- Jay Sekulow: Obama Should Be "Held Accountable" For The "Soft Coup" Against Trump
In light of the recent flurry of leaks by the so-called “deep state”, which includes such agencies as the NSA and FBI and which last week lead to the resignation of Mike Flynn after a phone recording of his phone conversation with the Russian ambassador was leaked to the WaPo and other anti-Trump publications, an article published on January 12 by the NYT has generated renewed interest. One month ago, the NYT reported that “In its final days, the Obama administration expanded the power of the National Security Agency to share globally intercepted personal communications with the government’s 16 other intelligence agencies before applying privacy protections.”
The new rules significantly relax longstanding limits on what the N.S.A. may do with the information gathered by its most powerful surveillance operations, which are largely unregulated by American wiretapping laws. These include collecting satellite transmissions, phone calls and emails that cross network switches abroad, and messages between people abroad that cross domestic network switches. The change means that far more officials will be searching through raw data. Essentially, the government is reducing the risk that the N.S.A. will fail to recognize that a piece of information would be valuable to another agency, but increasing the risk that officials will see private information about innocent people.
While previously the N.S.A. filtered information before sharing intercepted communications with another agency, like the C.I.A. or the intelligence branches of the F.B.I. and the Drug Enforcement Administration, and furthermore N.S.A.’s analysts passed on only information they deemed pertinent, screening out the identities of innocent people and irrelevant personal information, following passage of Obama’s 11th hour rule, “other intelligence agencies will be able to search directly through raw repositories of communications intercepted by the N.S.A. and then apply such rules for “minimizing” privacy intrusions.“
In other words, what until recently was a trickle of private data captured about US individuals by the NSA with only a handful of people having full, immersive access, suddenly became a firehose with thousands of potential witnesses across 16 other agencies, each of whom suddenly became a potential source of leaks about ideological political opponents. And with the universe of potential “leaking” culprits suddenly exploding exponentially, good luck finding the responsible party.
However, the implications are far more serious than just loss of privacy rights.
According to civil right expert and prominent First Amendement Supreme Court lawyer, Jay Sekulow, what the agencies did by leaking the Trump Administration information was not only illegal but “almost becomes a soft coup”, one which was spurred by the last minute rule-change by Obama, who intentionally made it far easier for leaks to propagate, and next to impossible to catch those responsible for the leaks.
This is his explanation:
There was a sea-change here at the NSA with an order that came from president Obama 17 days before he left office where he allowed the NSA who used to control the data, it now goes to 16 other agencies and that just festered this whole leaking situation, and that happened on the way out, as the president was leaving the office.
Why did the Obama administration wait until it had 17 days left in their administration to put this order in place if they thought it was so important. They had 8 years, they didn’t do it, number one. Number two, it changed the exiting rule which was an executive order dating back to Ronald Reagan, that has been in place until 17 days before the Obama administration was going to end, that said the NSA gets the raw data, and they determine dissemination.
Instead, this change that the president put in place, signed off by the way by James Clapper on December 15, 2016, signed off by Loretta Lynch the Attorney General January 3, 2017, they decide that now 16 agencies can get the raw data and what that does is almost creates a shadow government. You have all these people who are not agreeing with President Trump’s position, so it just festers more leaks.
If they had a justification for this, wonderful, why didn’t they do it 8 years ago, 4 years ago, 3 years ago. Yet they wait until 17 days left.
One potential answer: they knew they had a “smoking gun”, and were working to make it easier to enable the information to be “leaked” despite the clearly criminal consequences of such dissemination.
As this point Hannity correctly points out, “it makes it that much more difficult by spreading out the information among 16 other agencies, if they want to target or take away the privacy rights, and illegally tap the phones, in this case General Flynn, it’s going to be much harder to find the perpetrator.”
Sekulow confirms, noting that back when only the NSA had access to this kind of raw data, there would be a very small amount of people who have access to this kind of data. “But this change in the Obama Administration was so significant that they allowed dissemination to 16 other agencies, and we wonder why there’s leaks.”
The lawyer’s conclusion: “President Obama, James Clapper, Loretta Lynch should be held accountable for this.”
Full clip below:
- Retired Green Beret Warns: Deep State's Utopia Of Oligarchs Is "Enslavement And Complete Control Of All Of Mankind"
In past articles the fact of a long struggle was mentioned and how it ties in with the current first year of the President’s administration. The struggle is not merely to overcome the executive actions and orders of Obama. The true battle is to remove the Marxists from bureaucratic fiefs established by Obama for carryover into the current administration and to deflect and negate their attacks and the attacks of others.
