- Whiff of Panic in Miami’s Condo Market
By Wolf Richter, WOLF STREET
The Miami-Dade County condo market is coming under severe stress, and turmoil is spreading. There are two aspects: supply and sales activity overall, and the more obscure but highly indicative “preconstruction market.”
Preconstruction condos are a favorite playground for condo flippers. They buy the units before construction begins. When the building is completed, some of the buyers (in recent years 30% to 40%) flip their units at a profit, benefiting from the run-up in condo prices in the interim. This activity is crucial in helping developers fund their working capital. Alas, the math has stopped working.
The overall condo and townhouse market in Miami-Dade County is already in trouble. In October, sales plunged 30% year-over-year, while inventory for sale rose to over 14,000 units as of November 1, according to StatFunding’s Preconstruction Condo Market Update.
At the current sales rate, that makes for over 13 months’ supply. The blue bars in the chart from StatFunding represent the swooning sales (in units, left scale). The green line represents the ballooning inventory (in units listed for sale, right scale):
There is some seasonality. So here is another way of looking at these sales on a year-over-year basis (red line = 2016 sales):
Behind the scenes, it looks a lot worse: the preconstruction market is in the process of unraveling. A total of 4,525 condos were completed between 2012 and 2016 at 20 large projects (80+ units each). Of them, 878 “preconstruction” units are now listed for sale by investors who’d bought from developers before construction began – 19% of the total units in those projects! At the 234-unit Marina Palms North, completed a year ago, 93 units are for sale.
But only 47 resales have actually occurred over the last six months. This makes for a supply of 112 months, or nearly a decade, at the current sales rate. At seven of those developments, with a combined 209 units listed for sale, no sales have occurred over the past six months, and the months’ supply would be infinite.
Of those 47 sales, 43% produced net losses after commissions. Now even more flippers are willing to take a loss: 70 units have been listed with underwater asking prices, up from 44 on August 1 and from 14 on May 1. But losses will be higher: 30% of the units that were sold at a loss had asking prices above break-even.
And it will spread from there: These losses are establishing a down-trend in the “comparable sales” data – the Holy Grail by which the industry values properties – which will depress future asking and sales prices further.
Just then, new supply will flood the market. Over the next 24 months, another 10,328 units at large developments are scheduled to be completed.
If the recent average of 30% to 40% of these new units is listed for resale, it would add another 3,614 units to the list, on top of the 878 units of 2012-2016 vintage listed today. This would increase the supply to 468 months at the current sales rate. That would be 39 years’ supply!!
No one will wait 39 years to sell a condo. Something is going to give. Prices may drop until demand materializes. Sellers may flood the already flooded rental market with these units. Or as Andrew Stearns, Founder and CEO of StatFunding put it, “something unexpected may occur due to imbalances in the market.”
At the five large developments completed between August 2015 and June 2016 with a total of 912 units, 156 units are for sale. Developers still own 123 units. Only 25 of them are listed for sale and are included in the 156. The remaining 98 developer-owned units are not listed for sale. Developers are just sitting on them. It’s the shadow inventory. The units listed for sale and the shadow inventory combined amount to 254 units, or 28% of all units in the developments.
After the prior condo crash during the Financial Crisis, and through to 2015, all developers sold all units. In the past, the moment developers got stuck with unsold condos marked “the inflection point in a condo cycle.” In the Press Release, Stearns said, “It looks like we may be experiencing the same thing all over again.”
But unsold units can be costly for developers. StatFunding:
Some developers have not repaid their construction loans, others have taken out bridge loans. Developers are also responsible for taxes, maintenance fees, and insurance of unsold units. What will developers do to liquidate unsold units?
Market gurus are eagerly proclaiming that this time, the condo cycle is different because preconstruction condos are sold with a “50% deposit.” But this isn’t a 50% deposit. It’s a series of five 10% progress payments due at at the time of reservation, at contract, at groundbreaking, at concrete-pour at the 15th floor, and at Top Off. They typically spread over 24 months.
When a buyer defaults on a progress payment in this market, with little possibility of selling the unit, everyone from the lenders to the developers is bending over backwards to accommodate the nonpayment. Also, alternative lenders have sprung up with loans for the defaulted progress payments. The actual number of defaults is a secret closely guarded by developers (though their lenders know).
But when the project is completed and the buyer with defaulted progress payments attempts to get a mortgage to finalize the purchase, which is what the developer wants to happen, the bank sees the defaulted progress payments along with the stress in the condo market and might not offer a mortgage. This is when the whole deal falls apart, even as the buyer is in arrears with the progress payments. Hence, the value of that “50% deposit” to bail out the developer can be minimal.
Progress payment defaults “are on the rise,” according to Stearns, “and everyone in the preconstruction condo ecosystem is trying to cope with the issue.” These defaults are “a new risk to the market.”
And now the ultimate nightmare has happened for preconstruction condo flippers: The first big condo project in the area has stalled in this condo cycle, “which could be a sign of things to come,” Stearns says.
In September, the developer of the 247-unit H3 Hollywood ran out of funds and halted construction halfway into it. This is in Fort Lauderdale, Broward County, which is adjacent and to the north of Miami-Dade County. While they’re different markets, this incident is a harbinger of what may occur in Miami.
If the developer fails to get funding to finish the project, buyers of preconstruction units are at risk of losing all or almost all of their deposits. Stearns:
“Most preconstruction buyers do not understand that most of their deposit is used as working capital to build the condo project, and that if the project fails, they might lose their deposit.”
Foreclosures suddenly spike most since the last Housing Bust. Read… What the Heck’s going on with Foreclosures? Why this Spike?
- Stay Alert, America: The Worst Is Yet To Come
Submitted by John Whitehead via The Rutherford Institute,
“Those who do not remember the past are condemned to repeat it.”—Philosopher George Santayana
Stay alert, America.
This is not the time to drop our guards, even for a moment.
Nothing has changed since the election to alter the immediate and very real dangers of roadside strip searches, government surveillance, biometric databases, citizens being treated like terrorists, imprisonments for criticizing the government, national ID cards, SWAT team raids, censorship, forcible blood draws and DNA extractions, private prisons, weaponized drones, red light cameras, tasers, active shooter drills, police misconduct and government corruption.
Time alone will tell whether those who put their hopes in a political savior will find that trust rewarded or betrayed.
Personally, I’m not holding my breath.
I’ve been down this road before.
I’ve studied history.
I know what comes next.
It’s early days yet, but President-elect Trump—like his predecessors—has already begun to dial back many of the campaign promises that pledged to reform a broken system of government.
The candidate who railed against big government and vowed to “drain the swamp” of lobbyists and special interest donors has already given lobbyists, corporate donors and members of the governmental elite starring roles in his new administration.
America, you’ve been played.
This is what happens when you play politics with matters of life, death and liberty.
You lose every time.
