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Everyone knows that the U.S, Israel & their allies fund, arm, protect, and created ISIS, who kills untold numbers of Christians and others. The U.S. government has been doing this for centuries. This is a classic article about the 'Cristero War' in Mexico, which took place in the 1920s and 1930s. Even Former Mexican President Vicente Fox admits that the freemasonic-led government in Mexico had outlawed Catholicism, and the rebel groups of freedom fighters, called the Cristeros, took up arms against their corrupt government. Their battle cry was Viva Cristo Rey!", which means "Long Live Christ the King." U.S. President Hoover aided the Mexican military, providing 10 MILLION ROUNDS of ammo, 10,000 Enfield Rifles, military planes & tanks to slaughter the freedom fighters. This is in Congressional records and covered extensively by the NY Times. In the end, the body count favored the rebels- 100,000 lives were reportedly lost in the Cristero war- 40,000 Catholic Cristeros and 60,000 Mexican government agents.
People sense the 'recovery" is bogus, and their rational response is to save more money rather than squander it.
Sometimes one chart captures the fundamental reality of the economy: for example, this chart of money velocity and the civilian-population ratio. (thank you, Joseph Y. for posting it on my Facebook feed.)
When the blue line is up, more of the population has a job. (the blue line is the Employment-Population ratio.)
The red line is money velocity, the rate at which money changes hands. (Money buried in the coffee can in the back yard has a money velocity of zero.)
As Joseph noted, the correlation between the percentage of people working and money velocity was strong until 2010. In the post-2009 recession "recovery," the percentage of the populace with jobs rose modestly, but money velocity absolutely cratered to unprecedented lows.
(The one other disconnect was triggered by the 1987 stock market crash, which caused money velocity to dip even as more people entered the workforce. This absence of correlation was relatively brief.)
The correlation between more people working and money velocity is commonsensical. More people working = more household income = more spending = higher money velocity.
But something changed in 2010. Did the quality and compensation of work change? Joseph observed: People started going back to work after the official recession ended in Q4 2009 but they were working for lower pay. With lower pay comes less disposable income, hence the cliff-like drop off in velocity.
Another potential factor is higher inflation. Some recent estimates (Where's The Beef? ‘Lies, Damned Lies, And Statistics’) suggest the gap between official inflation and actual inflation in rent, food, energy and medical care in the past 20 years has subtracted 20% from paychecks.
The four "biggies" for the average American are rent, food, energy, and medical care, in approximately that order. These "four horsemen" have been galloping along at a faster rate than headline CPI. According to the BLS definition, they compose about 60% of the aggregate population's consumption basket, but for struggling middle-class Americans, it's closer to 80%. For the working poor, spending on these four categories can stretch to as much as 90% of total spending.
(If we add exposure to higher education's soaring costs, the rate goes even higher.)
So even if wages held steady, once we factor in "real" inflation, real take-home pay has declined by 5% to 20%, depending on the household's exposure to rent, food, energy, medical care (love those co-pays and out-of-pocket expenses) and higher education.
Another potential factor is the figurative coffee can in the back yard: people sense the 'recovery" is bogus, and their rational response is to save more money rather than squander it. Even though central banks have reduced the yield on savings to less than zero, people are still saving whatever they can.
Data suggests it's all three: lower incomes, higher inflation and a recognition that savings are more important in a ‘Lies, Damned Lies, And Statistics’ economy than more spending.
This chart says it all: real income is declining and the bottom 95% are poorer. No wonder people are socking away what they can and tightening their spending: they have no other choice, even as the Federal Reserve strip-mines their savings.
First there were seventeen. At length, there was one.
Donald Trump’s wildly improbable capture of the GOP nomination, therefore, is the most significant upheaval in American politics since Ronald Reagan. And the proximate cause is essentially the same. Like back then, an era of drastic bipartisan mis-governance has finally generated an electoral impulse to sweep out the stables.
Accordingly, the Donald’s patented phrase that “we aren’t winning anymore” is striking a deep nerve on main street. But that is not on account of giant trade deficits or a faltering foreign policy and failed military adventures per se.
Indeed, it has very little to do with any patriotic impulse with respect to America’s collective polity, and everything to do with voter perceptions that they personally are not winning economically anymore, either.
What is winning is Washington, Wall Street and the bicoastal elites. The latter prosper off finance, the LA branch of entertainment (movies and TV), the SF/technology branch of entertainment (social media) and the great rackets of the Imperial City—including the military/industrial/surveillance complex, the health and education cartels, the plaintiffs and patent bar, the tax loophole farmers and the endless lesser K-Street racketeers.
Consequently, most of America’s vast flyover zone has been left behind. Thus, the bottom 90% of families have no more real net worth than they had 30 years ago. By contrast, the real net worth of the top 9% stands at 150% its 1985 level, and the very top 1% is at 300% of its level three decades ago.