The circuit court in San Francisco and the Department of Justice have been waging a seesaw-type of battle over the executive order signed by the President. The order’s intent is to stem the illegal aliens and foreigners entering the U.S. from Middle Eastern nations either openly hostile to or providing the highest probability (intentionally or indirectly) for terrorists to enter the country. This makes perfect sense, and because it does, one can easily see that only those hell-bent on weakening the U.S. and fostering infiltration would be against the order: those Marxists of the Left labeled as “Democrats” and calling themselves “Progressives.”
They are not alone: they are aided by the Left-Right, which is even worse. The Left-Right are those masquerading as Republican Conservatives, when they are Marxist-Leftists and proponents of Global Governance and the New World Order. They are the Paul Ryans, the Mitch McConnells, and the Newt Gingriches. They are the pseudo-Republican politico’s in office presently and in the past who have those CFR slots and are working toward their fantasy: The Utopia of Oligarchs.
Even if they do not overtly act on behalf of the Marxists, they have been guilty…numerous times…of enabling the Marxists through the complacency of inactivity.
They do not simply wish to derail the actions of President Trump: it is a much larger concept than that. They see themselves as “partners” with the Left in the same game: to establish an elitist politico-oligarchic ruling class, broken down into divisions throughout the globe for ethno-cultural manipulation, yet with the same end-state. That goal is the enslavement and complete control of all of mankind with the elitists ensconced as the ruling moneyed class. They see themselves as the educated, sensible minority with tender sensibilities and true humanistic views…who must…must…take a stand in the globalist crusade against the barbaric Neanderthals of the proletariat and populist serfs.
This new President has taken more action and more rapidly than even President Reagan did when he took office, and that is saying something. Even those globalists playing the part of conservatives are knuckling under in lock step, shivering internally: A President is in the White House that can turn these bedbugs out of the mattress and burn them. This new President quietly and without fanfare made it a point to be there for the SEAL who was killed in Yemen as his casket was brought back home.
That should speak volumes on the caliber of the man who is in the White House.
Everything that he does is attacked by the media and disparaged by the leftists. Even the removal of Dodd-Frank (let’s remember…that was Christopher Dodd and Barney Frank…two troglodytes…who came up with that one) is sneered at. The executive order to halt the illegals from potential hotbeds of Middle Eastern terrorism is challenged by states packed with liberals and also by the business and industry oligarchs who would rather the U.S. be vulnerable if they can continue to hire “tax-free” day-laborers for less than minimum wage with impunity.
Senator John McCain (R- AZ) wants to go to war with Russia and he wants to reshape eastern Europe. McCain and Lindsey Graham were instrumental in the Obama-ordered and sanctioned coup d’état that brought down Ukraine’s government and president and installed a U.S. puppet picked by Victoria Nuland. McCain hasn’t stopped: he’s just been “on hold” to see where he can take footing when the dust settles from the initial Trump shakeup.
In previous articles, it was mentioned how critical this first 6 months to one year-period in office is for the President, namely because of the midterm elections. If the public does not see results, they could very well change the complexion and composition of Congress in 2018 and the Republicans could lose control of either one of or both houses of Congress. The President realizes this, and he is moving swiftly.
The public will also see that he is doing good things, and that it is the Democrats who are attempting to obstruct his efforts. This will carry the Republicans through in the midterm elections, and thus all legislative efforts by the President will be able to be enacted. It’s a tough fight and at times it’s uphill, but he started out well, and right…and the Democrats won’t be able to hold him off.
- "It's Unfair" – Hispanic Workers Upset After Being Fired For Absence On "Day Without Immigrants"
The manager of the ironically named "I Don't Care" Bar and Grill in Catoosa, Oklahoma is hiring…
After firing 12 staff last week for violating his “no call/no show” policy.
Fox Baltimore reports that the workers are without a job after getting fired for skipping work as a show of support for “A Day Without Immigrants.”
The restaurant workers are all Hispanic and say it was important to them to participate in the national protest.
But they didn’t think it would cost them their jobs.
“They feel like they’ve been unfairly terminated," said a friend, translating for the employees.
The owner fired them by text message.
A message to one of the employees reads: "You and your family are fired. I hope you enjoyed your day off, and you can enjoy many more. Love you.”
What this text means for former employees at a restaurant in #Catoosa coming up at 6 on @KTULNews pic.twitter.com/WaMLt9znAA
— Ethan Hutchins (@ehutchinsnews) February 17, 2017
//platform.twitter.com/widgets.js
The group willingly chose to stay home with others across the country, supporting “A Day Without Immigrants.”
“(They’re) upset they stood for something they felt was necessary so the community would stand together, and they got terminated for that," said the friend.
Restaurant owner Bill McNally gave us a written statement, saying he has a "zero tolerance policy for no show/no call incidents and the 12 employees violated that policy."
