accuses the other of violating the embargo, any theoretical agreement will unravel before it's even enacted. So while the Berlin peace summit was in reality uneventful in impacting the military situation on the ground, there was one entertaining and interesting bright spot from the day. It came as the group of world leaders gathered for a photo op at the meeting's start, and is being dubbed the "Where's Putin?" moment:

Perhaps in unintended acknowledgement of just how crucial Putin's presence was to the proceedings (Russia is a key political backer of Haftar, while on the other side backing the GNA is Erdogan), German Chancellor Angela Merkel is seen for several moments looking around for Putin, while appearing to question those next to her, including Macron, over his whereabouts. President Putin then strolled in fashionably late alongside Italian PM Giuseppe Conte, and the minor "crisis" was averted. 

On a more serious note, the dividing lines on Libya were visible early in the proceedings, with Erdogan saying at the start of a meeting with Putin, "To implement the other stages of the political process and solution, Haftar's aggressive stance must come to an end." Erdogan had last week warned he would teach Haftar "a lesson" if he didn't halt the offensive on Tripoli. This after approving sending Turkish national troops to assist in the battle against Haftar. 

Erdogan-Putin meeting within the Berlin Conference on Libyan peace in Berlin, Germany on January 19, 2020.Via Turkish Presidency/ Anadolu Agency

Hitting back against the Turkish position on the conflict, France's Macron slammed the influx of foreign fighters into Libya. While not calling out Turkey directly, he expressed "acute concerns over the arrival of Syrian and foreign fighters in the city of Tripoli" which "must end" according to his remarks — a clear reference to Turkey after multiple reports have confirmed the transfer of at least 2,000 Syrian 'rebel' militants to the theater. 

German Foreign Minister Heiko Maas summarized the main thrust of the Berlin conference and continuing efforts at working toward a lasting ceasefire: "Europe and those players who are influential" have been called to Germany because "we have to make sure Libya doesn't become a second Syria".

Regrettably, in response to the German FM's point, no world leader stepped forward to point out the obvious — that neither Libya nor the world would be in this mess of witnessing a deadly Libya War 2.0 tearing the region apart in the first place if it hadn't been for the 2011 US-NATO regime change war to topple longtime secular autocrat  Muammar Gaddafi.

Tyler Durden Sun, 01/19/2020 - 17:50

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Bloomberg Journo Fabricates Bernie Sanders Quote About Buttigieg Having A ‘Gay Problem’

Bloomberg Journo Fabricates Bernie Sanders Quote About Buttigieg Having A 'Gay Problem'

In the latest example of MSM hackery, Bloomberg reporter Emma Kinery took it upon herself to fabricate a quote from Bernie Sanders (I-VA) to suggest that 2020 candidate Pete Buttigieg has a 'gay' problem.

During an interview with New Hampshire Public Radio, Sanders was asked if gender is "still an obstacle for female politicians," to which he replied: "yes, but I think everybody has their own set of problems. I'm 78 years of age, that's a problem ... If you're looking at Buttigieg, he's a young guy."

Except, Kinery - in a now-deleted tweet, quoted Sanders as saying:

"Buttigieg is young and Buttigieg is gay."

With no explanation or apology, Kinery deleted her tweet and re-tweeted a verbatim transcript:

Amazing!

Tyler Durden Sun, 01/19/2020 - 17:30

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The Question For 2020: Can Fundamentals Ramp Up Before Policy Fades

The Question For 2020: Can Fundamentals Ramp Up Before Policy Fades

Authored by Morgan Stanley's chief cross-asset strategist, Andrew Sheets

Markets are always subject to varied and shifting sets of drivers. Over the last 12 months, it has been a story of four – policy, sentiment, valuation and fundamentals. The question for 2020 is whether the last (fundamentals) can ramp back up before the first (policy) fades. It’s a race that makes us more nervous about the market after April and tactically mindful that several of our sentiment measures are now flashing red.

In the first phase of last year’s rally, policy, valuation and sentiment offset weak fundamentals. Global earnings revisions, trade volumes and manufacturing data all deteriorated sharply in early 2019. But the other three factors were still there, and in a big way. The Fed responded aggressively with easier policy via rate cuts. Valuations had adjusted meaningfully in late 2018, providing a more supportive base. And sentiment, if not universally negative, was a long way from optimistic.

