Nov 08

Today’s News 8th November 2017

  • Stephen Hawking: Earth Will Become A Flaming Ball Of Fire By 2600

    Authored by Mac Slavo via SHTFplan.com,

    Physicist and professor Stephen Hawking is warning that earth will become a flaming ball of fire by the year 2600.

    He also warns that if humans want to avoid permanent extinction, we should be making plans to evacuate the earth.

    Hawking claims that mankind will destroy the earth making it a fireball within the next 600 years. The renowned physicist believes soaring population sizes and consequential increasing demands for energy and food will lead to the catastrophe. Hawking also says that humanity should begin looking to the stars to avoid this fate, with our nearest neighbor Alpha Centauri the best candidate for our escape. Hawking also urged financial backers to put funds behind a project that would send probes to the star system.

    The Alpha Centauri system is the closest star system to our sun and consists of three stars. Of those three stars, Proxima is the closest to our sun. At a mere 4.367 light years away, on our sky’s dome, we see this multiple star system as a single star – the third-brightest star visible from Earth. And it’s this system that Hawking has his eye on.

    Stephen Hawking

    Stephen Hawking

    Hawking made the comments while speaking via video link at the Tencent Web Summit, held in Beijing. The British cosmologist, who was diagnosed with motor neuron disease at age 21, is backing the Breakthrough Starshot project. That project will likely see a probe sent to Alpha Centauri in the very near future; 20 years or so.

    “The idea behind this innovation is to have the nano craft on the light beam. Such a system could reach Mars in less than an hour, or reach Pluto in days, pass Voyager in under a week and reach Alpha Centauri in just over 20 years,” Hawking said praising the Breakthrough Starshot project. Astronomers feel that there is a reasonable chance that an Earth-like planet exists in one of the habitable zones within the star system too.

    Right now, the fastest spacecraft would take 30,000 years to reach Alpha Centauri. But Hawking also threw another doomsday prediction on the table.  At the 2017 Web Summit, held in Lisbon and attended by around 60,000 people, he warns that AI (artificial intelligence) is on the verge of replacing people.

     According to Hawking, humanity must be prepared to tackle artificial intelligence to stop robots replacing people. Hawking said the technology could transform every aspect of life in some good ways, but cautioned that intelligent machines pose new challenges. He said robots are already threatening millions of jobs but that this new revolution could be used to help society and for the good of the world, including alleviating poverty and disease.

    The rise of AI could be the worst or the best thing that has happened for humanity,” Hawking said via video link at the opening night of the summit on Monday.

     

    “We simply need to be aware of the dangers, identify them, employ the best possible practice and management and prepare for its consequences well in advance.”

  • America Cracks Up: The Anatomy Of A National Nervous Breakdown

    Authored by John Whitehead via The Rutherford Institute,

    Another shooting, another day in America.

    Or so it seems.

    With alarming regularity, the nation is being subjected to a spate of violence that terrorizes the public, destabilizes the country’s fragile ecosystem, and gives the government greater justifications to crack down, lock down, and institute even more authoritarian policies for the so-called sake of national security without many objections from the citizenry.

    Take this latest mass shooting that took place at a small church in a small Texas town.

    The lone gunman—a former member of the Air Force—was dressed all in black, wearing body armor, a tactical vest and a mask, and firing an assault rifle.

    Devin Patrick Kelley, the 26-year-old gunman, was described as a “regular guy” by those who knew him.

    This “regular” guy’s shooting rampage left at least 26 people.

    President Trump and the Governor of Texas have chalked the shooting up to mental illness.

    That may well be the case here.

    Still, there’s something to be said for the fact that this shooting bore many of the same marks of other recent attacks: the gunman appeared out of the blue without triggering any alarms, he was dressed like a soldier or militarized police officer, he was armed with military-style weapons and clearly trained in the art of killing, and the attacker died before any insight could be gained into his motives.

    As usual, we’re left with more questions than answers and a whole lot more fear and anxiety.

    That sense of unease is growing.

    How do you keep a nation safe when not even seemingly “safe places” like churches and rock concerts and shopping malls are immune from violence?

    The government’s answer, as always, will lead us further down the road we’ve travelled since 9/11 towards totalitarianism and away from freedom.

    Those who want safety at all costs will clamor for more gun control measures (if not at an outright ban on weapons for non-military, non-police personnel), widespread mental health screening of the general population and greater scrutiny of military veterans, more threat assessments and behavioral sensing warnings, more CCTV cameras with facial recognition capabilities, more “See Something, Say Something” programs aimed at turning Americans into snitches and spies, more metal detectors and whole-body imaging devices at soft targets, more roaming squads of militarized police empowered to do random bag searches, more fusion centers to centralize and disseminate information to law enforcement agencies, and more surveillance of what Americans say and do, where they go, what they buy and how they spend their time.

    All of these measures play into the government’s hands.

    As we have learned the hard way, the phantom promise of safety in exchange for restricted or regulated liberty is a false, misguided doctrine that has no basis in the truth.

    Still, why do these things happening?

    Clearly, America is in the midst of a national nervous breakdown.

    Things are falling apart, and the inmates in the asylum are starting to turn on each other.

    This breakdown – triggered by polarizing circus politics, media-fed mass hysteria, militarization and militainment (the selling of war and violence as entertainment), a sense of hopelessness and powerlessness in the face of growing corruption, the government’s alienation from its populace, and an economy that has much of the population struggling to get by – is manifesting itself in madness, mayhem and an utter disregard for the very principles and liberties that have kept us out of the clutches of totalitarianism for so long.

    When things start to fall apart or implode, as they seem to be doing lately, I have to wonder who stands to benefit from it. In most cases, it’s the government that stands to benefit by amassing greater powers at the citizenry’s expense.

