Three vaccine 'science' fraudsters who should probably be (or already have been) in jail: Poul Thorsen, Paul Offit and Henry Miller
With Janet Yellen due to speak in under an hour (in a speech that will be a big dud because as SocGen notes, "little emphasis on the monetary policy outlook is expected at this event"), a recurring question is why does the market remain so nonchalant about the possibility of a rate hike as soon as one month from now.
One of the better explanations on the matter comes from Citi's Steven Englander, according to whom it boils down to the market's sentiment about what happens with the Fed's hiking path after the first hike. As the Citi strategist points out, this is merely the latest feedback loop the Fed has found itself trapped in:
Asset markets have done very well since the fed funds market began pricing in a summer hike. The question is why? We think that investors are trading the equation
an extra 2016 hike but very little else + better Q2 growth data = stronger asset markets
The question is whether this is a sustainable equation. Better growth, if sustained, is likely to induce more hikes. If we go from ~2.5% GDP in Q2 to 1.5-2% subsequently, we are likely to unwind the recent optimism.
Or maybe we won't, because the only thing more bullish than a hawkish Fed is a dovish Fed. Let's assume for the sake of this argument that the market is, like it was in December, fixated on the favorable "growth" outcome as a result of an upcoming rate hike (something with Jeff Gundlach mocked two days ago), as the alternative of yet another Fed policy error may be just too much of a shock. Here is why Eglander is cautious in reading this interpretation:
On the better sustained growth/faster hiking scenario, the slope of the Fed’s policy rate path will steepen. This will be another challenge to commodity and EM currencies. It may well turn out that a modestly steeper path of Fed hikes does not damage global growth prospects or asset prices a lot, but that is not likely to be the immediate response.
Alternatively if the hiking path reflects the expectation that better growth is temporary, the recent strength of US asset markets may come into question. The shallow path of hikes now priced in will not take the Fed away from the danger zone of a negative shock pushing them into the incipient negative policy rate. So a resumption of 1-2% growth rates after a solid Q2 may sap the confidence that markets have displayed in recent weeks.
In other words, the market is confident that the Fed's rate hike itself will be enough to stop any more rate hikes, irrelevant of the data. What the market is forgetting however is that the rate hikes in early 2016 were delayed not so much because of the data, which was already deteriorating as the Fed hiked, but because of the market's reaction. As such, the "market" is hoping to skip the critical step where it sells off to delay even more tightening. That however is the very problem the market, which no longer can discount anything, would create.
Consider the chart below which shows from bottom to top how many bps of hikes has been added fed funds expectations for July 16 (light blue), Dec 16 (dark blue), Dec 17 (red) and Dec 18 (green). We have 15 extra bps now for the rest of 2016 and only 21 or 22 for the next two years. And obviously there has been no change of expectations for 2018 relative to 2017.
As Englander points out, "literally since the trough of fed funds the market has not even added a full hike over the next three years and about 70% of what has been added is in 2016. By contrast when lift-off expectations were priced into fed funds last October, the outyears moved much more than the near contracts. This suggests that the market then saw liftoff as signaling a steepening of the pace of fed hikes, whereas the recent move is add one but no accelerated pace beyond."
Or, on other words, one and done. Cue Englander:
The scenario that the market seems to be buying is that the signs of growth that we are seeing will embolden the fed to one but no more additional hike. The rationale may be that EM currency weakness will deter the Fed in the future, although that is not clear. If we look at asset price performance since May 9, oil (dotted green), equities (thick dotted blue), and high yield (solid dark blue) have done the best. EM equities (solid light blue), and non-oil commodities (red) are up but not quite as much. EM currencies overall (solid grey) and non-CNY Asia (dotted thin blue) are down. It is possible that the outperformance of US asset reflects an assessment that the hike won’t damage US growth prospects a lot but could lead to underperformance in EM assets. This is, of course, a very speculative explanation for the lack of conviction that on future fed hikes, despite their reiteration of the 2+ hikes scenario in various speeches and discussions.
Whether this is true or not, and whether the Fed's rate hike will only damage the "global environment" while leaving the US and domestic corporate profits unscathed, is unclear but what the market makes very clear is that it itself is confident none of that will impact the market itself. What the market is also forgetting most of all, is that the only "data" the Fed is dependent on is the "Dow Jones" - in other words, if the market is pricing in no more rate hikes, it itself will have to crash, a step which the market is hoping it can simply skip at this moment.
Head spinning from all this reflexivity yet? Good.
How does all this get resolved? Here is Englander with the longer explanation:
The way to reconcile these asset price moves is either 1) investors see a temporary pick up in US activity (GDP ~2.5%), but will fall back in H2 to around trend without any significant inflation move, 2) US activity will be ok but not great and the spillover into the rest of the world will be negative enough to deter further hikes.
It is also possible that the outcome is a compromise between optimists who see an extended period of 2.5% GDP growth and the 2-3 hikes that come with it and pessimists who see ongoing soft outcomes and FOMC worries about drifting into recession. Anecdotally, it is hard to find any client or colleague who feels that economic outcomes we will be on the knife edge that the market is pricing - just good enough to prevent disaster but not good enough for anything beyond token subsequent hikes.
But it would seem to us that the equity outcome in the weighted average view is a lot less positive. There are few S&P 2500 optimists even at 2.5% growth but plenty of S&P 1600 or less pessimists on the negative scenario.
Bottom line – one more and pretty much done is unlikely to be as risk positive as recent asset market prices action suggests. But it may allow EM to bounce back a bit once the snail pace of Fed hikes is restored as the baseline expectation. We do not think that EM is as vulnerable to two hikes a year as pessimists argue, but the transition to pricing in two hikes a year is likely to be rocky, even if the EM ultimately bounces back.
That was the long way of saying the market is currently overpriced for precisely the event it is trying to price in, and not correctly accounting for the path of future rate hikes.
The short one is far simpler, and goes back to the chart we showed a week ago.
In short, the only thing that can prompt the Fed to delay a rate hike is neither the global nor the local economy, but the market itself... which because it is back at 2100 shows no interest in actually prompting the Fed's move that it is "pricing in." Finally remember: the Fed needs more "non-asymmetric" buffer so, according to its thinking, it can cut rates more aggressively (and from a higher point supposedly) when the next recession hits.
"I'm Going To Stick With This Right To The End" - French President Hollande Threatens Union Protesters
French president Francois Hollande is not bending to pressure by labor unions trying to force the government to retract unpopular labor laws that were recently forced through parliament. Unions have gone on strike in order to shut down refineries, and have blocked fuel distribution with barricades and pickets in hopes that the economy will suffer enough to get the government to back off the reforms. In response, the government is now sending police in riot gear to break up the blockades.
The unions, as they intended, are certainly having an impact. Fuel shortages intensified as 30 percent of the country's 12,200 stations across the country are short of fuel and Total SA, France's largest oil company said that 346 out of it's 2,200 French gas stations are completely out of stock, while 395 lack some fuels according to Bloomberg.
Walkouts at Electricite de France SA cut more than 5,000 megawatts of combined output at a dozen nuclear reactors on Thursday (but have since returned to normal on Friday), and unions have gone on strike at all 8 French oil refineries, with Total reporting that five of its refineries have been completely halted.
In response to the actions, Prime Minister Manuel Valls told the unions that continued disruptions would be dealt with "extremely firmly", and president Hollande has shown no signs of letting up on the new laws. Hollande warned protesters that he would not let them strangle the economy, perhaps taking comfort in the fact that consumer confidence surged to the highest level since 2007.
"I'm going to stick with this because I think it's a good reform. This is not a moment to endanger the French recovery."
Hollande further added "We can't accept that there are unions that dictate the law. As head of state, I want this reform. It fits with everything we have done for four years. I want us to go right to the end."
Indeed, it will be a bitter fight between Hollande and the unions to get this situation resolved. CTG union boss Philippe Martinez said the strikes will continue until the labor law is reformed.
"We'll see this through to the finish, to withdrawal of the labor law. This government which has turned its back on its promises and we are now seeing the consequences."
In another important development, oil tankers at the country's biggest oil port (the Fos-Lavera oil port in southern France) are still waiting to unload, and the backlog is growing. According to Reuters, 38 oil tankers are queued up waiting to unload at the port Friday, up from 12 the previous day. To make matters worse, members at the CIM oil terminal at the port of Le Havre which handles 40 percent of French crude imports voted to extend their strike until Monday.
- UNION OFFICIAL SAYS MANAGERS HAVE REOPENED PIPES TO SUPPLY CRUDE TO EXXON MOBILREFINERY, FUEL TO PARIS AIRPORTS
As Reuters reports, at least some relief has come since police started to break up barricades. In the Seine Maritime region North of Paris, local government official Nicole Klein said the number of petrol stations without fuel had fallen significantly and rationing orders have been lifted.
- *TOTAL: 659 FRENCH STATIONS OUT OF GAS AT 5PM VS 815 YDAY
In addition to the economic issues, there has been violence as well. As hundreds of thousands of protesters have taken to the streets, hundreds of police have been hurt and more than 1,300 arrested according to Reuters. Most recently, protesters attacked a police station and smashed bank windows on Thursday during rallies against the reform. According to the Interior Ministry, seventy seven people were arrested during the rally in which more than 150,000 marched.
France is hosting the Euro 2016 soccer tournament in two weeks, and with already dwindling popularity, the last thing Hollande wants voters to draw upon during elections next year is such a huge event being a disaster because labor reforms were forced through parliament without a vote. It will be interesting to see which side blinks first in this standoff, but at the moment it appears that nobody is willing to budge.
Federal investigators revealed another blow to Detroit Public Schools this week. Meet Carolyn StarkeyDarden - the system’s former grant-development director - who has just been charged on suspicion of obtaining nearly $1.3 million by lying about children’s tutoring services. As The Burning Platform's Jim Quinn rages, this is called the “No School Administrator Left Behind” Program.