- "There's Something Weird Going On": Jeff Snider On The Global Dollar Shortage
The first time we explained that one of the biggest risks facing a world in which the dollar is the reserve currency is a global USD shortage, was in mid-2009, when we wrote “How The Federal Reserve Bailed Out The World.”
At the time, the IMF calculated that just ahead of the financial crisis, “major European banks’ US dollar funding gap had reached $1.0–1.2 trillion by mid-2007. Until the onset of the crisis, European banks had met this need by tapping the interbank market ($432 billion) and by borrowing from central banks ($386 billion), and used FX swaps ($315 billion) to convert (primarily) domestic currency funding into dollars.” The IMF then extrapolated that “were all liabilities to non-banks treated as short-term funding, the upper-bound estimate would be $6.5 trillion.”
Since then the shortage, which some have dubbed a potential multi-trillion dollar margin call, has only grown and became a prominent issue back in March of 2015, when this phenomenon was used to explain why the cross-currency swap had plunged to multi-year lows. As JPM explained at the time, “the fx basis reflects the relative supply and demand for dollar vs. foreign currency funds and a very negative basis currently points to relative shortage of USD funding or relative abundance of funding in other currencies. Such supply and demand imbalances can create big shifts in the fx basis away from its actuarial value of zero.”
Fast forward a year and a half later, when none other than the Bank of International Settlements, or the “Central canks’ central bank”, warned last November that it was no longer the VIX that was the widely accepted barometer of market “fear”, it was now the dollar’s turn to become the global fear gauge: “just as the VIX index was a good summary measure of the price of balance sheet before the crisis, so the dollar has become a good measure of the price of balance sheet after the crisis. The mantle of the barometer of risk appetite and leverage has slipped from the VIX, and has passed to the dollar.”
Shortly thereafter we once recapped the main risks emerging from this increasingly more prominent threat to global financial stability, and wondered at what point would the Fed finally address this risk pointed out not only by this website for nearly 8 years, but also by the BIS, in a post which piggybacked on the recent work by ADM ISI’s Paul Mylchreest, who has made tracking the global dollar shortage one of his primary objectives.
* * *
Now, in an exhaustive, 70 minute interview, submitted by Patrick Ceresna at MacroVoices.com, another prominent analyst who has been closely tracking the global dollar shortage, Alhambra Partners’ Jeffrey Snider sat down with Erik Townsend to explain – once again – why this is such a critical topic, even if it comes at a time of unprecedented global complacency (it’s amazing what record high stock prices will do to concerns – or lack thereof – about the future).
As Snider puts it, while most other risk indicators imply smooth sailing, “there is ‘something’ weird going on” when it comes to dollar funding and global imbalances of the world’s reserve currency, i.e., dollar shortage.
- In the interview, among the many topics covered, are
- Understanding the Eurodollar Money Market
- Swap Spreads and Interbank Hierarchy
- Dimensions in the Eurodollar Futures and Eurodollar Money Supply
- Why does the World Need So Many Dollars?
- How the Eurodollar market supplanted the Bretton Woods System
- U.S. Dollar and the Dollar Funding Gap
- Reflation Trade Debunked
- Interest Rates Trapped
- Failing Global Currency System
While we urge readers to listen to the full interview below, here are some of the highlights, starting with “why the Dollar shortage a symptom of an inherently unstable system.”
As Snider explains, “the dollar shortage isn’t so much the shortage per se, it’s the fact that it’s a symptom of what is an inherently unstable system.” He notes that “the reason banks are withdrawing from the system is that it’s just is no longer tenable” and “so there has to be some kind of – whether you want to look at it like another Bretton Woods – conference, a global monetary system, a global monetary get together where people start to analyze solutions to the problem as they are rather than keep trying to apply band aids that are not going to work. “
But, he concludes, “step one of that task is to actually recognize the problem as it is and so doing more stimulus or doing more QE isn’t going to solve anything it isn’t do anything just like prior QEs and prior stimulus haven’t done anything either because the problem is an unstable system.”
* * *
Snider focuses on the Eurodollar system, which he defines as a problem of “decay and dysfunction” and explains that “nothing ever happens in a straight line even the Eurodollar problem has not been a singular event. It’s not been a decade long straight line of decay and dysfunction.”
He goes on to say that the fact that after enough time these markets have adjusted to the fact that the economy’s going to be bad for a very long time until something actually changes and so true reflation is predicated on something actually changing rather than the hope that something might change.
Looking at history, Snider observes that “what happened in July 2008 obviously was the fact that everyone decided almost all at once that wasn’t the right interpretation of what the Fed was doing nor was it the right interpretation of the dollar system overall. So, that reflation ended in reality which was the dollar system was eroding and it was eroding in a very dangerous way and that’s why oil prices essentially crashed from July till I think January 2009.”