    See, we’re like lab mice, conditioned to respond appropriately to certain stimuli.

    Right now, we’re being conditioned to be reactionaries capable of little more than watching and worrying. Indeed, we are fast becoming a nation of bad news junkies, addicted to the steady and predictable drip-drip-drip of news—be it sensational, devastating, demoralizing, disastrous, or just titillating—that keeps us plastered to our screen devices for the next round of breaking news.

    So much is happening on a daily basis that the average American understandably has a hard time keeping up with and remembering all of the “events,” manufactured or otherwise, which occur like clockwork and keep us distracted, deluded, amused, and insulated from reality.

    We are suffering from “the crisis of the now.”

    All the while, the government continues to amass more power and authority over the citizenry.

    This is how the corporate elite controls a population, either inadvertently or intentionally, and advances their agenda without much opposition from the citizenry.

    Rod Serling, the creator of the Twilight Zone, imagined just such a world in which the powers-that-be carry out a social experiment to see how long it would take before the members of a small American neighborhood, frightened by a sudden loss of electric power and caught up in fears of the unknown, will transform into an irrational mob and turn on each other.

    It doesn’t take long at all.

    So you see, Devin Patrick Kelley may have pulled the trigger that resulted in the mayhem in that small Texas church, but something else is driving the madness.

    As I make clear in my book Battlefield America: The War on the American People, we’re caught in a vicious cycle right now between terror and fear and distraction and hate and partisan politics and an inescapable longing for a time when life was simpler and people were kinder and the government was less of a monster.

    Our prolonged exposure to the American police state is not helping.

    As always, the solution to most problems must start locally, in our homes, in our neighborhoods, and in our communities. We’ve got to refrain from the toxic us vs. them rhetoric that is consuming the nation. We’ve got to work harder to build bridges, instead of burning them to the ground. We’ve got to learn to stop bottling up dissent and disagreeable ideas and learn how to agree to disagree. We’ve got to de-militarize our police and lower the levels of violence here and abroad, whether it’s violence we export to other countries, violence we glorify in entertainment, or violence we revel in when it’s leveled at our so-called enemies, politically or otherwise.

    Unless we can learn to live together as brothers and sisters and fellow citizens, we will perish as tools and prisoners of the American police state.

  • Iran Slams Saudi, US Claims It Ordered Ballistic Missile Attack From Yemen

    On Tuesday Iran slammed Saudi and US claims that it was supplying Yemen's Houthi rebels with advanced ballistic missiles that Saudi Arabia says targeted Riyadh international airport on Saturday – which would be a violation of a UN resolution which ensures conformity to the Iran nuclear deal.

    Iran's state-run IRNA news cited a letter sent to the UN Security Council signed by Iranian ambassador Gholamali Khoshroo, saying that Iran “categorically” rejects Saudi Arabia’s “baseless and unfounded accusations and considers it as destructive, provocative and a ‘threat to use of force”’ against a UN member state in defiance of the UN charter. Iran's foreign minister further called the Saudi claims "contrary to reality and dangerous".

    Iran's state-run PressTV file photo purporting to show a missile being fired from the direction of Yemen toward Saudi Arabia earlier during the conflict. 

    Though Saudi Arabia has mounted an aggressive aerial bombing campaign of deeply impoverished and disease-ridden Yemen for over the past two years, killing and wounding tens of thousands of civilians, it is Iran that is coming under intense pressure this week. Yesterday Saudi Arabia charged its regional rival Iran with "an act of war" while stating through its military coalition executing Yemen operations that, “Iran’s role and its direct command of its Houthi proxy in this matter constitutes a clear act of aggression that targets neighboring countries, and threatens peace and security in the region and globally.”

    However, the Iranian ambassador's letter to the UN responded directly to the charges with, “Such provocative statements by the Saudis are nothing but an attempt to shift the blame and to distract attention from its war of aggression against Yemen.” Other Iranian officials, according to various reports, called the Saudi claims "fake news". 

    Saudi Arabia has cast itself as the victim of external Iranian and pro-Shia plotting after its internal weekend of chaos which included a missile attack from Yemen, the deaths of two princes and other high officials within a mere 24 hours, and an aggressive crackdown against dissent in the royal family which saw close to a dozen princes placed under house arrest. While lashing out at Iran's supposed campaign of destabilization in Yemen and in the region, it appears that the Saudis are set to step up proxy skirmishes with Iran across the Middle East, possibly with the support of regional allies

    Predictably, the US immediately backed Saudi claims of direct Iranian involvement in the Yemeni conflict while citing no specific evidence. US Ambassador to the UN Nikki Haley pointed to a prior missile fired in July which she said was an Iranian Qiam, and likened the previous attack with Saturday's missile launch, saying it "may also be of Iranian origin," and added that the ballistic missiles were not "a type of weapon that had not been present in Yemen before the conflict."

    Haley further claimed that Iran's Islamic Revolutionary Guard Corp‎s had violated UN resolutions on Yemen and Iran, and said, "We encourage the United Nations and international partners to take necessary action to hold the Iranian regime accountable for these violations."

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    Above: Why is Yemen ignored in US politics? The US itself has been an integral part of the coalition (also including Bahrain, Kuwait, UAE, Egypt, Sudan, and with the UK as a huge supplier of weapons) fighting Shia Houthi rebels, which overran Yemen’s north in 2014. Saudi airstrikes on the impoverished country, which have killed many thousands of civilians and displaced tens of thousands, have involved the assistance of US intelligence and use of American military hardware.

    Regardless of the degree to which Iran may or may not be involved in advising and assisting Houthi rebels, it is astounding that in the rare moments that US officials actually make reference to the humanitarian disaster in Yemen, it is nebulous "Iranian agents" that are blamed even while American and British bombs are dropped from Saudi-piloted jets on a civilian population. 