Moreover, the wealth round trip of the bottom 90% depicted in the chart below was hardly real in the first place. Main Street net worth temporarily soared owing to Greenspan’s 15-year housing bubble which culminated in the great financial crisis. What is left is mainly the mortgage debt.
The same pattern is evident in real household incomes and average real earnings of full time workers. In this case, the metric displayed in the chart encompasses men over 16 to control for changes in the work force mix, but the result is unmistakable. To wit, real median household incomes in 2014 were no higher than the level first reached in 1989, and real weekly full-time wages were actually 4% lower.
In a similar vein, Indiana was supposed to be Senator Cruz’ last stand, but according to the pundits he ended up getting blown away by the “Carrier” vote. United Technology’s plan to move its air conditioner factory to Mexico became Donald Trumps whipping boy, but the metaphor had deep resonance.
Since the year 2000, the US has lost 20% of its highest paying full-time jobs in the goods producing economy—–that is, energy and mining, construction and manufacturing.
Even when you allow for the supposed shift to white collar jobs in finance, technology, entertainment and other domestic services, the story is pretty much the same. There are still nearly 2 million fewer full-time, full pay “breadwinner jobs” in the US today than when Bill Clinton was packing his bags to leave the White House in January 2001.
These jobs currently pay an equivalent annual wage of $50,000 on average, which isn’t affluence by any means. But the point is, these jobs are the best of what we have and the total has been going nowhere for the last decade and one-half, even as the adult population (over 16 years) has risen from 212 million to 250 million.
Stated differently, the Trump voters don’t watch CNBC. Or if they do, they are savvy enough to dismiss it’s specious celebration of America’s phony bicoastal prosperity, and especially the monotonously stupid and profoundly misleading ritual of Jobs Friday. The voters know from experience that those millions of “new jobs” are mainly part-time gigs that come and go between the financial crashes that arise every seven years or so out of Wall Street and Washington.
Indeed, these bread and circuses jobs may all be part of the “print” according to Keynesian windbags like Mark Zandi, but the flyover zone voters know the real truth. They pay cash wages of less than $20,000 per year on a full-time equivalent basis, offer virtually no benefits and are scheduled by the day and hour.
In fact, nearly 40% of all the net payroll jobs created since the year 2000 are in what we have called the Part Time Economy. Trump voters have gotten stuck in them, fear they will end up there or have friends and family who have no other opportunities.
Needless to day, they know they are not winning.
Meanwhile, the bicoastal elites tend to their increasingly fanciful projects and provocations. That is to say, Imperial Washington’s completely trumped up campaign against Russia and Putin is cut from the same cloth as Silicon Valley’s pretension that there are ( or were until February) 147 “unicorn” start-ups that are each worth a billion dollars or more—notwithstanding that few of them have meaningful revenues, cognizable business models or any prospect of earning a profit.
Everywhere the governing institutions are whistling past the graveyard, yet have become so insular and removed from accountability that they are clueless about their own impending doom. The Federal Reserve, for example, has now fueled the mother of all financial bubbles after seven years of non-stop money printing and radical interest rate repression, but nevertheless believes that the nirvana of full employment prosperity is just around the corner.
Likewise, US military intervention has failed in every Muslim land it has bombed, droned or occupied. Yet the White House is still sending more bootless boots to these decimated lands, thereby insuring even more blowback and gifting jihadist recruiters with endless fodder for outrage and revenge.
So too, a seven year “recovery” cycle has been squandered on the fiscal front. While Obama was taking bows for cutting the deficit in half and Republicans were joining in to gut the discretionary spending sequester, the fiscal time bomb of entitlements continued to tick unattended.
The fact is, nominal GDP is now growing at only 3% per year, and in a world of relentless deflation owing to the end of the great central bank credit bubble, there is no prospect that it will accelerate. Accordingly, by 2026 GDP will be $24 trillion under the best of circumstances, while the national debt will rise by $9 trillion per CBO’s Keynesian reckoning or upwards of $15 trillion if you believe the Fed has not abolished the business cycle.
That’s right. The virtually guaranteed national debt of $30-$35 trillion will reach an Italian style 140% of GDP just as the baby boom retirement wave hits full stride.
So when Trump says that Uncle Sucker is broke, the public believes him. It happens to be true.
Finally, the greatest bicoastal scam is the rampant Bubble Finance prosperity of Wall Street and Silicon Valley. Let’s face it. Facebook——along with Instagram, Whatsapp, Oculus VR and the 45 other testaments to social media drivel that Mark Zuckerberg has acquired with insanely inflated Wall Street play money during the last few years——-is not simply a sinkhole of lost productivity and low-grade self-indulgent entertainment. “Faceplant” is also a colossal valuation hoax.
Why? Because at bottom, Facebook (FB )is just an Internet billboard. It’s a place where mostly millennials idle their time in or out of their parents’ basement. Whether they grow tired of Facebook or not remains to be seen, but one thing is certain.