Then, as markets rose, valuations fell by the wayside... By the middle of 2019, valuations for both global equities and credit had moved back above their five-year (and 10-year) averages. Fundamentals remained weak, which together with richer valuations might explain why global equities trod water between May and September. But thankfully (for the market), supportive policy and sentiment were hanging around. The Fed began increasing its balance sheet again at a US$60 billion/month clip in October, and measures of investor positioning remained subdued, reflecting continued concerns about fundamental weakness.

...and then sentiment melted away... With markets pushing higher into the new year, a wide variety of measures suggest a significant increase in optimism. Net length in S&P 500 futures contracts is the highest since 2014. The put/call ratio has plunged. Morgan Stanley’s Global Risk Demand Index (US Pat. No. 7,617,143), which measures ‘fear’ and ‘greed’, is near its highest levels in the last 10 years. And to put a human face on these datapoints, investor polling of the 160+ investors who attended our recent Global Insights Day in London this week was the most positive in years.

...which leaves policy. Whether or not the Fed intended to provide material easing when it restarted purchasing securities in October at a US$60 billion/month clip, that was the effect. Stocks rallied, credit spreads tightened further and the dollar fell, all easing financial conditions. But with valuations higher, sentiment positive and fundamentals still soft, policy is now carrying a heavy load.

And so the race with fundamentals begins

Our interest rate strategists expect the Fed to end its US$60 billion/month of T-Bill purchases at the end of April and replace them with US$15 billion/month of purchases across the Treasury curve. This ‘step-down’ in Fed support lends credence to the idea that gains in 2020 will be front-loaded.

The question will be whether fundamental improvement can get there first. Our economics team sees global growth rebounding and key parts of the manufacturing cycle picking up. But so far, we see this driving only a modest and highly uneven recovery in global earnings. One reason why we remain positive on equities in Korea and Japan is conviction that the earnings pick-up in these markets is real and can meet bottom-up consensus expectations.

But there’s also a risk that fundamental improvement has even less time. While the pace of increase in permanent assets on the Federal Reserve’s balance sheet should remain steady through April, my colleague Kelcie Gerson from our interest rate strategy team notes that the growth in reserves may be ending around now, as the Fed dials back on repo operations. If the size of reserves, rather than the balance sheet, is a better measure of policy support, fundamentals have even less time to pick up, and the current earnings season becomes more important.

Tyler Durden Sun, 01/19/2020 - 17:05

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“My Neighbourhood Is On Fire!!!” – Pipeline Explodes In Nigeria 

"My Neighbourhood Is On Fire!!!" - Pipeline Explodes In Nigeria 

According to Nigerian newspaper Vanguard News, a massive fire is raging at one of Nigeria National Petroleum Corporation's (NNPSC) pipelines in Abule Egba, a neighborhood in Lagos, Nigeria, although the state-owned oil corporation, NNPSC, has yet to report on the incident or if there was a disruption to its crude transportation. 

Besides Vanguard News, alleged video of the devastation surfaced on social media.

One Twitter handle said: "Fire service, please tell us what to do. Tell us what you've done. People are disturbed!!! My neighbourhood is on fire!!! Nigeria help !!!! Ekoro, Abule Egba, Pipeline. SOS SOS SOS !!!” 

Another user captured a massive fireball in the sky. 

Handle @IAMGFLOW2 tweets a picture of charred cars and possible structure fires, saying, "Several properties were said to have been consumed."

Handle @ConcernNigeriaC tweets a video of a massive fireball lighting up the sky with hundreds of people watching. 

Besides the various media reports, there is no incident report yet on any NNPSC's pipelines:

Tyler Durden Sun, 01/19/2020 - 16:40

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The Tight Rope Market

The Tight Rope Market

Authored by Sven Henrich via NorthmanTrader.com,

None of us can know where markets would be trading without the Fed’s constant massive liquidity injections, but now that the bubble recognition has gone mainstream (BloombergFT) and acknowledged by at least one Fed president (Kaplan) I think it’s fair to say: Lower, much lower.

