Dec 16

Today’s News 16th December 2016

  • Obama Vows to Exact Revenge Against Russia for Unsubstantiated Russian Hacking Claims

    Those who deny the assertions put forth by the Washington Post, citing unnamed and nefarious CIA sources, regarding Russian intervention in the US elections, are being labeled as traitors. Conservatives view all of the Russian hysteria business as the final stage of grief being played out in public, by a completely broken and mentally addled globalist movement left in shambles. The media is attempting to up the rhetoric by moving past the discovery phase of the investigation, without ever having to actually prove that Russia meddled with the elections, in order to attempt to implicate the GOP and of course Donald Trump. Nevermind the fact that Julian Assange plainly stated today that Wikileaks did not receive the data from any state source, and certainly not Russia.

    Democrats are only capable of believing what they want to believe, which is that Russia helped Trump win. How else could they grasp the reality that America turned on them and their degradative policies that seek to annihilate the middle class?

    In an NPR interview today, President Obama promised revenge against Putin for his meddling. Note that this is extremely uncouth and unseemly — especially since he is a lame duck President. To start a conflagration before the next President takes office is nothing less than a slap in the face to Trump.

    source: CNN

    “I think there is no doubt that when any foreign government tries to impact the integrity of our elections that we need to take action and we will at a time and place of our own choosing,” Obama told National Public Radio.

    Describing potential countermeasures by the US, the President said “some of it may be explicit and publicized; some of it may not be.”

     
    He said he directly confronted Russian President Vladimir Putin about a potential US response, and said his counterpart acknowledged his stance.
    “Mr. Putin is well aware of my feelings about this, because I spoke to him directly about it,” Obama said.

    Obama and Putin conferred on the sidelines of the G20 meeting in China in September.

    Afterwards, Obama told reporters he raised cybersecurity with the Russian leader.

    Intelligence agencies in October pinned blame on Russia for election-related hacking. At the time, the White House vowed a “proportional response” to the cyberactivity, though declined to preview what that response might entail.

    Officials have said US actions against Russia may not be revealed publicly.

    Speaking Thursday at the White House, Press Secretary Josh Earnest declined to say whether the US had already begun its response to Moscow’s actions.

    “The President determined once the intelligence community had reached this assessment that a proportional response was appropriate,” Earnest said. “At this point, I don’t have anything to say about whether or not that response has been carried out.”

    Enter Keith Olbermann, the liberal elite left personified. They have no interest in democracy.

    The Russian Embassy in the UK’s response.

     

    Content originally generated at iBankCoin.com

  • Silver Smoking Gun to Stop Dishonest Dealing

    By Bron Suchecki

    Last week ZeroHedge reported on the amended London Silver Fixing Antitrust Litigation which included damaging chat logs provided by Deutsche Bank that reveal collusion between bullion bank traders to “shade”, “blade”, “muscle”, “job”, “spoof” and “snipe” the silver market.

    While the amended complaint only provides selected examples from the 350,000 pages of documents and 75 audio tapes that the plaintiffs received as part of the settlement with Deutsche Bank, what has been provided shows cliques of traders who worked together against the interests of their clients.

    Below is a network map of these cliques, which shows every trader mentioned in the complaint with the lines indicating who chatted with whom (view the map online here).

     Network map of fix manipulation traders

    The key ringleader is DB Trader-Submitter A (submitter refers to their role submitting orders into the London Fix) and this sort of hub and spoke model is common in social networks. The two persons with a slash and two banks in their name indicate that they moved banks during the period of the complaint. This is not uncommon in bullion banking since it is a small industry and would increase the risk of collusion between former workmates, something the management of the banks should have been alert to.

    The lack of connection between these groups is likely due to them being in different timezones. The group of four in the top left corner are most likely in Singapore, given the use of Singlish terms like “lah” in the chats. The larger group is based mostly in London with one in New York, based on references in the complaint. The group of three at the bottom may be in Dubai, although that is speculation.

    The chats have a jovial feel with traders calling each other “bro”, “dude” and “mates” and show no care for clients on the other end of their schemes: for example, Deutsche Bank Trader B talks about “wanna ramp it up like really just buy at mmkt and fk everyone so bad”. No doubt these chats will now be a lot more stilted as traders realise that collusive behaviour brings with it personal consequences like jail terms, as it did with LIBOR.

    Nick Laird at goldchartsrus.com has collated all the chats in chronological order here with a chart of the silver price underneath to help put the chats in context of market price action at the time. In general, the chat logs show collusion to tactically/short-term manipulate the London Silver Fix and spot market (curiously, there is no mention of Comex futures, but the plaintiffs are only giving us a sample in this complaint).