To wit, FB has invented nothing, has no significant patents, delivers no products and generates no customer subscriptions or service contracts. Its purported 1.8 billion “MAUs” (monthly average users) are fiercely devoted to “free stuff” in their use of social media.
Therefore, virtually all of its revenue comes from advertising. But ads are nothing like a revolutionary new product such as Apple’s iPhone, which can generate tens of billions of sales out of nowhere.
The pool of advertising dollars, by contrast, is relatively fixed at about $175 billion in the U.S. and $575 billion worldwide. And it is subject to severe cyclical fluctuations. For instance, during the Great Recession, the U.S. advertising spend declined by 15% and the worldwide spend dropped by 11%.
And therein lies the skunk in the woodpile. Due to its sharp cyclicality, the trend growth in U.S. ad spending has been about 0.5% per annum. Likewise, the global ad spend increased from about $490 billion in 2008 to $575 billion in 2015, reflecting a growth rate of 2.3% annually.
Yes, there has been a rapid migration of dollars from TV, newspapers and other traditional media to the digital space in recent years. But the big shift there is already over.
Besides that, you can’t capitalize a one-time gain in sales of this sort with even an average market multiple. And that’s saying nothing about the fact that FB’s current $340 billion market cap represents a preposterous multiple of 211 times its $1.6 billion of LTM free cash flow.
In any event, the digital share of the U.S. ad pool rose from 13.5% in 2008 to an estimated 32.5% last year. But even industry optimists do not expect the digital share to gain more than a point or so per year going forward. After all, television, newspapers, magazines and radio and highway billboards are not going to disappear entirely.
Consequently, there are not remotely enough advertising dollars in the world to permit the endless gaggle of social media space entrants to earn revenue and profits commensurate with their towering valuations and the sell side’s hockey stick growth projections. In social media alone, therefore, there is more than $1 trillion of bottled air.
But the social media billionaire brats are not the half of it. The central bank money printers have transformed Wall Street into a nonstop casino that has showered a tiny slice of hedge funds and speculators with unspeakable windfalls from the likes of monstrosities such as Valeant and hundreds of similar momentum bubbles.
Just consider the shameless mountebank who has conjured the insane valuation of Tesla from the gambling pits of Goldman Sachs and Wall Street. The company has never made a profit, never hit a production or sales target and has no chance whatsoever of becoming a volume auto producer.
Yet after posting another wider than expected $283 million loss in the first quarter, which was nearly twice last year’s red ink, Elon Musk doubled-down on his snake oil offering. His promise that Tesla would finally become cash flow positive in 2016, after burning through $4 billion in cash since 2008, was abruptly declared inoperative. Instead, Tesla will do another giant dilutive capital raise in order to fund an acceleration of the Model 3 so that it can deliver 500,000 vehicles in 2018.
That’s a con job worthy of the seediest used car lot in America. In auto production land, today is already 2018 in the case of a mass production vehicle that has barely been designed, and which has not yet been production engineered, tooled, tested or sourced for components and materials.
Indeed, the idea that a company which produced only 50,000 vehicles in the last 12 months can scale up to 10X that volume virtually over night on a production line and supply system that does not even exist is a laughable fiction. But what isn’t laughable is that the Wall Street casino is so blinded by speculation, greed and Fed puts and liquidity pumping that it is enabling dozens of circus barkers like Elon Musk to inflate spectacular bubbles—–financial deformations which will end up destroying the main street homegamers who fall for them, and dissipating loads of scarce capital in the process.
The fact is, the bicoastal elites have been showered with stupendous windfalls since the March 2009 bottom because the Fed has engineered through ZIRP, QEs and open mouth cheerleading a systematic falsification of financial prices and the diversion of massive amounts of new debt and other capital into rank financial speculation.
On a net basis, for example, virtually the entirety of the $2 trillion in incremental business debt raised since 2007 (from $11 trillion to $13 trillion) has been cycled into stock buybacks, wildly over-priced M&A deals and other forms of financial engineering—–all of which result in the bidding up of existing equities, not the investment of new funds into productive assets. Indeed, the C-Suites of corporate America have been transformed into stock trading rooms.
So it is no wonder that main street believes it is not winning anymore.
Unfortunately, it is too late to reverse the tidal wave of system failure that has been brewing for two decades now and which is likely to end in a speculator implosion before election day on November 8th.
To wit, the stock market is valued at a nosebleed 24X actual GAAP earnings—-earnings which have declined by 18% from their September 2014 peak and which are heading lower—— and is therefore a crash waiting to happen. Likewise, there is a $3 trillion bubble of junk bonds and loans that are heading for a day of reckoning soon.
Finally, after 84 months of the weakest recovery in history, the signs of recession are emerging everywhere. By November it will be either declared or impossible to deny. The updated budget projections, therefore, will show a swift return to trillion dollar annual deficits.