    Saudi Arabia has in recent years managed to use the UN to protect and enhance its image when it comes to questions of both domestic human rights abuses and rampant war crimes in Yemen. Absurdly, the autocratic country which has Wahhabi Islam for its official state religion continues to serve its 3-year term on the UN Human Rights Council.

    But it appears that for now that the Saudi "but Iran did it" line is enough to satisfy Nikki Haley and the US administration. 

  • Pension Panic In Paradise: Maui Residents Outraged Over 52% Spike In Pension Contributions

    Earlier this year, Maui County residents in the island state of Hawaii were somewhat less than ecstatic to learn that their property taxes were going to increase by approximately $29.7 million for fiscal 2018.  According to County Council member statements at the time, the additional funding was needed to help provide better public services for Maui residents.

    That said, fast forward just a few months and it looks like a substantial portion of those tax increases won’t go to provide better public services for Maui residents at all but rather will be plowed into the state’s massively underwater pension fund.  As The Maui News points out today, Maui’s contributions to the state Employees’ Retirement System will surge 52% over just the next couple of years…and that’s if everything goes to plan.

    “This is a massive, massive increase,” Williams said.

     

    Maui County paid $31 million into the pension fund in fiscal 2017. But now, its payments will increase to approximately $34 million in fiscal 2018, $36 million in fiscal 2019, $42 million in fiscal 2020 and $47 million in fiscal 2021.

     

    This amounts to a total of $36 million in extra payments by Maui County over the next four years alone — and its contributions are set to remain just as high every year afterward.

     

    Williams said the extra payments were needed to help the public pension system avert a crisis in unfunded liabilities, currently estimated at about $12.4 billion.

    Pension

    Meanwhile, as we’ve pointed out multiple times before, the victims of Hawaii’s ponzi failure will inevitably be the kids as funding gets diverted from public schools and into the pockets of a few retired public employees.

    Williams is correct that the increased payments will help the state pay down its unfunded liabilities and return to being able to meet its current obligations to state and county employee retirees. But a new crisis has begun — the crisis of taxpayers feeling the pressure to bail out the system.

     

    Williams acknowledged that the counties would be under more financial pressure.

     

    “We know over time it really crowds out other goods and social services that are required, whether it’s education or roads or hospitals, or you name it,” he said. “There are limited revenues available, and these are commitments that have been made and need to be paid.”

    But, maybe there’s a better way…we happen to know of a guy who recently paid $100 million for a large chunk of Kauai and is eager to settle a dispute with locals over his massive border wall (see: Protesters Plot “Border Wall” Rally For Tomorrow…At Zuckerberg’s Sprawling $100mm Hawaiian Estate)…perhaps a 1x gift to the Hawaii retirement ponzi is the perfect solution?

    Zuck

  • Trump Blames Gillespie For Virginia Defeat: "He Did Not Embrace What I Stand For"

    Update (8:45pm EST): In a somewhat terse tweet, President Trump wasted not time apportioning any blame squarely on the shoulders of establishment Republican Ed Gillespie for his loss

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    Update (8:10pm EST): MSNBC has called Virginia's Gubernatorial Race for Democrat Ralph Northam

    For now the spread is narrower than the 5.4pt spread Hillary won over Trump

    There is however a strong tendency shifting more democratic across the counties that have results in…

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    Here's a live feed of the results:

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    After a hard-fought campaign, one which turned downright vicious in recent weeks, Virginia's race for governor is now just hours away from being decided with polls set to close at 7pm EST.  The race pits Lt. Gov. Ralph Northam (D) against former Republican National Committee chairman Ed Gillespie (R) and will undoubtedly be spun as a referendum on the Trump administration no matter which side emerges victorious later this evening. 

    According to The Hill, given that this is an off-year race, strategists in both camps expect a low-turnout affair in which only about 41% of the state’s electorate is expected to cast a ballot.  And while small variations in voter turnout assumptions can have monumental impacts on polls (in addition to the already built-in liberal bias), the Real Clear Politics average shows a slight advantage for Northam headed into tonight.

    Of course, polls showed a similar advantage for Jon Ossoff heading into Georgia's special election earlier this year and we all know how that turned out (see:  The Russians Do It Again: Democrats Get Crushed In Georgia Election Despite 7x Spending Advantage).

    Not surprisingly, at least not in today's political climate, Virginia's governor race started off as a contest between two fairly moderate candidates but has quickly morphed into what a former Republican congressman described as a choice between "an MS-13 member and a Nazi."

    Northam’s campaign has spent the final weeks before Election Day tying Gillespie to President Trump, and Democratic outside groups have portrayed Gillespie supporters as white supremacists sympathetic to the white nationalists who rallied in Charlottesville.

     

    Gillespie has accused Northam of voting to allow sanctuary cities — though no Virginia jurisdiction counts itself as a sanctuary for undocumented immigrants — and therefore exacerbating a rising crime wave fueled by the MS-13 gang.

     

    Both pitches are aimed squarely at firing up the two sides’ respective bases.

     

    “We’re two one-party states,” said Tom Davis, a former Republican congressman from Northern Virginia. “This comes down to who shows up their base, which is why at the end of the campaign I’m having to choose between an MS-13 member and a Nazi.”

    Meanwhile, the need to rally the base sparked the following mini tweet storm from President Trump earlier this morning attacking Ralph Northam as "weak on crime, weak on our GREAT VETS, Anti-Second Amendment…and has been horrible on Virginia economy."

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    As the Washington Post points out, the key to a Northam victory will be high voter turnout in deep-blue, urban Northern Virginia cities while Gillespie will be relying on the more rural towns in the Southwest.