    With the Deutsche Bank chat logs showing a collusive network across banks, it would seem unlikely that the defendants will be able to refute the antitrust claim by the plaintiffs. The next question is that of damages. As it stands, the tactical nature of the manipulations means that the defendants are likely to argue that the members of the class action can only claim damages if they traded at the same time as the chat evidence shows market manipulation.

    To cover the entire class and increase the damages, the plaintiffs need to show that the traders’ actions resulted in ongoing suppression of the silver price.

    In the chats the traders do not explicitly indicate any plans to suppress the price on an ongoing, multi-day/month/year basis or reference having to manage a large naked futures short position (which many have said is necessary for ongoing price suppression to exist). Monetary Metals have written on the naked short theory in the past, noting that it is not supported by observation of prices as contracts approach first notice day. To implement such an ongoing suppression using futures, the bullion banks would need to roll their oversized short position by purchasing the expiring contract and shorting the next contract. Such massive buying of an expiring contract would cause the basis to rise, yet the opposite occurs – see here for more details.

    Absent such explicit proof of suppression, the complaint masses a number of different econometric analyses to show that the London Silver Fix impacts other silver prices in the wider market.

    The analysis does not start off well where, on page 40, the plaintiffs fall for the “correlation proves causation” fallacy claiming that “the prices of COMEX silver futures contracts are directly impacted by changes in the Fix price, which determines the value of the physical silver underlying each COMEX silver futures contract” on the basis of a regression analysis between futures closing prices and the Silver Fix of 99.85%. The defendants will be able to rebut such claims by referring to papers like London or New York: where and when does the gold price originate? which show that neither London (spot) nor New York (futures) are dominant in terms of price and that the dominant market switches from time to time.

    We feel the plaintiffs are on stronger footing when comparing spot and futures price movements around the fix (see page 71 onwards, figures 24 to 28). The plaintiffs’ show a few charts demonstrating a spot to futures linkage but we would suggest that to win the case the analysis would benefit from looking the spread between spot and futures markets, or the basis, which we report on each week. For an example of the application of basis to forensic price analysis, see our November 13 report where we show that the drop of $30 in the gold price around the London Fix on November 11 was driven by selling of futures as the gold basis began to fall before the price did (see below).

    Gold Intraday Nov 11

    The final challenge for the plaintiffs is to prove that the impact of the banks’ manipulative actions persisted “well beyond the end of the Fixing Member’s daily conference call” (see pages 81-83). While the plaintiffs claim that this is proven because the mean of the cumulative unadjusted returns “on Down Days does not recover fully from the price drop that occurs at the start of the Silver Fix”, the very wide confidence interval implies that on a number of days it did recover. It will be interesting to see how the defendants response to this crucial claim.

    The Deutsche Bank chat logs have enabled the plaintiffs to get over the first huge hurdle of showing antitrust behaviour. The focus of media reports to-date on the colorful chats gives the impression this is a closed case but the lack of explicit chats discussing management of a large naked futures short position and/or plans to supress the price over months is unusual. One would expect that managing such a large ongoing supression would be the main focus of discussions between traders. It is possible that the plaintiffs may have withheld this evidence for strategic purposes but if not, this case may end up turning into a battle of the bookworms with academics arguing econometrics and questioning what does the “mean of the cumulative unadjusted returns” really mean.

    Whichever way the case develops, bullion banks now have increased costs of supervising and managing the risks that precious metals trading desk “bros” might be looking to “fk” their clients. Combined with the potential that the “cost of doing business will jump – perhaps by 300% on one estimate” due to Basel 3 rules, some may decide to do a Deutsche Bank and pull out of the market. The result may be further consolidation in bullion banking and give regulators more justification to push those that remain out of “dark” OTC trading and on to “lit” exchanges.

  • What Is The Real Purpose Behind "Fake News" Propaganda?

    Submitted by Brandon Smith via Alt-Market.com,

    Here is the first problem with modern political discourse – too many people want to “win” arguments instead of getting to the greater truth of the matter. Discussions become brinkmanship. Opponents launch into immediate attacks instead of simply asking valid questions. They assert immediately that their position is the only valid position without verification. When confronted with rational responses and ample evidence, they dismiss everything instead of pondering what you have handed them. After this line is crossed, there is no point in continuing the debate. It will go on forever.