So there is a perfect storm of calamity brewing, and the rumbling sounds of its arrival are being heard by the plain people of America, even if the bicoastal elites remain clueless in their temporary world of bubble finance prosperity.
Indeed, busily and self-righteously remonstrating against Trump’s bombastic and politically incorrect style, they are not likely to see his potential landslide victory coming, either.
If it happens, the nation is likely to become engulfed in a shitstorm of political conflagration, financial crashes and recessionary relapse. The Donald could easily turn into every bit of the scorched earth loose cannon that Hillary is now shrieking about.
But there is a sliver of hope. If Donald Trump does not capitulate to the mainstream policies of the Wall Street/Washington/Bicoastal establishment now that he has won the nomination, there is a way forward for the great deal maker to move the whole mess out of the hopeless box that now afflicts the nation.
A President Trump would need to make Six Great Deals.
A Peace Deal with Putin for cooperation in the middle east, defeat of ISIS, withdrawal from NATO and a comprehensive worldwide disarmament agreement.
A Jobs Deal based on slashing taxes on business and workers and replacing them with taxes on consumption and imports.
A Federalist Deal to turn back much of Washington’s domestic programs and meddling to the states and localities in return for a 4-year freeze on every single pending regulation and statue.
A Health Care Deal based on the repeal of Obamacare and tax preferences for employer insurance plans and their replacement with wide-open provider competition, consumer choice and individual health tax credits.
A Fiscal Deal to slash post disarmament defense spending, devolve education and other domestic programs to the states and cities and to clawback unearned social security/medicare entitlements benefits from the affluent elderly.
And a Sound Money Deal to end the Fed’s war on savers and retires, repeal Humphrey-Hawkins and limit the Fed’s remit to a providing liquidity at a penalty spread over market interest rates, while limiting this constricted backstop to “narrow banks” which only take deposits and make loans, and have nothing to do with Wall Street trading, derivatives and other forms of financial gambling.
Former US presidents George H W Bush and George W Bush will not endorse Donald Trump's candidacy for president, aides have told local media.
May 4th was officially declared “Star Wars Day” back in 2011, although the joke has been around since 1979: “May the 4th be with you”. Truth is, they’d rather have people thinking about May 4th for something like that and not the Kent State killings where Ohio National Guard fired upon unarmed college students, killing four of them and wounding nine back in 1970 during a protest against Nixon announcing the invasion of Cambodia.
So this clip below went through the mainstream news cycle yesterday for everyone’s amusement (and distraction).
Except… amusing probably isn’t the word I would use.
Dozens of people are reported to have been killed in an air strike on a refugee camp in rebel-held northern Syria, monitors and witnesses say.
Images on social media showed tents destroyed at the Kamounia camp near Sarmada in Idlib province, close to the Turkish border.
Some reports say the attack was by Syrian or Russian war planes but this has not been confirmed.
It was almost a year ago, when having tumbled in early 2015, oil proceeded to rebound strongly into the summer, where it traded at about $60 for three months, before US production resumed resulting in the next big leg lower which culminated with this's February drop to 13 year lows. At that point a comparable rebound to last year materialized, and just like last year, the pundits have emerged claiming that there will be no further downside. Incidentally, we covered this comparison previously in "For Oil 2016 Is Setting Up To Be A Rerun Of Last Year."
However, unlike last year, not everyone is (wrongly) convinced that this time the rebound in oil will be sustainable. One very prominent company that is already preparing for the next oil crash is the world's largest shipping company, Danish conglomerate A.P. Moeller-Maersk A/S (also known as Maersk).
Maersk is perhaps best known for its pragmatic, even downright bearish outlook on the global economy. Recall that three months ago, the company admitted in its annual report that "demand for transportation of goods was significantly lower than expected, especially in the emerging markets as well as the Group’s key Europe trades, where the impact was further accelerated by de-stocking of the high inventory levels."
The company's CEO, Nils Andersen, told the FT in February that "it is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse but we are better prepared."
It is the risk that the current 60% rebound in oil prices from 2016 lows is just another temporary bounce, that has forced Maersk to start preparing for the next oil crash. The company's CEO is confident that since the world keeps producing more petroleum than it can consume, it is "adapting its cost base to prepare for the risk of lower crude prices" according to Bloomberg.
As a result, Maersk's oil unit is already exploring bigger cost cuts than previously planned. "The price will obviously be driven by the balance between supply and demand and there will be oversupply for many months still,” he said by phone from Copenhagen. "It definitely can’t be ruled out that the oil price will fall again."
To be sure, Andersen is ultimately bullish on higher oil price... he is just not bullish on the path that oil prices will take to his higher price target: "I have previously said the oil price was too low, but it’s very plausible that the balance between supply and demand will continue to be unfavorable,” Andersen said.