    Northam and the Democrats are concentrating on a deep-blue urban crescent that runs from Northern Virginia to Richmond and Hampton Roads and has been key to Democratic wins for statewide offices since 2009.

     

    Gillespie has been courting Republicans in white rural Southwest and Southside Virginia but also needs to peel away moderates and independents. He particularly needs votes in Northern Virginia, where he lives, to overcome Northam’s built-in advantage with Democrats in the most populous part of the state.

     

    African American voters are an important bloc for Democrats and have been pivotal in their ability to win statewide elections. Northam comes from Hampton Roads, home to a large African American population, and is backed by scores of black elected officials statewide, relationships that he cultivated over 10 years as a state lawmaker and lieutenant governor.

    Meanwhile, The Hill notes that just one Virginia county, Prince William County in North Virginia, has managed to pick the winning candidate in every race since 2004.

    Observers in both parties are zeroing in on a handful of key precincts in bellwether counties and cities, crafting base appeals aimed only at turning out their core voters.

     

    In the last nine closely-fought statewide elections — the presidential contests in 2004, 2008, 2012 and 2016; Senate contests in 2006 and 2014; and gubernatorial races in 2005, 2009 and 2013 — only two jurisdictions have picked the winning candidate every time: Prince William County, just south and west of the Washington Beltway, and tiny Radford City, on the I-81 corridor west of Roanoke.

     

    Six other jurisdictions have picked the winner in eight of those nine close elections: Albemarle County and Harrisonburg City, both near Charlottesville; Henrico County, in the Richmond suburbs; Northern Virginia’s Loudoun County; Northampton County, on the eastern shore; and Sussex County, south of Richmond.

    As a reminder, here is how Virginia's results turned out in the 2016 Presidential race.  Hillary won the state by nearly 5.5 points with large victories in Richmond, Alexandria, Norfolk and Virginia Beach.

    Of course, in the end, tonight's race will all come down to just how effective the Russians have been at manipulating the ignorant masses across Virginia who couldn't possibly form their own opinion without some nefarious Facebook advertisements to tell them how to vote.

  • Facebook Now Wants Your Nude Photos

    To combat ‘revenge porn’, Facebook is now asking users to send in their nudes, to test a new anti-revenge porn technology.

    A pilot program is currently underway in Australia, where one in five women aged 18-45 and one in four Indigenous Australians are victims. It appears, Facebook made the right choice to test out Australian users before a much wider and or global rollout occurs.

    Australian Government, e-Safety Commissioner Julie Inman Grant said victims of “image-based abuse” would be able to censor images before posted on Facebook’s platform(s).

    Grant further said, “we see many scenarios where maybe photos or videos were taken consensually at one point, but there was not any sort of consent to send the images or videos more broadly.”

    According to the Daily Mail, sending your nudes to Facebook will stop the so-called ‘revenge porn’ phenomenon:

    • The trial requires users to send naughty pictures to themselves via Facebook Messenger.
    • Ms Grant said: ‘It would be like sending yourself your image in email, but obviously this is a much safer, secure end-to-end way of sending the image without sending it through the ether.’
    • Once the image has been sent, Facebook will then ‘hash’ the image – create a digital fingerprint or link.
    • Ms Grant explained: ‘They’re not storing the image, they’re storing the link and using artificial intelligence and other photo-matching technologies.
    • ‘So if somebody tried to upload that same image, which would have the same digital footprint or hash value, it will be prevented from being uploaded.’
    • If the technology works , the photo should never appear on Facebook.

    Facebook announces measures against revenge porn

    Antigone Davis, head of global safety at Facebook, said ”the safety and well-being of the Facebook community is our top priority”. And to provide such safety, Facebook wants your nude pictures.

    She also added, “as part of our continued efforts to better detect and remove content that violates our community standards, we’re using image matching technology to prevent non-consensual intimate images from being shared on Facebook. These tools, developed in partnership with global safety experts, are one example of how we’re using new technology to keep people safe and prevent harm”.

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    We ask one simple question: What Rights Does Facebook Have to Your Photos?

    In Facebook’s terms of service: “You own all of the content and information you post on Facebook”.

    …but Facebook gets a “non-exclusive, transferable, sub-licensable, royalty-free, worldwide license” to your photos.

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    Conclusion– don’t take nudes and problem solved. Otherwise, some creepy techie in Silicon Valley along with artificial intelligence will be admiring what you do on a personal level. SkyNet called it wants your nude pictures.

  • "Explosive" Leaked Secret Israeli Cable Confirms Israeli-Saudi Coordination To Provoke War

    Early this morning, Israeli Channel 10 news published a leaked diplomatic cable which had been sent to all Israeli ambassadors throughout the world concerning the chaotic events that unfolded over the weekend in Lebanon and Saudi Arabia, which began with Lebanese Prime Minister Saad Hariri's unexpected resignation after he was summoned to Riyadh by his Saudi-backers, and led to the Saudis announcing that Lebanon had "declared war" against the kingdom. 

    The classified embassy cable, written in Hebrew, constitutes the first formal evidence proving that the Saudis and Israelis are deliberately coordinating to escalate the situation in the Middle East. 

    The explosive classified Israeli cable reveals the following:

    • On Sunday, just after Lebanese PM Hariri's shocking resignation, Israel sent a cable to all of its embassies with the request that its diplomats do everything possible to ramp up diplomatic pressure against Hezbollah and Iran.
    • The cable urged support for Saudi Arabia's war against Iran-backed Houthis in Yemen.
    • The cable stressed that Iran was engaged in "regional subversion". 
    • Israeli diplomats were urged to appeal to the "highest officials" within their host countries to attempt to expel Hezbollah from Lebanese government and politics. 