Unfortunately, in this instance, we all lose because of the deluded hypocrisy of the Left and the Right, both of which sanctioned the expansion of the police state as long as it was their party at the helm.
For the past eight years, the Left—stridently outspoken and adversarial while George W. Bush was president—has been unusually quiet about things like torture, endless wars, drone strikes, executive orders, government overreach and fascism.
As Glenn Greenwald points out for The Washington Post:
Beginning in his first month in office and continuing through today, Obama not only continued many of the most extreme executive-power policies he once condemned, but in many cases strengthened and extended them. His administration detained terrorism suspects without due process, proposed new frameworks to keep them locked up without trial, targeted thousands of individuals (including a U.S. citizen) for execution by drone, invoked secrecy doctrines to shield torture and eavesdropping programs from judicial review, and covertly expanded the nation’s mass electronic surveillance…
Liberals vehemently denounced these abuses during the Bush presidency… But after Obama took office, many liberals often tolerated — and even praised — his aggressive assertions of executive authority. It is hard to overstate how complete the Democrats’ about-face on these questions was once their own leader controlled the levers of power… After just three years of the Obama presidency, liberals sanctioned a system that allowed the president to imprison people without any trial or an ounce of due process.
Suddenly, with Trump in the White House for the next four years, it’s all fair game again.
As The Federalist declares with a tongue-in-cheek approach, “Dissent, executive restraint, gridlock, you name it. Now that Donald Trump will be president, stuff that used to be treason is suddenly cool again.”
Yet as Greenwald makes clear, if Trump is about to inherit vast presidential powers, he has the Democrats to thank for them.
A military empire that polices the globe. Secret courts, secret wars and secret budgets. Unconstitutional mass surveillance. Unchecked presidential power. Indefinite detention. Executive signing statements.
These are just a small sampling of the abusive powers that have been used liberally by Obama and will be used again and again by future presidents.
After all, presidents are just puppets on a string, made to dance to the tune of the powers-that-be. And the powers-that-be want war. They want totalitarianism. They want a monied oligarchy to run the show. They want bureaucracy and sprawl and government leaders that march in lockstep with their dictates. Most of all, they want a gullible, distracted, easily led populace that can be manipulated, maneuvered and made to fear whatever phantom menace the government chooses to make the bogeyman of the month.
Unless Trump does another about-face, rest assured that the policies of a Trump Administration will be no different from an Obama Administration or a Bush Administration, at least not where it really counts.
For that matter, a Clinton Administration would have been no different.
In other words, Democrats by any other name would be Republicans, and vice versa.
This is the terrible power of the shadow government: to maintain the status quo, no matter which candidate gets elected.
War will continue. Surveillance will continue. Drone killings will continue. Police shootings will continue. Highway robbery meted out by government officials will continue. Corrupt government will continue. Profit-driven prisons will continue. Censorship and persecution of anyone who criticizes the government will continue. The militarization of the police will continue. The government’s efforts to label dissidents as extremists and terrorists will continue.
In such a climate, the police state will thrive.
The more things change, the more they will stay the same.
We’ve been stuck in this political Groundhog’s Day for so long that minor deviations appear to be major developments while obscuring the fact that we’re stuck on repeat, unable to see the forest for the trees.
This is what is referred to as creeping normality, or a death by a thousand cuts.
It’s a concept invoked by Pulitzer Prize-winning scientist Jared Diamond to describe how major changes, if implemented slowly in small stages over time, can be accepted as normal without the shock and resistance that might greet a sudden upheaval.
Diamond’s concerns are environmental in nature, but they are no less relevant to our understanding of how a once-free nation could willingly bind itself with the chains of dictatorship.
Writing about Easter Island’s now-vanished civilization and the societal decline and environmental degradation that contributed to it, Diamond explains, “In just a few centuries, the people of Easter Island wiped out their forest, drove their plants and animals to extinction, and saw their complex society spiral into chaos and cannibalism… Why didn’t they look around, realize what they were doing, and stop before it was too late? What were they thinking when they cut down the last palm tree?”
His answer: “I suspect that the disaster happened not with a bang but with a whimper.”
Much like America’s own colonists, Easter Island’s early colonists discovered a new world—“a pristine paradise”—teeming with life. Almost 2000 years after its first settlers arrived, Easter Island was reduced to a barren graveyard by a populace so focused on their immediate needs that they failed to preserve paradise for future generations.
To quote Joni Mitchell, they paved over paradise to put up a parking lot.
In Easter Island’s case, as Diamond speculates:
The forest…vanished slowly, over decades. Perhaps war interrupted the moving teams; perhaps by the time the carvers had finished their work, the last rope snapped. In the meantime, any islander who tried to warn about the dangers of progressive deforestation would have been overridden by vested interests of carvers, bureaucrats, and chiefs, whose jobs depended on continued deforestation… The changes in forest cover from year to year would have been hard to detect… Only older people, recollecting their childhoods decades earlier, could have recognized a difference.
Sound painfully familiar yet?
Substitute Easter Island’s trees for America’s republic and the trees being decimated for our freedoms, and the arrow hits the mark.
Diamond observes, “Gradually trees became fewer, smaller, and less important. By the time the last fruit-bearing adult palm tree was cut, palms had long since ceased to be of economic significance. That left only smaller and smaller palm saplings to clear each year, along with other bushes and treelets. No one would have noticed the felling of the last small palm.”
We’ve already torn down the rich forest of liberties established by our founders. They don’t teach freedom in the schools. Few Americans know their history. And even fewer seem to care that their fellow Americans are being jailed, muzzled, shot, tasered, and treated as if they have no rights at all. They don’t care, that is, until it happens to them—at which point it’s almost too late.
This is how the police state wins. This is how tyranny rises. This is how freedom falls.
A thousand cuts, each one justified or ignored or shrugged over as inconsequential enough by itself to bother. But they add up.
As I make clear in my book Battlefield America: The War on the American People, each cut, each attempt to undermine our freedoms, each loss of some critical right—to think freely, to assemble, to speak without fear of being shamed or censored, to raise our children as we see fit, to worship or not worship as our conscience dictates, to eat what we want and love who we want, to live as we want—they add up to an immeasurable failure on the part of each and every one of us to stop the descent down that slippery slope.
It’s taken us 200 short years to destroy the freedoms our founders worked so hard to secure, and it’s happened with barely a whimper of protest from “we the people.”
So when I read about demonstrations breaking out in cities across the country and thousands taking to the streets to protest the threat of fascism from a Trump presidency, I have to wonder where were the concerns when access to Obama came easily to any special interest groups and donors willing and able to pay the admissions price?
When I see celebrities threatening to leave the country in droves, I have to ask myself, where was the outcry when the government’s efforts to transform local police into extensions of the military went into overdrive under the Obama administration?
When my newsfeed is overflowing with people wishing they could keep the Obamas in office because they are so cool, I shake my head in disgust over this “cool” president’s use of targeted drone strikes to assassinate American citizens without any due process.