An implication of the ongoing reserve currency funding shortage is that, according to Snider, despite the occasional blip (arguably funded by massive Chinese credit creation), “reflation is going to fail and there’s nothing the Fed can do about it.” He goes on to state that “until they fix the global dollar problem we’re not going to fix the global economy and so we’re kind of stuck gyrating between various levels of really bad. We go from the lack of recovery to what looks like a global recession to the lack of recovery and back again” as a result he thinks that “reflation is going to fail.”
Snider also said that “because of how they’ve defined the last ten years” even the Fed “no longer believes that it’s in its interest to do anything.” He agrees and sais that “there’s nothing that the Fed can do about it.”
“In other words, we want them to start considering the global currency system and how it actually is operating and failing rather than their stylized academic approach which doesn’t apply. And until they’re actually convinced that there is a role for the central bank in that condition output gap or not, we’re kind of stuck.”
The failure to stimulate benign inflation is captured on the next two charts which show “why this version of ‘reflation’ is so far less than even 2013’s version.“
His troubling assessment: “I hate to think of what the next decade might look like because history is not very kind in these kinds of situations where you have prolonged periods of stagnation.“
* * *
Putting it all together, Snider goes on to say that the Eurodollar futures market in particular is saying is that “if the Fed is going to raise rates it’s not to raise rates for a long or it’s not going to be able to raise rates for long.” Echoing a warning we – and many others have made on many occasions – Snider says that if the yield curve happens to invert again “if they ever get that far” then it will “immediately be like in 2005 or 2006 all over again it won’t stay that way for very long either the market will force the Feds’ hand or the Fed will realize the error and correct it. What’s important about this is that “in each of these reflation episodes you can clearly see the market’s faith in that reflation diminishes each time for these very reasons that we’re talking about because these markets have become attuned to the fact the Fed isn’t exactly what everybody thought it was, monetary policy isn’t what everybody thought it was.”
Snider summarizes by saying that “the fact that these markets realize that there’s a problem in Eurodollar system, there’s no banking to be had, no additional marginal banking capacity being added and without it none of these stuff really matters, none of these other stuff really matters. That’s the only thing that truly matters” and concludes gloomily that “the probability scenarios for economic and financial future are much darker now than they were three years ago.“
* * *
Snider’s full interview can be heard below (Here is a link to the entire podcast transcript):
The embed code for this episode can be found here.
We also urge listeners to follow along using Snider’s prepared slides presented below.
https://www.scribd.com/embeds/339694812/content?start_page=1&view_mode=scroll&access_key=key-KRsfrHVI6trsjrwvEKyd&show_recommendations=true - The FBI Is Pursuing Three Separate Probes Into "Russian Hacking" Of The Elections
While it has been previously documented that the FBI has launched an investigation into Russian “hacking” of the elections, today Reuters provided more details on the ongoing effort to scapegoat Hillary Clinton’s loss on the Kremlin, when it reported that the FBI is pursuing at least three separate probes relating to alleged Russian hacking.
The details according to Reuters, which cites unnamed officials, are as follows:
- the FBI’s Pittsburgh field office, which runs many cyber security investigations, is trying to identify the people behind breaches of the Democratic National Committee’s computer systems. Those breaches, in 2015 and the first half of 2016, exposed the internal communications of party officials as the Democratic nominating convention got underway and helped undermine support for Hillary Clinton. The Pittsburgh case has progressed furthest, but Justice Department officials in Washington believe there is not enough clear evidence yet for an indictment, two of the sources said.
- the FBI’s San Francisco office is trying to identify the people who called themselves “Guccifer 2” and posted emails stolen from Clinton campaign manager John Podesta’s account, the sources said. Those emails contained details about fundraising by the Clinton Foundation and other topics.
- FBI counterintelligence agents based in Washington are pursuing leads from informants and foreign communications intercepts, two of the people said. “This counterintelligence inquiry includes but is not limited to examination of financial transactions by Russian individuals and companies who are believed to have links to Trump associates. The transactions under scrutiny involve investments by Russians in overseas entities that appear to have been undertaken through middlemen and front companies”
Among the topics pursued by the counterintelligence investigations are the alleged contacts between members of the Trump campaign and current and former Russian intelligence officers prior to the November election, as previously reported by the New York Times.
When reached by Reuters, Scott Smith, the FBI’s new assistant director for cyber crime, declined to comment this week on which FBI offices were doing what or how far they had progressed. The White House likewise had no comment on Friday on the Russian hacking investigations. A spokesman pointed to a comment Trump made during the campaign, in which he said: “As far as hacking, I think it was Russia, but I think we also get hacked by other countries and other people.”