    Left: Israeli PM Netanyahu, Right: Saudi Prince Mohammed bin Salman

    As is already well-known, the Saudi and Israeli common cause against perceived Iranian influence and expansion in places like Syria, Lebanon and Iraq of late has led the historic bitter enemies down a pragmatic path of unspoken cooperation as both seem to have placed the break up of the so-called "Shia crescent" as their primary policy goal in the region. For Israel, Hezbollah has long been its greatest foe, which Israeli leaders see as an extension of Iran's territorial presence right up against the Jewish state's northern border. 

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    The Israeli reporter who obtained the document is Barak Ravid, senior diplomatic correspondent for Channel 10 News. Ravid announced the following through Twitter yesterday:

    • I published on channel 10 a cable sent to Israeli diplomats asking to lobby for Saudis/Harir and against Hezbollah. The cable sent from the MFA in Jerusalem [Israeli Ministry of Foreign Affairs] to all Israeli embassies toes the Saudi line regarding the Hariri resignation.
    • The Israeli diplomats were instructed to demarch their host governments over the domestic political situation in Lebanon – a very rare move.
    • The cable said: "You need to stress that the Hariri resignation shows how dangerous Iran and Hezbollah are for Lebanon's security."
    • "Hariri's resignation proves wrong the argument that Hezbollah participation in the government stabilizes Lebanon," the cable added.
    • The cable instructed Israeli diplomats to support Saudi Arabia over its war with the Houthis in Yemen. The cable also stressed: "The missile launch by the Houthis towards Riyadh calls for applying more pressure on Iran & Hezbollah."

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    Watch today's Hebrew broadcast Channel 10 News report which features the Israeli diplomatic cable – the text of which is featured in Channel 10's screenshot (below) – here

    Below is a rough translation of the classified Israeli embassy cable using Google Translate as released by Israel's Channel 10 News

    "To the Director-General: you are requested to urgently contact the Foreign Ministry and other relevant government officials [of your host country] and emphasize that the resignation of Al-Hariri and his comments on the reasons that led him to resign illustrate once again the destructive nature of Iran and Hezbollah and their danger to the stability of Lebanon and the countries of the region. 

     

    Al-Hariri's resignation proves that the international argument that Hezbollah's inclusion in the government is a recipe for stability is basically wrong. This artificial unity creates paralysis and the inability of local sovereign powers to make decisions that serve their national interest. It effectively turns them into hostages under physical threat and are forced to promote the interests of a foreign power – Iran – even if this may endanger the security of their country.

     

    The events in Lebanon and the launching of a ballistic missile by the signatories to the Riyadh agreement require increased pressure on Iran and Hezbollah on a range of issues from the production of ballistic missiles to regional subversion."

    Thus, as things increasingly heat up in the Middle East, it appears the anti-Iran and anti-Shia alliance of convenience between the Saudis and Israelis appears to have placed Lebanon in the cross hairs of yet another looming Israeli-Hezbollah war. And the war in Yemen will also continue to escalate – perhaps now with increasingly overt Israeli political support. According to Channel 10's commentary (translation), "In the cable, Israeli ambassadors were also asked to convey an unusual message of support for Saudi Arabia in light of the war in which it is involved in Yemen against the Iranian-backed rebels."

    All of this this comes, perhaps not coincidentally, at the very moment ISIS is on the verge of complete annihilation (partly at the hands of Hezbollah), and as both Israel and Saudi Arabia have of late increasingly declared "red lines" concerning perceived Iranian influence across the region as well as broad Hezbollah acceptance and popularity within Lebanon.

    What has both Israel and the Saudis worried is the fact that the Syrian war has strengthened Hezbollah, not weakened it. And now we have smoking gun internal evidence that Israel is quietly formalizing its unusual alliance with Saudi Arabia and its power-hungry and hawkish crown prince Mohammed bin Salman.

  • Growth In China Is Slowing: What Does It Mean For Commodity Prices

    By Gordon Johnson of Axiom Capital

    CHINA MACRO ANALYSIS: Growth in China is Slowing… Will it Continue, and What, if Any, will be the Impact to Commodity Prices?

    While steel prices have firmed to start this week on rumors that steel mill production cuts, particularly in China’s biggest steel-producing city Tangshan, have failed to meet targeted levels (link), we see this as temporary – steel prices are following iron ore and coking coal prices higher to start the week, driven, we believe, by speculators; because, if more steel supply is coming, the exact opposite should be occurring (i.e., steel prices should be falling).

    So why are we so concerned about cooling credit growth in China? Well, with economic growth slowing in China, the question is will it continue into 2018, and will it lead to bulk commodity prices deflating? In short, due mainly, we believe, to slower overall credit growth vs. prior mini-bubbles (i.e., 2009, 2013, and 2016), a material slowdown in economic growth or asset values in China’s market is inevitable – barring another massive ramp-up in credit issuance (which doesn’t appear to be “in the cards” near-term) – it’s simply math.

    Stated differently, mathematically explaining why slowing credit growth in China is a big deal, we note that if an economy is 50 and credit is 100, and the economy grows 10%/year, while credit grows 30%/year:

    • At the end of year 1, the economy is 55 and credit is 130. Total demand is 55 + 30 (i.e., new credit created) = 85;
    • At the end of year 2, the economy is 60.5 and credit is 169. Total demand is 60.5 + 39 = 99.5, up 17.1%;
    • At the end of year 3, the economy is 66.6 and credit is 219.7. Total demand is 66.6 + 50.7 = 117.3, up 17.8%;
    • At the end of year 4, the economy is 73.2 and credit is 285.6. Total demand is 73.2 + 65.9 = 139.1, up 18.6%.