When legal think tanks are threatening lawsuits over the possibility of Trump muzzling free expression, I can’t help but wonder where the outrage was over the Obama administration’s demonizing and criminalization of those who criticized the government.
And when commentators who previously dismissed as fear-mongering and hateful any comparison of the government’s tactics to Nazi Germany are suddenly comparing Trump to Hitler, I have to wonder if perhaps we’ve been living in different countries all along, because none of this is new.
Indeed, if we’re repeating history, the worst is yet to come.
- A Record 25% Of Used Car Trade-Ins Are Underwater
We have frequently written about the unsustainable trends in new car sales in the United States created by the combination of lower rates, loosening underwriting standards and voracious demand for new securitizations by wall street and pension funds that will do just about anything for an extra 20bps of yield.
Today, we find that Edmunds’ “Q3 2016 Used Vehicle Market Report” reveals that many of the same problems also afflict the used auto market. The most startling takeaway from the report is that the percentage of used cars being traded in with negative equity values continues to spike and currently stands at an all-time high 25%. Moreover, the average balance of the negative equity also continues to rise and stood at $3,635 for Q3 2016, up from roughly $2,750 in Q3 2011.
Meanwhile, the average used car price also continues to rise and stood at $19,200 as of Q3 2016. This implies that, since most people simply roll their negative equity into their new loans (because, why not?), many used car buyers are likely sitting on loans where ~15-20% of their outstanding balance simply reflects their negative equity from their previous car.
But wait, there’s more (think weekend CNBC infomercial). Despite rising average used car prices and rising negative equity, average monthly payments for used cars have managed to stay pretty much flat since Q3 2011. Obviously, monthly payments are determined by 3 variables: beginning loan balance, interest rate and term. While interest rates have certainly come down from Q3 2011, they haven’t declined nearly enough to offset a $3,300 increase in starting principal balance which indicates that, like new car loans, used car loan terms are getting stretched out further and further to manage monthly payments.
Of course, none of this is terribly surprising…just another ponzi scheme, courtesy of accommodative fed policies, which will all come crashing down at some point. And while timing when bubbles will burst is always tricky, with terms already maxed out, treasury yields spiking and used car purchasers extremely sensitive to monthly payments we suspect the time could very well be near.
- Can President Trump Really "Open Up Libel Laws"?
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Ken White over at law blog Popehat has written a very useful article on whether or not Trump is likely to be the existential threat to free speech that so many are concerned about.
Fortunately, he argues that free speech is pretty well protected at the judicial level, adding that most contemporary attempts to whittle away at First Amendment rights actually emanate from “liberal” judges targeting hate speech, as opposed to conservative ones.
Here’s the article: Lawsplainer: About Trump “Opening Up” Libel Laws.
Donald Trump famously said he’d like to “open up” libel laws. How much should that concern you?
From my perspective — as a First Amendment advocate and an opponent of Trump — it should concern you as an attitude about speech, but not much as a policy agenda.
Let’s start with what he said.
“One of the things I’m going to do if I win, and I hope we do and we’re certainly leading. I’m going to open up our libel laws so when they write purposely negative and horrible and false articles, we can sue them and win lots of money. We’re going to open up those libel laws. So when The New York Times writes a hit piece which is a total disgrace or when The Washington Post, which is there for other reasons, writes a hit piece, we can sue them and win money instead of having no chance of winning because they’re totally protected,” Trump said.
I begin with the proposition that Trump is a bullshitter. The polite way to put that is that he says things that are not intended to be taken as factual statements. Was this one? Was it merely emotive? Did he think he could do this sort of thing? It’s anybody’s guess. My guess it that it was mostly bullshit — worrying in terms of his attitude towards free expression, but not a policy agenda.
Let’s talk about the substance, such as it is.
Trump complains about the press being able to run “hit pieces” and purposely “negative and horrible and false” articles. Part of that is true and part is false. The press can absolutely run hit pieces and negative and horrible articles. We don’t have sedition laws any more, and it’s not illegal to be biased or “unfair” in a philosophical sense. Only false statements of fact can be defamatory. Arguments, characterizations, insults, and aspersions can’t be, unless they are premised on explicit or implied false statements of fact.
When a public figure like Trump sues for defamation, they must prove that the defendant made a false statement with actual malice — that is, they must show that the statement was false and that the defendant either knew it was false or recklessly disregarded whether or not it was false. “Reckless disregard” means something like deliberately ignoring manifest signs that the statement was false. That’s been the standard since New York Times v. Sullivan in 1964. Note that even under this standard, a media outlet that wrote a “purposely . . . false” statement of fact can be held liable. It’s a difficult standard, but it can be done, as Rolling Stone found out this month.
So. There are two impediments to Trump and his sympathizers being able to sue whomever they want for “hit pieces” or “negative” and “horrible” statements. First, there’s the requirement that defamation involve a statement of fact, not an opinion or insult. Second, there’s the actual malice standard that applies to defamation claims against public figures.
Trump doesn’t have a clear way to “open up” either one.
Defamation is a creature of state law, not federal law. When you sue someone for defamation, you do so under a statute or the common law of one of the states, not under federal law. You might sue in federal court if that court has jurisdiction (a tedious discussion I’ll spare you today), but that doesn’t make defamation law federal — you’d still be suing under state law. Federal law touches defamation law only to this extent: since 1964 both state and federal courts have applied First Amendment standards to defamation claims, and First Amendment law is often developed by federal courts. In addition, a few overarching federal laws limit state defamation law (for instance, Section 230 of the Communications Decency Act, which says that a service provider isn’t liable for defamation based on what a user posts, and the SPEECH Act, which prevents enforcement of foreign libel judgments in U.S. courts unless those judgments comply with First Amendment standards).
As President, Trump will appoint federal judges, from the Supreme Court to the various Courts of Appeal to the trial judges on the many District Courts. But that’s not a clear or easy path to “opening up” defamation law and changing either the actual malice standard or the requirement that defamation involve false statements of fact. The Supreme Court has supported the First Amendment very strongly in the last generation, particularly in comparison with other rights. The Court has repeatedly rejected recent attempts to create new exceptions to the First Amendment or to narrow it. Consider Snyder v. Phelps, in which the Supreme Court ruled 8-1 that Westboro Baptist Church protests at funerals were protected speech. That represented a firm refutation of the notion that speech could be limited because it is hurtful or offensive. Or consider the somewhat obscure but incredibly important United States v. Stevens, in which the Court — ruling 8-1 again — overturned a federal law against “crush videos” (don’t ask) and sternly rebuked the government’s position that courts can create new ad hoc exceptions to the First Amendment based on a weighing of the value of speech. Or consider Reed v. Town of Gilbert last year, in which the Court unanimously (though with some justices taking a different route) held the line on the idea that laws that restrict speech based on content are subject to strict scrutiny.