It was unclear if any FBI bureaus were investigating the leaks emanating from the US government which Donald Trump repeatedly slammed in the past week, and which led not only to the resignation of Michael Flynn but to constant disclosures into the inner workings of the Trump cabinet. While many of the opponents of the Clinton, Podesta and Democratic leaks – broadly grouped under the “Russians hacked the election” umbrella – have slammed “Russian interference” in the US electoral process, they have been far less troubled by similar leaks impacting Trump, and – of course – vice versa.
- Trump Supporters Rally In Downtown Atlanta With Semi-Automatic Weapons
As Trump was preparing to address an audience in Florida on Saturday afternoon, in a speech which Reuters summarized as “returning to the campaign trail to attack the media again and tout his accomplishments in the friendly atmosphere of a rally with supporters”, a group of supporters gathered for a pro-President Trump rally in downtown Atlanta armed with semi-automatic weapons.
The crowd met at Centennial Olympic Park. Those there told Channel 2 Action News that they are part of an area militia group, III% Security Force, which was also serving as security for the event.
As WSB-TV reports, members of the militia group said they were there to protect President Trump supporters.
“We’re using our second amendment rights to protect the first amendment rights,” Chris Hill said.
“Throughout the day we’re going to have more people, more Trump supporters come to this corner, showing their support for President Trump. We are going to make sure that these people are safe and have the right to have their voices heard without fear of violence or intimidation from any opposing groups.”
Hill said he has seen counter-protesters circling the block, but he and his group want to make sure things stay peaceful.
“We want to make it known that this is a peaceful event and we’re going to do everything in our power to make sure that remains the case,” he said. Hill said he expected 20 to 30 people to show up for the rally. He said a permit is required if there are more than 35 people, but he did not think that would be the case.
There were no reports of any confrontations or violence during the rally.
In an interview on its website with one of its founding members, the “Three Percenter” militia explains that it is “is comprised of men and women as citizens in esch state which come together to form a chapter. Each chapter is classified as being part of the “Unorganized Militia,” we are officially a civilian volunteer organization.
We will come to the defense of public and private property, lives, and liberty to exercise God-given rights, seen plainly in the laws of Nature, and codified in the Declaration of Independence and Bill of Rights.
All local laws (not in violation of the U.S. Constitution and/or State Constitutions) shall be observed by members of III%SF. Each and every member and personnel within III%SF shall always conduct himself/herself with professional aptitude, integrity, and respect of others at all times. III%SF and its members shall not and will not ever cause or create any attempt to attack or overthrow any local, state, or federal department. We will never advocate or promote violence towards any organizations, groups, or persons.
GSF III% has a zero tolerance policy regarding racial discrimination. The Constitution says a militia is necessary for the security of the free state. The State of Georgia says the militia is comprised of all males between 17 and 45 and physically capable of acting in our common defense.
A video showcasing the group is shown below.
- The Shadow Government's Destruction Of Democracy
The 'Deep State' has one simple rule – "do it my way… or else!"
And on the heels of Dennis Kucinich's warnings, The Intercept's Glenn Greenwald, who opposes Trump for a variety of reasons, warns that siding with the evidently powerful Deep State in the hopes of undermining Trump is dangerous. As TheAntiMedia's Carey Wedler notes, Greenwald asserted in an interview with Democracy Now, published on Thursday, that this boils down to a fight between the Deep State and the Trump administration.
https://www.democracynow.org/embed/story/2017/2/16/greenwald_empowering_the_deep_state_to
Though Greenwald has argued the leaks were “wholly justified” in spite of the fact they violated criminal law, he also questioned the motives behind them.
“It’s very possible — I’d say likely — that the motive here was vindictive rather than noble,” he wrote. “Whatever else is true, this is a case where the intelligence community, through strategic (and illegal) leaks, destroyed one of its primary adversaries in the Trump White House.”
According to an in-depth report by journalist Mike Lofgren:
“The Deep State does not consist of the entire government. It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street.”
As Greenwald explained during his interview:
“It’s agencies like the CIA, the NSA and the other intelligence agencies, that are essentially designed to disseminate disinformation and deceit and propaganda, and have a long history of doing not only that, but also have a long history of the world’s worst war crimes, atrocities and death squads.”
Greenwald believes this division is a result of the Deep State’s disapproval of Trump’s foreign policy and the fact that the intelligence community overwhelmingly supported Hillary Clinton over Trump because of her hawkish views. Greenwald noted that Mike Morell, acting CIA chief under Obama, and Michael Hayden, who ran both the CIA and NSA under George W. Bush, openly spoke out against Trump during the presidential campaign.