    This is one of the great tragedies of the Saul Alinsky method of political confrontation; it has bred entire generations of people who now believe that there is no objective truth. They think everything is relative. Because of this belief, they assume that there is no wrong or right side, no wrong or right goal. Instead, there are only goals that are MORE right than the goals of others. Everything boils down to a “lesser of two evils” mentality, and the ends therefore justify the means. Using dishonest measures to win the fight becomes acceptable.

    In the end, ideological combat actually prevents people from learning rather than helping them get to the root of the issue. We live in a world where truth is superfluous to the overall narrative. The only thing that is important is destroying your rivals.

    A classic strategy of dishonest debate and disinformation is to use every method possible to avoid confronting your ideological opponents legitimate arguments and to attack him personally. If you can’t beat him on fair ground using reason and evidence, then why not undermine his character so that the public will be influenced to avoid listening to him at all.  This is sometimes called “inoculation.”

    At first glance, this is what the entire “fake news” meme supported by the mainstream media seems to be about.

    The MSM has proven itself utterly ineffective against the rise of the alternative media. And as I have explained in recent articles, there is a very good and obvious reason for this. The alternative media is the closest thing to a “free market” of ideas that the world has had in a very long time.  Before web media, the public was strictly limited to a handful of corporate outlets that dictated information flow with an iron fist.  If you wanted to learn anything beyond the mainstream narrative, you had to data mine at the library in an infinitely slower fashion, or try to personally seek out people who represented sources and witnesses.

    Today, data mining happens at light speed. Facts and evidence are uncovered in real time. Video interviews and transcripts can be achieved as quickly as a phone call. They can be examined and witnesses can be cited without traveling across the country. The prevalence of visual media also makes it difficult for witnesses to lie about their original claims later down the road.

    Beyond this, the alternative media offers something the masses have rarely ever had — choice. People can now look at all sides of an issue and all available evidence and decide for themselves what conclusions make the most sense. The mainstream media has only ever offered one side, with highly regulated information and cherry-picked evidence.

    The mainstream media’s purpose has never been to convey the unfettered “news.”  Rather, their purpose has always been to manipulate public opinion, and we saw this revealed undeniably during the 2016 election as Wikileaks exposed journalist after journalist using their position of public trust as a weapon to influence the election outcome.

    Instead of admitting wrongdoing after this embarrassment, the MSM has decided to double down and escalate the accusation that the alternative media is “fake news.” Meaning, the MSM wants people to believe that we are liars and amateurs, that they are the “professionals,” and that the public should ignore everything the alternative media has to say from now on.  I have to point out, though, that the narrative of mainstream news versus “fake news” seems a little thin to me.

    Meaning, I believe there is more going on here than the MSM simply trying to save itself.

    Call me a “conspiracy theorist,” but the elitist controlled mainstream media does little to help itself through this strategy. Think about it; the MSM is already clearly dying if one looks at the ever shrinking size of their audience and the loss of younger viewers and readers. They have been deteriorating for years, while the alternative media has been exploding in influence. The promotion of the fake news meme requires these mainstream media outlets to actually LIST which sources they believe represent fake news.  This is what the Washington Post did with their promotion of liberal professor Melissa Zimdar’s list.

    So, forgive me if I am making too much of a leap here, but it seems that this tactic will only bring MORE web traffic to the sites listed, because the list does not really include any specific examples of “fake news” trespasses.  People who are curious will be compelled to then visit the alternative sites to see what all the fuss is about. Perhaps many of them will find something they like, rather than something they hate. To me, the entire set-up of the fake news meme hurts the mainstream news more than it helps them.

    The next major story linked to fake news has been the assertion by some in government (including the CIA) that the alternative media is actually a front for Russian hacking and propaganda. I predicted this development two years ago in my article 'When War Erupts Patriots Will Be Accused Of  Aiding “The Enemy.”'

    In that article, I argued that a war is being engineered between Eastern and Western powers (Russia and China vs. the U.S. and parts of Europe), and that this war will likely be an economic war.  I also pointed out that such a conflict might be used by the elites in the West to rout out the alternative media as agents of Russian propaganda.  Here’s a quote:

    “Another aspect of this plan, I believe, involves the hijacking of the image of the liberty movement. The liberty movement is essentially the most dangerous unknown element on the elite’s global chessboard. In fact, because we understand that international financiers and central bankers are the real enemy, we have the ability to leave the chessboard entirely and play by our own rules. Widespread economic or military conflict provides an opportunity to neutralize liberty activists who might turn revolutionary.