Unlike, say, Roe v. Wade, nobody’s been trying to chip away at Sullivan for 52 years. It’s not a matter of controversy or pushback or questioning in judicial decisions. Though it’s been the subject of academic debate, even judges with philosophical and structural quarrels with Sullivan apply it without suggesting it is vulnerable. Take the late Justice Scalia, for example. Scalia thought Sullivan was wrongly decided, but routinely applied it and its progeny in cases like the ones above.1 You can go shopping for judicial candidates whose writings or decisions suggest they will overturn Roe v. Wade, but it would be extremely difficult to find ones who would reliably overturn Sullivan and its progeny. It’s an outlying view — not chemtrial-level, but several firm strides in that direction. Nor is the distinction between fact and opinion controversial — at least not from conservatives. There’s been some back and forth over whether opinion is absolutely protected (no) or whether it might be defamatory if it implies provably false facts (yes) but there’s no conservative movement to make insults and hyperbole subject to defamation analysis. The closest anyone gets to that are liberal academics who want to reinterpret the First Amendment to allow prohibitions of “hate speech” and other “hurtful” words. It seems unlikely that Trump would appoint any of these.
Indeed, fake liberals wanting to restrict free speech is a trend I’ve focused on for many years.
See:
Obama Enters the Media Wars – Why His Recent Attack on Free Speech is So Dangerous and Radical
Executive Director of the Kansas City Library System Issues Dire Free Speech Warning
Glenn Greenwald Confronts American “Liberals” Trying to Destroy Free Speech
Speechless – UCLA Engages in Absurd, Anti-Intellectual and Dangerous Attack on Campus Free Speech
Here We Go…Slate Magazine Bashes the First Amendment
In short, there’s no big eager group of “overturn Sullivan” judges waiting in the wings to be sent to the Supreme Court. The few academics who argue that way are likely more extreme on other issues than Trump would want.
So: whether or not Trump really wants to “open up” defamation law, it’s unlikely he can.
The statement remains concerning, though, because it displays a contempt towards First Amendment values and freedom of the press. It carelessly conflates false statements and negative coverage. It encourages the public to scorn First Amendment rights, and the public already does that enough already. It also likely encourages defamation litigation, which by its nature silences speech through the expense and stress of litigation even when the defendant prevails. For those, I condemn Trump.
- Bond Bloodbath Becomes Buying-Panic As Treasury Yields Tumble Most Since June
After 3 days of carnage in US Treasuries, pushing longer-dated bond yields notably above US equity dividend yield – and following both Citi and Goldman reports that Trumponomics may be less inflationary than expected (and the yield surge is tightening financial conditions) drastically, longer-dated bond yields are dropping notably in the early Asia session. 10Y yields are down 8bps – the most since June as 30Y drops back below 3.00%.
The yield on the 10Y US Treasury note is now 12bps 'cheap' to the dividend yield from the S&P 500 – the highest since Dec 2015…
And as Bloomberg reports, Fed speakers this week are unlikely to be as hawkish as the market, which could dent market pricing and lead to profit-taking on rates and USD, according to Citi managing director of G-10 FX strategy Steven Englander.
Were the Fed to indicate that it thought three hikes were possible, we could see a lot more damage than we have seen till now, Englander writes in note.
Citi however expects a far more dovish tone given:
- Fed doesn’t know the nature of Trump’s fiscal measures that will be implemented, and they likely won’t be shovel ready
- It’s cognizant of Dollar Index strength as it approaches log-term highs of 100.33
Fed would rather react to any revival of “animal spirits” rather than anticipate them
Bottom line to Fed view is:
- FOMC will accelerate hikes if fiscal thrust takes economy into red zone, although where this zone lies is unclear
- Fed may allow inflation to run and thus recoup some of the prior inflation undershoot
- Fed won’t want to tighten prematurely and create a sinkhole for growth in 2017
- Fed will move judiciously until the nature of the stimulus that emerges and the timing of its impact are clear
As we detailed earlier, Goldman is less enthused about Trumponomics inflationary aspect...
- Following Donald Trump’s victory in the US presidential election, the focus now turns to the potential economic implications of his proposed policies. The November 12 US Economics Analyst used the Fed staff’s FRB/US model to analyse the consequences for the US economy. In today’s companion piece, we assess the potential global economic spillovers from the Trump agenda using our global macro model.
- Following the US simulations, we analyse four of Mr. Trump’s policy proposals, including fiscal stimulus, trade tariffs, restrictive immigration policies and a hawkish tilt in Fed policy. We first analyse the policies individually and then combine them into possible packages, including our own assumed policy outcomes.
- Fiscal stimulus has positive global spillovers, as stronger US demand boosts imports for foreign goods and services. Dollar strength reinforces the positive spillovers to DM economies with floating exchange rates, but limits the gains in EM economies. The spillovers to China, for example, depend on the extent to which the Renminbi appreciates with the dollar and the net effects are less positive for EM economies that rely heavily on dollar-denominated debt.
- The other components of Mr. Trump’s agenda (trade policies, immigration and Fed) have negative global spillovers as US inflation is higher and US growth slows. The growth drag is generally muted for DM economies with floating exchange rates but significantly negative for some EM economies (including China).
- Taken together, our analysis suggests that Mr. Trump’s policies might act as a modest drag on global growth. DM growth receives a brief boost from the fiscal stimulus but then weakens and spillovers into EM economies are negative throughout. Moreover, the risks around this base case appear asymmetric. A larger fiscal package could boost global growth moderately more in the near term, but a more adverse policy mix would likely act as a significant drag on world growth in subsequent years.
All of which appears to have sparked buying again in bond land as 30Y yield is back below 3.00%
While still relatively small compared to the surge in yields, this is still the biggest yield drop in 10Y since June…
The drop in yields could be a major problem for the exuberance in US financial stocks (which have run way ahead of credit)…
And perhaps it's time for US stocks to catch down to the world's reality?
- How Trump can make billions for America Inc. with no risk, and support the US Dollar
A simple plan to boost the American financial markets and bring back unknown billions in US Dollars, and to solidify the US Dollar as the only World Reserve Currency
Several simple steps to make money for America Inc. and create an environment for growth at the same time
Trump’s transition team announced the repealing of Dodd-Frank (LOUD CHEERING). This ‘Dodd-Frank’ act is a cancer, it has been eating away at the financial industry and the entire economy, like a wrecking ball smashing what was left of the economy after the housing crash.
One of the abused children of this damage (there were many) was the Currency market, or FOREX. We will here elaborate on key points here for the Trump Administration which no doubt the market will agree with.
Dodd-Frank is a giant Octopus with 15,000 rules and 20,000 + pages – there’s probably not a single human being on the planet who has read and understands the entire ‘law’. We will elaborate here on a very specific part of Dodd-Frank, all that pertains to FOREX.