Greenwald asserts the the CIA preferred Clinton because, like the clandestine agency, she supported regime change in Syria. In contrast, Trump dismissed America’s practice of nation-building and declined to tow the line on ousting foreign leaders, instead advocating working with Russia to defeat ISIS and other extremist groups.
“So, Trump’s agenda that he ran on was completely antithetical to what the CIA wanted,” Greenwald argued. “Clinton’s was exactly what the CIA wanted, and so they were behind her. And so, they’ve been trying to undermine Trump for many months throughout the election. And now that he won, they are not just undermining him with leaks, but actively subverting him.”
“[In] the closing months of the Obama administration, they put together a deal with Russia to create peace in Syria. A few days later, a military strike in Syria killed a hundred Syrian soldiers and that ended the agreement. What happened is inside the intelligence and the Pentagon there was a deliberate effort to sabotage an agreement the White House made.”
Greenwald, who opposes Trump for a variety of reasons, warns that siding with the evidently powerful Deep State in the hopes of undermining Trump is dangerous. “Trump was democratically elected and is subject to democratic controls, as these courts just demonstrated and as the media is showing, as citizens are proving,” he said, likely alluding to a recent court ruling that nullified Trump’s travel ban.
He continued:
“But on the other hand, the CIA was elected by nobody. They’re barely subject to democratic controls at all. And so, to urge that the CIA and the intelligence community empower itself to undermine the elected branches of government is insanity.”
He argues that mentality is “a prescription for destroying democracy overnight in the name of saving it,” highlighting that members of both prevailing political parties are praising the Deep State’s audacity in leaking details of Flynn’s conversations.
As he wrote in his article, “…it’s hard to put into words how strange it is to watch the very same people — from both parties, across the ideological spectrum — who called for the heads of Edward Snowden, Chelsea Manning, Tom Drake, and so many other Obama-era leakers today heap praise on those who leaked the highly sensitive, classified SIGINT information that brought down Gen. Flynn.”
He also points out the left’s hypocrisy in condemning Flynn for lying when James Clapper, Director of National Intelligence during the Obama administration, perpetuated lies without ever being held accountable.
- Goldman: Investors Will Soon Realize They Were Too Optimistic
Goldman Sachs really wants the market lower.
After several increasingly more comprehensive critiques of Trump’s fiscal policies (most recently this past weekend), on Friday, just as the S&P closed at fresh all time highs propelled by a late day ramp, Goldman’s chief equity strategist who has a 2,300 year end target on the index, cautioned that “cognitive dissonance exists in the US stock market” as “investors must reconcile S&P 500’s performance with negative EPS revisions from sell-side analysts.” Specifically, Kostin notes that the “S&P 500 has returned 10% since Election Day while consensus 2017E adjusted earnings have been lowered by 1%“, and predicts that “investors will soon de-rate their expectations of potential 2017 EPS growth as they face the reality that the accretive impact from tax reform will not occur until 2018.“
In short, “Financial market reconciliation lies ahead: We are approaching the point of maximum optimism and S&P 500 will give back recent gains as investors embrace the reality that tax reform is likely to provide a smaller, later tailwind to corporate earnings than originally expected.“
First, Goldman points out that the underlying current of optimism unleashed with the Trump election is no longer warranted:
Cognitive dissonance exists in the US stock market. S&P 500 is up 10% since the election despite negative EPS revisions from sell-side analysts (see Exhibit 1). Investors, S&P 500 management teams, and sell-side analysts do not agree on the most likely path forward. On the one hand, investors, corporate managers, and macroeconomic survey data suggest an increase in optimism about future economic growth. In contrast, sell-side analysts have cut consensus 2017E adjusted EPS forecasts by 1% since the election and “hard” macroeconomic data show only modest improvement.
Some of the optimism has to do with a jump in Q4 earnings, however much of that has to do with a slowdown in energy company writedowns.
On an operating basis, EPS grew by 24% aided by a recovery in Energy profits. Energy operating EPS recovered from -$2.43 in 4Q 2015 – the lowest level on record since 1967 – to $0.29 in 4Q 2016 as asset write-downs slowed. Energy contributed 13 pp of 24 pp to 4Q S&P 500 EPS growth. Index-level operating EPS grew by roughly 6% in 2016; we expect 10% growth in 2017.
While there has certainly been an earnings rebound, the future is far less exciting than the recent rally will make it appear.
Investors are optimistic about an improvement in economic growth and the prospect of increased corporate EPS.
All 11 sectors contributed to the 10% rise in the S&P 500 index,
with Financials and Information Technology contributing 30% and 22% of
the 208 point gain. Decomposing the strong performance shows reduced EPS
growth has been more than offset by P/E expansion which accounts for
all the index gain (Exhibit 2).