     

    Recently, I came across an article from The Atlantic titled Russia And The Menace Of Unreality. Now, some alternative analysts would read this article and immediately shrug it off as yet another attempt by the Western media machine to propagandize against Russia. Though their motivations are genuine, these analysts would be cementing the delusion that Russia is the “good guy” and the U.S. is the ever present “bad guy.” The Atlantic piece is a far more intricate manipulation than they would be giving credit for…”

     

    “…This was not as pressing an issue two years ago, when conflict with Russia was a ridiculous notion for many people. But today, conflict with Russia, at the very least on an economic scale, is an inevitability. If you read in full the linked Atlantic article, the narrative that is being constructed is clear — the establishment hopes to rewrite the history and image of the liberty movement by painting us as dupes radicalized by Russian propaganda, rather than being the originators of our own grassroots movement with our own philosophy and methodology. Through this, they take away our ownership of our own cause.”

    It would appear that everything I warned about two years ago is now happening.  That said, I would amend my original viewpoint to include a new dynamic. 

    The coming economic war will be based on a false paradigm — the false East/West paradigm.  Over the years I have outlined in great detail the evidence that Eastern nations are just as controlled by central banking elites and globalist interests as Western nations, including evidence that Vladimir Putin is an avid supporter of the International Monetary Fund’s push for a single global currency system using the Special Drawing Rights basket as a bridge. He is also now suddenly a supporter of the UN’s climate change and carbon taxation agenda.

    I consistently warned analysts within the liberty movement to be careful about cheerleading too much for Russia and Putin, not only because he is controlled opposition, but because eventually we would be caught up in a media war that would label us as enemy conspirators.  Remaining (rightly) critical of Putin was the best way to avoid being labeled as a member of the “fake news,” or a purveyor of Russian propaganda.

    It was my original belief that the elitist media would use the alternative media’s love affair with Putin as a means to undermine our credibility. However, today I would say that in a strange kind of way, the opposite is taking place.

    Confusing? Yes. Look at it this way; with the predominantly leftist mainstream media dying in an irreversible way, no amount of whining about “fake news” is going to save them. The rise of the “populists” is at hand, and as I have warned for the past year, this is by design.  Just as conservative anti-establishment movements are rising in geopolitical influence, so to is the anti-establishment media. We are sort of a package deal.

    My belief is that conservative movements and the alternative media are being allowed into a position of cultural authority. The globalists are stepping out of the way (for now) as we grow in power. They are doing this in preparation for the final stage of an economic collapse they have been gestating since at least 2008. They are doing this because their goal is to set us up as scapegoats for a global disaster that will be remembered for centuries to come. I was able to predict the success of the Brexit Referendum,  Donald Trump’s election win and the latest Federal Reserve rate hike based on this theory and I believe it will continue to prove itself.

    The globalists know that at this stage the fake news meme will only HELP US, rather than hurt us. That is to say, the elites are throwing the leftist media to the wolves and the Russian propaganda claims will only make the MSM look more ridiculous.  The globalists see the writing on the wall — in fact, with the level of web analytics at their disposal, they can read and predict shifts in social consciousness before almost anyone else is aware of them.

    Instead of trying to obstruct us or fight us directly, I believe the elites plan to co-opt us or co-opt our image. That is to say, they will let us grow in apparent influence, trigger a crisis, and either use certain alternative outlets as the new mainstream, or simply paint all of us as complicit in the failures of conservative governments and nationalism.

    The end game here is to destroy the underlying principles of liberty movements; to make future generations reel in horror at the very mention of conservatives and national sovereignty.  The elites are playing a very complex strategy of fourth-generation warfare. Nothing you see is exactly what it seems. The fake news label is not meant to disrupt the alternative media. In fact it will help us rise to a position in which we can be blamed for negative global influence.

    Some people will say I am reading too much into the situation, or that I am giving the elites “too much credit,” or attributing too much “omnipotence” to their position. They will probably reference the recent passage of the 'Countering Disinformation And Propaganda Act' and claim that this is clearly meant to take down the alternative media.

    I would ask these people to consider a question, though — who will really have control over this legislation in the near future?  If I am right, and Trump enters the White House in January with a Republican majority in Congress and the Senate, will it not be Trump that most benefits from the legal framework? How then will it serve to undermine the alternative and conservative media?

    I predict, in fact, that conservatives are being given enough rope to hang themselves with. I predict that Trump will utilize this legislation to go after the mainstream media, not the alternative media, and that many conservatives will support him even though questions of constitutionality will increase. I believe the fake news meme will backfire and that the MSM will die off as a result.