But while investors continue to dance on the liquidity driven momentum rally right into major resistance currently ignored data keeps suggesting that risk is much higher than anyone is willing to acknowledge. Indeed these data points suggest investors may be walking a precarious tight rope without even realizing it.

I do my best to keep pointing out these data points, but so far admittedly in vain:

Since the Fed is currently hosting the most expensive frat party of all time it’s no wonder that investors are currently ignoring everything else consequences be damned.

I’ll let the reader be the judge, but below are a few charts I think are worth documenting as they highlight what investors are entirely ignoring at this stage.

And no I’m not talking about valuations. I’ve already made that point in the Ghosts of 2000, valuations are at records highs on many measures and that goes without saying. Valuations are high during any bubble, but rather there are underlying data trends that often precede coming recessions.

What recession? Everybody has declared recession risk to have faded. Why? Because stock prices have rallied to new all time highs? When has that ever be an indication that there is no recession risk ahead? Markets made new all time highs in the Fall of 2007. The recession started in December of 2007. Markets rallied to new all time highs in 2000. Did that mean there was no recession in 2001/2002? Of course now.

If anything high optimism is always a concern as it historically it is followed by, well, less optimism:

Yield curves have un-inverted and everybody declares recession risk to be over. Why?

The steepening has traditionally been the red flag ahead of a recession. Along with a slew of other data points that everybody is again ignoring.

In order for markets to grow into excessive valuations you need growth to follow suit. In order to see growth to emerge you need to see an expansion investment and credit.

Commercial and industrial loan growth shows none of that, it continues to decline:

Often associated with coming recessions it signals that companies are not as confident as markets who are hoping for a 2016 repeat. But then we didnt have a yield curve inversion and then steepening.

In context then it’s perhaps noteworthy that suddenly job openings have dropped hard, the most in this cycle:

This cycle remains very much long in the tooth and slowing employment growth is always a red flag at the end of a cycle. Where are the great new hiring plans?

May I remind everyone there’s a US election coming and this one may have consequences. I can’t predict elections, but depending on outcome it may bring about a  change in tax outlook.

Corporations surely must know that they were handed an unprecedented gift during the Trump presidency that may not last forever:

Uncertainty breeds risk and corporations may well hold off on big expansionary plans until after the election, especially considering that there a few signs that industrial production growth is picking up at this stage:

In fact, despite being awash in cash and in a tax nirvana corporations appear to dial it back on the buyback bonanza front:

As they do when they sense growth issues ahead (see 2007 into 2008).

On that note, here’s a little watched indicator, heavy weight truck sales:

Oddly enough that one dropped hard in front of the last 2 recessions following an aggressive ramp up. And it just did as well.

These data points are by far an exhaustive list, but they show a confluent picture of data points that suggest recession risk is not off the table. If anything they show factors that are entirely consistent with previous business cycles coming to an end.

And if this rally is all Fed driven, then it’s the Fed that will have brought about the final spurt of excess that will lead to an ugly reversion that could bring about the very recession it was so scared of in the first place.

It’s not like financial asset valuations versus the the underlying size of the economy are historically outsized or anything:

The New York Fed Nowcast keeps showing less than 2% GDP growth for Q4 2019 and Q1 2020. 1.2% and 1.7% respectively.

That’s the growth we get with a $400B expansion in the Fed’s balance sheet, 3 rate cuts and a trillion dollar deficit?

It’s almost as if the Fed’s power to stimulate growth is waning:

I submit investors, drunk at the latest Fed party, are walking a very tight rope. Who’s the designated driver once the party ends?

*  *  *

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Tyler Durden Sun, 01/19/2020 - 16:15

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Never Before Seen Market Complacency, As Everyone Goes Even More “All In”

Never Before Seen Market Complacency, As Everyone Goes Even More "All In"

Last weekend, we pointed out that according to the latest flow data as compiled by Deutsche Bank's Parag Thatte, virtually every segment of the market - from institutional to retail investors, and systematics such as quants, risk-parity, vol-targeters, and CTAs - were essentially "all-in" stocks (if you missed it, please read "Institutions, Retail And Algos Are Now All-In, Just As Buybacks Tumble").