Goldman then notes that while corporate management team commentary from Q4 earnings calls substantiates some of this optimism, forward EPS do not justify it, and indeed “analyst EPS estimates paint a different picture. Consensus 2017E adjusted EPS has been revised downward by 1% over the last 3 months. Sell-side analysts appear hesitant to incorporate potential tax reform and deregulation into their estimates given elevated policy uncertainty. Positive revisions to aggregate S&P 500 EPS estimates are rare – during the last 33 years, consensus EPS estimates have been revised upward from their starting point just six times.”
Kostin then points out something we have shown on various occasions in the past month: the recent “recovery” has been all in soft economic indicators such as sentiment and outlook. Hard data has for the most part, faded the entire bounce since the election:
“Hard” macroeconomic data has shown only modest improvement. Housing indicators have flashed mixed signals with a notable decline in the latest reading of new home sales. Industrial Production was weaker-than-expected in January (-0.3% vs. median forecast of flat) and the December reading was revised down.
Just as Congressional Republicans are likely to use the reconciliation process to pass fiscal policy legislation this year, so must investors reconcile S&P 500 performance with corporate earnings. We are approaching the point of maximum optimism regarding policy initiatives. Our US Economics team expects a tax reform package may not pass until late 2017 or early 2018. Even so, the tailwind to corporate earnings from tax reform will be constrained by the unwillingness of certain Congressional Republicans to significantly expand the federal budget deficit.
Kostin’s conclusion: “We expect investors will soon de-rate their expectations of potential 2017 EPS growth as they face the reality that the accretive impact from tax reform will not occur until 2018. Many investors have incorporated lower taxes in a 2017 S&P 500 earnings estimate of roughly $130, reflecting 11% growth. In contrast, our S&P 500 adjusted EPS estimate for this year remains $123, just 5% above the flat earnings of 2014, 2015, and 2016. We forecast S&P 500 will peak in 1Q at 2400 before slipping to 2300 by year-end.”
It’s perhaps worth noting once again, that every time Goldman has warned that a market turnaround is imminent, the S&P has proceeded to surge to new highs. For those expecting Trump’s first market correction, or worse, they may have to hold their breath until the bank that spawned most of Trump’s economic advisors finally throws in the towel and says to buy at any price.
- Trump Left Saudi Arabia Off His Immigration Ban… Here's Why
Submitted by Nick Giambruno via InternationalMan.com,
On August 15, 1971, President Nixon killed the last remnants of the gold standard.
It was one of the most significant events in US history—on par with the 1929 stock market crash, JFK’s assassination, or the 9/11 attacks. Yet most people know nothing about it.
Here’s what happened…
After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar.
The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.
The Bretton Woods system made the US dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the US government for gold.
By the late 1960s, the number of dollars circulating had drastically increased relative to the amount of gold backing them. This encouraged foreign countries to exchange their dollars for gold, draining the US gold supply. It dropped from 574 million troy ounces at the end of World War 2 to around 261 million troy ounces in 1971.
To plug the drain, President Nixon “suspended” the dollar’s convertibility into gold on August 15, 1971. This ended the Bretton Woods system and severed the dollar’s last tie to gold.
Since then, the dollar has been a pure fiat currency, allowing the Fed to print as many dollars as it pleases.
Of course, Nixon said the suspension was only temporary. That was lie No. 1. It’s still in place over 40 years later.
And he claimed the move was necessary to protect Americans from international speculators. That was lie No. 2. Money printing to finance out-of-control government spending was the real threat.
Nixon also said the suspension would stabilize the dollar. That was lie No. 3. Even by the government’s own rigged statistics, the US dollar has lost over 80% of its purchasing power since 1971.
The death of the Bretton Woods system—which was really the US government defaulting on its promise to back the dollar with gold—had profound geopolitical consequences.
Most critically, it eliminated the main motivation for foreign countries to store large US dollar reserves and to use the US dollar for international trade.
At this point, demand for dollars was set to fall… along with the dollar’s purchasing power. So the US government concocted a new arrangement to give foreign countries another compelling reason to hold and use the dollar.
The new arrangement, called the petrodollar system, preserved the dollar’s special status as the world’s reserve currency. For President Nixon and Secretary of State Henry Kissinger, it was a geopolitical and financial masterstroke.
From Bretton Woods to the Petrodollar
From 1972 to 1974, the US government made a series of agreements with Saudi Arabia, which created the petrodollar system.
The US handpicked Saudi Arabia because of the kingdom’s vast petroleum reserves and its dominant position in OPEC—and because the Saudi royal family was (and is) easily corruptible.
The US also picked Saudi Arabia for geopolitical reasons. During the Yom Kippur War of 1973, OPEC’s Arab members started an oil embargo to punish the US for supporting Israel. Oil prices quadrupled, inflation soared, and the stock market crashed.