    I believe that this is all part of a carefully crafted narrative in which the right wing gains unprecedented political sway, only to be met with economic and social disaster. I believe that the game is far from over in the fight between globalists and sovereignty activists. I believe they cannot defeat us directly, so they now hope to defeat us indirectly, or, trick us into defeating ourselves. In reality, the game is just beginning.

  • Wall Street is Overly Optimistic on Trump Presidency (Video)

    By EconMatters


    We discuss some of the challenges Donald Trump has had in his past with just making good solid decisions, let alone being the savior that is currently priced into financial markets for the US Economy. The Stock Market is setup for a big letdown in 2017 if past performance of Donald Trump regarding his competency at doing anything right is analyzed in depth.

    I would really like to know how we are going to cut the corporate tax rate, and at the same time fund a large infrastructure project in a rising rate environment with a strong US Dollar and 20 Trillion Dollars in National Debt and climbing. Wall Street does understand that this is impossible and actually incompatible economic policy goals right?

     

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  • Entire Police Department Quits After "Illegal, Unethical, And Immoral" Requests By Town Council

    The Town Council of the small town of Bunker Hill, Indiana, home to 888 residents, is likely wishing they had  “do-over” this morning after constant budget cuts and alleged “illegal, unethical, and immoral” requests from council members resulted in the entire police force quitting.  Per the Fox 59 affiliate in Indianapolis, the Bunker Hill town Marshall and his 4 deputies all walked off the job earlier this week and have no intention of returning. 

    An entire Indiana town has no police officers after every single one walked off the job. The officers blame the Bunker Hill Town Council for the situation.

     

    Thomison served as town marshal for four years until Monday night when he and four other officers handed over resignation letters to the council, telling them they have had enough.

     

    “They would not communicate with us or the officers and they kept scaling back,” said Thomison.

     

    In their resignation letters, the officers accuse council members of asking them to “do illegal, unethical, and immoral things.” They cited examples like asking police to run background checks on other town councilors to find their criminal history. The officers also claim they were threatened when they said no.

     

    Another issue they brought up in the letter was their safety. The officers say they were all forced to share one set of body armor, putting their lives on the line while they were out making arrests and serving warrants.

     

    “I did not want to send someone out there with bad body armor so I would take mine off and provide it to the other officers. I told them we have to provide this, there is an IC code that explains that and says that the town has to provide that body armor,” said Thomison.

     

    Meanwhile the Bunker Hill Town Council offered the following statement to residents saying that disagreements with the police force were “caused by the lack of funding available to the town” but that council members had never asked officers to “be involved in any illegal, unethical or immoral actions.”  Well, clearly it seems like someone is stretching the truth slightly.  

    Like most small towns, there have been from time to time, disagreements in the policy making process between the town council and other town departments. The current town council as well as prior councils have, on occasion, had disagreements with Mr. Thomison over a number of things. These disagreements have primarily been caused by the lack of funding available to the town to invest in the police department. However, the council denies that it has failed to provide body armor for the marshal or reserve deputies. The council is well aware of Indiana law on the topic and has complied with it fully. Further, the council absolutely denies that it has ever asked Mr. Thomison or any of the reserve deputies to be involved in any illegal, unethical or immoral actions.

     

    The council admits that it had made a number of cuts to the police department over the last few years. This was a decision the town made due to a lack of funding. Bunker Hill is diligently working to solve this problem for the coming year. The cuts made to the police department were not made with the intention of jeopardizing the safety of any of the town’s police officers. Over the last few years, the Council has made attempts to find additional money for the department. Mr. Thomison was instrumental in obtaining a large sum of money on behalf of the town. However, he fails to state that the police department received the benefit of a large portion of that funding.

     

    As Mr. Thomison has stated, there is currently a lawsuit pending against the town relating to Indiana’s Open Door Law. The council denies that it has violated Indiana’s Open Door Law in any manner. However, the council will not comment further on this topic as the litigation is still pending.

     

    The resignation of the entire police force has come as a shock to the council. It has never been the goal to dismantle or otherwise endanger the town police department or officers. The council thanks these officers for their service to the town. Bunker Hill is in the process of obtaining a new marshal and reserve deputies. The council asks for patience from the town residents in this process.

    If ever there was a time and a place for some drag racing on public streets…this is it for Bunker Hill residents…enjoy!

  • Obama Vows Retaliation Against "Russia Hacking", To Hold Press Conference On Friday

    With last night’s top nationwide story, the NBC report that according to unnamed CIA sources, Vladimir Putin himself supervised the hacking of the US presidential election (it is still unclear precisely how Putin “hacked the election”, or for that matter, what if any proof exists ), making the rounds and as of this moment having been placed front and center on the front page of Reuters.com …

    … it was obvious that this story was not going away just four days before the Dec. 19, Electoral College vote.