Fast forwarding to today, when the S&P just had another impressive meltup week, sending the S&P more than 3% higher YTD and for the 11th consecutive year blowing the professional investing community out of the water (hedge funds have underperformed the S&P on every single day of 2020 so far)...

... we find that investors are, inasmuch as that is possible, even more "all in" stocks. So without boring readers with the same narrative as we laid out last weekend, for the simple reason that nothing has changed since then, here is a quick rundown the key charts showing just how vested (and invested) everyone is in stocks as of this moment.

We start with consolidated equity positioning, representing a weighted average of Z-scores for positioning and flows indicators used by Deutsche Bank in tracking its entire positional universe:

A somewhat simpler and perhaps more accurate take, one based on the aggregated equity futures positioning as a % of Open Interest, shows that asset managers and levered funds have never been longer!

A similar picture emerges when looking at just net positioning in S&P 500 futures among asset managers and leveraged funds.

Curiously, while Discretionary investors are almost at all time highs, if not quite, Systematic investors have now thrown all caution to the wind, perhaps as a result of the sharp drop in VIX Y/Y, and have never been more invested:

Among the systematics, the bullishness of risk parity is now almost literally off the charts.

Likewise for vol-control funds, these are at the maximum of their theoretical maximum equity allocation.

And while CTAs have had a higher beta to equities in the past, this too is rising fast and approaching the all time high.

In one ominous sign that we are taking the stairs higher and will take the parachute on the way down, the higher we get, the lower overall market liquidity gets.

Another ominous signal: hedge funds are unable to keep up with the meltup in the broader market, with hegde fund shorts dominating performance ever since the summer of 2018, and preventing the 2 and 20 community to keep up with the S&P500.

And as a result of the negative contribution from shorts which are once again outperforming the broader market, hedge fund beta is near the lowest in the four years.

As a result of aggressive central bank intervention which has effectively wiped out risk, extreme put-to-call ratios indicate near record complacency...

... as does collapsing implied vol and skew.

This has also led to near all time low short interest across single stocks and ETFs:

Meanwhile, the biggest conundrum of 2019 has carried over into 2020, as massive equity outflows persist and offset tremendous inflows in bonds as well as money market funds, suggesting the primary buyer remains stock buybacks...

... despite stable inflows into tech, real estate and utilities.

Last but certainly not least, the biggest concern for stocks is the precipitous decline in announced buybacks: without this single biggest buyer of stocks over the past 10 years, just who will propell stocks to new all time highs once sentiment reverse and marginal traders start dumping?

 

Tyler Durden Sun, 01/19/2020 - 16:00

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US Drug Overdose Deaths Drop For First Time Since 1990

US Drug Overdose Deaths Drop For First Time Since 1990

Authored by Paula Liu via NTD.com,

For the first time in nearly three decades, the deaths resulting from drug overdose in the United States have dropped, according to multiple reports.

As reported by The New York Times, according to government data that was published on Jan. 15, the total amount of deaths resulting from drug overdose dropped around 5 percent in 2019.

“[For the] first time in almost 30 years, we’ve seen a decline in the number of Americans dying from an overdose—its a 5 percent reduction,” said Jim Carroll, the director of the Office of National Drug Control Policy, according to The Hill.

The news outlet reported that Carroll was appointed director in 2018 by President Donald Trump.

“It’s a result of everything - its working on the supply of drugs that are coming in but it’s also working on demand. It’s getting more people into treatment and its spreading the message on prevention,” Carroll said.

Carroll commended some local officials for trying to look past incarceration as a means to solve the epidemic, and instead looking for ways to offer treatment. Instead of arresting drug users, the goal is to treat and educate them as an individual. Carroll stated that this method had made a difference in the community.

According to the report, the drop was primarily attributed to the number of deaths from prescription opioid drugs, one of the drugs that had set off an epidemic in the United States. The New York Times reported that the opioid epidemic was so catastrophic that the drug had decreased the life expectancy in the country.

The Centers for Disease Control and Prevention (CDC) stated that 67.8 percent of the drug overdose deaths back in 2017 (which was 70,237 deaths) was due to opioid drugs, according to data on drug overdose deaths. In addition, on average 130 Americans die every single day from an opioid drug overdose, according to the CDC.