    However, similar to what we’ve seen recently in China, if credit growth were to slow from 30% in years 1-4 to 15% in year 5, at the end of year 5 the economy would be 88.6 and credit would sit at 328.5. That’s total demand of 80.5 + 42.8 (i.e., the change in credit), or 123.4, representing a -11.3% fall Y/Y. Thus, as detailed in Exhibit 2 below, where China’s credit growth has slowed from +20% Y/Y as of 6/30/13 to +12.3% Y/Y as of 9/30/17, we see a material weakening in China’s total demand as fated – we feel the inevitable reckoning here has been delayed by pre-19th Party Congress distortions, which effectively “outlawed” select economic indicators from falling, as well as certain companies from reporting bad results, in an successful effort by President Xi to consolidate his power (via both government mandate and fiscal/monetary stimulus) – yes, you heard that right  – link.

    In summary, as observed by Tyler Durden, and supported by our work, thanks to ~$4 trillion (at least) in credit creation in 2017 – more than the rest of the developed world combined – China has been the proverbial (and debt-funded) "growth" dynamo behind the recent period of "coordinated global growth". Yet, with the pace of credit growth slowing throughout 2017, and likely to slow further looking ahead, we see outsized risk to both Chinese bulk commodity demand, and, by a process of elimination, global bulk commodity prices. 

    ANALYSIS: Chinese GDP was recently reported for 3Q17; and, as many expected, at +6.8% Y/Y (Exhibit 1), it was spot on Consensus estimates. However, we contend that the recent slowing in China’s credit growth (Exhibit 2), a sizeable risk to the country’s continued economic growth, is a byproduct of both: (a) more debt in China going toward rolling existing credits and recapitalizing interest vs. finding its way into the real estate/construction markets (we estimate that China’s banking system boasts ~$40tn in debt at present, up from just ~$3tn in 2006 [i.e., +1,233%] – against just ~$2tn in equity and ~$1tn in liquid reserves; by comparison, at the height of the global financial crisis [“GFC”], the US banking system had ~$16.5tn in debt and ~$1tn in equity), and (b) the Chinese government’s crack-down on runaway credit issuance (link).

    In short, while not a Consensus call at present, we believe the slowing in China’s Y/Y credit growth (Exhibit 2), more recently, likely means a further slowing in a number of economic indicators crucial to commodity prices – China’s October data deluge, due out in 1-to-2 weeks, we believe will be a negative catalyst for bulk metals prices. Furthermore, with: (a) Y/Y credit growth in China slowing (defined as Total Social Financing [“TSF”] + local government debt issuance), and as a result (b) the partials that contribute to GDP growth in China slowing, (c) deteriorating new construction start growth, (d) falling home price growth, (e) spiking debt costs, and (f) limited signs of cooling steel output, we see the rest of this year being defined by overall headwinds for global bulk commodity prices, driven by a government-coordinated slowing in China’s economy. As this unfolds, we expect a number of bulk commodity prices in China to move lower, spilling over into the global markets.

    Yet, with our conversations with a number of pundits leading us to the conclusion that the Consensus among the “smart money” is that bulk commodity strength in emerging markets will continue, we see the potential for weaker commodity prices to surprise many, driving a number of metals and mining stocks lower. On this theme, our top short ideas consist of: FMG (SELL), CLF (SELL), X (SELL), GATX (SELL), TRN (SELL), and to a lesser degree RIO (SELL).  

    Exhibit 1: China GDP – Quarterly Y/Y % Growth

    Source: Bloomberg.

    Exhibit 2: China Total Debt Growth vs. Commercial Bank Asset Growth, %Y/Y


    Source: Peoples' Bank of China (PBOC), Axiom Capital Research.

    A CLOSER LOOK AT GDP. When observing the partials that contribute to China’s GDP, while mixed, the data that support China’s construction economy were notably weaker. That is, as detailed below (Exhibit 3), for the month of September, fixed asset investment at +7.5% Y/Y was the weakest result since 12/31/99 (i.e., the height of the global financial crisis), followed by industrial production at +6.7%, which has remained subdued for some time, and finally retail sales at +10.3%, marking the only Y/Y “bright spot”. Furthermore, as detailed in Exhibit 4 below, in October, China’s manufacturing PMI tumbled from a 5-year high, due, we believe, to officials: (a) attempting to rein in debt, (b) clamping down on housing market speculation, and (c) focusing on pollution limits.

    Exhibit 3: Growth Internals – China (FAI, Industrial Production, & Retail Sales)


    Source: National Bureau of Statistics, Axiom Capital Research.

    Exhibit 4: China PMI Readings Turn Down


    Source: China Federation of Logistics and Purchasing, Axiom Capital Research.

    WHAT ABOUT CREDIT/DEBT? According to our checks, at the 19th Party Congress a few weeks back (i.e., China’s once-in-every-five-year leadership transition), China’s top policymakers reiterated their efforts to contain excessive risk-taking in the financial system beyond 2017. More specifically, as detailed here, China leadership pointed to a continuation of efforts aimed at limiting debt, with hints of more regulation targeted at the interbank and wealth management product (“WMP”) arenas. And, as would be expected, on the back of these comments, the yield on three-year AAA notes in China – the most common grading for Chinese corporate debt – spiked higher, now up 20bps over just the past 3 weeks; stated differently, over the course of October, the cost of AAA-rated corporate debt in China increased 29bps, or the highest level in nearly 6 months. And, while the spread between these notes and government debt (i.e., the China 10yr bond) has recently climbed to 102bps (from just 86bps in early July), we are still a long way from this year’s peak of 134bps set in May.