As CNN reports, Carolyn StarkeyDarden set up a company and allegedly ran a scheme between 2005 and 2012 in which she submitted fake invoices for tutoring services that were never provided to students, according to charges filed by the U.S. Attorney’s Office in Michigan’s Eastern District.
StarkeyDarden, 69, was charged Monday with federal program theft, for which she could receive up to 10 years in prison and fines of up to $250,000 if convicted.
“Ms. StarkeyDarden cheated the students of Detroit Public Schools out of valuable resources by fraudulently billing for her company’s services,” said David P. Gelios, special agent in charge of the FBI in Detroit. “In fact, Detroit students were cheated twice by this scheme.
“Students that needed tutoring never received it, and money that could have been spent on other resources was paid to Ms. StarkeyDarden as part of her fraud scheme.”
Calls made by CNN to StarkeyDarden and her lawyer were not immediately returned Wednesday evening.
The charge is not the first to be leveled this year against school officials in Michigan’s most populous city.
In March, 13 principals were charged with bribery in an alleged kickback scheme, the U.S. Attorney’s Office said.
A vendor paid bribes and kickbacks to the principals to allow their schools to be charged for supplies that were never delivered, authorities say.
These charges are compounded by ongoing fights by the teachers for pay in the financially ailing school district, as well as deterioration in “hazardous” schools.
In May, the 47,000 students in Detroit Public Schools went for days without their teachers after a “sick-out” protest was held by the educators, concerned that they would be unpaid by a school district that has $500 million of operating debt.
The utter corruption of liberal led, union controlled school districts in urban ghetto kill zones across America is disgusting to behold. The Democratic party controls every one of these shithole cities and is 100% responsible for the administration of these criminal school districts. They matriculate functionally illiterate dumbasses into society while enriching themselves with taxpayer money.
Vote for Hillary if you want more of this. And of course the liberal MSM wouldn’t possibly put a picture of this despicable human being in their story, so we found one.
Is that raciss?
Very few people know this about me.
But, despite me being 37 years old, I actually have a little sister who recently turned 18 and just graduated from high school.
Technically she’s my half-sister– after my parents got divorced, my father remarried and had another child when I was 19.
We have a great relationship, and I visited her last week when I was in the US to discuss the inevitable dilemma that all young people face: what’s next?
Naturally, the dominant expectation for her is to go to university where the average young person in the Land of the Free walks away with $50,000 in debt.
And, by the way, that student debt is almost impossible to discharge.
So even if you’re forced to declare bankruptcy later in life, your student debt will continue to haunt you forever.
Student debt is really nothing more than a fancier form of indentured servitude.
It keeps people chained to jobs they hate where they have little prospect of personal or professional growth all so that they can keep making those monthly payments.
What’s really ironic is how many of these student loans are owned by the US government.
In fact, according to the Treasury Department’s annual financial statements, the US government’s #1 financial asset is student debt.
That’s really sad.
Now, clearly there are instances where university education can generate a fantastic return on investment, or at least get a foot in the door.
And there are certain professions (like medicine) where it’s absolutely vital.
But expensive degrees and success in life don’t always go hand-in-hand.
Real success depends almost invariably on one’s ability to create value, whether as an employee, business owner, artist, humanitarian, etc.
And in order to create value, it’s critical to have the necessary skills. Execution. Managing people. The ability to sell. Investment management. Etc.
Many of these vital skills simply aren’t taught in a university environment.
I’ve long felt that the best way to learn critical skills is the traditional way: mentorship.
In the past, young people would become apprentices to established merchants, craftsmen, and professionals, and they would learn the trade on the job directly from people who had mastered it.
This system worked for thousands of years until our society apparently ‘evolved’.
So instead of what worked so well in the past, today we expect an 18-year old kid to know exactly what s/he wants to do for the next fifty years, and then make a life-altering financial decision to take on debilitating, non-dischargable debt in exchange for a piece of paper doesn’t actually confer any tangible skills.
This seems like a raw deal. So, I offered a bit of advice to my little sister:
Get out of your comfort zone and travel. For a few thousand dollars you can generate an exceptionally high return on investment—you’ll learn so much about the world and its opportunities.
Only when you can truly see what’s out there with your own eyes will you be educated enough to make a decision about which direction to take your life.
More importantly, travel and exploration will help develop two of the most important attributes that are critical to success: persistence, and the ability to cope with uncertain outcomes.
2) Seek mentorship.
Find someone who inspires you and who you aspire to be. Then, make yourself indispensable to that person and do whatever it takes to learn.
Sleep on the floor. Offer to carry their suitcase. Work for free. Whatever it takes to spend some time around them and learn.
Be willing to pay the price with your time and energy. But the return on investment will be enormous.
Increase your chances of success by finding other people who are one to two degrees away personally or professionally from your target.
For example, maybe you aspire to be like Warren Buffett.
But if you can’t land Uncle Warren as a mentor, research other successful value investors who are in Buffett’s concentric circles.
This would be people like Prem Watsa, Howard Marks, Jean-Marie Eveillard, etc.
3) Look abroad.
Part of being a Sovereign Man is expanding your thinking beyond borders and making the whole world your oyster.
So if you absolutely, positively feel the need for a university environment, then look overseas for lower cost options.
For example, you can attend one of the best universities in Europe (where Albert Einstein went to school in Switzerland) for less than $600 per semester.
There are dozens of fantastic options overseas.
You’ll receive a fantastic education, great international experience, develop critical language skills, AND save a LOT of money.
Even if you’re terrified of having a degree from a foreign university, then at least try it for a year or two.
Then, if you really feel compelled to have a piece of paper from your home country, you can always transfer your credits and complete your degree back home.
4) Time is your most valuable asset.
You’re only young once. This is the only time in your life where you don’t have any obligations– no mouths to feed, no mortgage to pay, no employees to look after.
Don’t waste your time and freedom indulging in endless leisure activities or posting pictures of your latest dessert on Instagram.
This is the time to truly learn… to put your heart and soul into building the knowledge, skills, and character that can set you up for the rest of your life.
Make it count.
In order to press his individual agenda of preserving optionality to intervene in the FX market and push the Yen lower (using increasingly more desperate measures), Japan's Prime Minister had just one task in the latest G-7 meeting: to have the Group of Seven leaders warn of the risk of a global economic crisis in the final communique issued as the summit wrapped earlier today in Japan.
He failed. In fact, the final statement went the other way and declared that G-7 countries "have strengthened the resilience of our economies in order to avoid falling into another crisis. The global recovery continues, but growth remains moderate and uneven, and since we last met downside risks to the global outlook have increased," the statement says. "Weak demand and unaddressed structural problems are the key factors weighing on actual and potential growth."
The communique urged a coordinated, albeit differentiated, response to storm clouds gathering over the global economy. Leaders pledged to use a mix of tools depending on their circumstances.
The G-7 statement compromised on the austerity-versus-stimulus debate by leaving each country’s road map open - saying they will take "into account country-specific circumstances" as they move to use "all policy tools, monetary, fiscal and structural, individually and collectively to strengthen global demand and address supply constraints while continuing our efforts to put debt on a sustainable path."
As Bloomberg adds, Japan had pressed G-7 leaders to note "the risk of the global economy exceeding the normal economic cycle and falling into a crisis if we did not take appropriate policy responses in a timely manner." On Thursday, Abe presented documents to the G-7 indicating there was a danger of the world economy careering into a crisis on the scale of the 2008 Lehman shock.
This is not surprising: this past weekend we wrote that following the G-7 meeting of finance ministers and central bankers which also took place in Japan, Japan ended up 'humiliated" due to a "sharp rift over Yen intervention" with Jack Lew and the rest of the G-7 making it abundantly clear that Japan no longer has sole authority over its own monetary policy. The reason: fears that any unilateral action by Japan, such as the country's still inexplicable descent into NIRP, would push China over the edge and lead to another uncontrolled round of global currency turmoil.
Meanwhile, the kindergarten that is Japan's government finds itself increasingly the laughing stock of the world. As a reminder, Abe has frequently said he would proceed with a planned increase in Japan’s sales tax in April 2017 unless there is an event on the scale of Lehman or a major earthquake. He is expected to announce next week he is deferring the tax rise, Japanese media reported.
However, the lack of the G-7 endorsing his gloomy version of the world, has made the Japanese PM lose even more face with the global community because while Japan will certainly delay the sales tax increase, it now has lost its doomsday justification for doing so.
Abe can thank China for being relegated to the very bottom of the developed world scrap heap. According to Glenn Maguire, Asia-Pacific chief economist at Australia & New Zealand Banking Group, "Asia is feeling the brunt of the Chinese slowdown given its trade exposure, with a more marginal impact so far on the U.S. and Europe."
"Hence it is not entirely surprising that a coordinated response to an unevenly felt dynamic could not be reached at the G-7 negotiating table," Maguire said. "Moreover, the G-7 is obviously aware of the ‘announcement effect’ the official communique has,” he said. "In such a situation, warning of negative risks and sentiment can become self-fulfilling."
The biggest irony is that Abe is absolutely correct in asking for a warning, however just like in Europe's relentless war against Grexit in the 2010-2014 period, the mere admission that this was a possibility would create a self-fulfilling prophecy that would accelerate the process.
We have now gotten to the point where the world's leaders are too scared to admit the truth over fears it will merely accelerate its inevitable arrival.
“Something startling is happening to middle-aged white Americans. Unlike every other age group, unlike every other racial and ethnic group … death rates in this group have been rising, not falling.”
The big new killers of middle-aged white folks? Alcoholic liver disease, overdoses of heroin and opioids, and suicides. So wrote Gina Kolata in The New York Times of a stunning study by the husband-wife team of Nobel laureate Angus Deaton and Anne Case.