As a result of the epidemic, some of the states have tackled the issue head on, and created programs to help counter the amount of deaths as a form of solution, according to The Hill.

Andrew Kolodny, the co-director of opioid policy research at Brandels University said that the drop in deaths could be a turning point, calling the decrease “light at the end of the tunnel,” but said that the decrease was still nothing to celebrate because the amount of people who died from drug overdoses is still very high, according to The New York Times.

Tyler Durden Sun, 01/19/2020 - 15:25

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MSNBC Promotes Biden Lie That Sanders ‘Doctored’ Video; Politico Debunks, Sirota Simmers

MSNBC Promotes Biden Lie That Sanders 'Doctored' Video; Politico Debunks, Sirota Simmers

Bernie Sanders and Joe Biden are having an old man fight.

In a January 7 newsletter, Sanders' campaign wrote that Biden "lauded" former Republican House Speaker Paul Ryan's efforts to cut social security - claiming "In 2018, Biden lauded Paul Ryan for proposing cuts to Social Security and Medicare."

In truth, Biden said that Ryan was "correct" to have gone after Social Security and Medicare - as it's "the only way" to make the numbers work, though the former VP later clarified that America needs a progressive tax code that "raises enough revenue to make sure that the Social Security and Medicare can stay - still needs adjustments, but can stay."

Watch:

After Sanders' campaign claimed that Biden lauded Ryan's plan, Biden lied - claiming Sanders 'doctored' the video.

"PolitiFact looked at it and they doctored the photo, they doctored the piece and it’s acknowledged that it’s a fake," Biden falsely claimed.

Politifact didn't say the video was doctored, though they did suggest that Sanders had mischaracterized Biden's comments. Interestingly, Politifact omits Biden's mention that Social Security and Medicare would 'still need adjustments.'

Sanders' campaign hit back in a Saturday statement from Campaign Manager Fritz Shakir, who said "Joe Biden should be honest with voters and stop trying to doctor his own public record of consistently and repeatedly trying to cut Social Security," adding "The facts are very clear: Biden not only pushed to cut Social Security — he is on tape proudly bragging about it on multiple occasions."

Biden, meanwhile, said on Saturday "It is simply a lie, that video that’s going around. And ask anybody in the press, it’s a flat lie. They acknowledged that," adding "This is a doctored tape. And I think it’s beneath him. And I’m looking for his campaign to come forward and disown it. But they haven’t done it yet."

Politico set the record straight on Saturday, noting that the video was not doctored, and that Biden has a "long-standing record of entertaining cuts" to the programs - only for MSNBC to peddle the 'doctored video' accusation on air. Sanders speechwriter David Sirota called them out over Twitter on Sunday.

And on it goes...

In short:

Tyler Durden Sun, 01/19/2020 - 15:00

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How The Supreme Court Could Be Pulled Into The Trump Impeachment

How The Supreme Court Could Be Pulled Into The Trump Impeachment

Authored by Jonathan Turley,

After its 2000 decision in Bush v. Gore, Justice David Souter reportedly “wept” when the role of the Supreme Court was raised in determining the outcome of the presidential election.

The court continues to grapple with the legacy – and controversy – of that decision. With the still developing Senate trial in President Trump’s impeachment, the court could soon be pulled into the flip side of Bush v. Gore, not who could be declared but who should be removed as president.

Despite what Trump counsel Rudolph W. Giuliani has declared in calling for the court to nullify the impeachment, the Constitution does not state any function of the court in impeachments other than the limited role of the chief justice as the presiding judge. That suits most justices just fine. Most justices would prefer to drink molten lead than get pulled into another presidential legitimacy case.

Yet, the Trump impeachment trial may force that cup to the lips of the justices. With a trial starting in the Senate on Thursday, the looming question over the Senate will be whether to allow witnesses. While I strongly disagreed with the House in rushing this impeachment forward rather than waiting a couple of months to complete its record, I still support a trial with witnesses in the Senate. If witnesses are called, however, the court could be forced to finally face a question more than 50 years in the making.