    And sure enough, on Thursday evening CNN reported that President Barack Obama vowed retaliatory action against Russia for its meddling in the US presidential election, in effect telling Russia he is about to declare cyberwar on it.

    “I think there is no doubt that when any foreign government tries to impact the integrity of our elections that we need to take action and we will at a time and place of our own choosing,” Obama told National Public Radio. He is certainly right: the only doubt is that a foreign government did in fact try to “impact the integrity of our elections.”

    Describing potential countermeasures by the US, the President, confirming he had learned something from Donald Trump, said “some of it may be explicit and publicized; some of it may not be.“

    Obama also said he directly confronted Russian President Vladimir Putin about a potential US response, and said his counterpart acknowledged his stance. “Mr. Putin is well aware of my feelings about this, because I spoke to him directly about it,” Obama said.

    As CNN adds, Obama and Putin conferred on the sidelines of the G20 meeting in China in September. Afterwards, Obama told reporters he raised cybersecurity with the Russian leader. It was not clear if Obama had told Putin he was prepared to launch World Cyber War I against the Russian, just because Hillary won an election every “expert” in the country said Trump would lose.

    Intelligence agencies in October pinned blame on Russia for election-related hacking. At the time, the White House vowed a “proportional response” to the cyberactivity, though declined to preview what that response might entail.

    Russia has, of course, laughed off this escalating stupidity. Russian Foreign Minister Sergei Lavrov told state TV channel Rossiya-24 that he was “dumbstruck” by the NBC report of Putin’s alleged involvement.
    “I think this is just silly, and the futility of the attempt to convince somebody of this is absolutely obvious,” he said.

    Early on Thursday, Putin spokesman Dmitry Peskov told the AP the report was “laughable nonsense“, while Russian foreign ministry spox Maria Zakharova accused “Western media” of being a “shill” and a “mouthpiece of various power groups”, and added that “it’s not the general public who’s being manipulated,” Zakharova said. “the general public nowadays can distinguish the truth. It’s the mass media that is manipulating themselves.“

    That may be true, but Obama is set to give it one last try.

    As CNN further adds, officials have said US actions against Russia may not be revealed publicly.

    Speaking Thursday at the White House, Press Secretary Josh Earnest declined to say whether the US had already begun its response to Moscow’s actions. “The President determined once the intelligence community had reached this assessment that a proportional response was appropriate,” Earnest said. “At this point, I don’t have anything to say about whether or not that response has been carried out.”

    Meanwhile, at Hillary Clinton’s “thank you” party for billionaire donors, the topic of both Donald Trump and Russian hacking came up, and Hillary told her supporters not to “lose heart.”

     

    Then there were other, unsubstantiated if more concerning reports:

    * * *

    So what does it all mean? We’ll know the answer tomorrow early afternoon.

    According to Reuters, President Barack Obama will hold an impromptu press conference at the White House on Friday at 2:15 p.m. ET before leaving for his annual family vacation in Hawaii, the White House said on Thursday. It would be fitting if Obama announced he would start a cyberwar with Russia, then jetted off to the safety of a far off, golf-friendly island.

  • Doug Casey: "Sell All Your Bonds"

    Via Casey Daily Despatch,

    [The following essay originally appeared in this month’s issue of The Casey Report.]

    So, Trump has won the election. Of course anything can happen between now and his presumed inauguration on January 20. Maybe the Swamp Creatures will succeed in causing a recount in so-called Purple States that could change the number of electors in Hillary’s favor. Maybe they’ll somehow influence Trump electors to vote for Hillary. None of this would have been an issue if Baby Bush II, Jeb, had been the Republican nominee, as was supposed to have happened. It all just shows what a transparent (a word these people love to use) fraud “democracy” has become.

    Let the hoi polloi cast a meaningless vote, so they have the illusion of being in control. Instead of seeing themselves as subjects, they’ll think they’re “we the people,” who actually have some say in what happens. That way they’ll pay their taxes willingly, enthusiastically sign on to aggressive wars on the other side of the world against people they know nothing about, and generally do as they’re told. Because it’s supposed to be patriotic. “Democracy” is a much more effective scam for controlling the plebs than kingship or dictatorship.