    In short, while we see an outright cash shortage as unlikely, with waning bond issuance (Exhibit 6) weighing on credit availability in China – following acute support in 2015 and 2016, incremental bond issuance in China has become a headwind to credit growth – we feel the “smart money” should be betting on a continued slowing in China’s economy over the near-term (although, based on discussions with a number of our clients recently, this is not Consensus thinking at present). This will likely invite weaker bulk commodity prices, which contrasts with the viewpoints from many of our peers at present.

    Exhibit 5: China AAA Corporate Bond Yield – Moving Higher Since Congress Meeting


    Source: Bloomberg.

    Exhibit 6: China Bond Issuance – Sharp Downturn in 2017 (weighing on credit)


    Source: Chinabond.com.

    SO WHAT? Interestingly, in our discussions with investors over the past several weeks, the response we get to slowing Chinese data is simply… “so what, stocks don’t fall, and China growth will be strong next year”. While, in general, we acknowledge this sentiment is widespread, we notice a number of troubling trends that bear watching, including: (1) China construction new starts (i.e., China residential + commercial + office construction) slowed to +6.8% Y/Y YTD through September (marking the third consecutive month YTD new start growth has fallen Y/Y, and the weakest number in 10 months) – Exhibit 4, (2) completions fell to -1.9% YTD through September Y/Y, or the lowest level since mid-2015, and (3) space sold fell to +7.6% YTD through September Y/Y, or the lowest level since late 2016.

    So what’s the big deal you ask? Well, when considering residential + commercial + office construction activity accounts for nearly half of China’s steel consumption, and China represents roughly half of the world’s steel consumption, with growth in these areas in China slowing, it seems that the outlook on global steel demand could be in much worse shape than many steel market pundits are predicting (i.e., Cleveland Cliffs [CLF; SELL], Steel Dynamics [STLD; NC] & Nucor [NUE; NC]).

    Exhibit 7:  China Residential + Commercial + Office Construction Starts


    Source: National Bureau of Statistics, Axiom Capital Research.

    WHAT ABOUT HOME PRICES IN CHINA? In September, China home prices slowed further, rising +0.19% M/M (or the weakest growth since late 2015) and +6.40% Y/Y (or the weakest growth since mid-2015) – Exhibit 8. Furthermore, when looking at the data segmented by Tiered city, headwinds are being felt everywhere, with Tier 1 cities’ growth seemingly set to go negative Y/Y, Tier 2 not that far behind, and lower Tier cities now beginning to feel the pinch of falling prices – Exhibit 8. And, with the historical correlation seen in falling Y/Y home price growth in China and weakness in bulk commodity prices (Exhibit 9), we see the deterioration in China’s residential values as a harbinger of bulk commodity price deflation ahead. Caveat emptor.

    Exhibit 8: Avg. Price Change of New Residential Buildings, by Tiered-Cities, %Y/Y (rhs)


    Source: National Bureau of Statistics (NBS), Axiom Capital Research.

    Exhibit 9: China New Home Price Growth Y/Y% vs. Iron Ore Port Inventories


    Source: Bloomberg Intelligence, Shanghai SteelHome, Axiom Capital Management.

    HOW DOES ONE GAUGE STEEL DEMAND IN CHINA? In September, amid environmental restrictions and weaker-than-expected demand, Chinese crude steel production was weak (up 5.3% Y/Y to 71.83mt, but down -3.7% M/M). Furthermore, when adjusting for induction furnace production of ~50mt/year (which was shut down in 2017, although these figures were not previously reported in China crude steel output, making 2017 production look higher than it actually is), crude steel production in China was roughly flat YTD through September 2017, and down Y/Y for the month of September 2017. Along these lines, after falling -4.2% M/M in July 2017, September 2017 CISA-member mill inventory is down -9.8% through 9/20/17 M/M (Exhibit 10). Thus, with inventory down M/M, as well as production, we believe demand is also likely suffering at present. That is, in our view, with both crude steel output unexpectedly down in September M/M, and CISA-member mill inventories also falling M/M in September (i.e., displaying, in our view, a lack of confidence by traders inside China on any sustained steel price increase over the near-term), we believe steel demand in China is currently in retreat (a potential negative for steel prices for the rest of this year).

    Exhibit 10: CISA Members' Daily Crude Steel Output & Inventory (mn m.t.)


    Note: Days inventory takes 10-day avg. member-mill inventories divided by 10-day daily mill output. Source: CISA, Mysteel, and Axiom Capital Research.

  • Donna Brazile Has A Few Theories About Who Might've Killed Seth Rich

    Donna Brazile’s new book is out, and reporters at the Daily Caller, who apparently have already combed through the book, have published a series of stories summarizing the book’s most embarrassing and shocking allegations about the Clinton campaign and DNC.

    Their reporting shows Brazile taking aim at other erstwhile political allies like former President Barack Obama, whom she blamed for leaving the DNC in disarray, while also revealing who she believes may have been responsible for Seth Rich’s murder.

    Brazile says a chill ran down her spine when Hillary Clinton refused to concede to Donald Trump on election night of 2016 after a hushed mood had fallen over crowds of supporters at the Javits Center, who had arrived in high spirits, expecting their candidate to be swiftly anointed by the American electorate.

    Unfortunately for Clinton’s most hard-core supporters, the voters had other plans. Furthermore, Brazile said Clinton’s refusal reminder her of Democratic presidential candidate Al Gore’s reaction to the election results in 2000, when Gore refused to concede and demanded a recount after results showed that George W. Bush had won.

    Clinton adviser Minyon Moore “told me that at 1:30 a.m. John Podesta was going to address the crowd at the Javits Center and tell them to go home,” Brazile writes. “A shiver came over me, a memory of the Gore defeat, where we had Bill Daley go out and address the crowd because Gore was still wrestling with the results, as I knew Hillary was tonight."