In 1974, the Supreme Court ruled in United States v. Nixon and ordered the release of the Watergate tapes to special prosecutor Leon Jaworski – and ultimately to Congress. Nixon resigned roughly two weeks later. That case has spawned a variety of interpretations of its rejection of executive privilege, including one interpretation I call the “Nixon fallacy.” The fallacy goes something like this:

Impeachment so exceeds in importance executive-privilege claims that the Supreme Court has already declared that criminal or impeachment investigations take precedence over privilege so any withholding of testimony or documents is per se obstruction.

In reality, the Supreme Court never said anything like that.

Yes, the court rejected what it described as the claim of an “absolute, unqualified Presidential privilege of immunity” to withhold relevant evidence in a criminal investigation. But it did not say that a president could not invoke privilege over the testimony in an impeachment proceeding or that such privilege assertions could not ever prevail. Indeed, it did not even categorically reject such claims in a criminal investigation but simply said that “without more” of a justification from Nixon, the tapes would have to be turned over to the Watergate special prosecutor.

A national security adviser speaking to a president about the delivery of military aid to a foreign country is the very definition of a core protected area of executive privilege. That does not mean the White House would win in a fight over John Bolton’s testimony. However, it does mean Trump has a viable and recognized basis for withholding information in this area – creating an issue capable of judicial review and resolution.

So, here is one scenario. The Senate crosses the Rubicon and both sides call witnesses from Bolton to Hunter Biden to give depositions. While Biden would not be able to refuse to testify absent a Fifth Amendment plea (which could be overcome by a grant of immunity), the White House would try to halt Bolton’s participation under a claim of privilege. The White House would presumably push the case into the federal district court, which would have to review each area of questioning to determine if executive privileges or congressional prerogatives should prevail. Appeals would follow. And all that assumes the Senate is willing to wait for those courts to rule.

The problem is time. It took only three months to litigate the Nixon tapes controversy from the district court to a final decision of the Supreme Court. By refusing to delay the impeachment vote, the House effectively gave up control of its own case. The Senate may have little time or patience to allow the House to correct that blunder.

In my view, Bolton should testify. Indeed, he should have been subpoenaed in the House. There are valid privilege claims to be raised, but he can clearly answer questions narrowly tailored to the issue of a quid pro quo.

The only body less eager to grapple with those claims than the Senate is the Supreme Court. The aversion is only enhanced by the possibility of recusal of Chief Justice John G. Roberts Jr. in any appeal, leaving the court with a risk of a tie vote on a critical impeachment question. Over a decade after she ruled in Bush v. Gore, Sandra Day O’Connor was still expressing regrets and wondered aloud, “Maybe the court should have said, ‘We’re not going to take it, goodbye.'”

But that may be difficult when the Senate is waiting roughly 1,500 feet away for an answer on what Bolton might say. Three branches of government would literally be locked in a constitutional hold with the curious figure of Bolton sitting in the center. Before he speaks, the court may have no alternative but to be heard.

Tyler Durden Sun, 01/19/2020 - 14:35

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FL-20200119-70518-BRA – Flood – Brazil – South-America

Flooding and landslides triggered by torrential rains have claimed six lives in southeast Brazil, firefighters said Saturday.Footage on social media showed streets in Espirito Santo state turned into rivers and cars being swept away by raging, muddy water.In one clip, the water almost reaches the roof of a gas station.The fatalities happened in the towns of Iconha and Alfredo Chaves, with three deaths in each town. In the latter, two of the victims were elderly people who died after a landslide engulfed their home in mud.Officials said that in just 24 hours, Alfredo Chaves recorded the ...

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Syrian Jihadists Filmed Jet-Setting To Next Proxy War On Commercial Plane

Syrian Jihadists Filmed Jet-Setting To Next Proxy War On Commercial Plane

Turkish President Recep Tayyip Erdogan has continued warning that terrorist groups as well as a 'flood of refugees' will show up on Europe's shores if the Tripoli government were to fall to renegade General Khalifa Haftar, amid his continued offensive to control the Libyan capital. Erdogan's statement came a day before he heads to Berlin for a major peace conference which will attempt to halt the fighting. 