Deaton could cite but one parallel to this social disaster: “Only H.I.V./AIDS in contemporary times has done anything like this.”
Middle-aged whites are four times as likely as middle-aged blacks to kill themselves. Their fitness levels are falling as they suffer rising levels of physical pain, emotional stress and mental depression, which helps explain the alcohol and drug addiction.
But what explains the social disaster of white Middle America?
First, an economy where, though at or near full employment, a huge slice of the labor force has dropped out. Second, the real wages of working Americans have been nearly stagnant for decades.
Two major contributors to the economic decline of the white working-class: Scores of millions of third-world immigrants, here legally and illegally, who depress U.S. wages, and tens of thousands of factories and millions of jobs shipped abroad under the label of “globalization.”
Another factor in the crisis of middle and working class white men is the plunging percentage of those who are married. Where a wife and children give meaning to a man’s life, and to his labors, single white men are not only being left behind by the new economy, they are becoming alienated from society.
“It’s not surprising,” Barack Obama volunteered to his San Francisco high-donors, that such folks, “get bitter, they cling to guns or religion or antipathy to people who aren’t like them…”
We all have seen the figure of 72 percent of black children being born out of wedlock. For working class whites, it is up to 40 percent.
A lost generation is growing up all around us.
In the popular culture of the ’40s and ’50s, white men were role models. They were the detectives and cops who ran down gangsters and the heroes who won World War II on the battlefields of Europe and in the islands of the Pacific.
They were doctors, journalists, lawyers, architects and clergy. White males were our skilled workers and craftsmen — carpenters, painters, plumbers, bricklayers, machinists, mechanics.
They were the Founding Fathers, Washington, Adams, Jefferson and Hamilton, and the statesmen, Webster, Clay and Calhoun.
Lincoln and every president had been a white male. Middle-class white males were the great inventors: Eli Whitney and Thomas Edison, Alexander Graham Bell and the Wright Brothers.
They were the great capitalists: Andrew Carnegie and John D. Rockefeller, Henry Ford and J. P. Morgan. All the great captains of America’s wars were white males: Andrew Jackson and Sam Houston, Stonewall Jackson and Robert E. Lee, U.S. Grant and John J. Pershing, Douglas MacArthur and George Patton.
What has changed in our culture? Everything.
The world has been turned upside-down for white children. In our schools the history books have been rewritten and old heroes blotted out, as their statues are taken down and their flags are put away.
Children are being taught that America was “discovered” by genocidal white racists, who murdered the native peoples of color, enslaved Africans to do the labor they refused to do, then went out and brutalized and colonized indigenous peoples all over the world.
In Hollywood films and TV shows, working-class white males are regularly portrayed as what was once disparaged as “white trash.”
Republicans are instructed that demography is destiny, that white America is dying, and that they must court Hispanics, Asians and blacks, or go the way of the Whigs.
Since affirmative action for black Americans began in the 1960s, it has been broadened to encompass women, Hispanics, Native Americans the handicapped, indeed, almost 70 percent of the nation.
White males, now down to 31 percent of the population, have become the only Americans against whom it is not only permissible, but commendable, to discriminate.
When our cultural and political elites celebrate “diversity” and clamor for more, what are they demanding, if not fewer white males in the work force and in the freshman classes at Annapolis and Harvard?
What is the moral argument for an affirmative action that justifies unending race discrimination against a declining white working class, who have become the expendables of our multicultural regime?
“Angry white male” is now an acceptable slur in culture and politics. So it is that people of that derided ethnicity, race, and gender see in Donald Trump someone who unapologetically berates and mocks the elites who have dispossessed them, and who despise them.
Is it any surprise that militant anti-government groups attract white males? Is it so surprising that the Donald today, like Jess Willard a century ago, is seen by millions as “The Great White Hope”?
In a stunning reversal for an organization that rests at the bedrock of the modern "neoliberal" (a term the IMF itself uses generously), aka capitalist system, overnight IMF authors Jonathan D. Ostry, Prakash Loungani, and Davide Furceri issued a research paper titled "Neoliberalism: Oversold?" whose theme is a stunning one: it accuses neoliberalism, and its immediate offshoot, globalization and "financial openness", for causing not only inequality, but also making capital markets unstable.
There are aspects of the neoliberal agenda that have not delivered as expected. Our assessment of the agenda is confined to the effects of two policies: removing restrictions on the movement of capital across a country’s borders (so-called capital account liberalization); and fiscal consolidation, sometimes called “austerity,” which is shorthand for policies to reduce fiscal deficits and debt levels. An assessment of these specific policies (rather than the broad neoliberal agenda) reaches three disquieting conclusions:
- The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.
- The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.
- Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.
Wait... you mean that the IMF becoming, gasp, Marxist? Did last summer's dramatic interaction with Greece and its brief but memorable former Marxist finance minister, Yanis Varoufakis, leave such a prominent mark on the IMF's collective subconsiousness, that it is now overly rejecting the tenets on which the IMF was originally founded?
Let's read on for the answer.
Here is a very notable segment on "globalization" aka financial openness:
In addition to raising the odds of a crash, financial openness has distributional effects, appreciably raising inequality. Moreover, the effects of openness on inequality are much higher when a crash ensues .
It gets better:
The mounting evidence on the high cost-to-benefit The mounting evidence on the high cost-to-benefit ratio of capital account openness, particularly with respect to shortterm flows, led the IMF’s former First Deputy Managing Director, Stanley Fischer, now the vice chair of the U.S. Federal Reserve Board, to exclaim recently: “What useful purpose is served by short-term international capital flows?” Among policymakers today, there is increased acceptance of controls to limit short-term debt flows that are viewed as likely to lead to—or compound—a financial crisis. While not the only tool available—exchange rate and financial policies can also help—capital controls are a viable, and sometimes the only, option when the source of an unsustainable credit boom is direct borrowing from abroad.
The IMF then goes full-Magic Money Tree and reverts back to a mode first observed several years ago when it said that not only is austerity bad, but that unlimited debt issuance is probably good.
Markets generally attach very low probabilities of a debt crisis to countries that have a strong record of being fiscally responsible. Such a track record gives them latitude to decide not to raise taxes or cut productive spending when the debt level is high. And for countries with a strong track record, the benefit of debt reduction, in terms of insurance against a future fiscal crisis, turns out to be remarkably small, even at very high levels of debt to GDP. For example, moving from a debt ratio of 120 percent of GDP to 100 percent of GDP over a few years buys the country very little in terms of reduced crisis risk.
But even if the insurance benefit is small, it may still be worth incurring if the cost is sufficiently low. It turns out, however, that the cost could be large—much larger than the benefit. The reason is that, to get to a lower debt level, taxes that distort economic behavior need to be raised temporarily or productive spending needs to be cut—or both. The costs of the tax increases or expenditure cuts required to bring down the debt may be much larger than the reduced crisis risk engendered by the lower debt. This is not to deny that high debt is bad for growth and welfare. It is. But the key point is that the welfare cost from the higher debt (the so-called burden of the debt) is one that has already been incurred and cannot be recovered; it is a sunk cost. Faced with a choice between living with the higher debt—allowing the debt ratio to decline organically through growth—or deliberately running budgetary surpluses to reduce the debt, governments with ample fiscal space will do better by living with the debt.
Of course, what both the IMF and the Magic Money Tree lunatics fail to grasp, is that the only reason debt interest hasn't exploded in a world that has never had more debt (a process that inevitably ends in war) is thanks to central bank monetization of said debt, and third party investors frontrunning said central banks. Let's revert to the "low costs of debt" if and when runaway inflation forces central banks to reverse what has been a 30+ year process that started with the great moderation and will end either with helicopter money (and thus hyperinflation) or central banks owning every single assets (and thus the death of capitalism.
But back to the IMF's rant, just in case the IMF's dramatic U-turn on its support for a neoliberal agenda was not clear, here is another reiteration:
In sum, the benefits of some policies that are an important part of the neoliberal agenda appear to have been somewhat overplayed. In the case of financial openness, some capital flows, such as foreign direct investment, do appear to confer the benefits claimed for them. But for others, particularly short-term capital flows, the benefits to growth are difficult to reap, whereas the risks, in terms of greater volatility and increased risk of crisis, loom large. In the case of fiscal consolidation, the short-run costs in terms of lower output and welfare and higher unemployment have been underplayed, and the desirability for countries with ample fiscal space of simply living with high debt and allowing debt ratios to decline organically through growth is underappreciated.
The IMF's punchline:
[S]ince both openness and austerity are associated with increasing income inequality, this distributional effect sets up an adverse feedback loop. The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth.
And here is the IMF doing the unthinkable, and waving to Marx:
The evidence of the economic damage from inequality suggests that policymakers should be more open to redistribution than they are.
As a reminder, this is taking place just days after the St. Louis Fed admitted the Federal Reserve itself is, indirectly, a primary reason for the current record wealth inequality thanks with its focus on the "wealth effect" and boosting asset prices.
* * *
What is the conclusion from all this? Perhaps that the push for global wealth redistribution, and an end to conventional capitalism, is in the works.
How this transition takes place is unknown: whether by government decree, by regime change, by a - paradoxically - global government (one in which the IMF would be delighted to administer global monetary policy) to rein in globalization, or simplest of all, by helicopter money, is still unclear.
Whatever it is, something is coming, because for a stunning paper such as the one below to be published, it certainly had to be vetted not only at all executive levels of the IMF, but was surely preapproved by all legacy financial institutions.
And that should be the basis for great concern.
Here is the original IMF paper "Neoliberalism: Oversold?" (IMF)
Central Banks Need to either go all the way with Policy Goals, or get out of financial asset purchases altogether. The current stop and start cycling sets the financial markets up for huge crash scenarios every ten years.
Gold is perhaps the most maligned asset class in the world.
On an almost weekly basis the financial media mocks Gold and publishes articles claiming it is a terrible investment.