List of steps to take to reform Dodd-Frank by reversing FOREX specific rules, that will boost markets, increase profits, reduce volatility, save on costs & fees, and bring money back to USA:
1) Delete the FIFO rule. FOREX is not futures. There’s absolutely no utility to FIFO as it pertains to FX. Some algorithmic traders may have 100, 200, or 300 orders on an account. Exiting positions in the exact manner that they were entered, in such situation, is impossible. Why should any trader have to exit positions in the same order as they were entered? (Use the Hotel analogy, Trump owns 12 hotels, some are profitable some not – why should Trump sell the 1st hotel built – and not just the 3 losers?)
2) Increase the leverage. Increased leverage IS NOT correlated to increased risk. The regulators force members to say that an increase in leverage is an increase in risk. This is mathematically and logically incorrect. Increase in leverage MAY increase risk, however it is NOT CORRELATED. For example, if your use of the leverage is for hedging purposes, in this scenario, increased leverage DECREASES risk. There are few hedging possibilities for multi-nationals in USA (such as vanilla options), Spot FX remains the only hedging option for many small businesses. This may be as simple as opening an Oanda account and taking opposite positions against accounts receivable. In such a scenario, the profit or loss from such a position is a wash against the real business money flows, in which case, a high amount of leverage can be useful. The decrease in leverage was a knee-jerk reaction to quell the rampant fraud, but the real effect was simply that back alley dicers as we call them in FX, simply moved their accounts to London. The decrease in leverage has no economic benefit, doesn’t serve any purpose other than forcing billions of dollars outside of USA. The argument that 500:1 leverage is for gamblers is very weak, these people don’t understand FX. In the stock market it might be ridiculous, however FX doesn’t move that much. In a typical week the EUR/USD may move 1% or 2% – in extreme cases up to 5%, such as during Brexit when the GBP/USD moved 9%. Compared to any other market, this is very small. The brightest example provided by Google (GOOG) which is up 1,415.39% since IPO. This is an impossibility in FX – if the EUR/USD is up 50% in a year, it will likely be down 50% the next. Currencies have a tendency to revert to the mean, and even when they trend, the changes are slight on a percentage basis. For this reason, if a small degree of leverage was used as in stocks, it would be impossible to ever turn a profit by trading FX. And, incidentally, increased leverage will support the Fed’s QE program as Liquidity Providers (LPs) extend credit to US Dollar markets they are effectively creating credit. The current leverage policy on FX is contrary to the Fed’s QE program.
3) Delete the Hedging rule. The most ridiculous of all rules is the so called ‘hedging’ rule that prohibits being long & short the same currency on the same account. Regulators claim it’s a good rule because if you are long and short you are effectively flat, but it charges a fee (the spread) and thus, the rule saves money to customers. This is warped and twisted thinking, incoherent and not based on reality – similar to their statement that “Foreign Futures is Forex” – no, Foreign Futures are Foreign Futures. FOREX is Foreign Exchange of currencies, or spot trading, and NOT futures. FOREX is always traded ‘off-exchange’ by the nature of what it is. FOREX is a banking market, traded by interbank FOREX dealers – not on a futures exchange like the CME. What traders mostly complain about this rule – if someone wants to hedge, why not let them? If the brokers EXPLAIN to customers this flawed logic, that’s one thing – that’s acceptable. Make customers tick a box that they understand the potential for unnecessary costs- but allow them to do it! Because practically, when trading FOREX, you need hedging. This rule simply forced many strategies to stop working completely, or move overseas.
4) Bring back the PAMM. PAMM stands for Percent Allocation Management Module. PAMM is the FOREX equivalent of a futures ‘block account.’ The problem is for Forex managers, trading many client accounts as one. It’s a simple solution – independent software combines many small accounts into one ‘master’ account, which enables the manager to trade one account vs. hundreds or thousands of individual accounts.
5) Reduce the net-cap for RFEDS to a reasonable $5 Million if they are STP (Agent only). FXCM, Oanda, and Gain Capital have a Monopoly on retail FX. And, even though FXCM has been under DOJ investigation, hundreds of client lawsuits, countless fines from the CFTC, NFA, and other regulatory bodies, hundreds upon hundreds of customer complaints; they continue to be one of the few options for retail traders which practically, is no option. The chances of making money at FXCM are slim to none, as they say in FX you have 2 hopes; no hope and Bob Hope. FXCM takes screwing the customer to a ‘new fangled art form’
6) Allow Broker Dealers to offer FX. The NFA is no more an FX regulator than FINRA. FX should be regulated on a banking level, perhaps by the Fed. It was thought that currencies are financial commodities, and since FX futures were already offered at the CME, the CFTC seemed to be the natural regulator for FX. A currency is not a security, but it does meet the definition of a security if you invest in it. Although the IRS considers investment in foreign currency as debt under some rules; some investors will place their funds in a currency with the intent of appreciation of capital. Or to put it differently, they are afraid of the deterioration of value of their domestic functional currency. This was obvious before “Brexit” when lines formed outside of banks from customers who wanted to exchange their British Pounds for US Dollars, Euros, and Swiss Francs. In any case, the securities business is in many aspects far more complex than commodities. Securities brokers, broker dealers, and other FINRA licensed organizations are also under far greater scrutiny, have higher costs of compliance, have more compliance related staff, etc. Why keep their noses out of the feeding trough?
7) Stop intimidating foreign brokers through FATCA. There isn’t any law that strictly prohibits a retail US Citizen from opening a foreign FX account. However, since many larger institutions in general are afraid they will be “Swissed” hitman style by goons as described in Confessions of an Economic Hitman, they simply do not allow US Citizens to open accounts. US Citizens have become persona non-grata in the FX world. US Citizens can’t even visit their websites. In order to allow the foreign brokers to fairly compete with new US broker upstarts, this practice should be stopped. If the tax code is to be overhauled, visit FATCA and specifically, make FATCA reporting easy and simple; most importantly for institutions. TD Ameritrade doesn’t whine and complain about issuing 1099s at the end of the year – it’s mostly automated. It’s been “Turbo Taxed” by accounting departments. It should be just as easy for foreign institutions to report US citizen taxpayer obligations. Oh and by the way – this will also stop foreign non-reporting of income, which previously was a big black hole!
Practically, the majority of rules apply only to retail investors which in today’s environment, means 99% of the population. The rules don’t apply to the one percenters or in FOREX LINGO QEPs, ECPs. Leverage still applies, but ECPs can easily open accounts in London, Singapore, and Sydney legally and circumvent all these rules which are guaranteed to choke any strategy.
Why did Dodd-Frank make all these silly rules?