    That said, the Establishment, the Deep State, was genuinely shocked and appalled by Trump’s victory. As Baby Bush the First would have said, they misunderestimated how angry the average voter was. That’s because the Coastal Democratic Elite are totally out of touch with the common man. But they needn’t fret too much. They’ll be re-installed, with a vengeance, in four years.

    That will likely be true for two reasons:

    1. Simple demographics. The groups that vote Democrat (e.g., blacks, Hispanics, urban dwellers, immigrants, Millennials) are growing in numbers faster than those who vote Republican. Republicans are older people, and the Boomers (born 1946–1966) and the Silent Generation (1926–1946) are dying off. More people are moving to the cities, and that influences them to vote Democratic. More people (still, idiotically) are pursuing higher education, and that also influences them to vote Democrat.

    2. The Greater Depression. One definition of a depression is a period of time when distortions and misallocations of capital are liquidated. A time when bubbles caused by monetary expansion are popped. A time when unsound businesses fail. I re-emphasize this because the party on whose watch it happens is automatically kicked out. So, the Democrats actually got quite lucky not to be in office when the time bomb goes off. Trump could easily go down as Herbert Hoover II.

    What could change things? A serious war, much bigger than the sport wars the US is currently engaged in, is the biggest danger. That’s much less likely with Trump than Hillary, but these things have a life of their own. My guess for the next president is either a left-wing general (because Americans love and trust their military), or a left-wing populist, like Elizabeth Warren.

    But that’s crystal balling at this point. Let’s proceed on the assumption Trump is actually going to be the president for at least the next four years. Although problematical, he’s a vast improvement over Hillary. What will it mean for the US and the world? More importantly, what will it mean for your personal finances and freedom? Let’s look at the possibilities.

    Bonds—With bonds, we’re at the peak of the biggest financial bubble in world history. This is a very big deal.

     

    Interest rates move in very long cycles. They went up from the mid-1940s to the early ’80s, when long-term government bonds peaked at close to 16%, and T-Bills at over 16%. I thought they hit bottom years ago, but the cycle overshot.

     

    My guess is that they’re headed up in earnest now. And Trump, as someone who understands business (even though he doesn’t understand economics), will likely (I think…) do what he can to send them higher. Why? He understands the country needs to save, to rebuild capital. And higher rates will encourage saving and discourage debt.

     

    The risk is that, with all the debt that’s been put on in the last decade, debtors will be hard-pressed to service it. That includes the USG with $20 trillion of on-balance-sheet debt, and a lot more in the way of off-balance-sheet debt, guarantees, and contingent liabilities. Much of it will be activated if higher rates cause a lot of defaults.

     

    What should you do? Sell all your bonds.

     

    Real Estate—Property, at least in the English-speaking world, floats on a sea of debt. Interest rates go up, real estate prices go down. The economy goes down, so do property prices. Add to that the aging US population, which isn’t good for property; as people age, they downsize. Add to that the fact we’re in another real estate bubble, similar to what we saw in the mid-oughts. After bonds, property is likely the worst place to be. In fact, I’ll go so far as to say the great post–World War II property boom is at an end—but that’s a subject for another time. There’s not much that Trump can do to fix this.

     

    What should you do? Lighten up on property. Make sure any mortgages you keep are at fixed rates.

     

    Stocks—If Trump only follows through with his promise to cut taxes, and eliminate two old regulations for every new one, it would be wonderful for the economy. But the economy and the stock market are two different things; they only correlate over the long run. I suppose he’ll follow through with his promise to build lots of new infrastructure. Government deficits will soar, and only the Fed will be on hand to buy all that new debt.

     

    Infrastructure companies will get a fat slug of the newly printed money. But I find it hard to get enthusiastic for the stock market. In terms of dividends, P/E ratios, or book value, it’s already at one of the highest levels ever. Bear in mind that well-selected stocks can still go up, even if the market as a whole goes down.

     

    That said, I feel more comfortable with shorts than longs at this point.

     

    Gold and Commodities—Frankly, where do you put your money when almost everything is overpriced? Commodities are coming out of a five-year-long bear market. They’re about the only thing that’s cheap. That’s true relative to their cost of production (farmers, ranchers, and miners are breaking even, at best, all over the world). And it’s true relative to their history (they’re down 50% from the peak of 2011).

     

    In other words, commodities are a much safer place for your capital than stocks, bonds, or real estate (excepting agricultural property) for the foreseeable future. The problem is that it’s hard to hold a carload of wheat or ten tonnes of sugar.

     

    Remember that gold and other commodities aren’t “investments.” An investment is something that acts to create new wealth. They’re simply assets. Sometimes they can be excellent speculations. Gold, however, is money, and will remain so long after the US destroys its currency.