It’s rather odd, as less than 1% of investors actually owns Gold. Why is it so important to trash an asset class that almost no one actually owns?
Actually, forget that question, I’d like to see answers to these questions instead…
If owning Gold is such a bad idea…
· Why are Central Banks buying it?
· Why do we rank countries based on the Gold reserves they own?
If the goal for Central Banks is to generate inflation… why is owning Gold stupid?
Regarding that last point, global Central Banks have completely abandoned the façade that they are trying to generate growth.
The Bank of Japan’s Kuroda even admitted indirectly that QE and ZIRP couldn’t work. Mario Draghi never even uses the word “growth” anymore. And the Fed is concentrating on “inflation targets” because GDP growth is impossible.
Put simply: Central Banks care concentrating on inflation. The reason for this is because they’ve finally come clean that their primary concern is the bond bubble, NOT the real economy.
Gold is perhaps the best inflation hedge in the world. During the last inflationary binge in the ‘70s it staged on the biggest bull markets in history.
So… with Central Banks pushing for inflation… and inflation turning up in the US… why is owning Gold a mistake?
Inflation is back. And Gold and Gold-related investments will be exploding higher in the coming weeks.
We just published a Special Investment Report concerning a secret back-door play on Gold that gives you access to 25 million ounces of Gold that the market is currently valuing at just $273 per ounce.
The report is titled The Gold Mountain: How to Buy Gold at $273 Per Ounce
We are giving away just 100 copies for FREE to the public.
To pick up yours, swing by:
Chief Market Strategist
Phoenix Capital Research
There has never been a more destructive central banking policy than the Fed’s current maniacal quest to stimulate more inflation and more debt. That’s what is killing real wages and economic vitality in flyover America - even as it showers prodigious windfalls of unearned wealth on Wall Street and the bicoastal elites who draft on the nation’s vastly inflated finances.
In fact, the combination of pumping-up inflation toward 2% and hammering-down interest rates to the so-called zero bound is economically lethal. The former destroys the purchasing power of main street wages while the latter strip mines capital from business and channels it into Wall Street financial engineering and the inflation of stock prices.
In the case of the 2% inflation target, even if it was good for the general economy, which it most assuredly is not, it’s a horrible curse on flyover America. That’s because its nominal pay levels are set on the margin by labor costs in the export factories of China and the EM and the service sector outsourcing shops in India and its imitators.
Accordingly, wage earners actually need zero or even negative CPI’s to maximize the value of pay envelopes constrained by global competition. Indeed, in a world where the global labor market is deflating wage levels, the last thing main street needs is a central bank fanatically seeking to pump up the cost of living.
So why do the geniuses domiciled in the Eccles Building not see something that obvious?
The short answer is they are trapped in a 50-year old intellectual time warp that presumes that the US economy is more or less a closed system. Call it the Keynesian bathtub theory of macroeconomics and you have succinctly described the primitive architecture of the thing.
According to this fossilized worldview, monetary policy must drive interest rates ever lower in order to elicit more borrowing and aggregate spending. And then authorities must rinse and repeat this monetary “stimulus” until the bathtub of “potential GDP” is filled up to the brim.
Moreover, as the economy moves close to the economic bathtub’s brim or full employment GDP, labor allegedly becomes scarcer, thereby causing employers to bid up wage rates. Indeed, at full employment and 2% inflation wages will purportedly rise much faster than consumer prices, permitting real wage rates to rise and living standards to increase.
Except it doesn’t remotely work that way because the US economy is blessed with a decent measure of free trade in goods and services and virtually no restrictions on the flow of capital and short-term financial assets. That is, the Fed can’t fill up the economic bathtub with aggregate demand because it functions in a radically open system where incremental demand is as likely to be satisfied by off-shore goods and services as by domestic production.
This leakage through the bathtub’s side portals into the global economy, in turn, means that the Fed’s 2% inflation and full employment quest can’t cause domestic wage rates to rev-up, either. Incremental demands for labor hours, on the margin, are as likely to be met from the rice paddies of China as the purportedly diminishing cue of idle domestic workers.
Indeed, there has never been a theory so wrong-headed. And yet the financial commentariat, which embraces the Fed’s misbegotten bathtub economics model hook, line and sinker, disdains Donald Trump because his economic ideas are allegedly so primitive!
The irony of the matter is especially ripe. Even as the Fed leans harder into its misbegotten inflation campaign it is drastically mis-measuring its target, meaning that flyover American is getting an extra dose of punishment.
On the one hand, real inflation where main street households live has been clocking in at over 3% for most of this century. At the same time, the Fed’s faulty measuring stick has led it to keep interest pinned to the zero bound for 89 straight months, thereby fueling the gambling spree in the Wall Street casino. The baleful consequence is that more and more capital has been diverted to financial engineering rather than equipping main street workers with productive capital equipment.
As we indicated in Part 1, even the Fed’s preferred inflation measuring stick——the PCE deflator less food and energy—has risen at a 1.7% rate for the last 16 years and 1.5% during the 6 years. Yet while it obsesses about a trivial miss that can not be meaningful in the context of an open economy, it fails to note that actual main street inflation—led by the four horseman of food, energy, medical and housing—–has been running at 3.1% per annum since the turn of the century.
After 16 years the annual gap, of course, has ballooned into a chasm. As shown in the graph, the consumer price level faced by flyover America is now actually 35% higher than what the Fed’s yardstick holds to be the case.
Stated differently, main street households are not whooping up the spending storm that our monetary central planners have ordained because they don’t have the loot. Their real purchasing power has been tapped out.
To be sure, real growth and prosperity stems from the supply-side ingredients of labor, enterprise, capital and production, not the hoary myth that consumer spending is the fount of wealth. Still, the Fed has been consistently and almost comically wrong in its GDP growth projections because the expected surge in wages and consumer spending hasn’t happened, causing it to double-down on the very policies that are generating the problem.
Even using the standard, understated CPI, real household income has been falling on an irregular basis since the turn of the century. That apparently does not phase the FOMC because their faulty model says they only thing that counts is spending—-even if from borrowed money and levered-up balance sheets.
Indeed, the Keynesian bathtub model is so primitive that households could be buried in twice today’s debilitating debt level—say $28 trillion versus the actual level of $14.2 trillion—and it would make no difference whatsoever. The more they borrowed, the higher would go the consumer spending and GDP computations.
In fact, however, real household income has plunged by 20% since the turn of the century when nominal incomes are deflated by our Flyover CPI. The chart-picture below actually explains better than the proverbial “thousand words” why the Fed is failing on the economic front and Donald Trump is succeeding in the political arena.
We will have more to say in future installments about how the Fed’s destructive policies are squeezing the purchasing power of main street wages and salaries, but in light of today’s release of more bad data on manufacturing shipments, which was falsely spun as positive news by the MSM, it is worthwhile to look at one of the key precursors of wage and salary income.
Needless to say, the rate of capital investment profoundly impacts the competitive position of flyover zone workers versus the rest of the world. Yet today’s release on April orders and shipments for core manufacturers CapEx (less defense and aircraft) not only documented that this so-called recovery is rolling over; it actually nailed our indictment of Fed policy to the wall.
As shown in the chart below, orders and shipments are now down nearly 12% and 10%, respectively, from their September 2014 cycle high. You can’t call double-digit declines evidence of escape velocity.
But here is the more startling thing. Manufactures’ CapEx today is no higher than it was in the spring of 1999!
Yes, $4 trillion worth of Fed money printing ago (when its balance sheet was less than $500 billion) the monthly rate of capital spending in nominal terms was higher than it is today. And in inflation-adjusted dollars, it has descended into the sub-basement.
Where has all the investment gone?
Funnily enough, Goldman Sachs explained it about as well as anyone. The share of corporate cash flow being pumped back into the casino in the form of stock buybacks and dividends is now at an all-time high of nearly 50%—-or nearly double its turn of the century level.
And even that understates the case because the overwhelming share of M&A deals are driven purely by financial engineering based on cheap debt and purchase accounting games with post-acquisition earnings. The truth is, upwards of 60% of projected S&P 500 cash flow for 2016 will be cycled back into Wall Street according to Goldman projections.
That’s about $1.3 trillion, and the reason is hardly subject to dispute. Fed policy has turned the C-suites of corporate America into stock trading rooms. Investments in flyover zone businesses which might pay-off 5 years from now can hardly compete with stock option winnings next quarter.
Indeed, Fed policy has had a double whammy effect on the flyover zone economy. It drove inflation up when down was needed; and its strip-mined capital from American business when increased capital investment was of the essence.
Despite all the Fed’s palaver about “low-flation” and undershooting its phony 2% target, American workers have had to push their nominal wages higher and higher just to keep up with the cost of living.
But in a free trade economy the Fed’s wage-price inflation treadmill was catastrophic. It drove a wider and wider wedge between US wage rates and the marginal source of goods and services supply in the global economy.
Accordingly, at the end of the day it was the Fed which hollowed out the American economy. Without the massive and continuous inflation it injected into the US economy, nominal wages would have been far lower, and on the margin far more competitive with the off-shore.
That’s because there is a significant cost per labor hour premium for off-shoring. The 12,000 mile supply pipeline gives rise to heavy transportation charges, logistics control and complexity, increased inventory carry in the supply chain, quality control and reputation protection expenses, lower average productivity per worker, product delivery and interruption risk and much more.
In a sound money economy of falling nominal wages and even more rapidly falling consumer prices, American workers would have had a fighting chance to remain competitive, given this significant off-shoring premium. But the demand-side Keynesians running policy at the Fed didn’t even notice that their wage and price inflation policy functioned to override the off-shoring premium, and to thereby send American production and jobs fleeing abroad.
Needless to say, that giant blunder has gut-punched flyover America at its most vulnerable spot. That is, among workers with less than a college education.