The reasoning was, that because FX frauds used these tools, they should be eliminated. But this is severely flawed logic that would never work in the real world – that would be like saying, let’s bomb a village because one or two criminals live there. Dodd-Frank and the climate in general cleaned up a lot of the fraud – thank you. Now the fraud is gone. But instead of harassing legitimate traders and investors, regulators should invest in fraud prevention tools. The list here can be very long. Some suggestions:
A managed reporting system such as the NFA uses for RFEDs like FORTRESS but for CTAs, Hedge Funds, and other CPOs who choose to participate in the verified reporting system. Sites such as myfxbook.com and fxblue.com provide this service technically to traders – but there is no auditing function. One of the largest frauds has to do with financial reporting, more specifically, the misreporting of performance numbers. The solution is very simple – a centralized reporting system that automatically captures performance data (there are only so many trading venues) and ‘verifies’ these numbers are true and accurate, and also can return statistics such as peak to valley draw downs, etc. Each product can have an ID, similar to an NFA ID, where investors can check in an official database, which is secured and encrypted, all the numbers. Building such a system is extremely cost effective, it would reduce regulatory costs as well, reduce fraud, and boost investor confidence. In fact, it would cause foreigners to invest in USA. Something like this doesn’t exist in Europe. Let’s bring that money into USA, support our markets, support the economy. Wall St. and Chicago should be the trading centers of the world – not London. What happened to the American Revolution, that 200 years later we’ll regulate and tax our financial businesses out of America and back to the British? WTF
What would be the effect on the markets if these suggested changes were implemented?
1) There would be competition in retail FX – this would make trading better, as competition in any market does. There was competition in the US before Dodd-Frank and in the legitimate FX world (discounting the fraud) there were many legitimate companies that had a good offering.
2) Billions of dollars would flow back to USA to be held by institutions in New York, Chicago, Charlotte, Los Angeles, and others.
3) Instead of a new growth industry of algorithmic FX taking off in foreign countries, it would happen right here at home in Charlotte, Chicago, New York, San Francisco, Atlanta, and in other trading centers.
4) Stabilization of FX markets in general; this will be nebulous to quantify, however it’s not difficult to surmise, that if there is more competition, more volume, and less fees – that the FX market will be more stable. Because the US Dollar is the world’s reserve currency – that’s really important! Also, it is critical that the United States take a global role in administrating FX markets, because of the USD world reserve status.
Look at a quick practical example. Here’s a strategy that didn’t lose in 4 years of real live trading www.magicfxstrategy.com – but it won’t work with the ridiculous US rules. The stock market is going to tank, hedge funds are flat on the year, 11 Trillion is in negative yielding assets. Investors will seek such strategies. But in this case, it will be market centers like London, Singapore, Sydney, Auckland, Limassol, Moscow, and others – that will receive the millions of dollars that will pour into such strategies. Why not, make Wall St. the FX capital of the world? Isn’t that the idea of global capitalism?
Or checkout some eye-opening classics: Wall Street and the Bolshevik Revolution. Armand Hammer: The Untold Story – Confessions of an Economic Hit Man. This is a MUST READ for any trader who claims to understand the markets.
[pictured above, this mountain is in North Carolina (Not Switzerland)]
- What Hedge Funds Bought And Sold In Q3: The Full 13-F Summary
Today was the deadline for hedge funds to submit their Q3 13-F filings, which considering they represent a snapshot in time as of Sept 30, prior to both the October volatility spike and the presidential election, are likely totally irrelevant by this time.
Among the more notable changes was Berkshire taking new stakes in American Airlines, Delta and United, sending the airlines sector higher after hours. Large-cap tech stocks remain favored as many funds bought or boosted stakes in Apple, Alphabet, Facebook and Alibaba just ahead of the post-Trump FANG rout.
David Tepper’s Appaloosa Management bought into the surge in technology stocks in the third quarter, taking new stakes in Apple, Yahoo and Facebook. Tepper, who moved Appaloosa to Miami Beach from New Jersey this year, added the social media company to his portfolio, as did Sarasota-based Aviance Capital Management, and Tampa-based Suncoast Equity. Boca Raton’s American Asset Management, Polen Capital and Steinberg Global, along with Aviance Capital Partners in Naples and St. Johns Investment in Jacksonville all boosted stakes in Facebook.
And speaking of Appaloosa, we find it amusing that the biggest long equity position of the wealthiest hegde fund manager possibly alive today, is none other than the market itself: at $541 million, Tepper’s top holding is the SPY.