    In another surprising – and ultimately revelatory – anecdote, Brazile recounted how former Democratic National Committee chair Rep. Debbie Wasserman Schultz did not seem particularly concerned about the cyber breach that led to Wikileaks’ publication of internal emails.

    DWS even waited more than a month after first learning of it in April. Then she refused to apologize to those affected by the breach.

    As for the murder of Seth Rich – the subject of perhaps the most controversial claims advanced by Brazile so far – Brazile has a couple of theories – though neither involve the Democratic Party.

    I felt some responsibility for Seth Rich’s death. I didn’t bring him into the DNC, but I helped keep him there working on voting rights. With all I knew now about the Russians’ hacking, I could not help but wonder if they had played some part in his unsolved murder.

     

    Besides that, racial tensions were high that summer and I worried that he was murdered for being white on the wrong side of town. [My friend] Elaine expressed her doubts about that, and I heard her.

     

    The FBI said that they did not see any Russian fingerprints there.

    Finally,  Brazile wrote that Obama “leeched [the party] of its vitality” in the lead-up to the 2016 election campaign.

    “We had three Democratic parties: The party of Barack Obama, the party of Hillary Clinton, and this weak little vestige of a party led by [Florida Rep. Debbie Wasserman Schultz] that was doing a very poor job getting people who were not president elected,” Brazile.

    * * *

    As the excerpts that were published before the book’s official release made clear, Brazile has a particularly strong distaste for Robby Mook, Clinton’s former campaign manager.

    The intensity of her dislike is laid bare throughout her book. With that in mind, here are 12 choice quotes about Mook, courtesy of the Daily Caller.

    1) The Cultish Nature of the Mook Crew

    “I want to talk about the arrogance and isolation of the Clinton campaign and the cult of Robby Mook, who felt fresh but turned up stale, in a campaign haunted by ghosts and lacking in enthusiasm, focus, and heart."

    2) ‘What Does This Have To Do With The Russians?"

    “From offstage, I could hear Robby Mook, Hillary’s campaign manager, pretaping a segment before the roundtable. Robby was talking about the Russians, and the Russians, and the Russians, and I thought, ‘What does this have to do with the Russians?‘"

    3) ‘Leaving You With The Impression That He Has Listened To You'

    “Try as I might to explain it to Brooklyn, all of my urgent pleas felt like they were words falling down a well. Take Hillary’s campaign manager, Robby Mook. He had this habit of nodding when you are talking, leaving you with the impression that he has listened to you, but then never seeming to follow up on what you thought you had agreed on."

    4) ‘Everybody Worshiped The Data And The Analytics'

    “The young men that surrounded Robby Mook–and they were all men in his inner circle–had mastered a cool and removed style of politics. They knew how to size up voters not by meeting them and finding out what they cared about, what moved their hearts and stirred their souls, but by analyzing their habits. They could take all the things you bought while shopping online in the last six years, analyze them, and say they were confident that they knew pretty much all there was to know about you. … Everybody worshiped the data and the analytics."

    5) ‘I’m About To Kill Robby'

    “One night when I went home I called Charlie Baker to warn him that I was struggling to keep Dolores contained. ‘Charlie, I’m about to kill Robby,’ I told him. ‘And it ain’t going to be pretty.'"

    6) Does He Not Know Who I Am?

    “Did he not understand that I had long-standing friendships with most of his superiors in Brooklyn, with the exception of Robby Mook?"

    7) ‘Believed He Understood The Country By The Cluster Of Information About Voters He Had Gathered'

    “Robby Mook believed he understood the country by the cluster of information about voters he had gathered.

     

    I remember saying to him, after he described this very smart way he had determined which candidate people in a particular neighborhood were likely to vote for, that he was neglecting the whole story."

    8) He Kind Of Unnerved Me

    “He has a cool gaze of someone who has a determined sense of values and judges everyone by those principles. That inner cool makes someone like me who runs hot feel as though I’m bouncing off the walls when I talk."

    9) ‘Robby Was Unwavering'

    “Even when Clinton squeaked by in the Iowa caucuses and when she took a drubbing in New Hampshire, Robby was unwavering. He had a plan and he was sticking to it."

    10) ‘They Saw Me Only As Someone Who Could Rouse Up The Emotions'

    “Robby asked me to address the staff and volunteers, and I gave a speech off the cuff that was designed to remind them of the reasons we do this…

     

    They saw me only as someone who could rouse up the emotions, but they were not interested in my practical advice. My feeling was that data was a tool for engagement, but there was no substitute for that human touch. This was a message that sunk to the carpet in the antiseptic rooms of Brooklyn."

    11) ‘Dismissed My Report With A Condescending Tone'

    “Mook’s lieutenant Marlon Marshall ‘dismissed my report with a condescending tone in his responses. He and Robby didn’t appreciate challenges to their strategy.'"

     

    …And in the spirit of saving the best for last…

    12) ‘I Could Hear Tears In His Voice'

    “As the train pulled out of Philadelphia my phone rang. It was Robby Mook.

     

    ‘Madam Chair, I’m so sorry,’ he said. I could hear the tears in his voice. ‘I’m so sorry.'

     

    ‘I know, Robby,’ I said. ‘You did your best. You worked hard. We all did."

    Now that the book has been released and read through by members of the media, we imagine all of the explosive revelations contained therein have, at this point, been widely discussed.

    However, even if people continue to disgaree about the purity of Brazile's motives, one thing is certain: She has managed to deeply embarrass a Democratic Party establishment that has somehow retained its grip on power, even after the drubbings Democratic candidates have taken during the last two election cycles. Perhaps Brazile’s revelations – particularly the exposure of the Clinton campaign-DNC joint fundraising agreement will go a long way toward undermining the very forces that advocated for Clinton and her particular brand of antisceptic incrementalism.
     

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