Recent cost-cuts by Maersk have drastically reduced its breakeven oil price: in its latest full year forecast, the company predicted it can now break even with oil at $40 to $45. It previously said oil needed to trade at about $45 to $55 in order to avoid a loss. "We’re happy we’ve reached the goal we set,” Andersen said. “We will definitely work on cutting costs even further."
As it continues to cut costs, we expect that Maersk will soon be profitable with oil in the $30, if not lower. Which is precisely the contingency Maersk is actively preparing for.
By Brandon Turbeville
Over the past few days, the Western corporate press has kicked into overdrive with reports of hospital bombings, dead civilians, and war crimes all blamed predictably on the secular government of Bashar al-Assad. According to Western governments and their media mouthpieces, Assad’s forces have targeted civilian hospitals in order to . . . well . . . no one knows why Assad’s forces would logically target civilian hospitals. Still, the Western harpies – both media and “human rights NGOs” – continue to hammer the unsubstantiated claims and misinformation at the tops of their lungs that the SAA is dropping bombs on civilian medical facilities...
Who could have seen this coming? Remember a week ago when TV entertainers crowed about the surge in The Baltic Dry Freight Index was a "clear signal" that 'China is back' baby and that escape velocity growth was just around the corner as global growth was destined to pick up... Well, just as we warned very explicitly, the ramp in the index merely reflected the frenzied speculation in industrial metals by the Chinese and as authorities have cracked down on that idiocy, so the Baltic Dry has plunged by the most since November... as real demand punches back.
Submitted by Wolf Richter of Wolf Street
Freight Rail Traffic Plunges: Haunting Pictures of Transportation Recession
292 Union Pacific engines idled in Arizona Desert
Total US rail traffic in April plunged 11.8% from a year ago, the Association of American Railroads reported today. Carloads of bulk commodities such as coal, oil, grains, and chemicals plummeted 16.1% to 944,339 units.
The coal industry is in a horrible condition and cannot compete with US natural gas at current prices. Coal-fired power plants are being retired. Demand for steam coal is plunging. Major US coal miners – even the largest one – are now bankrupt. So in April, carloads of coal plummeted 40% from the already beaten-down levels a year ago. The AAR report:
Rail coal traffic continues to suffer due to low natural gas prices and high coal stockpiles at power plants. Coal accounted for just 26% of non-intermodal rail traffic for US railroads in April 2016, down from 36% in April 2015 and 45% as recently as late 2011.
Only five of the 20 commodity categories saw gains. Of the decliners, coal was the biggest. But petroleum products also plunged 25%, and grain mill products dropped 7%. Even without coal, carloads were down 3% year-over-year.
But it’s not just coal. In April, loads of containers and trailers fell 7.5% year-over-year to 1,028,460 intermodal units. They transport goods for retailers and wholesalers. They haul parts, components, and assemblies for manufacturers. They haul imported goods from ports and borders to different destinations across the country, and they haul goods to be exported to the ports and borders. They’re a measure of the real economy.
For the first 17 weeks of the year, total rail freight fell 7.8% from the same period a year ago, with carload traffic down 14.3% and intermodal down 0.8%.
But there’s hope, because there’s always hope. AAR Senior VP of Policy and Economics John Gray:
“We expect non-coal carloads to strengthen when the economy gets stronger, and we think intermodal weakness in April is probably at least partly a function of high business inventories that need to be drawn down before new orders, and thus new shipments, are made.”
Ah yes, inventories. We’ve long bemoaned their ballooning to crisis levels.
It didn’t get any better at the end of April: for the week ending April 30, carloads plunged 14.1% and intermodal traffic dropped 8.6% from the same week a year ago.
The impact on railroads is now very visible – and not just in the numbers on their income statements.
Here’s how Union Pacific is dealing with this issue, via Google Earth, on May 3: 292 engines idled on a siding west of Benson, Arizona, along I-10, for a stretch of nearly 4 miles. Note how the line of locomotives curves and fades into the left edge of the photo – an once majestic and haunting sight, all these powerful machines idled on a track in the Arizona desert (click images to enlarge):
These engines are expensive pieces of equipment. When they just sit there, not pulling trains, they become “overcapacity,” and they get very expensive. Then there are engineers and other personnel who suddenly become unproductive. What you see parked here is a drag on earnings. I added the red line for clarity:
The person who sent me these pictures lives and works in that neck of the woods. He said:
“I remember back in 2008-2009, hundreds if not thousands of rail cars stacked along I-10 in AZ-NM on side rails. I have not traveled east bound in a couple of years. I suspect rail cars may be piling up. They need to be parked somewhere. We may head over to Carlsbad Caverns in eastern NM soon, and I will keep an eye out…”
This scenario is playing out across the country, railroad by railroad, perhaps thousands of engines and hundreds of thousands of rail cars – an enormous capital investment – parked mostly out of sight somewhere, “overcapacity” that is now waiting for better days, and the end of the US transportation recession.