Below is a summary, courtesy of Bloomberg of 3Q equity holdings from Sept. 30 13-F filings by the top hedge funds, with some of the new, added, cut and exited positions for each.
ADAGE CAPITAL
- New stakes in KMI, SWK, AYI, BABA, NOC, ITW, MAS, WLK, ASH, EMN
- Boosts AAPL, MRK, CF, PNC, GOOGL, TAP, HDS, EMR, APC
- Cuts BMY, AAL, HON, AGN, MMM, T, BURL, PCG, ADP
- No longer shows HES, NSAM, POR, CFX, HE, STI, NLSN, HSY, LDOS, SBGL
APPALOOSA MANAGEMENT
- New stakes in FB, AAPL, YHOO, TPX, BAC, CFG, QCOM, PNC, VMW, DAL
- Boosts KMI, GT, GLBL, HCA, ETP, HDS
- Cuts LUV, NXPI, GOOG, SYF, GM, WHR, MHK, HAIN, WMIH, ALL
- No longer shows FOXA, CYH, TGI, IR, FOX, PPG, QHC
BAUPOST GROUP
- New stakes in SYF, NSAM, ODP, CPAA
- Boosts PBF, FOXA
- Cuts OLN, INVA, VMW, OREX, PYPL, KIN, LNG
- No longer shows C, CAR, OZM
BLUEMOUNTAIN
- New stakes in KLAC, SHPG, NXST, SAEX, XPO, TWNK, MRO
- Boosts SYMC, CI, LRCX, MYGN, TV, KSS, ALSN, WST, URI
- Cuts MBLY, ARMK, AVGO, APD, BBY, TPX, AGN, IAC
- No longer shows MDVN, WLTW, VRNT, FNG, JWN, CCE, BIOS
BERKSHIRE HATHAWAY
- New stakes in AAL, QSR, DAL, UAL
- Boosts CHTR, PSX, LBTYA, V, WBC, BK
- Cuts WMT, KMI, DE
- No longer shows SU, QSR, MEG
BRIDGEWATER ASSOCIATES
- New stakes in SWN, ENDP, IBM, RCI, CAG, TU, UPS, LB, JCP
- Boosts AAPL, INTC, MSFT, CSCO, CPB, AMAT
- Cuts GG, ABC, ADS, AEM, SPLS, LYB, BIIB, FDX, JNJ, TOL
- No longer shows ABX, MET, MRK, PH, CVS, PEP, LNC, NTAP, RCL, PVH
CORVEX MANAGEMENT
- New stakes in JCI, CCE, JPM, HAIN, TMUS, BAC, CSOD, BIIB
- Boosts ZAYO, PAH, MPC, COMM, TMH, SIG
- Cuts WMB, BEAV, BLL
- No longer shows VER, GOOGL, KSU
ELLIOTT MANAGEMENT
- New stakes in MPC, ECA, GEO, CXW, RAD, GPI, ABG
- Boosts AA, SYMC, MENT, IMPV, LOCK, BBL, MITL, HLF, IPG
- Cuts FTNT, NE, FBIO, CAB
- No longer shows CNP, SBS, PAY, NBHC, QLYS, CYBR, SPSC, RNG, QEP, EGN
EMINENCE CAPITAL
- New stakes in DNKN, CBG, EXPE, CTRP, FTNT, COMM, MENT
- Boosts ADSK, HUM, CF, WEN, YHOO, ARRS, MS, ANTM, ZNGA, GPI
- Cuts BIDU, TTWO, CAA, FCE/A, SPGI, BERY, CCE, ICE, PTC, KAR
- No longer shows FOSL, DLTR, TRIP, LGF, AMBA, SJM
ETON PARK CAPITAL
- New stakes in FANG, TWTR, GOOG, KMI, CAB, IMPV
- Boosts MSFT, CLR, MHK, AMZN
- Cuts SYT, WB, SBAC, AFI, SINA, ADBE
- No longer shows CRTO, ODP, ECR
GLENVIEW CAPITAL MANAGEMENT
- New stakes in UHS, TWX, ENDP, PAH, AAPL, HPE, CCE, BEAV, TLRD, WLTW
- Boosts CBS, ANTM, Q, HUM, WMB, HCA, FDC, CSC, ESRX
- Cuts ABBV, LH, HTZ, TEVA, CHTR, FLEX, MAN, VER, FMC, CI
- No longer shows WOOF, FIS, SBAC, TMUS, SYT
GREENLIGHT CAPITAL
- New stakes in X, GEO
- Boosts AER, CPN, UHAL, MYL, VOYA, RAD
- Cuts KORS, AAPL, TTWO, TWX, ACM, TPH, AGR, DSW, QHC
- No longer shows FOXA, HUM, PRGO, ABC, HTZ, CYH, LAMR, VOD
HAYMAN CAPITAL MANAGEMENT
- Cuts NMIH
HIGHFIELDS CAPITAL MANAGEMENT
- New stakes in RAD, HSY, LBTYA, COST, SYT, HRI, PDCE, TRU, AA
- Boosts HLT, BEN, MAR, APC, SU, CF, MIK
- Cuts TEVA, WBA, WMB, MSFT, HTZ, PFE, CBS, TRIP, TSLA
- No longer shows PEP, BP, RDS/B, GG, GS, SWN, VRX, CC
ICAHN ASSOCIATES
- Boosts LF, HTZ, IEP
- Cuts AGN, NUAN, CVRR
- No longer shows CHK, RIG
ICONIQ CAPITAL
- New stakes in ADSK, RH
- Boosts JD
- Cuts FB
- No longer shows TSLA
JANA PARTNERS
- New stakes in UHS, PCLN, MDLZ, VIAB, TWTR, SEM, VVV, KATE
- Boosts HDS, JCI, WLTW, CSC, HPE, MPC, HRS
- Cuts GOOG, LBRDK, CCE, CAG, USFD, CSRA, GPK
- No longer shows WBA, MSFT, EXPE, PF, AN, ADS, SYF, BERY, ASH, RACE
LONE PINE CAPITAL
- New stakes in EBAY, EXPE, BABA, TV, AVGO, HLT, ICE, KMI, WMB, ALGN
- Boosts EA, ATVI, CHTR, VMC, COMM, DLTR, MNST
- Cuts PCLN, FB, V, LULU, YUM, EQIX, STZ, SHPG, ULTA, MHK
- No longer shows NOC, BUD, MA, PYPL, SHW, PXD, ANET, GOOGL, AXP
LONG POND CAPITAL
- New stakes in WFC, GGP, SHW, CAA, CZR, MPW
- Boosts EQR, ESS, LEN, MAR, INXN, MSG, BYD
- Cuts TCO, H, FCE/A, MTH, LQ, PGRE, BXMT, HLT
- No longer shows CBG, KEY, SFR, BPOP, CFG, BLDR, SRC, PFSI
MARCATO CAPITAL
- New stakes in BWLD, IAC, ADS, TEX, AIRM, FC, PNK, RH, HMTV
- Boosts CSC, VRTS, ABTL, BLDR, LIND
- Cuts BK, SIG, URI, LBRDK, M, CBPX, LBRDA, HZN, GT, BID
MAVERICK CAPITAL
- New stakes in DG, QCOM, SUM, SWFT, TMUS
- Boosts AAPL, BUD, LVLT, ORLY, UHS
- Cuts ADBE, AXP, CMCSA, FB, MYL
- No longer shows AGN, ARMK, CL, JACK, TSN
MELVIN CAPITAL
- New stakes in GOOGL, YY, EA, BABA, MA, MGM, COST, AVP, MAS, CALM
- Boosts FB, LOW, CASY, SHW, ZTS, DE, STZ, ADBE, SUM, PLAY
- Cuts DLTR, NFLX, AMZN, PCLN, SBUX, BURL, MHK, MNST, KATE, V
- No longer shows WMT, CRM, NWL, SIG, CMG, JACK, USFD, GRUB, PLKI
MOORE CAPITAL
- New stakes in GOOGL, MA, PCLN, AVGO, FL, SIVB, GXP, TWX, CPAA
- Boosts FB, BABA, STZ, EA, HD, V, CL, APC
- Cuts BAC, PPG, WLK, AME, EQIX, M, HUBB, GIS, AMZN
- No longer shows in C, JPM, ABX, CMA, WBC, CONE, CAG, JCP, CQH, ICE
OMEGA ADVISORS
- New stakes in HES, P, WMB, SSNC, TIME, PE, RICE, TSE, VVV
- Boosts SHPG, PVH, BERY, ASPS, NBR, EPD, TCRD, GPOR, MDCA, MVC
- Cuts GOOGL, CIM, NRZ, AGN, TRCO, DOW, MSFT, ASH, EA, ETFC
- No longer shows UNH, TRGP, C, NFLX, SLW, FCB, TJX, CP, AZO, RLGY
PASSPORT CAPITAL
- New stakes in CX, MRVL, PE, SINA, SYMC
- Boosts BABA, CXO, JCI, RICE, WDC
- Cuts AGN, CF, LBTYA, SRE, TAP
- No longer shows CHTR, CSCO, EQT, GE, YHOO
PAULSON & CO
- New stakes in HPE, STE, EBAY, HUM, HCA, MAR, CVS
- Boosts BIIB, LOXO, FB, FDX, BSX, ETSY, LIVN, BCRX
- Cuts MYL, TEVA, GRFS, SHPG, AU, AGN, NG, CIE, AKRX
- No longer shows BEAV, Q, CI, RAD, PCLN, PRGO, EGRX, KTWO
PERRY CORP.