The US was in a vulnerable position. It needed to neutralize the Arabs’ potent Oil Weapon. Turning a hostile Saudi Arabia into an ally was the key. The alliance would also help check Soviet influence in the region.
In essence, the petrodollar system was an agreement that the US would guarantee the House of Saud’s survival. In exchange, Saudi Arabia would:
1. Take the Oil Weapon off the table.
2. Use its dominant position in OPEC to ensure that all oil transactions would only happen in US dollars.
3. Invest billions of US dollars from oil revenue in US Treasuries. This let the US issue more debt and finance previously unimaginable budget deficits.
Oil is the world’s most traded and strategic commodity. If foreign countries need US dollars to trade oil, it creates a very compelling reason to hold large dollar reserves.
For example, if Italy wants to buy oil from Kuwait, it has to purchase US dollars on the foreign exchange market to pay for the oil first.
This creates an artificial market for US dollars. The dollar is just a middleman in countless transactions that have nothing to do with US products or services.
Ultimately, the arrangement boosts the US dollar’s purchasing power. It also creates a deeper, more liquid market for the dollar and US Treasuries.
Plus, the US has the unique privilege of buying imports, including oil, with its own currency… which it can print.
It’s hard to overstate how much the petrodollar system benefits the US dollar. It’s allowed the US government and many Americans to live beyond their means for decades. And it’s the reason the media and political elite give the Saudis special treatment.
It’s the reason why President Trump left the Saudis off of his recent immigration ban.
It was a glaring omission that Saudi Arabia—the country that provided 15 of the 19 hijackers for the 9/11 attacks—was absent from the list.
In short, the petrodollar is the glue that holds the US–Saudi relationship together. But its bind is not permanent.
Bretton Woods lasted 27 years. So far, the petrodollar has lasted over 40 years. However, the glue is already starting to lose its stick.
I think we’re on the cusp of another paradigm shift in the international financial system, a change at least as fundamental as the end of Bretton Woods in 1971.
The relationship between Saudi Arabia and the US is near historic lows. I only expect it to get worse.
The US government has released 28 previously classified pages of the 9/11 Commission Report, which show Saudi government involvement in the attacks. And Congress passed a law allowing 9/11 victims to sue the Saudi government.
These are major, unprecedented, irreparable blows to the petrodollar arrangement.
Even without these radical changes, the petrodollar could still bite the dust…
The Saudis could decide to sell their oil in Chinese renminbi, euros, IMF SDRs, gold, or many other non-dollar currencies. And they could influence most of OPEC to follow suit.
Or the House of Saud could implode. I think that’s inevitable anyway, given the colossal economic and military mistakes it’s made recently.
The geopolitical sands of the Middle East are rapidly shifting.
Saudi Arabia’s regional position is weakening. Iran, which is notably not part of the petrodollar system, is on the rise. US military interventions are failing. And the emerging BRICS countries are creating potential alternatives to US-dominated economic/security arrangements. This all affects the stability of the petrodollar system.
Right now, the stars are aligning against the Saudi kingdom. This is its most vulnerable moment since its 1932 founding.
That’s why I think the death of the petrodollar system is the No. 1 black swan event for 2017.
I expect the dollar price of gold to soar when the petrodollar system crumbles in the not-so-distant future. You don’t want to find yourself on the wrong side of history when that happens.
When Nixon took the dollar off gold in 1971, it skyrocketed over 2,300%, from $35 an ounce to a high of $850 an ounce in 1980. Gold mining stocks did orders of magnitude better.
I expect the returns to be at least this great after the end of the petrodollar.
But that brings up another crucial point. There’s also likely to be severe inflation.
The petrodollar system has allowed the US government and many Americans to live way beyond their means for decades.
The US takes this unique position for granted. But it will disappear once the dollar loses its premier status.
This will likely be the tipping point…
Afterward, the US government will be desperate enough to implement capital controls, people controls, nationalization of retirement savings, and other forms of wealth confiscation.
I urge you to prepare for the economic and sociopolitical fallout while you still can. Expect bigger government, less freedom, shrinking prosperity… and possibly worse.
It’s probably not going to happen tomorrow. But it’s clear where the trend is headed.
It is very possible that one day soon, Americans will wake up to a new reality, just as they did when Nixon severed the dollar’s last link to gold.
Once the petrodollar system kicks the bucket and the dollar loses its status as the world’s premier reserve currency, you will have few, if any, options.
The sad truth is, most people have no idea how bad things could get, let alone how to prepare…
Yet there are straightforward steps you can start taking today to protect your savings and yourself from the financial and sociopolitical effects of the collapse of the petrodollar. This recently released video will show you where to begin. Click here to watch it now.
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