     

    I recommend, therefore, that you accumulate gold and silver instead of plunging into conventional investments. Check with the dealers we list in The Gold Book to see who you prefer to work with. [Editor's note: The Gold Book is exclusive to readers of The Casey Report, which you can sign up for at the end of today's essay.] But if you don’t have a significant position in the metals already, please get going.

    A final thought. It’s usually a mistake to count on any head of state to make things in a country better. It can certainly happen—as with Erhard in Germany after WW2, Pinochet in Chile, Thatcher in Britain, or even Reagan in the US. Maybe it will be true of Trump. He’s got a much stronger personality than Reagan, for openers. But the bigger and older a State gets, the harder it is to change. It’s comparable to trying to stop a fully loaded supertanker.

  • Goldman Warns Bond Yields Are Now "A Threat To Risky Assets"

    At the end of November, when the 10Y yield had just cracked 2.3%, Goldman, together with SocGen, JPM, RBC and various other banks, gave its answer to what may be one of the most important questions for the market right now: how high can 10Y bond yields go before they start to hurt equities? Goldman answered that “the equity market is still at a level that can cope with moderately rising bond yields. We estimate that a rise in US bond yields above 2.75% or probably between 0.75-1% in Germany would create a more serious problem for equity markets: at that point we would expect the correlation between bonds and equities to be more positive – i.e., any further rises in yields from there would be a negative for stock returns.”

    2.75% is also the level above which JPM’s Marko Kolanovic said last week the 10 Year would begin to cause problems for stocks:

    Going into US elections, macro systematic investors (such as trend followers and various Var-based strategies) were long bonds. While the performance of these strategies suffered, the “risk on” nature of the market reaction (bonds down, equities up) prevented a more rapid deleveraging. Yet this risk is not entirely eliminated, and should bond yields continue increasing (e.g. 10Y beyond 2.75%) this will risk an equity sell-off that usually triggers a broader deleveraging of var-based strategies.

    Incidentally, according to other banks such as SocGen, the market is already in purgatory: at the end of November we showed an analysis by SocGen according to which at bond yields above 2.60%, stocks are rich relative to bonds.

    In any case, fast forward to today when Goldman has refreshed its cross-asset modelling, and reports that “US 10-year rates have now overshot our 3-month forecast of 2.30%, and are now close to our Bond Sudoku macro measure of ‘fair value’, which is currently around 2.60%. 

    US Treasuries Have Reached our Sudoku Fair Value of 2.6%

    This is the first time since 2013 Goldman reports the “valuation gap” is completely closed.

    The bank then notes that based on its bond impulse analysis – designed to identify which bond market is leading the others – the sell-off in global rates is solely led by the US.

    But the Goldman punchline is that with US Treasuries now at the bank’s measure of fair value, they are now “starting to become a problem for the risk complex.” To wit:

    As a result of the strengthening of the Dollar and the increase in long-term rates, US Financial Conditions are tightening on our preferred measure. The change in financial conditions since September is roughly equivalent to 70bp of cumulative Fed hikes. As we argued in a recent note, should US 10-year rates move above ‘fair value’, this would represent a threat to risky assets unless incoming data continue to sustain the optimism they now discount.

    The problem is that incoming data, if anything, indicate that the Fed is now not only behind its own curve, but that of Donald Trump, whose hundreds of billions in fiscal stimulus will only push the envelope further, and force the Fed to tighten even more aggressively as Yellen hinted during the FOMC press conference.

    For now, however, Goldman has issued its warning, although it is unclear if the hypnotized, euphoric market will even bother to listen.

  • China Devalues Yuan To Weakest Fix Since May 2008

    Following last night’s bond bloodbath, The Fed fallout continues in China as The PBOC has devalued the official Yuan fix the most since Brexit to its weakest level since May 2008, breaking above 6.95/USD. Since the “one-off” devaluation in Aug 2015, the Chinese currency has now weakened almost 14% against the dollar.

    While the broad Renminbi basket has been “stable” against China’s global trading partners for 3 months…

     

    It appears the devaluation pressure has been focused back against the US Dollar…

     

    And bear in mind that the “stability” we described above came at the grand cost of a stunning quarter of a trillion in reserves ‘defending’ the outflow pressure in 2016…

     

     

    For now the China bond market has stabilized a little (by which we mean it is not collapsing).

     

    At some point this butterfly’s wings of turmoil will ripple across the world’s liquidity markets and punch all those with a plan in US banking stocks in the face… the question is, when?

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