- Cuts ALLY, AER
- No longer shows AIG, BLL, TWX, JNJ
POINT72 ASSET MANAGEMENT
- New stakes in GOOGL, CMCSA, GOOG, MCD, AME, HON, FTV, LUV, BCR, WFM
- Boosts FB, BG, SRPT, AAPL, YHOO, SHW, LOW, WNR, HAL, V
- Cuts AMZN, KAR, TSO, SBH, SIG, LLY, INTC, LNCE, SLB, CMG
- No longer shows GLW, KORS, RLGY, CRM, SWN, UTX, VMW, MXIM, BLL, WCC
POINTSTATE CAPITAL
- New stakes in BAC, VRX, HUM, MRK, CFG, ATVI, MPC, CXO, CHK, APC
- Boosts AVGO, ADBE, ECA, CLVS, UNP, AMZN, COG, PH, GOOGL, APD
- Cuts TEVA, CELG, CHTR, STZ, XEC, SWN, BHI, EOG
- No longer shows AGN, CPN, EGN, DYN, RRC, AET, FDC, DVN, SGEN, SPB
SANDELL ASSET
- New stakes in SVU
- Boosts KLAC
- No longer shows AKRX
SOROS FUND MANAGEMENT
- New stakes in WMB, HPE, INTC, UBNT, FHB, SYMC
- Boosts LBRDK, VMW, ABX, AMZN, TIVO, WUBA, AMAT, SUPV, VIAV,
- Cuts DISH, ZTS, EBAY, KHC, EXAR, MDLZ, ATVI, AAL, EXA, MJN
- No longer shows GLPI, CIT, ESNT, CBPO, JD, W, SYNA, CMCSA, HUM, POWI
STARBOARD VALUE
- New stakes in PRGO, HPE, STC, CAB, TRNC, FRGI, IMPV
- Boosts MRVL, M, AAP
- Cuts WRK, CW, BAX, PNK
- No longer shows DRI, DK, NXST, FCPT
TEMASEK
- New stakes in ACIU, RDS/B, CTRP
- Boosts EROS
- Cuts BABA
- No longer shows Q
TIGER GLOBAL
- New stakes in BABA, GOOG, CMCSA, VIPS, V, AWI, WUBA
- Boosts PCLN, AAPL, MA
- Cuts CHTR, JD, FLT, ONDK, ETSY, AMZN
- No longer shows XRS, SQ
THIRD POINT
- New stakes in AAPL, BABA, HUM, V, CAG, WMB, KDMN
- Boosts FB, GOOGL, GD, TAP, SPGI, BID, DHR, LBTYA, SHW
- Cuts AGN, YUM, MHK, CB, AME, CHTR, BUD, SHPG, UNP
- No longer shows LOW, SEE, ATVI, CCE, HRS, WLL, MRO, TSO, DVN
TRIAN FUND
- Boosts BK, SYY
- Cuts GE
TUDOR INVESTMENT
- New stakes in SHW, JCI, FLT, HUM, WEX, RJF
- Boosts MRK, BIIB, ADS, PEP, FB, GOOGL, BCR, MA, UNH
- Cuts ESRX, LH, POST, FICO, IAC, PX, DPS, MDLZ, KLAC, V
- No longer shows PG, ARMK, PNR, NWL, HR, AMAG, NSA, RCL, ADP, LII
VIKING GLOBAL
- New stakes in BAC, LYB, UHS, CRM, LOW, AZN, LBTYA, LBTYK, MET, AMSG
- Boosts MSFT, CP, STZ, GOOGL, ECA, GOOG, JD, MA, APC, RICE
- Cuts AVGO, TEVA, NFLX, LLY, APD, BABA, WBA, WUBA, KITE
- No longer shows NWL, AGN, DVA, ICE, CTRP, PXD, MMC, HIG, AET, HCA
Source: Bloomberg
- Devastated Left Calls For An End To The Electoral College
The disaffected left is increasingly lashing out at the foundation of American democracy by calling for the electoral college system to be abolished. Over the weekend we noted that Michael Moore had seemingly lost his mind after visiting Trump Tower and leaving a note for the President-elect which read: “You lost. Step aside.”
I was able to get into Trump Tower & deliver him a message: “You lost. Step aside.” SS took the note I wrote up & went 2 give it to him.
— Michael Moore (@MMFlint) November 12, 2016
Moore also tweeted out a “to-do” list for democrats which included a suggestion to “abolish the electoral college and electronic voting.”
My 2nd To-Do List: #6. Abolish electoral college & electronic voting, Election Day on the weekend, restore voting rights of former prisoners
— Michael Moore (@MMFlint) November 13, 2016
But calls to abolish the electoral college system aren’t just coming from the far-leftists like Moore. As Politico pointed out, failed 1988 presidential candidate Michael Dukakis, is also calling for the system to be scrapped saying it “should have been abolished 150 years ago.” As a side note, Dukakis lost both the electoral college and popular vote in a landslide victory for George H.W. Bush in 1988.
“Hillary won this election, and when the votes are all counted, by what will likely be more than a million votes. So how come she isn’t going to the White House in January? Because of an anachronistic Electoral College system which should have been abolished 150 years ago,” he wrote Sunday in an email to POLITICO.
“That should be at the top of the Democratic priority list while we wait to see what a Trump administration has in store for us. So far, all we know is that dozens of lobbyists are all over the Trump transition — a strange way to drain the swamp.”
Meanwhile, Hillary has also called for an end to the electoral college in the past:
“I believe strongly that in democracy we should respect the will of the people, and to me that means it’s time to do away with the Electoral College and move to the popular election of our president,” she said at the time, shortly after her own election to the Senate. “I hope no one is ever in doubt again about whether their vote counts.”
Of course, with a 2016 electoral college map that looks like the one below, it’s no wonder that Democrats would want to abolish a system that provides influence to people outside the major metropolitan areas of the Northeast and West Coast.
But despite what the disaffected left now says about the “outdated” electoral college system, there was and still is solid reasoning behind it’s existence. The power of the individual states weighed very heavily on the founding fathers who created the electoral college system specifically to avoid the mass centralization of power in high population density areas. And, while we certainly understand why the left would look to now discredit such a system, the fact is that there would be no United States of America without it as smaller states simply never would have opted in to the union.
Per the map above, absent the electoral college system, presidential elections would be almost entirely determined by a handful of cities including New York City, Boston, Chicago, Los Angeles and San Francisco. And while the left would prefer to ignore the opinions of those in the “fly-over” states, we would suggest that their representation in the electoral college is a vital underpinning of American democracy…without such representation we’re not sure why the fly-over states would choose to remain a part of a union where they had no say.
- Key Reversal Day in Oil Markets (Video)
By EconMatters
We discuss some oil technicals, and the upcoming drivers for some short covering ahead of contract rollover, and key OPEC Meetings and Production Cut Decision regarding the potential for Oil to have bottomed during this month long downtrend in Price. If OPEC Cuts the Oil Markets are Positioned Very Badly for said Event!
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