"Own volatility.." is the subtle message from BofA's Michael Hartnett, who warns "don't add risk before SPX 1950-2000 range and/or VIX>20." Simply put, as he explains below, bullish "positioning shocks" & "policy shocks" are largely behind us; and there is no bullish "profits shock" coming in a world that cannot cope with a higher US dollar & higher rates.
2016 YTD global total returns: commodities 7.6%, bonds 7.5%, equities 1.1%, the US dollar -5.8%.
Our base case remains:
End of excess liquidity + end of excess profits = end of excess returns = higher weightings in cash, volatility & gold in 2016
Shift from "raging bull" (2009-13) to ‘sitting bull” (2014-15) to “volatility bull" (2016) reflects: a. low probability of Higher EPS & Lower Rates, and, b. redemption, repression, regulation risks
Positioning + policy correctly caused Feb-April risk-rally; post-March we have been sellers into strength; case for volatility once again rising driven by the “3P’s” of Positioning, Policy & Profits
The bullish “positioning shock” is largely behind us: our BofAML Bull & Bear index has jumped from an uber-bullish 0.1 level in Feb to 5.1 today, an 11-month high (Chart 5); cash levels, which were at 15-year highs in Feb according to the BofAML FMS, are falling as investors rotate from cash to corporate bonds; BofAML private client equity allocation is back up to 59% (up from 56% in Feb’16, albeit below all-time high of 63% in Mar’15).
The bullish “policy shock” is largely behind us: the policy “panic” of Feb & March was ended with the BoJ decision last week to disappoint market expectations of further easing; Quantitative Failure stalks Japan (see yen surge and unbelievably low level of JGB yields - 0.31% for the 40-year yields; debt deflation stalks China (watch CN0C Index); and while the ECB is limiting credit spreads, recent ECB actions have coincided with higher euro, not higher bond yields, bank stocks & inflation expectations; meanwhile Fed willingness to raise rates likely will continue to create fear of “events” (Chart 6). The likelihood of a Trump-Clinton election match-up supports our Main Street versus Wall Street theme. Both candidates state support for the working class versus the rich.
There is no bullish “profit shock”: global EPS (Chart 7) & global GDP forecasts continue to be revised lower; good, reliable, cyclical lead indicators, e.g. the SOX index, are rolling over/heading back toward floor of 18-month range; and the decline in US corporate profits has extremely ominous implications for US payroll numbers in coming months (consensus looks for 200k on Friday). Watch credit: the global high yield index (HW00 Index) is approaching all-time highs; a break above 330 would be risk-on, but we think credit fails to hit new highs.
And finally, ahead of tomorrow, we note that profits portend weaker payrolls...
“We are talking not only about some technical measures, we are talking numbers as well. Russia will increase the strength of its military forces on the northern and northwestern borders if Sweden becomes a NATO member, this also includes the North Sea Fleet,” RIA Novosti quoted Senator Evgeny Serebrennikov as saying on Friday.
Let us start with an historical fact. Treason and betrayal by the highest levels is a common feature of history, whether it is Judas vs Jesus, Brutus vs Julius Caesar, Benedict Arnold, the Rosenbergs, Jonathan Pollard, Aldrich Ames, Robert Hanssen. It is just a fact of life. It does happen.
Back in 1996, when Bill Clinton was running for re-election, he authorized the transfer of highly sensitive technology to China. This technology had military applications and allowed China to close the gap in missile performance with the United States. The transfers were opposed and severely criticized by the Defense Department.
At the same time Bill Clinton was transferring this technology to China, huge donations began to pour into his re-election campaign from the US companies allowed to sell the technology to China, and from American citizens of Chinese descent. The fact that they were US citizens allowed them to donate to political campaigns, but it later emerged that they were acting as conduits for cash coming in from Asian sources, including Chinese Intelligence Agencies! The scandal eventually became known as China-gate!
A global anti-corruption agency designed to track dirty money and crack down on tax evasion, expected to be tabled by Prime Minister David Cameron next week, will have no law enforcement powers whatsoever, it has emerged.
British sailors have fired warning shots at a Spanish Guardia Civil vessel which they claim was hassling the 560-ft-long USS Florida nuclear submarine docking in the British overseas territory of Gibraltar.
The incident, which occurred in April but was only reported on Thursday, saw the Royal Navy deploy an attack vessel, HMS Sabre, which then shot flares across the bow of the 20-ton Spanish vessel Rio Cedena.
The temporary takeover of the Iraqi parliament building and other facilities in the fortified Green Zone in central Baghdad by followers of Muqtada al-Sadr was a demonstration not only of current fractures in Iraqi politics but also of a recurring American misconception about the application of military force on behalf of political objectives.
On Thursday, the Food and Drug Administration unveiled broad new rules governing e-cigarettes, cigars, and hookahs—products that in recent years have exploded in popularity among young people and until now have been largely unregulated. Under the new rules, it will be illegal to sell e-cigarettes to anyone under 18, and companies that manufacture e-cigarettes will be forced to register with the agency.