And contrary to establishment propaganda, the devastating decline in the employment/population ratio shown below is not due to an aging demographic. The over 65 population’s workforce participation rate has actually soared.
The latter trend probably explains where Wal-Mart finds its greeters.
But both lines on the chart surely point to where the Donald is finding his voters.
UMich Consumer Confidence Fades From Early May Exuberance, Inflation Expectations Slump To Record Lows
Having spiked magnificently (and surprisingly) to 11-month highs (from 7-month lows) with May's preliminary print at 95.8 (driven by a massive spike in 'hope'), today's final print of 94.7 (still an 11-month high) dropped from preliminary and missed forecasts. Expectations faded notably from 87.5 prelim to 84.9 final - still an 11-month high for 'hope'. However, despite the hype in the hope, short- and long-term inflation expectations tumbled with 5-10Y outlook now at record lows.
So no higher highs in confidence and lower lows in inflation expectations... get back to work Ms. Yellen.
Prepping? You should be thinking about what you might need.
But focusing all your time and energy on the wrong priorities can leave you just as ill-prepared as if you had done nothing at all.
City Prepping shares his top 6 priorities for being ready – starting with the most obvious necessities and working towards an expanded plan for survival in case of the worst.
Whether or not you agree with his specific order of operations, starting with a solid foundation and working towards the more extravagant possibilities is a good way to plan and develop skills.
Becoming fully prepared is an ongoing process and will undoubtedly require a lot of effort on your part, but starting here will make sure you can survive most situations, as further steps will cover the less likely “what ifs.”
Check out the video:
- Water is an absolute necessity, and drinking unsanitary water will make you sick. Make sure you have plan to have enough clean water. Store it, treat it, purify it, have access to it. How much water do you need? 1 gallon per person per day for drinking, cooking, sanitation and the like. Water preservative can help keep it long term, and make sure it doesn’t become contaminated.
- Storable Food. Extra food can be built up gradually a few cans at a time, and rotated out. Get items that you would actually eat, and balance your needs between protein, fats and carbs. Many canned foods have lots of extra sodium, which requires more water to balance out. In the event of a power outage or other emergency, eat the perishable foods you have on hand first, since they will of course go bad soonest.
- -How will you cook your food? Keep extra fuel and useful stoves, grills, etc. on hand that aren’t reliant on the electric grid, or far away resources that would take a lot of effort to gather or obtain.
- -Where to store food an water? Basements, closets, under stair storage space, etc. to keep it cool and away from sunlight.
- Medical care preps, supplies, equipment and, of course, skills. First aid kits and basic medical skills, including C.P.R., are essential. Know how to handle major and minor cuts, stop bleeding and keep wounds from becoming infected. Learn how to clear an airway, when and how to use a tourniquet and take classes from your local medical authorities if you can. Know how to treat shock, since it is very common during stressful situations – and basically anything that falls under SHTF.
- Having cash on hands. If/when the grid goes down, credit cards and online payment systems will be out altogether.
- Securing your home. The widespread instability will leave countless people desperate and willing to invade your home and/or attack your family or group. Avoid conflict when possible, but have firearms and other weapons to defend your family, your preps and your property. What type of gun is best for you is a matter of preference, training and the amount you are willing to invest; however, ideally you would want a rifle or shotgun as well as a handgun, among other options. Train and continue to train as much as possible.
- Prepare to bug out (but don’t leave unless it becomes necessary). Bugging out early and without need could put you in greater danger of exposure to the elements or bad circumstances, and your home may be the best place to stay. Nevertheless, you should have your bug out bag and plan ready to go, and execute when the time is right. It should provide all your vital needs for 72 hours, and will be different for each person and geographic area.
Tailor this list to your own specific needs, and do your due diligence to be ready for whatever may come.
Stay vigilant and protect those that you love.
Reprinted from HumanProgress.com
Three years ago, a well-known American leftist, David Sirota, wrote the following in a Salon essay titled Hugo Chavez’s economic miracle,
Chavez became the bugaboo of American politics because his full-throated advocacy of socialism and redistributionism at once represented a fundamental critique of neoliberal economics, and also delivered some indisputably positive results… When a country goes socialist and it craters, it is laughed off as a harmless and forgettable cautionary tale about the perils of command economics. When, by contrast, a country goes socialist and its economy does what Venezuela’s did, it is not perceived to be a laughing matter – and it is not so easy to write off or to ignore.
Last Sunday, Nicholas Casey of The New York Times reported in an article Dying Infants and No Medicine: Inside Venezuela’s Failing Hospitals,
By morning, three newborns were already dead. The day had begun with the usual hazards: chronic shortages of antibiotics, intravenous solutions, even food. Then a blackout swept over the city, shutting down the respirators in the maternity ward. Doctors kept ailing infants alive by pumping air into their lungs by hand for hours. By nightfall, four more newborns had died… The economic crisis in this country has exploded into a public health emergency, claiming the lives of untold numbers of Venezuelans.
I start with these rather long quotations with a heavy heart. Contrary to Sirota’s glib prediction, I do not intend to laugh off as “harmless and forgettable” Venezuela’s “cautionary tale about the perils of command economics.” I do not find dying children laughable. But then, I did not laugh when I read about starving Ukrainians eating their children during Stalin’s Holodomor. I did not laugh when I read of Khmer Rouge soldiers shooting infants off their bayonets in communist Cambodia. And I certainly did not laugh when I saw with my own two eyes children reduced to starvation by the Marxist dictator of Zimbabwe, Robert Mugabe. In fact, there is nothing laughable about the almost incomprehensible degree of suffering that socialism has heaped upon humanity wherever it’s been tried.
As much as I would like to enjoy rubbing Sirota’s nose in his own mind-bending stupidity, I cannot rejoice for I know that Venezuela’s descent into chaos – hyperinflation, empty shops, out-of-control violence and the collapse of basic public services – will not be the last time we hear of a collapsing socialist economy. Looking into the future, it is safe to predict that more countries will refuse to learn from history and give socialism “a go”. And, I am equally certain that there will be, to use Lenin’s words, “useful idiots,” like David Sirota, who will sing socialism’s praises until the moment when the last light goes out and time comes for them to move on and find something else to write about. And that begs an important question: considering that socialism has failed wherever it has been tried, why do we persist in trying to make it work?Evolutionary psychology provides one plausible answer. According to Professors John Tooby and Leda Cosmides of the University of California, Santa Barbara, human minds evolved in the so-called “Environment of Evolutionary Adaptedness” between 1.6 million and 10,000 years ago. “The key to understanding how the modern mind works,” Cosmides writes, “is to realize that its circuits were not designed to solve the day-to-day problems of a modern [humans] – they were designed to solve the day-to-day problems of our hunter-gatherer ancestors.” In other words, modern skulls house Stone Age minds. So what are some of the characteristics of these Stone Age minds and what do these characteristics tell us about the way we understand economics?
- First, we evolved in small groups. We knew each other and were, probably, related to each other. In a world without specialization and trade, gains by one group, “us,” tended to come at the expense of another group, “them.” That makes it difficult for us to understand and appreciate gains from complex economic activities, such as global trade.
- Second, like many other animals, we have evolved to form hierarchies of dominance. And, like other animals, we resent those at the top and form coalitions to displace them. Our resentment of hierarchies includes not only zero-sum hierarchies, like dictatorships, which channel resources to the top, but also positive-sum hierarchies, like corporations, which improve human lives.
- Third, the “social nature of hunting and gathering, the fact that food spoiled quickly, and the utter absence of privacy,” Will Wilkinson writes, meant that “the benefits of individual success in hunting or foraging could not be easily internalized by the individual, and were expected to be shared. Envy of the disproportionately wealthy may have helped … those of lower status on the dominance hierarchy guard against further predation by those able to amass power.”
Put differently, humans are, by nature, envious, resentful and unable to comprehend, let alone appreciate, a sophisticated economic system that has evolved in spite of, not because of, our best efforts.For these and other reasons, people like Sirota wax lyrical about Venezuela, while ignoring examples of true success in the global economy. Chile is one such example. In the 1970s, Chile switched from socialism to free markets and thrived. In 1973, which was the last year of socialist rule, average per capita income in Chile was 37 percent that of Venezuela. By 2015, Venezuela’s average per capita income was 73 percent that of Chile. The Chilean economy has expanded by 231 percent. Venezuela’s has contracted by 12 percent. With any luck, Nicolas Maduro, Chavez’s successor will soon be gone, and the people of Venezuela will be able to fix their broken country. They should look to Chile as an example to follow.
As a kid Steve Rees played in caves and learned how the earth could cool. As an adult, he buried two shipping containers and created an off-grid retirement home for himself and his wife Shirley.
This home in Northern California cost Steve and his family $30,000, solar included, and their 640-square-foot space cost them less than $50 per square foot. They accomplished this by hiring an excavator and doing most of the work themselves.
Oh, and they haven’t had any city water or electric bills since 2002. Their well is powered with solar, and a bit of propane and solar tubes give them most of their light.
As Kirsten Dirksen shares, “Winter temperatures in their home (even during 20 degrees outside) never fall below 62 degrees (an RV catalytic heater is sufficient for heating). Even when the temperature rises to 110 outside in the summer, their home has never risen above 82 degrees.”
Check out the video tour! What do you think?
If you want to learn more about shipping container homes, check out this free shipping container shelter guide by my friend Dan Carpenter at The Daily Prep.
Also check out the Earth-Sheltered homes entry in the Self-Reliance Catalog for three more case studies of earth-sheltered homes.
Original story here.
The post Earth-Cooled, Underground Shipping Container Home for $30K appeared first on Walden Labs.
In a world where fundamentals don't matter, everyone's attention will be on Janet Yellen who speaks at 1:15pm today in Harvard, hoping to glean some more hints about the Fed's intentionas and next steps, including a possible rate hike in June or July. And with a long holiday in both the US and UK (US bond market closes at 2pm today), it is no surprise overnight trading volumes have been dreadful, helping keep global equities poised for the highest close in three weeks; this won't change unless Yellen says something that would disrupt the calm that’s settled over financial markets.