And yet look who's sending actual jihadists into the already war-ravaged country on comfortable commercial jets:

Middle East media outlet Arab News describes the footage as follows:

A video has emerged showing dozens of what appear to be Syrian rebels on an Afriqiyah Airways plane headed to Libya where they will allegedly fight alongside the country’s Government of National Accord (GNA), Libyan newspaper Al-Shahid has claimed.

In the video, the men — three of whom were seen wearing military uniforms — are on their way to Libya where they will reportedly fight as mercenaries for the GNA’s militias.

The shocking video of what is supposed to be a "covert" Turkey-sponsored mission to bolster the Tripoli GNA government with both Syrian jihadist FSA mercenaries (and separately Turkish national troops) confirms new reporting in The Guardian this week.

According to the bombshell Guardian report:

Two thousand Syrian fighters have traveled from Turkey or will arrive imminently to fight on the battlefields of Libya, Syrian sources in all three countries have said, in an unprecedented development that threatens to further complicate the north African state’s intractable civil war.

The deployment came after Turkey agreed last month to come to the aid of the Libyan prime minister, Fayez al-Sarraj, who is backed by the UN, in the face of a months-long campaign by his rival, the warlord Khalifa Haftar.

This perhaps makes Erdogan's latest 'warning' appear something more like a 'threat' in which he's the one actually holding the trigger

“Europe will encounter a fresh set of problems and threats if Libya’s legitimate government were to fall,” Erdogan said.

“Terrorist organisations such as ISIS [ISIL or Daesh] and al-Qaeda, which suffered a military defeat in Syria and Iraq, will find a fertile ground to get back on their feet,” he continued. “Keeping in mind that Europe is less interested in providing military support to Libya, the obvious choice is to work with Turkey, which has already promised military assistance,” Erdogan added.

Erdogan has long claimed Turkey's intervention in Libya is to "combat terrorism" — which for Ankara means defeating pro-Haftar forces. 

Meanwhile, journalist for The Sunday Times Hala Jaber has noted Turkey's latest foreign adventurism includes sending the same "guns for hire" once used to try and oust Assad to Libya.

Or we might even say many foreign fighters are going "back" to Libya, given in the early years of the Syrian war many thousands of jihadists from North Africa were allowed to enter northern Syria via Turkey to assist in the Western/Gulf military alliance in regime change efforts there. 

* * * 

Libyan Islamists backed by the West toppled Gaddafi and destroyed much of the country in the 2011 war. Here they are posing at Tripoli's international airport in 2014 after capturing and destroying airplanes

The rebel group Libyan Dawn in a 2014 bid to take Tripoli's airport, via Daily Mail.
Tyler Durden Sun, 01/19/2020 - 14:10

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MSNBC Slammed For Featuring ‘Body Language Expert’ Who Calls Bernie Sanders A Liar

MSNBC Slammed For Featuring 'Body Language Expert' Who Calls Bernie Sanders A Liar

Authored by Jon Queally via CommonDreams.org,

MSNBC and weekend anchor Joy Ann Reid came under fire from progressives and members of the Bernie Sanders campaign Saturday after airing a segment with a "body language expert" who — citing "eye level" and the turtling of the 2020 candidate's shoulders — accused Sanders of lying earlier this week when he denied ever telling Sen. Elizabeth Warren that a woman could not be president.

"This is unhinged,tweeted Meagan Day, a staff writer for Jacobin magazine, in response to the segment. "Genuinely divorced from reality."

MSNBC weekend anchor Joy Ann Reid host invited Janine Driver on her show Saturday morning. Image source: MSNBC/Screenshot

The guest on Reid's show "AM Joy" was Janine Driver, who promotes herself as an "international communications expert" and the owner and president of the Body Language Institute. The segment sparked howls of criticism aimed at Driver, Reid, and the network.

Driver, who bills herself as a "body language expert," accused Sen. Bernie Sanders of being a liar on national television because he "turtles" his shoulders and lowers his "eye level" when he says certain things.

"So now the slant is that he's physically intimidating too, oh and sexist," said writer and activist Malaika Jabali. "Totally cool, normal interpretation of someone being spontaneously confronted on national TV. It's getting outrageous."

While both the Warren and Sanders camp have appeared desirous to put the dust-up about what was or wasn't said during a private 2018 meeting behind them, Day — who openly supports Sanders as the better and more progressive candidate — was among those unwilling to disarm so long as the corporate media outlets continue to air such blatant and irrresponsible attacks to their massive audiences.

"I know there's a big push to move on but if the mainstream media is gonna broadcast this fraudulent garbage," said Day, "then I don't feel particularly compelled to drop it."

She was hardly alone.

"MSNBC is a fucking disgrace," said journalist Glenn Greenwald of The Intercept. Greenwald said the use of "bullshit charlatan body language analysis" to call Sanders a liar was "appalling but typical" of the network.

Driver's performance in the interview led many to check her credentials, political leanings, and background:

Media critic Adam Johnson noted, "just to be clear 'body language experts' aren't actually a thing and MSNBC should stop having them on all the time in general."

Johnson — who has long documented the corporate media's bias against Sanders as a presidential candidate — added:

Sanders' national press secretary Briahna Joy Gray also denounced the segment and said the "campaign is owed an apology" by the network.

"What are they going to do next, phrenology?" Gray said. "This is why no one trusts the media."

Tyler Durden Sun, 01/19/2020 - 13:45

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IMF Chief Warns Global Economy Faces New “Great Depression”

IMF Chief Warns Global Economy Faces New "Great Depression"

How's this for some New Years optimism?

The new head of the IMF, who took over from Christine Lagarde in November, warned that the global economy could soon find itself mired in a great depression.

During a speech at the Peterson Institute, IMF Chairwoman Kristalina Georgieva compared the contemporary global to the "roaring 20s" of the 20th century, a decade of cultural and financial excess that culminated in the great market crash of 1929.

According to the Guardian, this research suggests that a similar trend is already under way, and though the collapse might not be around the corner, when it comes, it will be impossible to avoid.

While the inequality gap between countries has closed over the last two decades, the gap within most developed countries has widened, leaving millions more vulnerable to a global downturn than they otherwise would have been.

In particular, she singled out the UK for criticism: "In the UK, for example, the top 10% now control nearly as much wealth as the bottom 50%. This situation is mirrored across much of the OECD (Organisation for Economic Co-operation and Development), where income and wealth inequality have reached, or are near, record highs."

She also warned about the potential for climate change to become a bigger obstacle for humanity, while increased trade protectionism instills more volatility in markets.

She added: “In some ways, this troubling trend is reminiscent of the early part of the 20th century – when the twin forces of technology and integration led to the first gilded age, the roaring 20s, and, ultimately, financial disaster."

She warned that fresh issues such as the climate emergency and increased trade protectionism meant the next 10 years were likely to be characterised by social unrest and financial market volatility.

"If I had to identify a theme at the outset of the new decade, it would be increasing uncertainty," she said.

Of course, the IMF isn't the first institution to try and gird the global financial system against the affects of climate change. It also isn't the first international institution to warn Britain about the possible economic fallout from Brexit.

Back in December, the Bank of England said it would set up "tough" climate stress tests for banks and insurers in the UK. The tests would involve three different scenarios stretching out over decades.

However, critics quickly pointed out that the tests would essentially be toothless. Regardless of whether institutions pass or fail, the results will initially only be published in aggregate without naming individual institutions, though the BoE hasn't ruled out naming and shaming in the future.

While geopolitical tensions are back in the headlines thanks to Iran, Hong Kong, and a rash of protest movements around the world, few would argue that the bull market that dominated the last decade was in any way impacted by geopolitics. Instead, the market largely ignored geopolitical tensions, and allowed itself to be carried ever-higher by a flood of easy money from central banks.

This is further evidenced by the fact that, every time the Fed has tried to wean the American economy off of rock-bottom interest rates or the central bank's ever-expanding balance sheet, markets have reacted with fury.

Having considered all of this, we'd like to present another scenario: if Trump loses in November, and the Fed regains the courage to raise interest rates now that President Trump isn't around to publicly browbeat and humiliate them, that might be enough to send markets into a tailspin, even if the Dems take the 'market friendly' road and nominate Joe Biden.

Tyler Durden Sun, 01/19/2020 - 13:20

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