In addition, vending machines will no longer be allowed to carry e-cigarettes. Free samples of the product will also be prohibited.
The Obama administration's new rules follow similar age restrictions imposed by a growing number of states out of concern that e-cigarettes are more harmful than the companies producing them have let on. In December, a study conducted by Harvard researchers found that flavored e-cigarettes—with fruity, appealing offerings—were linked to a dangerous lung disease.
"At last, the Food and Drug Administration will have basic authority to make science-based decisions that will protect our nation's youth and the public health from all tobacco products, including e-cigarettes, cigars and hookah," president of the American Lung Association Harold Wimmer said in a statement on Thursday.
The new rules are likely to be a controversial topic among public health experts, some of whom say e-cigarettes reduce rates of traditional smoking, which they believe to be more dangerous. Just last month, Britain's Royal College of Physicians concluded that the product was a healthier alternative to smoking.
Most importantly, the synagogue was never actually in any real danger.
This is because, the man ‘was stopped by FBI agents posing as fellow terrorists who set up a sting operation.’
The bomb, apparently a dummy, was ‘sold to him in Hallandale Beach by an FBI undercover operative just before the planned terror attack’.
What this means, is that the suspect James Medina, may have never had the material means to carry out any attack with an explosive device unless it had been provided by the FBI.
So why is anybody praising the FBI for stopping a terror attack when they are the very group that facilitated its implementation in the first place?
The race for The White House appears to have taken a backseat for a news cycle as the Republican "veepstakes" gets underway. Donald Trump said this morning that he would prefer a running mate with government experience to "help with pushing legislation through," adding that he puts a 40% chance that a former rival in the Republican race would get the nod.
As The Hill reports, picking a VP could be a difficult undertaking, as some potential candidates might be hesitant to hitch their political future to a polarizing figure like Trump, but there will be plenty willing to roll the dice and join his historic outsider campaign...
Based on discussions with strategists and political insiders, here are the top 10 early contenders to be Trump’s running mate:
New Mexico Gov. Susana Martinez
Landing the popular and telegenic governor of New Mexico would be a coup for Trump.
Martinez is the first female governor of New Mexico and the first Hispanic to lead the Republican Governors Association.
Those attributes could go a long way in helping Trump beat back criticism that he’s a misogynist and that his hawkish rhetoric on immigration is xenophobic and racist.
Furthermore, New Mexico was once a swing state. While the state has gone for Democrats in five of the last six elections, George W. Bush defeated John Kerry there in 2004.
Martinez has maintained a high favorability rating in the state through her second term and won reelection there in a landslide. Having her on the ticket could put the state in play.
But convincing Martinez to get on board could be a heavy lift for Trump. She backed Sen. Marco Rubio (R-Fla.) in the primary and has denounced Trump’s remarks about illegal immigrants being rapists and other criminals.
Ohio Gov. John Kasich
Trump said on Wednesday he’d consider vetting Kasich, even before the Ohio governor had officially ended his campaign.
Trump and Kasich never battled the way other former candidates did, and many Republicans believe he stayed in the race for so long to burnish his vice presidential bona fides.
Kasich is trail-tested and, as the popular governor of a critical swing state, must be included on any vice presidential short-list.
Trump has said he’s looking for someone with political experience. In addition to being governor, Kasich spent nearly 20 years as a member of the House. He was chairman of the Budget Committee and boasts of being the chief architect responsible for balancing the federal budget under former President Bill Clinton.
He has cut a mostly moderate profile as governor. His liberal rhetoric on healthcare, education and social issues drives some conservatives crazy but could expand Trump’s appeal to the middle in a general election.
Kasich’s hard line on abortion — he has signed anti-abortion laws that have led to the closure of many clinics in his state — could help Trump in an area where he has struggled to speak to the base.
Retired neurosurgeon Ben Carson
Trump has said he’s looking at an insider to help him bridge the gap to Capitol Hill, which would seem to eliminate Carson from consideration.
But Carson is deep inside Trump’s inner circle now.
Trump told The New York Times on Wednesday that Carson will play an important role in the VP search. That would seem to take him off the board, although Dick Cheney had the same charge for President George W. Bush in 2000 and ended up finding himself.
Trump and Carson’s combined celebrity and penchant for headline-grabbing comments would be off-the-charts.
As a candidate, Carson was an internet sensation. He was also a fundraising juggernaut — an area of campaigning where Trump could use some help.
And as the only black man to run for president this year, Carson adds diversity to the ticket.
Florida Sen. Marco Rubio
It’s hard to envision a Trump-Rubio ticket after the two spent weeks hurling personal insults at one another before Trump finally triumphed over “Little Marco.”
Last week, Rubio appeared to be warming to the idea of Trump, saying the businessman’s “performance has improved significantly.” But in a CNN interview on Tuesday, Rubio spokesman Alex Conant called reports of any détente between the two “false.”