Traders are now predicting a higher than 50% chance of an increase in July, so a misstep by Yellen risks upsetting a lull that has sent currency volatility to the lowest since January.
Looking at global markets, stocks were poised for the steepest weekly advance in more than a month on speculation financial risks around the world have eased. The dollar rose versus most peers, pushing oil lower with WTI falling below $49 after rising above $50 for the first time since NOvember yesterday. The British pound was the biggest gainer among major currencies this week on growing confidence the U.K. will remain in the European Union. As emerging markets rebounded, Russia and Qatar returned to international debt markets for the first time in at least three years.
Opinions about what Yellen would say varied from one extreme to the other.
"It will be a difficult task for Yellen," said Ulrich Leutchmann, head of currency strategy at Commerzbank AG in Frankfurt. “The discussion today will center around her past achievements and not on actual monetary policy, but if she doesn’t give any hawkish signal, many in the market will interpret this as dovishness given recent hawkish comments" by other Fed officials.
Elsewhere, Ralf Zimmermann, a strategist at Bankhaus Lampe, said that "today certainly all investors’ eyes will be on Yellen,” said “The Fed is obviously willing to increase rates. But it is more a risk than a chance for stocks. I was surprised with the recent strength.”
Also chimed in Mark Lister, head of private wealth research at Craigs Investment Partners, who said that "wwe are still a little cautious. Yellen is likely to continue with the rhetoric of wanting to hike and that’s their plan. Equity markets still offer value on a medium-term basis and it’s certainly the only place where you’re getting any sort of yield. We’d welcome a pullback because that would give us a chance to do some buying at more reasonable prices.”
Others, most notably Jeff Gundlach, disagreed with expectations for a hawkish Yellen. The DoubleLine CEO said he expects a dovish speech from Yellen and predicts the Fed will refrain from raising interest rates in June unless traders in the futures market assign a probability of at least 50 percent to such a move.
In short: nobody has any clue as usual what happens next, and certainly not the Fed.
As nothed above, market moves have been subdued. The MSCI AC World Index rose 0.1% in early trading, leaving it up 2.1 percent for the week. The Stoxx Europe 600 Index slipped 0.2% trimming a third weekly advance, with trading volumes 37 percent below the 30-day average before holidays in the U.K. and U.S. on Monday. Futures on the S&P 500 rose 0.1%, with the index up 1.8% this week, its biggest increase in more than two months.
- S&P 500 futures down less than 0.1% to 2089
- Stoxx 600 down less than 0.1% to 349
- FTSE 100 up less than 0.1% to 6268
- DAX down less than 0.1% to 10264
- S&P GSCI Index down 0.7% to 368.9
- MSCI Asia Pacific up 0.6% to 128
- Nikkei 225 up 0.4% to 16835
- Hang Seng up 0.9% to 20577
- Shanghai Composite down less than 0.1% to 2821
- S&P/ASX 200 up 0.3% to 5406
- US 10-yr yield down less than 1bp to 1.83%
- German 10Yr yield down 2bps to 0.12%
- Italian 10Yr yield down 3bps to 1.34%
- Spanish 10Yr yield down 2bps to 1.49%
- Dollar Index up 0.14% to 95.3
- WTI Crude futures down 1.3% to $48.86
- Brent Futures down 1.6% to $48.78
- Gold spot up less than 0.1% to $1,221
- Silver spot down 0.2% to $16.29
Top Global News
- KKR Buckles Up for Wild Ride Chasing Air-Bag Outcast Takata: Scope of recall creates ‘really high’ hurdle to sale: Aoki. Private equity bets in auto industry have had mixed success
- Valeant Rejected Takeda-TPG Takeover Bid in Spring, WSJ Says: No acquisition talks under way for the drugmaker. Takeda-TPG approach made before new Valeant CEO Papa arrived
- Axa Says U.K. Divestments to Generate Loss of EU400m: Co. will sell Sunlife to Phoenix Group
- Abe Fails in Bid to Have G-7 Leaders Warn of Global Crisis Risk: Statement says G-7 has strengthened resilience to avoid crises. Brexit would be risk to global growth, communique says
- Gundlach Says Yellen Remarks to Be Dovish as Treasury Bid Soars: Fed will hold off in June if odds below 50%, Gundlach says. Yellen to speak at Harvard University at 1:15pm local time
Looking at regional markets, we start in Asia where equities ignored yesterday's flat US close to trade mostly higher, although China lagged following slower growth in industrial profits. Nikkei 225 (+0.4%) was underpinned by the latest set of reports (now the 3rd or 4th) PM Abe could delay the sales tax hike as soon as next week while a continued decline in CPI data further added to calls for BoJ action. ASX 200 (+0.5%) was also upbeat led by defensive stocks and climbed above the 5400 level. Elsewhere, Chinese markets bucked the trend with the Shanghai Comp (-0.1%) and Hang Seng (+0.9%) with the Shanghai composite in negative territory following a slowdown in industrial profits growth which tumbled from 11.1% to 4.2%. 10yr JGBs traded higher despite the increased risk-appetite in Japan, underpinned by the BoJ's presence in the market for a total JPY 460b1n of government debt including inflation-linked bonds. Because there is nothing quite like free, central-bank free "markets."
Top Asian News
- Goldman Sees 0.2% China Bond Default Rate as Zombies Kept Alive: Global note default rate is 0.8% and U.S. 0.9%: Moody’s says
- Terex Ends Chinese Suitor Talks, Proceeds With Konecranes Deal: Zoomlion had made an unsolicited offer at $30/share in Jan.
- Abe to Decide on Japan Sales Tax Increase Before Summer Election: Abe says parallels between global economy and time of Lehman crisis
- Japan CPI Falls 0.3%, Raising Pressure on BOJ for More Stimulus: Core inflation rate declines for 2nd month in April
- Yuan Bears Once Compared to Soros in His Prime Now Look Subdued: Options, offshore trading show bears are reluctant to pile in
Like in Asia, European trading has been very light this morning as participants look towards the UK bank holiday and US Memorial Day, leading to very thin volumes. European equities initially traded in modest negative territory but have since pared this loses (Euro Stoxx 0.2%) with the IBEX (0.1%) yet again underperforming amid the extension of losses in Banco Popular shares, while the likes of Credit Agricole (-7%) and Natixis (-7.3%) weigh on French equities as they go ex-div. Elsewhere, the SMI notably outperforms led by Roche (+3.6%) in the wake of reports of a successful trial with their blood cancer drug.
Top European News
- Axa Sells SunLife, Appoints Harlin CFO of Chief Buberl’s Team: Axa SA sold its SunLife unit in the U.K. to Phoenix Group Holdings and announced the top-management team
- Philips Lighting Shares Soar After $839m Dutch IPO: Shares sold at EU20 each, near midpoint of marketed range. Spinoff underscores shift by Philips to health-care market
- Barclays Said to Raise Severance Offer Again for Tokyo Employees: Bank asked about 100 equity staff to leave in January: people familiar. Original offer was below market standards, union says
- Anglo Appoints Cleaver as De Beers CEO as Mellier Steps Down: Diamond producer resumes tradition of promoting from within. Bruce Cleaver has held strategy roles at Anglo, De Beers
- Oil Price Surge Can Trigger Writebacks, Dong Energy CEO Says: Writebacks in energy sector are rare: Bloomberg Intelligence. Chairman says oil unit now worth keeping after sale dropped
- Currency Traders Look Beyond the Pound to Combat Brexit Turmoil: Unigestion buys franc, krona options to hedge risk of EU exit. Aberdeen Asset Management sees euro as best sterling proxy
In FX, the BBG Dollar Spot Index climbed 0.2% after losing 0.2% in each of the last two trading sessions. The MSCI Emerging Markets Currency Index rose 0.3 percent this week, snapping a run of three weekly losses. Turkey’s lira and Russia’s ruble led gains, climbing more than 1 percent in the period. The currencies of oil-exporting nations pared their weekly advance on Friday as oil retreated. The Canadian dollar, Norwegian krone and the ruble weakened at least 0.3 percent. The pound strengthened 1 percent this week. A poll by former Conservative lawmaker Michael Ashcroft showed almost 65 percent of voters believe the U.K. will remain in the European Union after a June 23 referendum.
In commodities, oil trimmed its third weekly advance as Canadian energy producers moved to resume operations after wildfires eased. West Texas Intermediate dropped 1% to $49 a barrel, paring the weekly gain to 2.5 percent. Brent slid 1.6 percent to $48.84. Prices climbed above $50 a barrel on Thursday for the first time in more than six months as a decline in U.S. crude stockpiles and production accelerated. The Organization of Petroleum Exporting Countries may stick to its strategy of prioritizing market share over prices when it meets next week.
Iron ore futures in Dalian rebounded from the lowest level since February as authorities in China said there’s room to boost growth. Group of Seven leaders pledged to fix excess industrial capacity and a global glut of the metal caused by government subsidies and support. Industrial metals also advanced, with copper heading for its first weekly gain this month. The metal rose 0.7 percent, bringing the gain the week to 2.5 percent. Nickel climbed 0.7 percent and zinc advanced 1.1 percent. Gold was little changed at $1,221.77 an ounce. The precious metal is heading for the biggest monthly loss since November as investors anticipate higher borrowing costs in the U.S.
n the US event calendar, the focus will be on that aforementioned second revision to Q1 GDP and Core PCE, while there will also be some attention paid to the final May reading for the University of Michigan consumer sentiment data. The data comes before what may or may not be an important speech by Fed Chair Yellen this evening.
Bulletin Headline Summary from RanSquawk and Bloomberg
- This morning has been a rather light affair as participants look towards the UK bank holiday and US Memorial Day, with European equities initally trading in modest negative territory
- FX markets have largely been in favour of the USD, and that of minor losses in commodities and stocks
- Looking ahead, today will see data highlights in the form of the secondary US GDP reading and University of Michigan sentiment
- Treasuries little changed in overnight trading as global equities rally and oil sells off; G-7 meeting ends “amid discord over the best policy mix of fiscal spending, monetary stimulus or structural reforms.”
- U.S. fixed income markets early close today (2pm ET) and closed Monday for the Memorial Day holiday
- FX, interest rate futures trading floors early close (1pm ET) and closed Monday
- It’s one of the biggest dilemmas facing currency managers: how to protect against the fallout from the U.K. leaving the European Union without losing money should it vote to remain
- Italian business and consumer confidence unexpectedly declined this month, signaling growing pessimism among executives and households over the strength of the recovery in the euro region’s third-biggest economy
- Jeffrey Gundlach said he expects Janet Yellen will “be dovish” today and the Fed will refrain from raising interest rates in June unless traders in the futures market assign odds of at least 50% to the move
- Japan’s consumer prices dropped for a second month as central bank Governor Haruhiko Kuroda struggles to spur inflation with record asset purchases and negative interest rates
- Japanese PM Shinzo Abe is getting closer to a potential announcement on delaying an increase in the sales tax after his warning at a Group of Seven leaders meeting that the global economy faces significant risk of another crisis
- Miami’s crop of new condo towers, built with big deposits from Latin American buyers and lots of marketing glitz, are opening with many owners heading for the exits. A third of the units in some newly built high-rises are back on the market
- Sovereign 10Y yields mixed; European, Asian equities higher; U.S. equity-index futures rise; WTI crude oil, precious metals lower
US Event Calendar
- 8:30am: GDP Annualized q/q, 1Q S, est. 0.9% (prior 0.5%)
- Personal Consumption, 1Q S, est. 2.1% (prior 1.9%)
- GDP Price Index, 1Q S, est. 0.7% (prior 0.7%)
- Core PCE q/q, 1Q S, est. 2.1% (prior 2.1%)
- 10:00am: U. of Mich. Sentiment, May F, est. 95.4 (prior 95.8)
- Current Conditions, May F (prior 108.6)
- Expectations, May F (prior 87.5)
- 1 Yr Inflation, May F (prior 2.5%)
- 5-10 Yr Inflation, May F (prior 2.6%)
- 1:15pm: Fed’s Yellen speaks in Cambridge, Mass.
DB's Jim Reid concludes the overnight wrap
Today would normally be very quiet given it’s the Friday before Memorial Day in the US and Bank Holiday Monday in the UK. Indeed the US bond market closes early today. However we do have Yellen speaking at Harvard University at 6.15pm BST (shortly after lunch in NY) so it'll be slightly busier than it could have been. It's not clear whether she'll mention current policy but it will delay a few in the US from leaving early. That speech will aHer appearance a week on Monday June 6th when she is due to
address the World Affairs Council in Philadelphia has been billed as a
bigger event so that's the more likely venue for her to validate her
FOMC colleagues' recent hawkish bias or to put a more dovish spin on
future policy.lso come with the added benefit of the May employment report which is the highlight of what’s set to be a busy calendar next week.
Before that though and also in focus today will be the second revision to Q1 GDP in the US due out this afternoon. Current expectations are for an upward revision from the first estimate of +0.5% qoq to +0.9%, while the Core PCE reading is expected to be unchanged at +2.1% qoq. We'll also get a first sight at corporate profits which given recent weakness is an important sub complement. So something else to keep markets busy into the long weekend.
It was the data yesterday which was the main talking point for investors in what was a relatively lacklustre day of price action with the rally in risk assets coming to a stuttering halt. Indeed the S&P 500 (-0.02%) closed little changed by the end of play after failing to move with much conviction either way during the session. Markets in Europe had largely closed in positive territory (Stoxx 600 +0.10%, DAX +0.66%) although the rally for banks which had been driving moves this week abated somewhat. Spanish banks in particular were under the most pressure with Banco Popular slumping 26% and to the lowest in 26 years following the announcement of a rights issue plan to cover losses. Spanish equities (-0.50%) were the notable underperformers as a result and it was a reminder that the sector is still a long way from being out of the woods just yet.
With regards to that data it was bit of a mixed bag in the US, with the latest durable and capital goods orders in April getting most of the attention. Headline durable goods orders were up a bumper +3.4% mom last month, well exceeding the +0.5% consensus although that number was boosted by a huge rise in the volatile aircraft and parts orders series. Excluding transportation orders, durable goods orders rose more in line with expectations (+0.4% mom vs. +0.3% expected) although the concerning trend was in the core capex orders which declined -0.8% mom after expectations had been for a modest +0.3% rise. Our US economists noted that the three-month annualized change in core durable goods orders, which was slightly below +1% in March, plunged to -11% this month. That being said, the overall report was however enough for the Atlanta Fed to revise up their Q2 GDP forecast to 2.9% from 2.5% previously which is the highest forecast we’ve seen so far for the quarter.
Meanwhile, there was more bumper US housing market data to report with pending home sales in April rising a much better than expected +5.1% mom (vs. +0.7% expected). Elsewhere, initial jobless claims were down 10k last week to 268k and down for the second consecutive week following that huge spike up in the first week of the month. Finally the latest regional manufacturing data provided for further evidence of what’s been another difficult month for the sector. The Kansas City Fed’s manufacturing activity index was down 1pt this month to -5 after expectations had been for a modest 1pt rise. New orders extended their move lower into negative territory. Staying in the US we also heard from Fed Reserve Governor Powell (moderately hawkish usually) who said that a rate hike would be appropriate soon but that there is no reason ‘to be in a hurry’. Powell also echoed (Reuters) some of the comments from his colleagues in highlighting that the upcoming UK referendum vote is a reason for caution in tightening next month. It’s worth highlighting that we don’t hear from Powell too often so his comments are noteworthy.
Switching over to the latest in markets this morning where bourses in Asia are ending on a bit of a mixed note to finish the week. Leading the way is Japan where the Nikkei is +0.44%. That’s come after the April CPI report revealed a two-tenths of a percent drop in headline inflation to -0.3% yoy. While that was a little higher than expected (-0.4% expected) it still marks a move further into deflation for the second consecutive month. The ex-fresh food reading (-0.3% yoy vs. -0.4% expected) matched the headline and was unchanged from March. The so called core-core reading (ex food and energy) held steady at +0.7% yoy as expected. Nevertheless the data may have raised hopes that it could spark further action from the BoJ. Elsewhere we’ve also seen the ASX (+0.53%) gain overnight along with the Kospi (+0.32%), while the Hang Seng (-0.31%) and Shanghai Comp (-0.14%) are both lower. The latter perhaps on the back of the latest industrial profits data in China which showed profits of +4.2% yoy in April, down from the +11.1% yoy March reading. Elsewhere there was little interesting to report out of the conclusion of the G7 meeting in Japan this morning.
Meanwhile, there’s also been some interesting newsflow concerning Valeant overnight, with the WSJ reporting late last night that the pharma company rejected a takeover offer from Takeda and investment firm TPG in the spring. No price was quoted and the article states that there are no current talks, but it is another interesting twist in the long running saga for the company.
Moving on. Most of the interesting price action yesterday was reserved for rates markets where Treasuries in particular were well bid from the off. Indeed 10y yields ended the session just shy of 4bps lower in yield at 1.829% meaning they are lower now than where we closed last Friday. 2y yields were down even more (5bps lower) at 0.869% and much of the commentary is attributing this to another strong auction yesterday. Indeed such was the demand for investors at the 7y Treasury auction that primary dealers were left with just a 19% share of the allocation which is the second lowest on record. That actually follows a similar trend at 2y and 5y auctions earlier in the week with Bloomberg reporting that investors took down 80% of the $88bn across the three auctions. Despite the possibility of the Fed tightening as soon as this summer, the auctions are evidence that there’s still a decent hunt for yield in a world where global yields are so low.
Meanwhile, over in commodity markets it was Oil which had been generating the early headlines after WTI and Brent both broke through the $50/bbl level. Those moves faded however as the day wore on with both finishing below that at $49.48/bbl and $49.59/bbl respectively – a smidgen lower on the day although the moves were largely put down to some profit taking. It was a much better day for base metals though with Zinc (+2.32%), Copper (+0.15%) and Aluminium (+0.74%) all up, however the exception was Iron Ore which was down another couple of percent yesterday and tumbled back below $50/tn for the first time since February. It is now in fact nearly 30% off the highs for 2016 made just a month ago.
Looking at the day ahead, this morning in Europe the only data of note is the various confidence indicators which we’ll receive out of France and Italy. This afternoon in the US the focus will be on that aforementioned second revision to Q1 GDP and Core PCE, while there will also be some attention paid to the final May reading for the University of Michigan consumer sentiment data. The data comes before what may or may not be an important speech by Fed Chair Yellen this evening.
Gold prices are likely to rise above $1,900/oz in the next phase of the bull market and investors should “get in now,” Chief Market Analyst of the Lindsey Group, Peter Boockvar told CNBC’s “Futures Now” yesterday.
“This is just the beginning of a new bull market in the metals,” Boockvar believes.
Ultimately, Boockvar believes that the 2011 highs of around $1,900 for gold are not only reachable, but surpassable, as he reasoned that bull markets historically exceed the previous bull market peak at some point.
As Boockvar sees it, it’s just a matter of when.
“In order to be bearish on gold, you have to believe that the Fed is going to embark on 100 to 200 basis points of hikes over the next couple of years, which I think is completely unrealistic,” added Boockvar. “This is an ideal opportunity for those who have not gotten in.”