Still, if Rubio believes Clinton must be stopped and that Trump is the only one who can do it, he might reconsider. Rubio’s decision not to run for reelection to the Senate has at least freed him up professionally to consider the possibility.
Despite his failed presidential bid, Rubio still checks all the boxes as an ideal candidate: He’s bright, young, Hispanic, one of the premier conservative communicators and hails from a critical swing state.
New Jersey Gov. Chris Christie
The New Jersey governor’s decision to back Trump at an early stage shocked and baffled many Washington insiders.
He was condemned as an opportunist and a sell-out and someone to be shunned by many mainstream Republicans.
Now that gamble might pay off by landing him in the second highest office in the land.
Christie doesn’t bring a swing state with him, and as the primary showed, he has a large national profile but not much of a base.
But Trump prizes loyalty and could reward Christie for being one of the first establishment figures to publicly back him.
The New Jersey governor is sharp and charismatic and would be ferocious in his attacks against the Democrats.
Former Speaker Newt Gingrich
Trump said Wednesday he’s looking for a candidate with “great political experience” who speaks the language of Washington and will help him with outreach to lawmakers.
It would be hard to find a more experienced candidate than former Speaker Newt Gingrich, the architect of the Republican takeover of the House in the 1990s.
The Georgia Republican has been advising Trump in private while praising and defending him in public.
Gingrich was a surprise insurgent candidate in 2012, winning two states and reminding political watchers that he’s a skilled debater and a natural on the campaign trail.
Florida Gov. Rick Scott
Trump has said he’s considering Scott as a vice presidential candidate.
The Florida governor has said he’s not interested, but that’s a common reponse at this point in the process.
Scott, a former healthcare executive, is a business-minded Republican from a state that Trump must carry if he hopes to win the White House.
However, Scott’s favorability rating is underwater at home. That’s led to some awkward public moments, like a viral video of a woman shouting at him in a Starbucks.
And Scott didn’t exactly stick his neck out for Trump during the Florida primary, sitting on his endorsement until the day after the vote.
Gen. James “Mad Dog” Mattis
Trump is passionate about historical military leaders, often lionizing Gens. George Patton and Douglas MacArthur at campaign rallies while bemoaning the lack of strong leadership in the military today.
Mattis, a legendary, straight-talking four-star retired Marine Corps general whose nicknames include “Warrior Monk” and “Mad Dog,” might be right up Trump’s alley.
Mattis hasn’t spoken publicly spoken about his thoughts on Trump.
Anti-Trump conservatives spent months trying to recruit him to launch an independent bid. He officially removed himself from consideration for a third-party run last week.
Tennessee Rep. Marsha Blackburn
The outspoken Tennessee Republican is a veteran legislator with more than a decade of experience on Capitol Hill.
She’s vice chair of the Energy and Commerce Committee, a member of the Budget Committee and leading the House investigation into Planned Parenthood.
Trump has stumbled on abortion and failed in the eyes of some conservatives as a fierce enough critic of Planned Parenthood.
And having a woman on the ticket could be critical for Trump, who will likely face a rival in Hillary Clinton eager to highlight his past disparaging remarks about women.
Blackburn said she’d be open to being Trump’s vice president as far back as February, when most lawmakers were loathe to be associated with the businessman.
South Carolina Gov. Nikki Haley
The South Carolina governor backed Marco Rubio in the open primary and has harshly criticized Trump, even signaling that she wouldn’t support him as the nominee.
But that was before Trump became the likely nominee. On Wednesday, Haley told Reuters she’d support Trump as the nominee, although she sought to tamp down speculation she had any interest in being his vice president.
Haley would be on any candidate’s vice presidential wish list.
The fast-rising GOP star is a young, telegenic, charismatic Indian-American and one of the most popular governors in the country.
The last time the mayor of Cupertino walked into Apple – the largest company in his small Californian town and, it so happens, the most valuable company in the world – he hoped to have a meeting to talk about traffic congestion.
A North Carolina law limiting protections to LGBT people violates federal civil rights laws and can't be enforced, the U.S. Justice Department said Wednesday, putting the state on notice that it is in danger of being sued and losing hundreds of millions of dollars in federal funding.
Remember a time when people used to be cautious when it came to taking on debt? Probably vaguely since the entire U.S. economic system is built on “gold” and “platinum” credit cards being shelled out to people that can’t afford an ounce of either. In the mail I’m receiving overwhelming offers for credit cards and personal loans. The last time credit was flowing this easily was in 2005 and 2006. I’m not sure if people realize that the Great Recession was caused by excessive debt. Too much leverage. So it should be sobering to hear that since 2008 bank credit is up 44 percent while GDP is up 21 percent. What is basically happening is that for every $2 in lending GDP is moving up by $1. In other words, we are building a house of cards once again.