Citing the relative strength index (RSI), Boockvar said that gold is the most oversold it has been since mid-December. He also added that global interest rates have given trillions of dollars’ worth of sovereign bonds a negative yield. Coupled with rising Fed rates, this development would theoretically provide gold investors with positive carry on gold.
For additional context, Boockvar highlighted the mid-2000s, when the Fed raised the Federal funds rate from 1 percent to 5 percent. During that time, gold went from $400 to $700. The analyst also cited the start of 2016, when Bank of Japan Governor Haruhiko Kuroda adopted negative interest rates. However, the move failed to help the nation achieve stability in its currency.
Watch Boockvar’s interview on CNBC here
Recent Market Updates
– Gold and Silver “Bottom Is In” – David Morgan tells Max Keiser
– World’s Largest Asset Manager Suggests “Perfect Time” For Gold
– Gold As “Extremely Low-Risk Asset” – Rogoff Advises Creditor Nations
– Silver – “Best Precious Metals Trade”
– Bank Bail-Ins Pose Risks To Depositors, Investors & Economies
– Take Delivery of Gold and Silver Coins, Store Gold Bars – Hobbs
– George Soros Buying Gold ETF And Gold Shares In Q1
Gold and Silver News
Gold edges up, but stays near 7-wk low on Fed rate hike outlook – Reuters
Gold Snaps Six-Day Losing Streak as Rally in the Dollar Pauses – Bloomberg
Oil prices top $50, Asian shares struggle as China sags – Reuters
Pound Could Lose Its Reserve Currency Status on Brexit, S&P Warns – Bloomberg
Brexit Could Force UK to Extend Austerity by Two Years – Bloomberg
Greece’s “breakthrough” agreement is another “extend and pretend” – Telegraph
Why Strategas’ Chris Verrone Wants to Buy Gold (Video) – Bloomberg
Global Monetary System Has Devalued 47% Over The Last 10 Years – Zero Hedge
The Billionaires Are Wrong On Gold – Barisheff via Seeking Alpha
Dominick Frisby interviews James Rickards – Frisby’s Bulls & Bears
Read More Here
Gold and silver drifted lower this week, dollar prices falling approximately 2.5% and 1.5% respectively.
It is a continuation of the previous week’s trend, which saw larger falls. To date, from 1st January the dollar price of gold this morning in early European trade is up 15.14%, and silver 17.7%. So even though prices have fallen this month, holders of precious metals have done better than those exposed to other asset classes.
A notable feature has been the sharp contraction of gold’s open interest on Comex, which over the last eight trading sessions has contracted 71,400 contracts to a more normal 525,094 figure. This contraction broadly correlates with the fall in the gold price, as shown in our second chart.
The relationship between price and open interest shows that the ramp-up at the end of April, having initially failed to stop the price rising, managed to suppress it from the 4th May onwards. As an operation to stop the gold price rising, it appears that the bullion banks not only succeeded, but made substantial profits as well, closing their bears from the $1275 level into a falling market from 17th May onwards. This is beautifully illustrated in the next chart, of net swap positions, which rose to a record net negative 141,232 contracts on 17th May (the last recorded date at the time of writing).
At a guess, this category alone will have reduced its net position by about 50,000 contracts since 17th May / $1279, making profits between $150-200m. Oh, for the joys of being able to print short contracts without limitation!
The position in silver is notably different, with silver remaining overbought and open interest hardly reducing at all. This is shown in the next chart.
Notice the divergence between price and open interest. OI has fallen only 5,500 contracts since 17th May, while the price has dropped 8%. Could it be that the swaps will target silver next?
It cannot be ruled out, because the hedge funds are still net long to a significant degree. However, in day-to-day trading, silver has recently held up well when gold has been weak, which might indicate a pick-up in industrial demand, relative to physical supply, at current levels.
In analysing market trading in precious metals, we cannot ignore developments in the US dollar. After all, speculators do not so much buy or sell gold, rather they sell or buy the dollar. Gold is just one of the counterparty assets involved, the others being in a number of categories: US Treasuries, if it is an inflation or interest rate play, currencies for factors specific to the pairs, commodity indices for interest rates and prospective economic demand, and gold for interest rates and systemic risk. So it is no coincidence that the Fed’s attempts to jaw-bone markets away from negative dollar rates and back to “normalisation” has softened precious metals.
The views and opinions expressed in the article are those of the author and do not necessarily reflect those of GoldMoney, unless expressly stated. Please note that neither GoldMoney nor any of its representatives provide financial, legal, tax, investment or other advice. Such advice should be sought form an independent regulated person or body who is suitably qualified to do so. Any information provided in this article is provided solely as general market commentary and does not constitute advice. GoldMoney will not accept liability for any loss or damage, which may arise directly or indirectly from your use of or reliance on such information.
Following the propagandist double-speak gushing forth from the Obama administration over when a "boot on the ground" in Syria is a "boot on the ground," the following photographs via Agence France-Presse confirm US special operation forces in a rural village 40 miles from Raqqa. As The Guardian reports, the Pentagon press secretary, resisted commenting on the photographs and would only describe the US special operations forces’ mission in generic terms, despite the fact that these troops are at the frontline of fighting when President Obama assured America that forces are consistently behind the forward lines.
In April, State Department spokesman John Kirby attempted to change the narrative in a stumbling proposterous way denying President Obama had ever said "no boots on the ground" in Syria...
And here’s the relevant transcript:
“Kirby: there was never this – there was never this, “No boots on the ground.” I don’t know where this keeps coming from.
Question: But yes there – well, yes, yes, there was.
Kirby: There was no – there was – no there wasn’t. There was –
Question: More than –
Kirby: We’re not going to be involved in a large-scale combat mission on the ground. That is what the President has long said.”
To anyone who has been following this, Kirby’s argument is patently absurd. The President told the BBC less than twenty-four hours previously that there would be “no boots on the ground” – and then his administration announced that 250 more booted US soldiers would be treading Syrian ground. Not only that, but prior to the summer of last year, the President assured the American people there’d be no “boots on the ground” a total of sixteen times.
As George Orwell dramatized in Nineteen Eighty-Four, and also in this memorable essay, the degeneration of language into an instrument of concealment is one of the hallmarks of the modern age. In the novel, there is a vast apparatus concerned solely with erasing the past in order to justify the actions of the present: the Obama administration doesn’t have the power to do that, and yet thinks it can achieve the same ends by simply denying what everyone knows to be true, as shown by Kirby’s surreal exchange with reporters.
And now, as The Guardian reports, we have proof that not only was Kirby lying about the president's words, but the boots on the ground are far closer to the frontlines than Obama had ever admitted to the American public...
Elite US military forces have been photographed for the first time in Syria as they join largely Kurdish forces on an advance toward, Raqqa, the Islamic State terror group’s capital.
A photographer with Agence France-Presse captured US special operations forces with Kurdish forces known as the YPG, part of the US-mentored Syrian Democratic Forces, in a rural village less than 40 miles from Raqqa. Some US troops wear the insignia of the YPG in an apparent show of support.
Peter Cook, the Pentagon press secretary, resisted commenting on the photographs and would only describe the US special operations forces’ mission in generic terms... More lies....
Barack Obama announced last month that he would increase US special operations forces in Syria to 300, for what the Pentagon has consistently described as merely an advisory mission. AFP described the troops as “near the frontline” north of Raqqa, despite the Pentagon’s frequent claims that the forces are consistently behind the forward lines.
Cook denied any mission creep had occurred, saying the “advise-and-assist role has not changed”, and that the elite forces, the only ones thus far acknowledged in Syria, conduct “meetings” with indigenous forces “that are taking the fight to Isil”, another term for Isis.
“They are not on the forward line. They are providing advice and assistance,” Cook said.
* * *
So once again - do we believe a photographer's images and knowledge of the region or an Obama administration spokesman?
To say that Hillary did not react properly to the damning State Department Inspector General report which yesterday found that she broke numerous government rules by setting up her own email server, would be a gruesome understatement.
As a reminder, Hillary's kneejerk response was to plead ignorance and claim that she was merely doing what her predecessors had done before, a claim that was promptly refuted, which was followed by her spokesman Brian Fallon appearing on CNN and saying that the Obama appointed IG had an "Anti-Clinton" bias by releasing the report.
Things however turned decidedly worse for Hillary when even the rabidly pro-Clinton channel MSNBC decided to tear Hillary apart for what is now an insurmountable mountain of lies.
It took place early today when MSNBC host Joe Scarborough slammed Hillary Clinton, calling on the Democratic presidential front-runner to "stop lying" about her personal email account.
"It’s pretty remarkable," he said on "Morning Joe" of Clinton’s response to a watchdog report that found Clinton and her top aides did not comply with policy while she served as secretary of State as cited by The Hill. "I don’t understand why you put out a statement like that,” Scarborough added. "Stop lying, stop digging."
Instead she should have said "I screwed up. I’m terribly sorry" according to the MSNBC anchor which he offered as alternate responses. "'I hope the American people will forgive me and I hope they will let us move on to the issues that matter.'"
Scarborough continued his take down on Thursday saying that the issue remains a major concern for her campaign. "The biggest concern is security," he said. "A lot of people act like, ‘ooh, there’s much ado about nothing here."
"Well, actually, there was a lot of classified documents, a lot of classified materials going through this server. The great fear all along [was] that a home-brewed server in Chappaqua, N.Y., was going to be broken into."
And then there is the "Guccifer" wildcard. Recall that as we reported previously, the extradited Romanian hacker Marcel Lazar who allegedly hacked into Hillary's server just pled guilty and has promised to fully comply with the ongoing investigation. He has previously claimed that he had access to the former Secretary of State's "completely unsecured" server. "It was like an open orchid on the Internet," Lazar told NBC News. "There were hundreds of folders."
If he provides the evidence that he has done just that, and we are confident that is precisely why he was so eager to plea with the Feds, Hillary's troubles are about to skyrocket.
Full clip below: