Today’s News 19th March 2016

• The Government Actually Has A Zombie Apocalypse Plan – And It's Just Been Declassified

  Submitted by Jake Anderson via TheAntiMedia.org,

  A few years ago, the Center for Disease Control launched a zombie preparedness initiative that drew significant attention. The Department of Defense followed suit and developed an entire training course intended for the Joint Operational Planning and Execution System (JOPES). The complete response plan, called CONPLAN888, was recently declassified, and it’s just as weird and creepy as you might imagine.

  The Black Vault posted two documents retrieved from the NSA using the Freedom of Information Act.

  The purpose of the plan, according to the United States Strategic Command (USSTRATCOM), was to use a fictitious scenario to prepare for real-world emergencies.

  “[The training focused on how to] undertake military operations to preserve ‘non-zombie’ humans from the threats posed by a zombie horde. Because zombies pose a threat to all ‘non-zombie’ human life (hereafter referred to as ‘humans’), USSTRATCOM will be prepared to preserve the sanctity of human life and conduct operations in support of any human population-including traditional adversaries.”

  The objective of the three-fold plan includes the neutralization of zombies through “denial, deception, disruption, degradation or destruction,” though with the exception of ‘destruction,’ it is unclear what is meant by these terms with regard to fighting zombies.

  Reading at times like the treatment to a campy science fiction script, CONPLAN888 categorizes eight classes of zombies:

  1. Pathogenic zombies — Zombie life forms created after infection by a viral or bacterial contagion.
  2. Radiation zombies — Zombie life forms created after infection from electromagnetic or particle radiation.
  3. Evil Magic Zombies — Zombie life forms created by occult experimentation, or “evil magic.”
  4. Space Zombies — Zombies that come from space or are created by extraterrestrial toxins (this also includes Zombie Satellites that could pose a threat to SATCOM services like DirecTV)
  5. Weaponized Zombies — Zombie life forms engineered through bio-mechanical technology for the purposes of attacking another nation.
  6. Symbiant-Induced Zombies — Zombie life forms created after the “introduction of a symbiant life form into an otherwise healthy host.”
  7. Vegetarian Zombies — Zombie life forms that cause no threat to humans because they only eat plant life (could nevertheless “cause massive de-forestation or elimination of basic food crops essential to humans [rice, corn, soybeans])”
  8. Chicken Zombies (yes, this is real)— Zombies that are essentially old hens that can no longer lay eggs. Farmers euthanize them with carbon monoxide and stack them in piles; however, some of the hens are still alive and crawl out. Though they ultimately die of organ failure, chicken zombies are “simply terrifying to behold” and are likely only to make people become vegetarians in protest of animal cruelty.

  CONPLAN888 consists of multiple striking passages, given this is a government agency assessing a fictitious zombie uprising. More practical factors concern environmental issues such as groundwater contaminated with zombie pathogens.

  Other, more ominous notes, include references to the government declaring martial law within the United States. There is also a reference to epidemiologic surveillance for the purposes of watching changes in disease vectors.

  The government response to a zombie uprising unleashed by a nation-state, large corporation, or terrorist group includes the following additional measures: HAND SANITIZER, which, marketing materials say, kills 99% of germs (they note that hand sanitizer has never been tested on biohazard level 4 pathogens like ebola); and FIREPOWER TO THE HEAD (“the human brain will still be functioning in the zombie state, but it is universally agreed that the only part actually active will be the brain stem”).

  The document’s assessment of zombies states that they are “undead and thus feel no pain or fear of death, (therefore) riot control counter-measures would be completely ineffective.”

  CONPLAN888 references the books and articles The Zombie Survival Guide, World War Z; An Oral History of the Zombie War, and “Zombie Chickens Taking Over California,” among others.

  CONPLAN 8888 by JDStuster

  

  

  

  

  

• Greek Banks Admit To Charging Customers To Exchange Big Bills For Smaller Ones

  Earlier this month, a reader noticed something rather disturbing. Piraeus Bank seemed to have added a new line item in one of its reports and that new line item appeared to suggest that the bank was set to charge customers for exchanging €500 notes for smaller bills.

  And it wasn’t just Piraeus. Other Greek banks looked to be doing something similar.

  

  Now it would be bad enough if this was just another example of banks making up for lost margins by passing ZIRP and NIRP onto customers via fees or if this were simply Greek banks being forced to squeeze a little extra out of their retail business because they are still wholly insolvent. But it’s the timing of these new exchange taxes that raises eyebrows.

  Remember, reports began to circulate earlier this year that the ECB was considering doing away with the €500 note. That was distressing news for many Greeks who last year, fearing the troika may one day threaten to essentially confiscate their savings (again), eschewed the bank in favor of the mattress. Obviously, much of that mattress money is denominated in €500 notes – notes which Draghi is now set to phase out.

  Upon hearing the news, “many in Greece – especially older people – rushed to deposit the money in their accounts,” eKathimerini wrote last month, adding that “bank officials say depositing the 500-euro notes at a bank is the only way for people to rid themselves of them without losing the money, as it is not possible to exchange them for smaller notes.”

  Or at least it wouldn’t be once they’re taken out of circulation, but in the meantime it is possible, and as it turns out, Greek banks are indeed doing precisely what we suspected they were doing: they’re charging to exchange the €500 notes for smaller denominations.

  Here’s eKathemirini again:

  Banks collect a commission of 1.5 percent on average when changing 500-euro bills for notes of lower denominations, citing the administrative costs of keeping their branches stocked with notes of smaller value.

   

  When exchanging one 500-euro note for smaller bills, the charge is 3-5 euros (depending on the bank), while the maximum charge comes to 200-250 euros regardless of the amount a customer wishes to exchange.

  Right. Greek banks need to offset “the administrative costs of keeping their branches stocked with notes of smaller value.” Normally that would translate roughly to this: “we need to offset the administrative costs of being a bank,” but because this is Greece, the banks get to blame the ECB and Brussels: 

  In response to criticism about the commission they charge, banks counter that the administrative cost of supplying their branches around the country with smaller banknotes is unusually high at present with the capital controls still in place and a 420-euro cap on the weekly amount that can be withdrawn in cash.

  It’s not immediately clear why that makes sense, but we’re sure they’d have an answer should anyone care to ask.

  As eKathimerini continues, “people started going to banks to exchange top-denomination euro bills after it was reported that the European Central Bank intends to withdraw them as a measure against money laundering.” So if you are Greek and you were effectively forced to take your money out of the bank because after last summer you feared a depositor bail-in might be right around the corner, you now have the distinct pleasure of having to pay a fee to exchange your large bills for smaller ones at the very same banks where you withdrew the money in the first place. But that’s all part of living in a debt colony of Germany we suppose.

  

  The question now is how long before banks in countries that aren’t Greece adopt the very same fees? And what will their excuse be? Does the ECB really intend to to allow banks to make a profit off of the gradual phasing out of physical bank notes?

  There’s no fee in Greece, of course, if you simply deposit the €500 notes in your account. Just like they’ll be no fee when the final push to a cashless society begins and everyone is forced to turn in all their physical money in exchange for 0s and 1s on a computer screen. Or at least they’ll be no initial fee. But trust us, you’ll pay later when the economy starts to slow down and, without the option of resorting the physical cash, you’ll be forced to choose between swiping your debit card or seeing the bank confiscate a portion of your deposits once central banks cut rates to -20%.

  

  

  

  

  

• Illinois College Will Stop Arresting Students For Passing Out Constitution

  Submitted by Robert Gehl via DownTrend.com,

  An Illinois college has reversed its position and will allow students to pass out copies of the U.S Constitution on campus.

  It’s a good move, since the Alliance Defending Freedom threatened to sue them if they didn’t.

  Under the old policies, students were threatened with arrest if they passed out the founding documents on the campus of the College of DuPage.

  The exchange between a police officer and student Joseph Enders, captured on video, shows the officer telling Enders that, under campus policies, he needs a permit to offer the Constitution to passing students.

  The revised policies respect the constitutional freedoms of students by allowing them to pass out literature in outdoor areas of campus without prior permission, as the old policies required.

  “It makes no sense for a public college to censor distribution of the very document that ensures free speech for all Americans,” said ADF Senior Counsel Tyson Langhofer. “The college has done the right thing in revising its policies so that the school can once again function as the marketplace of ideas that an institution of higher education is supposed to be.”

   

  Enders, a political science major, has been working to start a Turning Point USA chapter at the college. TPUSA is a non-partisan student organization dedicated to promoting the principles of fiscal responsibility, free markets, and limited government. He was standing on a campus sidewalk, handing out copies of the Constitution and asking fellow students if they would be interested in joining the group, when he was approached by the officer, who stated that his actions were against school policy and that he would have to go to the Student Life office to acquire a permit for his activities.

   

  “The First Amendment does not tolerate this blatant suppression of speech,” ADF wrote in its letter to the college on behalf of Enders in October of last year. “The College’s…policy is unconstitutional because it requires prior permission before students are allowed to exercise their First Amendment rights, and it grants unfettered discretion to College officials in determining whether to grant permission to speak. To its credit, it is my understanding that the Board indicated that it would be reviewing and revising the College’s policies to ensure that they no longer restrict the First Amendment rights of students on campus.”

   

  In response to the ADF letter, the college invited Langhofer to attend a meeting of the Board of Governance “to make a presentation concerning free speech policies at public universities.”

   

  “With these changes, the college has taken a big step towards truly being a marketplace of ideas, where students of all different backgrounds and beliefs will be free to communicate their opinions and ideas without fear of censorship or punishment,” said ADF Senior Counsel David Hacker. “We hope that other colleges will follow DuPage’s example and ensure that the constitutionally protected freedoms of their students are thoroughly protected.”

  Still…

  

  

  

  

  

  

• Meet Two Of The Men Who Will Determine Whether Trump Becomes President

  One of the things that seems to have never sunk in for Donald Trump’s GOP rivals (or at least until they were either sitting back at home on the couch reflecting on why they were beaten so badly or else talking sheepishly to reporters on Capitol Hill about their plans to retire from politics after being trounced in their home state) is that he feeds off of controversy and publicity. The more you talk about him – good or bad – the larger he looms in voters’ minds.

  Although certainly adept at whipping crowds into a frenzy and clearly a much more savvy politician than probably even he suspected going into the campaign, the Trump juggernaut is to some extent a monster of the GOP field’s own making. The more they focused on Trump, the more voters did too, and before you knew it, he was the frontrunner. At that point, it became self-fulfilling – they had to focus on him because he was at the top of the polls.

  But alas, they never learned. He was best left alone from the start to fizzle out or, more likely, to self-destruct of his own accord. Instead, by creating an “us versus him” dynamic, the other Republicans made an anti-establishment candidate out of a billionaire who probably didn’t even know what “anti-establishment” meant when he entered the race. Before you knew it, Trump was Mr. Anti-Washington and from that point forward he could do no wrong.

  So oblivious to this are Republicans that they’re about to make the very same mistake with the GOP convention. If you were to have gathered an arena full of Trump voters in January and asked them to raise their hands if they could explain what a “contested convention” was, our guess is that you would have come up with a stadium full of full pockets.

  But that’s not the case now. The media, the Republicans, the Democrats, indeed damn near everyone is talking about what strategies the GOP can employ in Cleveland to steal the nomination away from Trump. Well guess what? Just like that, everyone has virtually guaranteed that they’ll never be able to get away with it.

  Now, Trump will make absolutely sure that his millions of rabid supporters know there’s a chance they may be effectively disenfranchised in July and thanks to the fact that America’s political establishment still hasn’t learned anything about why they’re losing to Trump, those same supporters will be able to turn on the nightly news and hear all about how the Republican party plans to screw them.

  Indeed, CNN was gullible enough to actually ask Trump what he thought would happen if the nomination were stolen from him, effectively affording him an “inception” opportunity which he jumped on immediately by saying in as innocent a voice as he could muster, “I think there’d be riots.”

  If there was any chance of pulling the wool over Trump’s eyes and duping his followers with backroom, old school politics in Cleveland, there sure as hell isn’t now. Just the same as if there was any chance of shutting down Trump’s campaign in the first GOP debate by effectively ignoring him and treating him as though he didn’t belong on stage, that chance was lost immediately when Fox’s Megyn Kelly made him a political star by asking him if he thought it was befitting of a President to call women “disgusting animals.”

  It’s been a comedy of errors on everyone’s part but Trump’s and now, by alerting the billionaire to just how real the threat of a convention coup truly is, he may actually end up turning the tables on them and stealing their delegates.

  With that as the backdrop, we bring you the following excerpts from a Reuters piece out today entitled “Meet The Man Who Will Help Determine Trump’s Fate In 2016 Race.”

  *  *  *

  From Reuters

  Mark Strang spends his days delivering farm equipment, listening to politics on the radio during cross-country drives. But in July, the 63-year-old could have an outsized voice in choosing the Republican nominee for president of the United States.

  For the first time in 40 years, Republicans could arrive at their national convention in Cleveland without a nominee. If front-runner Donald Trump fails to lock up the nomination before then, as some pollsters are predicting, Strang will have a chance to make history.

  Strang, from Illinois, is one of 2,472 delegates to the convention who will ultimately determine the party’s choice for the White House this November. In recent elections, the delegates have simply rubberstamped the presumptive nominee. But this year the convention could become a brutal fight in which every delegate vote will count.

  If the convention becomes a fight because no candidate has the needed 1,237 delegates on the first round of voting, most of the delegates would eventually be released. States are still sorting through some rules governing how long delegates are bound to candidates. Strang said if he found himself a free agent, he would be open to switching his vote.

  Interviews with Republican state party officials and some delegates who have already been selected reveal widespread soul-searching in anticipation of a potential fight. Officials and delegates described weighing their personal preference with the need to rally around a candidate going into the general election.

  Party faithful are steeling themselves for a battle, not just for the nomination, but also for the party’s core values.

  A contested convention would pose a major test for Trump’s campaign, which thus far has eschewed a traditional grassroots organization. His rivals, Cruz and Ohio Governor John Kasich, are already trying to lobby delegates who might be open to changing sides once they are allowed to become free agents in the convention.

  In every state, the party chair and two national committee members, a man and a woman, are automatically selected to be delegates. But from there, state parties use a wide variety of procedures to pick delegates, most of whom won’t be named until late spring or summer.

  “These are the base of the party,” said Michigan Republican Party chairwoman Ronna Romney McDaniel. “The delegates are not the establishment. They are the base. And I think that’s a great misunderstanding.”

  Often sporting outfits with homemade decorated hats or jackets weighed down with dozens of buttons, delegates who show up every four years include everyone from lawmakers to homemakers, and from those who write million dollar checks to retirees who make phone calls.

  Many states use small conventions to pick delegates, many of whom are long-time party activists and elected office holders. Not all of them personally back the candidate they are pledged to support in the first round of convention voting, said Virginia Republican Party chairman John Whitbeck. 

  Jim Carns, a state representative from Alabama, where delegates are selected in the primaries, signed up to represent Trump last fall — when many still viewed the rise of the New York real estate mogul as a temporary phenomenon.

  He sees no circumstance in which he would switch candidates. 

  *  *  *

  Right. Jim Carns, who pledged himself to Trump last year wouldn’t drop his support “under any circumstances.” 

  And how about Mark Strang, the Cruz delegate? Well, let’s go to Mark himself for the answer: “I am going to be loyal to Ted Cruz, and I will stick with him until I see if there’s no hope. And if there’s no hope for Ted getting in, as I understand it I can pledge my votes to somebody else, and I would hope Ted would understand.“

  We’re sure he will Mark. We’re sure he will.

  

  

  

  

  

  

• Gawker Ordered To Pay Hulk Hogan $115 Million In Sex Tape Lawsuit

  In a closely watched trial by the media community, shortly after 7pm on Friday night, and less than six hours after starting deliberations, the jury sided with ex-pro wrestler Hulk Hogan and awarded him $115 million in his sex tape lawsuit against Gawker Media. The trial lasted two weeks. The award consists of $55 million for economic injuries, and $60 million for emotional distress.

  According to CBS, Hogan, dressed all in black including a black bandana, cried when the verdict was announced, CBS affiliate WTSP said while members of Gawker’s team listened in shocked silence as the verdict was read.

  

  The trial, which has been years in the making, has major implications not only with its potential “chilling effect” on the freedom of speech, but also focuses on the grey space of “what is public news”, and finally has potentially terminal implications for the future of Gawker which will likely be forced to go out of business unless it miraculously lowers the damages on appeal.

  For those who are unfamiliar, Hogan, whose given name is Terry Bollea, had sued Gawker for $100 million for publishing an edited video of the wrestler having sex with the then-wife of a radio shock jock named Bubba the Love Sponge. Hogan contended the 2012 post violated his privacy.

  

  In spirited closing arguments on Friday, lawyers for Hogan and Gawker discussed themes of personal life versus celebrity, and freedom of speech versus the right to privacy.  Hogan’s attorneys told jurors this is the core of the case: “Gawker took a secretly recorded sex tape and put it on the Internet.”

  They said Hogan didn’t consent to the video, that Gawker didn’t follow usual journalism procedures before posting it and that the video wasn’t newsworthy. Gawker did not try to contact Bollea or the woman in the video, and nor did the website contact the woman’s husband, DJ Bubba The Love Sponge Clem, who recorded the video.

  It was never conclusively determined during trial who leaked the video to the media.

  Hogan didn’t ask for any of this to happen, lawyer Kenneth Turkel said, adding that Bollea, the private man, expected privacy during an intimate moment. Much was made during the trial of Hogan’s celebrity persona versus Bollea’s privacy.

  “I want you to imagine the fact that for 35 plus years he is essentially an actor, an entertainer, who has played the same role,” said Turkel. He said Hogan “has every right, every right, to keep whatever precious private moments in his life, which for this gentlemen are very few.”

  Hogan’s lawyers also said Gawker’s value increased by $15 million due to the post, while Gawker contends it made $11,000 in ad revenue.

   

  Hulk Hogan took the stand in court over a leaked sex tape of him, and some of the testimony got explicit.

   

  Gawker’s attorneys told the jury that the video is “not like a real celebrity sex tape” and urged them to watch the video, which contains nine seconds of sexual content.  They pointed out that news of the sex tape first appeared on at least two websites: TMZ and The Dirty. Hogan went on TMZ’s TV program to talk about it, and later appeared on the Howard Stern show.

  “He has consistently chosen to put his private life out there, for public consumption,” said attorney Michael Sullivan. He also criticized Hogan’s claim that he was in Hulk Hogan persona when he was doing interviews.

  “An actor playing a character does that on set, but when they go on a talk show, they’re themselves,” Sullivan said. Sullivan called into question whether the tape was all a celebrity stunt to drum up publicity for Hogan’s career. He suggested that although the jurors might find the video, Gawker and Hogan’s sex life distasteful, they must protect the First Amendment right to free speech.

  “We ask you to protect something that some of you may find unpleasant,” he said. “To write, to speak, to think about all topics, to hold public figures accountable. It is right in the long run for our freedoms.”

  The jury disagreed.

  Putting the $115 million award in context, according ro previously disclosed information, Gawker’s operating income for 2015 amounted to $6.5 million, 18 times less than the awarded damages. The website generated around $24 million in profit in the past 5 years. The company’s revenue in 2014 was $44.2 million.

  

  Previously Nick Denton, Gawker’s CEO, had indicated that Gawker’s future hung in the balance if the jury ruled in Mr. Hogan’s favor for the full amount. “It’s a $100 million lawsuit,” Mr. Denton told The New York Times earlier this month. “We don’t keep $100 million in the bank, no.”

  According to Gawker’s release, the company, which has never taken outside investment, has had five years of steady, if not eye-popping, growth. But for a media company, not losing money is good. Making some is even better. Many media companies would be very pleased with a profit growth of almost 10 percent. Gawker had also disclosed that its very expensive legal fees came out of its $6.53 million operating income but the company did take an $8 million loan from Silicon Valley Bank to pay for its new flatiron office, which the company is scheduled to move to later this month. That loan may now be impaired.

  “With the possibility of an initial judgment against Gawker Media at the forthcoming trial in Florida, there’s been interest in the company’s underlying financial health,” Denton said in a statement. “Our journalists and I stand for open discussion of true and interesting stories, and our finances have become part of the story. So we intend to be open about them, both in the media and in the St. Petersburg courtroom. I am as proud of our business track record as I am of our writers’ reputation for journalistic boldness.”

  He may now be regretting his writers’ journalistic boldness.

  And while the implications of this trial will reverberate in online media and the interpretation of what content is and what isn’t subject to the First Amendment, some early media comments suggest that for the time being schadenfreude is winning over concerns over the trial’s chilling effects on the media.

  Ordinarily I’d be very concerned about the effects of this Gawker verdict on chilling of press freedom, but it’s Gawker. Fuck em.

  — Popehat (@Popehat) March 18, 2016

  In retrospect it probably wasn’t a good idea for Gawker to sell ads on their live coverage of the trial, but then they wouldn’t be Gawker.

  — Popehat (@Popehat) March 19, 2016

  

  

  

  

  

• The New New 'Deal' – "Markets Are Too Important To Be Left To Investors"

  Submitted by Ben Hunt via Salient Partner's Epsilon Theory blog,

  Five Easy Pieces for the World-As-It-Is

  

  Our story so far…

  In the second half of 2014, export volumes in every major economy on Earth began to decline, the result of divergent monetary policies that crystallized with the Fed’s announced tightening bias in the summer of 2014. This decline in trade activity – which is far more impactful than a decline in trade value, because it means that the global growth pie is structurally shrinking – accelerated in 2015 and 2016 as Europe and Japan intentionally devalued their currencies to protect their slices of the global trade pie. In game theoretic terms, Europe and Japan have been “free riders” on the global system, using currency devaluation to undercut the prices of competing US and Chinese products in a way that avoids domestic political pain.

  But if there’s an iron law of international politics, it’s this: once the strategic interaction between nations begins to shift from cooperation to competition, once a principal player decides to defect and go for free rider benefits, then the one and only equilibrium of the new game has ALL principal players abandoning cooperation and competing with each other. Moreover, once one principal player begins to compete with a new and terrible weapon (i.e., mustard gas in World War I or negative interest rates in monetary policy or Trump-esque debate tactics in a Republican primary), then all principal players must adopt those tactics or lose the game. Universal competition is a highly stable equilibrium, both on the international stage and the domestic stage, particularly in the way it plays out in domestic politics, where there is never a shortage of populist politicians ready and willing to blame global trade for a host of ills. And because universal competition is such a stable equilibrium, typically only a giant crisis – one that shakes the principal players to their domestic political cores – gets you back, maybe, to a Cooperative game.
   
  Yikes, that sounds pretty dire, Ben. Are you sure? What about some prominent sell-side economists who recently published notes saying that you’re wrong about global trade? While it’s true, say these voices of consensus, that global trade values as measured in dollars are declining as commodities slide and the dollar gets stronger, aggregate global trade volumes are not contracting, so we really don’t have anything to worry about.

  Hmm … here’s what the World Trade Organization (the gold standard in the field) says about seasonally-adjusted quarterly export volumes in the four economies that matter for international relations. The chart below starts with the low-water mark of all four geographies in Q1 2009, draws a line to the respective high-water marks hit in the second half of 2014, and then connects to the current index value. I find this sort of minimum-to-maximum-to-current data representation to be a very effective way of isolating inflection points in data series that should (if all is well with the world) grow at a pretty steady linear clip. And no, that’s not an error in the Japan and China graphs. Both countries' export volumes peaked more than 5 years ago, essentially flatlined (a dip and recovery around the European crisis of 2012 not shown), and rolled over in late 2014. It’s pretty stunning, right? This is the primary reason why I think Japan gets no respect with their monetary policy experiments, and why I think we are already past the event horizon for China to float or otherwise devalue their currency. China has been trying to jumpstart industrial production growth for years now, nothing has worked, and the downturn since Q3 2014 not only puts them embarrassingly behind both the US and Europe in export activity, but also gives the lie to the idea that they can stimulate their way out of this.

  
  Source: World Trade Organization, as of 12/09/15. For illustrative purposes.

  To paraphrase George Soros, I’m not expecting a shrinking of the global trade pie and an expansion of competitive, protectionist domestic policies; I’m observing it. Something derailed the global trade locomotive in the second half of 2014, and it doesn’t take a genius to figure out that this something was divergent monetary policy, with the Fed embarking on a public quest to tighten, and the rest of the world doubling down on monetary policy easing. This is Exhibit 1 to support the case that we've entered a new, more competitive international political environment, as all four major global economies suffer a simultaneous contraction in trade volumes. I'm often asked what would need to happen for me to change my structurally bearish views about the world. So here you go. If this chart changes, then my views will change.

  As you can see, the published WTO data currently goes through Q3 2015. Now maybe the Q4 2015 WTO data will come out and show a new high-water mark for these principal players in the global economy. But I don’t see how. First, I've looked at Q4 year-over-year trade values in local currency. Not a perfect measure of volumes, but indicative. The US, Japan, and China are all clearly down year-over-year in Q4; it’s hard to tell for the EU without including intra-EU trade. Second, I've looked at the raw data of container volume in the major ports in the world. 2015 data isn’t available for China and Japan, but partial data is available for the largest EU port (Rotterdam) and full data for the largest two US ports (Los Angeles and Long Beach). Rotterdam is down a little in 2015 total volumes; Los Angeles and Long Beach are down a lot in export volumes, with the declines accelerating in Q4 (partially labor issues, but still). Want more? Read this FT article on structural shifts in global trade. Read this WSJ article on the expanding January US trade deficit driven by disappointing exports, or this WSJ article on enormous new US tariffs on Chinese cold-rolled steel (while you're at it, look who the biggest direct beneficiary of these tariffs is: Indian mega-billionaire Lakshmi Mittal … I swear to god, you can't make this stuff up … and you wonder why Bernie Sanders strikes a chord with his message?). Take a look at Chinese electricity consumption data for 2015 (highly correlated with industrial production) and tell me that we're not seeing continued declines.

  How, then, do consensus sell-side analysts claim that global trade volumes are increasing? Two ways. First, they include countries that don’t matter, like Canada and Brazil. Sorry, my friends to the north and south, but you can increase your export volumes all you like and it matters not to the Great Game. Second – and this is the really egregious data interpretation mistake – they report global trade growth by including intra-EU trade! It’s a statistic that the WTO reports (as they should), and they include it in their aggregated global trade number (as they should). But if you can’t see that you need to back this number out if you’re trying to understand the strategic interaction between central banks … if you can’t see that intra-EU trade is as extraneous to this analysis as trade between Texas and California … well, I really don’t know what to say.

  Now even though I think it's totally disingenuous to claim that all is well with global trade volumes, I will be the first to admit that all is not lost. Yet.

  First, export volumes have rolled over since the second half of 2014, but they haven't collapsed, certainly not in the US, anyway. Export values, on the other hand, have taken a nose dive, particularly in the US (the total value of merchandise goods exported by the US is currently off more than 15% from its high-water mark). Keep in mind, though, that I don’t think that a decline in export values is as much of an emergency alarm as a decline in volumes. Why? Because a decline in export values impacts industrial sector earnings, while a decline in export volumes impacts actual industrial sector production. I think this is exactly why we’ve seen an earnings recession in the US, particularly in any sector with a connection to trade, but not a jobs recession. When export values decline, companies are missing their revenue targets. When export volumes decline, companies are shutting down factories. This is the big question I have for the US economy: will export volume declines start catching up to export value declines? If yes, then I think we’re going to have a “real” recession. If no, then I think we’re likely to muddle through in the real economy.

  Second, it’s not like you can hide the fact that this enormous barge called global trade has reversed course over the past year and a half, and it’s not like central bankers or the IMF are oblivious to what’s going on. They’re going to respond, and who knows, maybe they’ll be successful in turning this barge back around. I don’t think they have the proverbial snowball’s chance, for reasons I’ll talk about in a second, but they’re certainly going to try.

  Here’s a chart of the CDS spread (the premium you have to pay to insure your bond against default) for a senior credit index of the 33 largest European financial institutions as of February 8. I used this chart in the Epsilon Theory note “Snikt” to show what it looks like when the claws of systemic risk pop out.

  
  © Bloomberg Finance L.P., as of 02/08/16. For illustrative purposes.

  But now here’s a chart of the same CDS spread as of March 11. We’ve retraced the entire move.
  
  © Bloomberg Finance L.P., as of 03/11/16. For illustrative purposes.

  What happened? Exactly what happened in August 2012, the last time Draghi built up huge expectations for a miracle cure, blew the press conference, and had to be bailed out by the Powers That Be. In short, I suspect that the allocation heads at one or two European mega-insurance firms were informed that they would be supporting risk assets, I can observe how the Narrative machine got into gear, and I am certain that real world investors do what they always do, they play the Common Knowledge Game. Hopefully, if you’ve seen this movie before, you traded around the spike in February, got out of the position entirely, and are looking for a reprise.

  Is there some reality to what the Narrative machine is pumping out? Sure, there always is. I think we have to take seriously the idea that the G-20 Shanghai meeting of the world’s central bankers and finance ministers in late February was more productive than anyone thought, and that maybe the joint communiqué calling for fewer beggar-thy-neighbor currency devaluations is a temporary truce of sorts. What would this truce look like? China agrees to give it the old college try one more time with domestic credit expansion and money printing, in an effort to replace feeble foreign demand for their products with goosed-up domestic demand and fiscal deficit spending. Europe agrees to lower its negative rates as little as humanly possible, and instead concentrate on good old-fashioned asset purchases. The US agrees to sit on its hands for a while with any more rate hikes, and Japan agrees to sit on its hands for a while with any more rate cuts. Sounds like a plan to me.

  So we’re in the early days of a perfectly investable rally, driven by a plausible Narrative of central bank cooperation on currencies. Reminds me for all the world of September 2007, right after every quant-oriented multi-strat fund in the world was gob-smacked in July and August (and if you’ve seen the returns for quant-oriented multi-strat funds this January and February you’ll get my point). We had a perfectly investable rally then, too, driven by the Bernanke Narrative that the sub-prime crisis was “contained” and that the real economy was just in a “mid-cycle slow-down”. All good, until Bear Stearns was taken out into the street and shot the following March. Which was itself followed by a perfectly investable rally from April to mid-summer 2008, under the pervasive Narrative that “systemic risk was off the table.” Until it wasn't.

  So forgive me if I call this a temporary truce, an investable rally before the next “shock” that no one sees coming. Forgive me if I note that yet another FT puff piece on the unappreciated genius of Mario Draghi is ultimately small comfort given that we are smack-dab in the middle of an endemic of political polarization and anti-liberal sentiment (that’s small-l liberalism, of course, the Adam Smith and John Locke sort), the sort of political plague that the world hasn’t seen since the 1930s.

  

  We are now in a world where principled politicians are called fascists, and fascist politicians are called principled. In most Western countries, we are one Reichstag Fire away from a complete up-ending of the core liberal principles of limited government and individual rights. At least the ascendant candidates on the right have the guts, for the most part, to wear their authoritarianism on their sleeves. The other side of the political spectrum, equally ascendant, is no less anti-liberal, they’ve just adopted the façade of smiley-face authoritarianism.

  Politics always trumps economics, and until someone can show me that the structural advance in anti-liberal politics is any less pronounced than the structural decline in global trade volumes, I can’t get away from my structurally bearish views about this market. Or about this world, for that matter.

  So what do we do about it?

  

  After all, as fictional gangster Hyman Roth, patterned after real-life gangster Meyer Lansky, would say, “This is the business we have chosen.” It’s all well and good to bemoan the thin gruel we are served in modern politics and markets, but it’s the only food we’ve got, and we have a responsibility to make the most of it. I've got some ideas, but to be useful, these ideas need to fit the reality of the investment world and the business we have chosen. Let's talk about that for a minute.

  I think that many investors, allocators, and financial advisors today find themselves in the position of Bobby Dupea, the character played brilliantly by a young Jack Nicholson in “Five Easy Pieces.” In that movie's iconic scene, Bobby just wants to get a side order of wheat toast with his breakfast at the local diner. But he is faced with what game theorists call a Hobson's Choice, which is part of a more general class of games that includes ultimatums and dilemmas. A Hobson's Choice is best understood as a strategic interaction where you are presented with what at first glance seem to be multiple opportunities for free will and free choice, but where in truth you only have a single option. Bobby has an entire menu to choose from, and the diner makes toast for sandwiches all day long, but it is impossible – despite a smart proposal of pair trades and long/short exposures that would isolate the wheat toast factor – for Bobby to get what he wants. He can have an omelet with a roll, or he can have nothing. Those are his true choices.

  A Hobson's Choice is Henry Ford telling you that you can have your Model-T in whatever color you like, so long as it's black. A Hobson's Choice is a Klingon telling you to surrender or die. A Hobson's Choice is Vito Corleone making you an offer that you can't refuse.

  Today we have what appears to be a wide-ranging menu of investment strategies and ideas to choose from. But like Bobby Dupea, our true range of choices turns out to be terribly limited if we show the least preference for something that goes against the grain of conventional wisdom. Specifically, the dominant conventions of modern investment are "stocks for the long haul", "you can't time markets", "focus on the fundamentals", and "buy quality". Everything you order from the investment menu has these conventional items embedded within them, and the more you question the conventional wisdom (not that it's all wrong or a big lie, but simply to inquire whether the conventional wisdom is perhaps less useful in unconventional times, and maybe – just maybe – you might want to have some wheat toast with your omelet) the more you risk getting kicked out of the diner.

  The Hobson's Choice that nearly every investor, allocator, or financial advisor faces today is always some variation of the famous quote from John Maynard Keynes: it's better for your reputation (i.e., your business) to fail conventionally than to succeed unconventionally. Every investment professional I've ever met – every. single. one. – wrestles with this dilemma. So do I. We've all seen examples in our portfolio results that the conventional tools aren't working. We know that the words we hear from our Dear Leaders and the articles we read from our Papers of Record are designed to manipulate and entertain us, not inform us. We want to succeed, and we feel in our gut that we should be trying something new and (maybe) better. But not if it means losing our clients or losing the support of our Board or losing the support of that little voice of convention inside each of our heads. It's that last bit that's probably the most powerful. As George Orwell so correctly observed about human psychology, the most terrifying part of hearing Big Brother say that two plus two equals five isn't that they might kill you for believing otherwise, but that you think they might be right!

  And make no mistake about it, our Hobson's Choice is getting worse. Investing according to conventional wisdom has always been the reputationally safe decision, but in the policy-controlled markets to come, investing according to conventional wisdom may well be the only legally safe decision.

  So here's what I'm not going to do. I'm not going to discuss "alternative strategies" that are always set off to the side in a little section of their own on an investment menu, intentionally organized and presented as if to say "Careful now! Here are some exotic side dishes that you might use to spice up your core portfolio a bit, but you'd be crazy to make a meal out of this … not that we'd let you do that anyway." I'm not going to perpetuate the Hobson's Choice game and its charade of false choices and hidden ultimatums. Instead, I'm going to recommend alternative thinking about your portfolio here in the Silver Age of the Central Banker. I'm going to recommend five specific ideas – Five Easy Pieces – that challenge conventional wisdom and (I hope) will spark readers to think differently about their entire portfolio and investment process, not just whatever small slice of the pie is reserved for "alternative strategies".

  Five Easy Pieces for the World-As-It-Is
  

  Because this is how we escape a Hobson's Choice. We must look beyond the false choice. We must reject the ultimatum (act conventionally or risk your business) and find a new dimension that avoids the false choice entirely. This was the genius of Mad Men's Don Draper: "If you don't like what's being said, change the conversation." Or to use a far more trite and shop-worn phrase, this is what "thinking outside the box" means – expanding our field of vision to incorporate not only the specific choice we're presented with, but also the act of choosing. To escape a Hobson's Choice we can't look at the world as (x) OR (y), as a series of choices we make from a menu that's handed to us. We have to step back and see the menu itself as a choice, that what we thought was (x) OR (y) is really (x OR y), and there's a big world outside of (x OR y). Expanding our perspective and changing our conversation changes everything. It allows us to re-engage in an entirely new way with whatever investment menu we might have in whatever our World-As-It-Is might be, such that whatever investment decisions we make are truly OUR choices, not THEIR choices. Maybe for the first time.
   
  

  This is a good example of what I'm talking about. Investment convention holds that you should be fully invested throughout a market cycle. Otherwise you must be—gasp!—a market timer. Boo! Hiss! If there's a worse insult in the investment world or a quicker way to get fired by your client than to be called a market timer, I'm not aware of it. And god forbid that you actually propose an "alternative strategy" that embraces market timing. But of course, we're ALL market timers, we just do it in a conventionally acceptable way by "shifting to defensive sectors" or "keeping our powder dry" or "managing risk" (whatever that means). We're all hypocrites when it comes to our professed faith in full investment, because we don't really believe in it. We all want to get out of markets when they're going down, we all want to get into markets when they're going up, and we all think that we have some insight into what's next.

  And that, of course, is the source of the actual wisdom in this conventional wisdom. We really don't have a crystal ball to predict whether the market will be up or down tomorrow or over the next week or over the next month or over the next year. We really do have biologically evolved social behaviors that push us to sell low and buy high. Whatever you think you should do as a short-term trade, you're probably wrong. Left to our own devices, almost all of us are almost always better off to put our investments in a drawer, close our eyes, and walk away.

  So here's the question. How do we change the conversation so that a rigorously conceived adjustment in portfolio exposure to risk assets isn't characterized as market timing? Because as soon as a strategy is characterized as market timing, then it's a Hobson's Choice situation, where you don't really have a choice but to reject it. Now I'm not talking about reading ZeroHedge and selling because you got all freaked out by an article, and I'm not talking about watching CNBC and buying because you got all bulled up by a talking head. That IS market timing, of an indefensible sort. But is there a defensible sort of portfolio exposure adjustment, one that has a foundation strong enough to allow a non-Hobson's Choice implementation? My answer: yes. In fact, I think there are two such approaches.

  First, markets are more volatile when countries are playing a Competitive game than when they're playing a Cooperative game. Now granted, this is a prediction of a sort, but it's a prediction of political dynamics – which is exactly what the game theory toolkit is designed to do – as opposed to a market prediction like whether the S&P 500 will be up or down next week. I think this is where Epsilon Theory can make a unique analytical contribution. The international political regime matters to markets. It matters a lot. I am convinced that we have entered a new, analyzable, competitive regime of domestically stressed nations, and that means that we have a deflationary hurricane brewing. What I don't know (yet) is whether this is going to be a Category 1 hurricane, a Category 3 hurricane, or a Category 5 hurricane. If China floats the yuan – and that's the big catalyst I think has a decidedly non-trivial chance of occurring – then it's Category 5. If they don't, it's something less. But regardless, a Competitive global trade game is going to be a big storm. Trim your sails. Whatever that means to you and your investment process, whether it's increasing cash, reducing net or gross exposure, shifting to long-dated Treasuries … whatever … that's what I think you should do when the world plays a Competitive game. Does that make me a market timer? Well, if that's the conversation you're stuck in … yes. But it's not the conversation I'm having, either with others or myself.

  Second, although I can't predict future market returns, I can observe how volatile the market has been in the short, medium, and long-term past. It's that George Soros quote again: I'm not predicting; I'm observing. I can also tell you about my personal appetite for risk and volatility. Put these two items together and you have the foundation for a new conversation about investing, a conversation based on observable risk rather than predicted reward. Is observed volatility going up above a level where I am personally comfortable? Well, let's take my market exposure down. Is observed volatility going down below that level? Well, let's take my market exposure up. There are a dozen variations on this theme: call it risk balancing or risk parity or volatility targeting or whatever. But whatever you call it, I think it is a better way of staying invested in markets through thick and thin. Just less invested when thick and more invested when thin.

  A systematic risk balancing strategy is at the core of what I have been describing as Adaptive Investing over the past two years. That and an appreciation for the political dynamics that underpin markets, creating different investment regimes as the game-playing moves from one equilibrium state to another. There is zero crystal ball gazing in a risk balancing strategy – zero. In that sense it is entirely compatible with the investment convention of not trying to time markets. But the alternative thinking I'm suggesting here is that "full investment over a market cycle" works better if it's risk being fully invested over a market cycle, not dollars. It's a new twist on an old idea, and once you start thinking of risk budgets first and dollar budgets second, everything changes.

  

  The usefulness of the game theory toolkit isn't limited to understanding the dynamics of strategic interactions between international political players like central banks. It's also useful in understanding the dynamics of strategic interactions between market players. It's also the rigorous foundation for changing the conversation about another market convention: focus on the fundamentals. Are fundamentals important? Of course they are. Knowing the fundamentals of an investment is like knowing how to play the cards you're dealt in a poker game. But as any successful poker player will tell you, it's not enough to play the cards well. More importantly, you also have to play the player.

  

  Wall Street players today aren't like a historical Jay Gould or a fictional Gordon Gecko, ruthless seat-of-their-pants robber barons with a great eye for arbitrage and leverage. To be sure, it's not the ruthless part that's missing today, or the eye for arbitrage and leverage. No, what's changed from the past and what Hollywood still doesn't get is that the whole instinctive, seat-of-the-pants thing is totally dead.

  

  Wall Street players today are creatures of process. They are Bill Belichick and Nick Saban, seemingly joyless automatons who do nothing but win (Roll Tide!) because they are monomaniacally focused on efficient process in every aspect of their organization and constant incremental adaptation to new information. It's not just the quants that have uniformly adopted a process-focused business strategy, but every successful investment firm, regardless of discipline or market focus. Ray Dalio at Bridgewater, certainly the most out-there proponent of Belichick-ian process discipline in the investment world, is best known for creating the largest hedge fund in the world. More interesting to me, though, is how the meme of process and incremental adaptation – principally authored by Dalio – is now part of the internal Narrative of every investment firm on Earth. Note that I'm saying this meme is part of the Narrative of these firms, not their investment DNA. Like all good memes, the belief in process and incremental adaptation is principally an instrument of internal social control, part of the modern day Panopticon ("what, you don't believe in process? hmm, not sure that you're going to fit here."), as well as an instrument of external social expression ("you can trust us … we're process-oriented!").

  Why is this primacy of process so important for understanding market dynamics? Because it means that while there is no single mode of market participant behavior, no single way of playing the market game, there is an underlying dimension – a common behavioral denominator, if you will – of prioritizing process and incremental adaptation. To torture the poker analogy a bit more, you have tens of thousands of poker tables in operation every day, with hundreds of different poker variations being played … No Limit Texas Hold 'Em here, 5 Card Draw there, etc. Some players have big stacks, some have small stacks, some play tight, some play loose. But they are ALL process-oriented players. They are ALL watching each other and the cards closely, they are ALL reacting to each other and the cards in an incremental process-oriented way, and they are ALL "learning" in an incremental process-oriented way.

  I don't think you have to be a poker expert to recognize that there's game-playing power to be found in the recognition of a common behavioral denominator, no matter how deeply it runs. In truth, the deeper it is, the more powerful it is. This is the structural reason why the Common Knowledge Game is such a useful way to analyze market dynamics in the modern age. The market-playing crowd is always looking at the market-playing crowd, and the crowd is hardwired – not by biology but by business process – to "learn" a similar reaction to similar Missionary statements.

  This is also the structural reason why I believe trend-following strategies are so interesting and effective in modern markets. In a very real sense, all of these process-focused and iteratively-learning investors are themselves augmenting whatever initial stimulus they're all looking at, creating trends where none was present before. If you've never read George Soros's "Alchemy of Finance", now might be a good time to start. What's perhaps even more interesting – and this will have to be a tease because it deserves several Epsilon Theory notes on its own – is whether it's possible to design a learning-following investment strategy. Now that would be something.

  

  Okay, this is a big one. What is negative carry? It's time working against you. It's the price you pay to carry or hold a position. Investors HATE negative carry, because almost all investment conventions are based on the assumption that time works for you, not against you. What's the basis of "stocks for the long haul"? Time working for you. What's the basis of compounding, which is nothing less than the most powerful investment idea in all of human history? Time working for you. What's the basis of retirement planning, saving, and – in a very real sense – the entire concept of investment? Time working for you.

  The damaging impact of negative interest rates on bank earnings and all that is very true and very real. But far more damaging is the impact of negative interest rates on these basic IDEAS about what it means to be an investor in public markets. If you see the world as principally a market of ideas and memes, rather than as a market of capital and labor – and this is exactly the perceptual lens I'm trying to explore with Epsilon Theory – then I don't see how you can't be freaked out by what's happening today. Certainly it's why I've gotten much more alarmist over the past few months in what I write. We are seeing huge chunks of stone being taken out almost daily from these central idea pillars of public markets. As market participants lose faith in the idea that time is on your side, as they start to question the idea that there's an inherent up-and-to-the-right arrow to any price-over-time chart … the entire financial advisory world is going to burn.

  So what do you do?

  I suggest we start thinking like a short seller. We don't have to BE short sellers, but we all need to THINK like short sellers. Why? Because short sellers naturally live in a negative carry world, both in their investments and their ideas. Dividends and yield-bearing securities constantly chip away at the value of a short seller's portfolio. Similarly, the long-biased information flow promoted by corporate management and the sell-side constantly chips away at the investment theses embedded in a short seller's portfolio. Time always works against a short seller (particularly in a zero or negative interest rate world … boy, do I miss the 5% interest paid on the cash generated from borrowing shares), and successful short sellers have learned to think differently as a result.

  1) If you're wrong on timing, you're just wrong. A successful short seller focuses on near-term catalysts, and that's exactly the focus that I think most investors could adopt, or at least incorporate, in this environment. If there's no catalyst to force investors to recognize the value that you think exists in a stock, then it doesn't exist. When a short seller reads a sell-side buy recommendation that begins with something like "For the patient, long-term investor…" they almost always look to short the stock, because it almost always means that the near-term catalysts are very negative for the company. But by the same token, a long-biased investor who thinks like a short seller is happy to buy a company with positive near-term catalysts even if the long-term prospects don't look so great. In fact, that's exactly how I would characterize risk assets in general today – structurally awful in the long-term as global trade and global cooperation and the idea of a positive risk-free rate and the liberal tenets of free markets die a little more every day, but with positive short-term catalysts as central bankers and their sell-side apologists rally the troops one more time. Every position is a rental if you're thinking like a short seller. Nothing is owned.

  A catalyst-oriented, everything-is-a-rental way of thinking sounds easy, but it's the hardest thing you'll ever do. It's hard because it's utterly unforgiving. Meaning, you can never forgive yourself. Here are the two thought processes that have ruined more catalyst-oriented investors than anything else:

  "Huh? No price reaction yet to this realized catalyst that I so brilliantly anticipated? Well, I suppose the market just needs a little more time to absorb its importance."

  "Golly, the earnings call just ended and the company didn't make the announcement I thought they would. Oh, well, I'm sure they'll announce it next quarter."

  Bzzzzt! Sorry, that's our tacky buzzer and you've just been eliminated from the game. When the catalyst happens – whether or not it impacts the price of the stock or bond like you think it should – you get out. If the time frame or event frame for the catalyst expires – whether or not the catalyst actually occurs – you get out. Thinking like a short seller means no excuses, particularly in the easiest place to make excuses – inside our own heads.

  2) The question that really matters: is the story broken? I've written about this at length, so I won't repeat all that here. But I'll give you an example of a story that ALWAYS breaks in a squirrely market: financial engineering. If you're long a company because "management is buying back lots of stock" or "there's a tax-advantaged spin-out possible here" or something similar … well, good luck with that in a risk-off environment. I'm not saying that financial engineering is bad. On the contrary, I love financial engineering. Seriously. It's an incredibly powerful tool for potentially making money. What I'm saying is that a financial engineering STORY is inherently pro-cyclical – it always works better than you expect in a rising market and worse than you expect in a declining market. A stock with a broken story will go down a lot more than what's "fair", and that's a very unpleasant ride. Fortunately, all stories heal and all stories evolve, which makes for some potential buying opportunities. But you won't recognize those opportunities (or you'll probably butcher the timing) unless you're focusing on what really matters – the story.

  So what strategies inherently "think" like a short seller? Managed futures and trend-following, for sure. Everything is a rental for a trend follower, by definition, and trends – because they are created by market behaviors, not the underlying qualities of a company – are inherently linked to the stories and narratives that shape behavior. More basically, any trader and any trading strategy tends to think like a short seller, and I believe there's room for these strategies to work in markets dominated by a Competitive international game. Ditto for some global macro strategies. Doesn't mean any of these strategies will work, of course, only that they possess what I think are some of the necessary qualities (as opposed to the sufficient qualities) to succeed.

  But when I say it's important to think like a short seller in a negative carry world, I don't mean that we have to go out and hire short selling managers. Because I will tell you that there are plenty of short sellers who think like long-only guys, and are thus the worst possible discretionary managers to turn to in this environment. The really crucial action, though, and it's an action we can all take inside our own heads even if we're not able or not allowed to actually do short selling, is to step back and reconsider all of our investment menu choices if time no longer works so clearly in our favor. That's the existential issue every investor, allocator, or advisor needs to wrestle with, no matter how painful that is. Otherwise, to use Ken Kesey's phrase from "One Flew Over the Cuckoo's Nest," you're choosing to let yourself be lost in the fog. And that's a Hobson's Choice of an entirely different sort.

  

  I’m pretty sure that I was the first to come up with the phrase “Central Bank Omnipotence.” It was in one of my very first notes – “How Gold Lost Its Luster, How the All-Weather Fund Got Wet, and Other Just-So Stories” – back in the summer of 2013, a note that even today remains one of the most popular in the Epsilon Theory canon. For the next six months or so, however, I would go around and talk with institutional investors about the Narrative of Central Bank Omnipotence – that markets acted as if central bank policy determined market outcomes – and I got enormous pushback. No, no, I heard, we’re on the cusp of a self-sustaining real economic recovery here in the US, and whatever the Fed and other central banks are doing, whatever the market reaction might be, it’s just a bridge to the happy days of “normal” markets ahead. And this is after the Taper Tantrum, mind you. It really wasn’t until the spring of 2014 that the steady drip, drip, drip of the Central Bank Omnipotence meme became a tsunami, and by the fall of 2014 it was impossible to find anyone who didn’t believe in their heart of hearts that Central Banks, for good or for ill, determined market outcomes.

  I bring this up because I've read lots of suggestions, particularly after the one day half-life of effectiveness for Kuroda’s negative rates announcement on January 28 and the one hour half-life of effectiveness for Draghi’s negative rates announcement on March 11, that the Narrative of Central Bank Omnipotence is dying. But then you get a day like March 12, where the Narrative engine springs to life in support of Draghi's "bold move", and now I read that the Narrative of Central Bank Omnipotence is alive and well.

  Here's what I think. As the strategic interaction between the four largest economies in the world shifts from self-enforced cooperation to self-enforced competition, from a Golden Age to a Silver Age, so does the market's Common Knowledge or Narrative regarding that strategic interaction. But it doesn't die, any more than the strategic interaction dies. Think of it as the same song, but now in a minor key. So long as every CNBC talking head genuflects in the direction of central banks in every single conversation, so long as front page articles about central banks dominate every day's issue of the WSJ and FT … then the Narrative of Central Bank Omnipotence is alive and well. The power of the Narrative is that we believe that all market outcomes are somehow the result of central bank policy, not that central bank policy necessarily generates a good or even intended market outcome. It's a narrative of Omnipotence, not Competence or Omniscience. The day that central bankers give up, the day that Yellen or Draghi appears on stage and says, "Well, there's really nothing more we can do. It's just out of our hands now. Sorry 'bout that." … that's the day that we lose our religion and the Narrative dies.

  Ultimately, we’re no closer to “normal” markets driven by fundamentals here in the Silver Age of the Central Banker – the age of strife and competition – than we were in the Golden Age of the Central Banker – the age of cooperation and great deeds. In fact, we’re farther away than ever. It’s a policy-driven market just as far as the eye can see.

  Policy-driven markets change the rules, both the formal rules of regulation and – more importantly – the informal rules of correlation, and they change these rules in predictably surprising ways. That is, the regulatory rule changes will always be surprisingly to the left or surprisingly to the right, never what you might expect by a central tendency theorem. That goes for correlation surprises, too. Both tails are equally fair game for a shock. I mean, the euro had a four percent trough to peak move on March 11! Two percent down and then two percent up. You think that didn’t blow up some correlation and volatility trades?

  When I say don't trust the models – and by models I mean pretty much of all mainstream portfolio and investment analysis, basically anything that says "Here's a pattern we observe from some period of time over the last 40 years, and now we're going to extrapolate what the future holds because of that observed pattern." – I mean two things. First, we haven't had a policy-driven market like this since the 1930s, so whatever historical data was used to power whatever model you're using needs to be taken with a grain of salt (read "I Know It Was You, Fredo", "Inherent Vice", "Funny How?", and "Ghost in the Machine" for more, and of course you can read anything by Nassim Nicholas Taleb or Benoit Mandelbrot for the same message presented in book form). Second, investors are not only risk/reward maximizers, but they are also regret minimizers. Almost all of modern econometrics, particularly portfolio analysis, is an exercise in risk/reward maximization and thus fails to connect with investors who are focused on concerns of regret minimization (read "It's Not About the Nail" for more).

  What this means in practice is that most portfolios are too flabby in what I’ll call the Big Middle – the large portfolio allocation that most investors, large and small, maintain in large cap stocks. The easy way out when it comes to investment conventions and the Hobson's Choice we all face when it comes to portfolio construction is always to add more S&P 500 exposure. The old IT saying used to be that no one ever got fired for buying IBM, and the current financial advisory saying should be that no one ever got fired for buying more Apple. Although maybe they should.

  I'm not saying that capital invested in the Big Middle must always be reallocated to make for a more convex, more diversified portfolio. But I am saying that every bit of your portfolio should be purposeful. I am also saying that there's a lot of wisdom for investing in what Plato said about politics almost 2,500 years ago (and he was quoting a guy who lived 400 years earlier), that the half is often greater than the whole. Meaning? Meaning that you get better outcomes when half of your citizens or half of your investments are organized efficiently and with right purpose than if all your citizens or all of your investments are organized haphazardly or without common purpose. Or for a more modern slant, I like George Carlin's take, that while some see a glass half-full and some see a glass half-empty, he sees a glass that's twice as big as it needs to be. Many portfolios are twice as big as they need to be. Not in dollars, of course (may your portfolio get much larger in that regard), but in terms of inefficient, mushy allocation to low risk, low reward, highly correlated investments.

  What goes into a purposeful portfolio in the Silver Age of the Central Banker? A lot of optionality, for one thing, which does not necessarily require expression through options and derivatives (although that certainly makes it easier) and is another way of saying convexity. A keen sense of correlation and correlation change, for another, which does not necessarily require expression through covariance matrices (although that certainly makes it easier) and is another way of saying diversification. While the terms can be daunting, the logic and practice aren't so much. Like thinking in terms of a risk budget instead of a dollar budget, it's more of a matter of perspective than anything else.

  One exercise I find useful is to think of different future scenarios for the world (not because I'm trying to predict which one will happen, but precisely because I can't!) and then to consider how my current exposures and strategies are likely to fare in those futures. My goal isn't to figure out the scenario where I think I'll do the best, because then I'll start hoping for it and consciously or unconsciously will start to assign a higher probability of it occurring, but to figure out the scenario where I'll do the worst (both in absolute terms and relatively to whatever I compare myself to). I'm trying to minimize my maximum regret – minimax regret, a powerful game theoretic tool for dealing with technical uncertainty, where you're not sure that you've identified all the potential outcomes and you're certainly not sure of the probability distribution to assign to those outcomes – and I do so by planting seeds (buying exposure with either embedded or overt optionality) in that least happy scenario. I find that this iterative, new information-friendly exercise changes the conversation you can have with others or yourself, away from a needlessly daunting conversation on risk/reward maximization and towards a more fruitful conversation on being an investment survivor in a decidedly dangerous time.

  

  And now for the big finish.

  Last summer I wrote a note called “The New TVA”, which made a direct comparison between the political dynamics of the 1930s and the political dynamics of today. What amazes me (still), is how the political conversations then are almost identical to the political conversations now.

  

  Just switch out FDR for Obama and you could easily imagine this cartoon being about healthcare or some such rather than New Deal legislation.

  Here's the skinny for that note: in the same way that FDR had an existential political interest in generating inflation and preventing volatility in the US labor market, so does the US Executive branch today (regardless of what party holds the office) have an existential political interest in generating inflation and preventing volatility in the US capital markets. Transforming Wall Street into a political utility was an afterthought for FDR, a nice-to-have but not a must-have, as Wall Street was not yet a Main Street phenomenon. Today the relative importance of the labor markets and capital markets have completely switched positions. Wall Street is now decidedly a Main Street phenomenon, and every status quo politician – again, regardless of party, and let's remember that the Fed is part of the Executive Branch – keenly desires to keep the genie of unfettered fear and greed firmly stopped up in its bottle. Georges Clemenceau, French Prime Minister before and after World War I, famously said that "war is too important to be left to the generals." Today, the quote would be "markets are too important to be left to investors."

  But it was only after Draghi's ECB announcement last Thursday that I think I see how a policy-driven market becomes a policy-controlled market. The ECB took a page from the Bank of Japan's playbook and announced that they would now buy non-bank investment grade corporate credit as part of their QE asset purchases, and that's at least as big of a deal as the BOJ taking a page from the ECB playbook in January and adopting negative interest rates. When two of the Big 4 adopt any policy, a point becomes a line and an idiosyncrasy becomes a pattern. The direct purchase of corporate securities by central banks is now in the official tool kit of every central bank. You cannot un-ring this bell. It is a "Goodfellas moment" of enormous consequence.

  In one fell swoop, Draghi has essentially made useless the most effective portfolio hedge I know against systemic risk – shorting investment grade credit through the CDS market. And he conceived this plan when senior bank debt CDS spreads (the best indicator of systemic risk levels I know) were only 120 bps wide! Imagine what's going to happen the next time spreads blow out to 200 bps wide, much less if we ever got close to the 350 bps spread of 2011. My point, of course, is that Draghi isn't going to allow CDS spreads to blow out again. Ever. Not even a little bit. The ECB will intervene directly in credit spreads from here to eternity, first in sovereign debt, now in non-bank corporate debt, tomorrow in bank corporate debt. That's how a policy-driven market becomes a policy-controlled market, not by outlawing short sales or credit default swaps, but by sitting down at the poker table with an infinitely large stack of chips relative to any other player. The ECB can now run over anyone who sits down at the European corporate credit poker table. Thanks, but I'd rather not play, no matter what cards I'm dealt.

  So if I can't protect my portfolio through effective shorts, and the Powers That Be are determined to turn public markets into political utilities, but I'm structurally bearish on the ability of the Powers That Be to prevent domestic political shocks and international political conflict of 1930-ish proportions, what's to be done with public market investing other than the occasional short-term trade? Two things, I think.

  First, I think it makes sense to use public markets for their liquidity and for tapping whatever this utility-like rate of return the Powers That Be have in mind. But I also think it makes sense to tap global beta through risk balancing strategies, because I really do think we're in for a bad storm, and I don't trust Captain Yellen or Captain Draghi to guide the ship for my benefit rather than their own political benefit. As for any effort to find alpha in public markets? Forget it.

  But, Ben, what about stock picking? Yeah, what about stock picking? You can read the S&P scorecard here. How did that actively managed US equity fund work out for you last year? Or the last 5 years? Or the last 10 years? Here's my issue with stock picking. Most stock pickers look at companies pretty much exclusively through the lens of "quality" – a quality management team, a quality earnings profile, a fortress balance sheet, etc. Unfortunately, this is the worst possible investment perspective to use in a policy-driven market, much less a policy-controlled market. It does not outperform a broad passive index. It does not generate alpha. Again with the George Soros quote: I'm not expecting it; I'm observing it. I know, I know. Heresy. But ask yourself this. Do you really think that the mandarins of the Fed or the ECB or the BOJ care one whit about whether this company or that company has a higher stock price? Of course not. They want ALL companies to have a higher stock price, and as a result the policies they are going to implement will inevitably help the weakest, lowest quality companies the most. Now if investing in quality-uber-alles is the conventional conversation you need to have to justify participating in public markets, I get it. But to me it's just another form of fighting the Fed, and for me it's always a losing conversation.

  Second, I think it makes sense to use public markets if that's the best way to own real assets. Why real assets? Because while nothing is immune to the predation of illiberal governments and the capricious rule-making and rule-breaking of central banks, real assets are at least insulated from both. What real assets? I have a very broad definition, including not only the obvious suspects like real estate and infrastructure and commodities, but also gold and intellectual/digital property. Actually, I think of gold as very similar to many forms of intellectual property, as its worth is found in behavioral preferences and affect, not in some intrinsic or commercial use case.

  All real assets are not created equal, of course. I'd much rather own an asset that generates some sort of cash flow than one that just sits there, but price will usually (although not always) take care of that differentiation. The most important consideration, I think, particularly when using public markets, is to get as close as you can to the fractional ownership share in the asset itself and as far away as you can from the casino chip. What that means in practice is getting as high up in the capital stack as you can while still having an equity claim on assets. For a highly levered or distressed company that probably means being in the senior secured debt. For a more typical company that might mean being in the preferred equity shares, if they exist, or choosing between this company's equity and that company's equity. It's making this sort of evaluation where I think that active managers, whether it's in equity or in fixed income, can prove themselves, and where I think there's a role for fundamentally-oriented, stock-picking active managers. It's not because I think they can stock pick their way to outperformance versus a passive index while we're in a policy-driven or policy-controlled market, but because I think they can identify a margin of safety in my public market ownership of real assets and real cash flows better than a passive index. Now that's a conversation worth having with active managers here in the Silver Age of the Central Banker.

  

  

  

  

  

• Here Is The Math: Trump "Almost Certain" To Win Republican Nomination Before Convention

  First it was all a joke. A media sideshow. A publicity stunt that no one really understood the purpose of.

  Donald Trump was actually going to run for President. His campaign slogan: “Make America Great Again.” It was laughable.

  Soon after the billionaire announced his candidacy, his nascent bid for the White House took on a more serious tone, but not because anyone was taking him more seriously. Rather, because his comments about Mexican immigrants were so inflammatory that it was difficult to dismiss them with derisive humor.

  From that point on, it was all downhill for the GOP establishment. Trump racked up popular support, defying every law of conventional politics along the way.

  Each and every time analysts and pundits doubted him, he prevailed and that unlikely momentum carried right over into the caucuses and primaries and now, after Super Tuesday 3, Trump has effectively knocked out every Republican challenger except Ted Cruz (let’s face it, Kasich isn’t going to get the nod).

  Still, all commentators and political “experts” want to talk about is a contested Republican convention in Cleveland. While that’s certainly an interesting outcome to consider as it forces us to look back at political history to understand the precedent and what that precedent might mean come July, it’s as if no one has learned anything from the past nine months.

  That is, the assumption should probably be that Trump is going to lock up the nomination before the convention, not that they’ll be some kind of historic bid to rob him in four months. The media – both liberal and conservative – act as though it’s virtually impossible for him to make it to 1,237 delegates. We’re talking about a guy here who no one thought would even register in terms of poll numbers and now he’s the overwhelming favorite.

  All of this is not to say that we – or anyone else for that matter – should necessarily believe that a Trump nomination is a good thing for the GOP let alone for America, but it is to say that all of the talk about a contested convention may be wishful thinking.

  As this simple graphic from The NY Times shows, if Trump simply maintains his current level of support, he’s “almost certain” to secure the nomination:

  

  (click here for interactive version)

  “After Tuesday’s contests, no other candidate retains a real chance of capturing the delegates required to win the nomination outright. Mr. Rubio dropped out, Gov. John Kasich of Ohio is too far behind, and Senator Ted Cruz of Texas would need to win the vast majority of the remaining delegates — a near impossibility,” The Times writes.

  “Crunching the latest numbers, Donald Trump needs to win 54% of the remaining delegates to obtain a majority [and] that’s doable, but not necessarily a slam dunk,” NBC adds, before noting that “Trump won 60% of the available delegates from the March 15 contests.”

  Trump currently leads Cruz by 261 delegates

  • Trump 683 (47% of all delegates won)
  • Cruz 422 (29%)
  • Rubio 172 (12%)
  • Kasich 143 (10%)

  Trump needs to win 54% of the remaining delegates to hit the 1237 magic number

   

  Cruz needs to win 80% of the remaining delegates to hit the 1237 magic number

   

  Kasich needs to win 107% of the remaining delegates to hit the 1237 magic number

  As Trump himself pointed out in his victory speech in Florida, the fewer candidates, the better his chances to win. Or, as NBC concludes, Trump won 60% of the delegates on March 15, “and that was with four candidates in the GOP field; now [that] there are three you could argue that the map only gets better for Trump.”

  Yes, you certainly could.

  

  

  

  

  

• Crude Oil Fractals & Funding Fears

  Submitted by Jeffrey Snider via Alhambra Investment Partners,

  From June 2014 until late January 2015, oil prices (WTI) fell about 60%. From June 2015 until late January 2016, oil prices (WTI) fell about 60%.

  

   

  The exact track each annual trading history took to achieve those results is different (2014-15 much more straight ahead and persistent; 2015-16 jagged and irregular), but you can’t deny the repetition in both the amount of time and the ultimate scale of the collapse.

  To my personal view, such self-similarity (fractal) is funding and “dollar.” The rebound after the latest “dollar” run is so far more quick and intense, but it remains to be seen whether that will make any difference.

  

  

  

  

  

• Where Does The Future Lie? Orwell Or Huxley

  Submitted by Martin Armstrong via ArmstrongEconomics.com,

  Are you more worried about a 1984-esque future or 'A Brave New World'-esque future?

  

  Unfortunately, the two go hand in hand. George Orwell simply took the past and laid out what government ALWAYS gravitates toward – total control. We live in a delusion with our brains filled with propaganda. Over the years, I have encountered comments from people who ask, “Why would anyone want to live outside the USA? We are the greatest nation on earth!” I typically reply, “Have you ever traveled outside the country?” The response is telling: “No. What’s the point?”

  Perhaps I am the doubting Thomas. I went through Checkpoint Charlie into East Germany before the wall fell because I really wanted to see what was true and what was false. You cannot just accept the indoctrination of society as it is systemic.

  So what George Orwell wrote was not pure fiction; no more than “Star Wars” being based on nothing. “Star Wars” is the epic battle between the Republic and Imperialism that dominated the Roman period going into the 1st century AD. They just changed it to planets and updated the swords to light sabers. In the case of Orwell, he took history and postulated what would happen in a modern context. He was only off in terms of technology advancement.

  

  So the bottom line is both will unfold.

  However, you cannot reach the second without causing pain with the first. With the NSA and socialism, you have seen terrorism used as the excuse to further the control of society so we cannot buy or sell anything ultimately without government approval. The IRS can revoke your passport if it even THINKS you owe more than $50,000 in taxes, fines, or penalties. You cannot travel on a train, plane, or ship, no less stay in a hotel without providing photo ID or in many cases possess a passport. So why do we need a passport, which can be revoked if we owe taxes, to travel? Well, passports were invented by the Romans and appeared in the 3rd century AD when government was in fiscal ruin. If everything was the Roman Empire, what was the purpose of a passport? It was to prove you paid your taxes and were free to travel.

  

  History repeats because the passions of humanity never change from one century to the next. We MUST move closer to absolute oppression in order for the silent majority to get angry and demand change. So until that tipping point is reached, be prepared to lose any concept of human rights you thought you once had. We are not living the “dream” but the nightmare of history.

  Only when it gets bad enough will we see the change toward the light of the second. Hence, this is why I do what I do, and it is why I say we first must crash and burn. Open your eyes. It is happening. If you understand the pattern, you will survive. If you want to leave a better world for your children, that is ONLY possible by identifying the trend in order to change it. History is our map to the future.

  

  

  

  

  

• Feeling Underpaid? This Is What Wage Inflation Around The World Looks Like

  Eight years of unconventional monetary policy, NIRP, ZIRP, QE, and asset bubbles as far as the eye can see, but where is that all important product of successful monetary policy – at least in a conventional Keynesian sense, where a steady increase in the cost of living and the loss of purchasing power is defined as success – namely inflation?

  For the answer we go to Deutsche Bank’s “Inflation Sensation” global inflation monitor. According to DB “it includes more than 150 time series covering consumer prices, producer prices, inflation surveys and wages across the G10. It uses PCA analysis to provide a global snapshot of where different countries stand on inflation.”

  Here is DB’s finding verbally:

  At a global level, our monitor remains a “sea of blue”. Little progress has been made in generating inflation in recent months. The most notable downward price pressures are in the Euro-area, Switzerland, New Zealand and Australia.

  And in graphic terms, here is the full G-10

  

  the U.S.

  

  Euro Area

  

  U.K.

  

  Canada

  

  Japan

  

   

  Or as Deutsche puts it: “a sea of blue.”

  * * *

  But why? Why this grand failure to achieve the central bankers’ only goal? One simple reason: they have been unable to create wage inflation: without rising wages there is no pickup in end demand, and instead what central banks create are bubbles after asset bubbles.

  Per Deutsche: “Wage developments are striking across the G10. While there are tentative signs of producer and consumer price disinflation bottoming in some countries, wage growth remains particularly weak.”

  That a mild way of putting it, because one look at global wage inflation, or the lack thereof, and it all becomes immediately clear.

  Presenting Exhibit 1, and only:

  

   

  And that is why central banks have failed. However, nearly a decade later, they continue to mask their inability to boost wages and living standards for everyone, but making the life of the 1% better than ever, and where they have certainly succeeded, is to reflate the S&P500 back to within a few percentage points of its all time high.

  

  

  

  

• The Two Worlds Of Precious Metals: East And West

  Submitted by Jeff Nielsen via SprottMoney.com,

  For five thousand years, gold and silver have been humanity’s premier form of money; real money, not the faux-money manufactured by our central banks. During that same period of time, these metals have been our premier instruments of wealth preservation and therefore our “safe havens.”

  There is nothing accidental about this phenomenon. Gold and silver have obvious aesthetic appeal. Indeed, silver is actually the more brilliant of the two metals. It is their aesthetic appeal that makes these metals “precious.” But more than simply their aesthetic appeal, they are also (relatively) rare.

  If diamonds were as common as pebbles, it would be impossible to impress one’s potential bride-to-be with such stones, even in a setting of gold. Diamonds have their value, both real and sentimental, not only because of their aesthetic qualities but also because of their perceived scarcity.

  The situation is the same for gold and silver. If gold and silver were as common as iron, zinc, or even copper, they would not be coveted as greatly, regardless of their aesthetic appeal, because of their abundance. It is the qualities of being “rare” and “precious” which are essential in order for any commodity to be considered a suitable currency. It is these properties that make a commodity a source of value. There will always be demand for these metals; therefore, they will always have value. For these reasons, gold and silver preserve and protect wealth.

  Gold and silver are both precious and rare, but they are more than that. As metals, they also exhibit uniformity. Once refined, any gold or silver coin is indistinguishable from any other. Conversely, diamonds lack uniformity, therefore they are not a good candidate to be used as “money.” Venders would complain that a particular buyer was using “low-grade” diamonds for payment. On the opposite side of the ledger, purchasers with stones of superior size or quality would seek to negotiate premiums on their “money.” It would wreak havoc for commerce.

  Gold and silver are perfect money, but they are also more than that. They are forms of money that are available at what must be termed near-optimal quantities and fulfill two separate but equally important functions. Silver is rare enough to be valued for its scarcity yet plentiful enough to be the ideal Peoples’ Money. It can be the wages of the workers; the payment used in basic commerce.

  Gold is more scarce than silver. Because of its greater degree of scarcity it derives greater value, yet it is still plentiful enough to be a tool of commerce. However, gold is not the Peoples’ Money. Rather, it is the money of nations or, alternatively, the wealthy. It is the money of investment and industry. This additional level of prestige makes gold ideal as a “standard” for a national or global monetary system.

  A White Paper previously released on this topic explained how and why “a gold standard” was the optimal basis for a monetary system in our modern economy. That same paper then provided extensive empirical evidence documenting the horrific economic carnage that resulted from the loss of our gold standard in the early 1970s.

  When our nations had gold as the money of governments and silver as the money of the people, we enjoyed a level of prosperity and economic stability that we have not seen either before or since that era. In the four and a half decades since these metals have lost their official monetary status, our economies have been destroyed, our governments have been bankrupted, and the currency in our wallets is fundamentally worthless.

  Decades of relentless brainwashing in the West have convinced the vast majority of our populations that there is no longer a place or role in our modern economy for Perfect Money. Consequently, the masses in the West generally shun gold and silver by storing and protecting only a tiny percentage of their wealth with these metals, in comparison with any other era in our society’s history.

  This is how gold and silver stand today from a Western perspective. What is continually forgotten beneath the veneer of our cultural arrogance is that the rest of the world, and the vast majority of humanity’s population, have a fundamentally opposite perspective regarding the world’s only Perfect Money.

  Unexposed to the decades of monetary brainwashing directed at Western populations, Eastern populations have never forgotten the important role of precious metals in our societies and economies. Even the most humble peasant understands why we store our wealth in gold and silver money – not the diluted and debauched paper currencies of bankers.

  Real money is a store of wealth. Mere paper currency is only a tool of commerce. As a store of value, these currencies are the equivalent of a “leaky bucket.” Over a period of thousands of years, gold has perfectly preserved the wealth of its holders. In the mere century in which the Federal Reserve was entrusted with “protecting” the dollar, it has lost 99% of its value and the wealth contained.

  Now that is a big leak. And it’s getting worse. Thanks to the ever-increasing rate of Fed money printing, and thus U.S. dollar dilution, 75% of that loss in value has occurred over just the last quarter-century of Federal Reserve fraud and mismanagement.

  We needed gold and silver for our financial protection a century ago. We really needed gold and silver 45 years ago when Paul Volcker assassinated the last vestige of our gold standard. And we really really need gold and silver to protect our wealth today – as the monetary crime of “quantitative easing” has rendered these faux currencies fundamentally worthless.

  In the East, China and Russia are relentlessly accumulating gold, observing a “rule” which is now forgotten by the arrogant oligarchs of the Corrupt West: the Golden Rule. He who has the gold makes the rules.

  Conversely, the Corrupt West has squandered its own once-vast reserves, both officially and surreptitiously. For the better part of two decades, Western governments were dumping hundreds of tonnes of gold per year into the market to suppress the price. Meanwhile, the central banks of these regimes were secretly dumping at least that much gold onto the market.

  This process was done via what these crooked bankers call “bullion leasing”: (supposedly) ‘lending’ their gold. Regular readers are already somewhat familiar with such frauds. “Gold generates no income.” The bankers tell us this all the time. Thus there can be no legitimate commercial purpose to so-called bullion-leasing.

  Instead, this “borrowed” gold is also dumped onto the market (i.e. sold), with much or most of that gold gone forever. Yet our corrupt central banks continue to register every ounce of gold on their books – pretending to continue to have legal title and possession of this gold.

  No one has seen any of this gold in decades. In the case of the United States’ mythical “gold reserves,” there has been no public accounting of this gold in over 50 years. The farce has grown to such an extreme that any time any significant quantities of this Western “gold” is transported, it is done secretly so that no one outside of these corrupt regimes ever gets even a glimpse of this myth-gold, let alone a touch or an official audit.

  The West’s gold is gone. Yet out of one side of their mouths, these rancid governments boast of supposedly gigantic reserves, while out of the other side of their mouths they continually denigrate its importance as a monetary asset. “Gold is a barbarous relic.” One would never hear such ignorance and idiocy emanating out of the East – or anywhere outside of the Corrupt West.

  Western governments and their deluded populations are about to get a history lesson and economics lesson all rolled into one. It could and should also be a lesson in humility, though that is likely too much for us to hope.

  Clearly China and Russia are not accumulating vast reserves simply to engage in idle boasting, as does the West. Both of these nations are deliberately understating their total reserves – significantly – though not declaring the gold they acquire domestically. With any gold acquired from domestic sources (i.e. gold mining) such declarations are entirely voluntary.

  The purpose of such massive stockpiling can only be with the intent of resurrecting “the gold standard.” The difference would be that these Eastern nations could and will occupy the drivers’ seat of the new system, which will replace the fraudulent Western system of un-backed and totally debauched paper currencies.

  He who has the gold makes the rules. The “world” in the East has never ceased to recognize the Golden Rule. The “world” in the West now contemptuously scorns this eternal wisdom. Another expression long forgotten in the arrogant West: pride cometh before a fall.

  

  

  

  

  

• "Only Bad Choices" Left For GOP: Trump, Supreme Court Put Party In Turmoil

  “Man, you guys cannot stop talking about him. He is a dangerous presence and, you know, it’s just like candy by the bushel.”

  That’s what Hillary Clinton – who possibly didn’t know her mic was live – told MSNBC last Monday night. The former First Lady was of course talking about Donald Trump, and the media’s interest is a byproduct of the public’s fascination.

  But if the media and voters “can’t stop talking about him,” America’s entrenched political aristocracy (on both sides of the aisle) wishes everyone would just shut up. While Democrats fear Trump as a kind of threat to the ideals and values that supposedly underpin American democracy, for the GOP this is an existential threat. Trump’s success has sent the establishment back to the drawing board and if he wins the nomination outright, the party will die.

  That’s not to say it won’t be resurrected, but it would be an enormous blow in the short-term.

  This is complicated by the fact that Republicans are facing a tough choice with Obama’s Supreme Court nomination. Here’s NBC outlining the GOP’s set of “Sophie’s Choices”:

  On Trump:

  • Acquiesce/surrender to Donald Trump, who is on track (though it’s not a slam dunk) to obtain a majority of Republican delegates. The problem here? Almost every poll we’ve seen shows Trump to be the weakest GOP candidate to face Hillary Clinton.
  • Fight Trump to stop him from getting the 1237 delegates he needs. The problem? Trump has talked about “riots” if he’s leading in delegates but is denied the nomination, and we don’t think he’s kidding.

  On SCOTUS:

  • Oppose the older and more moderate Garland (even hearings and consideration of his nomination), and hope that Republicans don’t lose the 2016 election, which would result in, say, a President Hillary Clinton nominating younger and more liberal replacement.
  • Relent on Garland, knowing the opposition hurts your vulnerable Senate incumbents up for re-election (Kelly Ayotte, Mark Kirk, Ron Johnson, Rob Portman, Pat Toomey), but welcome the wrath of the GOP base.

  Bear in mind, this isn’t a criticism of the GOP. Those are the choices they actually face in the months ahead, and there are no right answers. 

  Not mentioned are other concerns. For instance, if the Republicans “surrender” to Trump, they risk reputational damage. That’s not a comment on Trump – clearly he’s struck a (loud) chord with large swaths of the electorate – but the simple fact is that most establishment Republicans do not want to be associated with him and it’s not out of some petty jealousy. Well maybe it partly is, but part of it is that the GOP doesn’t believe that in the long-run, what Trump says should represent the party line. Perhaps the party should look at Trump’s spectacular numbers and consider where they went wrong in terms of connecting with voters because as the soon to be “private citizen” Marco Rubio will tell you, “we misjudged some folks.”

  On top of that, fighting Trump at the convention could be a disaster – and not just because of Trump’s “riots.” If the GOP stands up and essentially tries to nullify the people’s will, the party will make a fool of itself going into the national elections. That is, they would be playing from a position of weakness, especially if they end up nominating someone who didn’t even run. That could hand the election to Hillary which, if you’re a conservative, is the worst outcome possible.

  As it turns out, some Republicans are war-weary when it comes to the frontrunner. Here’s Politico with more:

  While some Republicans insist on standing firm against the businessman, more and more are contending that it’s time to reach a point of acceptance — and that a drawn-out primary or convention battle could be worse.

   

  “I’m soul-searching right now,” said Penny Nance, president and CEO of Concerned Women for America, who last year explored the possibility of launching an anti-Trump campaign. “There’s still a pathway to defeating him, but it’s getting harder to see that.”

   

  “We’re at a turning point,” conceded Randy Kendrick, wife of Arizona Diamondbacks owner Ken Kendrick and a major contributor to the stop-Trump effort.

   

  “It’s a fork in the road — a political fork.”

   

  
  

   

  At a posh resort in Palm Beach, Fla. — just minutes from Trump’s Mar-a-Lago estate — many of the Republican Party’s biggest donors discussed whether to continue shelling out millions on an anti-Trump offensive that so far has done little, if anything, to halt his rise. Many of those gathered, including New York hedge-fund manager Paul Singer and members of the Chicago Cubs-owning Ricketts family, have been the primary funders of Our Principles, a super PAC that spent heavily to defeat Trump, plastering Florida and other states with TV ads that portrayed him as a heartless businessman. Several of the donors reiterated their hope that Cruz or Kasich could still somehow win, sources familiar with the gathering told POLITICO. But others indicated they would be open to supporting Trump in the general election.

   

  Another factor: Though Trump remains wildly unpopular with the establishment, many in the party hierarchy now lack a figure to support. While Kasich has a virtually impossible path to the nomination, Cruz, who has devoted his Senate career to poking his finger in the establishment’s eye, is seen as an unpalatable choice.

   

  The confusion in the party’s top ranks has left Republicans divided about whether to keep up the anti-Trump offensive at all, or line up behind him.

  Again, there are no “right” answers and every political party faces existential threats at one time or another. But the Trump “problem” is particularly vexing for the GOP. 

  Perhaps the best move for Republicans would be to embrace the candidate American voters have chosen for the nomination and watch gleefully as a GOP “problem” quickly becomes a “problem” for Hillary Clinton and the Democrats in the national election. Something tells us the polls which show Trump faring worse than any other Republican candidate against the former Secretary of State might be just turn out to be wrong come November.

  

  

  

  

  

• 9 Signs That 2016 Looks Ominously Like 2008 (Just Before The Crisis)

  Submitted by Simon Black via SovereignMan.com,

  If you haven’t seen the 2015 Best Picture nominee, The Big Short, I strongly recommend it.

  The Big Short is based on Michael Lewis’ book which examines how such an extraordinary financial crisis gripped the world in 2008, and the handful of people who saw it coming.

  The movie opens asking a very simple question about the global financial meltdown:

  Wall Street missed it; the Federal Reserve missed it; the government missed it; every major financial institution missed it; the homebuilders missed it.

  So how is it that a handful of people were able to see it coming? How could they see what nobody else saw?

  Easy. They looked.

  For anyone who actually looked, it was obvious that the banking and housing boom in the early 2000s was built on a house of cards. The data was all there.

  Given the financial establishment’s astonishingly short-term memory and capacity to make even bigger mistakes than ever before, we now find ourselves in a very similar position today.

  Once again, the financial system is in desperate condition. And the data is all there for anyone who cares to look.

  Let’s look at a few of the numbers together.

  Back in 2008, much of the calamity was caused by an implosion of “subprime loans” in the housing market.

  These were frequently no-money down loans at teaser interest rates made to people with poor credit and limited income.

  Banks made these toxic loans with your money.

  The best example of this was probably Johnny Moon, a homeless man with no income or employment history who was able to borrow more than $600,000 to speculate in real estate.

  The total value of these subprime loans was a whopping $1.3 trillion.

  Not much has changed.

  In 2016, instead of loaning money to subprime home buyers, the financial system is now loaning money to bankrupt governments.

  They’ve even managed to go beyond “no-money down”, and are actually paying governments to borrow money at negative interest rates.

  Japan is as great example.

  Even though Japan’s national debt exceeds 200% of GDP, and it takes over 25% of tax revenue just to pay interest on the debt, the Japanese government is able to borrow money for ten years at negative interest.

  This means that investors are GUARANTEED to lose money. It’s worse than no money down. And it’s total madness.

  The bigger issue is that the size of this bubble is an astounding $7 trillion, far bigger than the subprime bubble in 2008. And it grows larger by the day.

  To expect that this will turn out any differently is foolish.

  Back in 2008, US government debt was “only” $9.5 trillion. The Federal Reserve’s balance sheet was $850 billion. Interest rates were over 4%.

  So at least they had some capacity to slash interest rates and fight the crisis using traditional policy tools.

  Today, US government debt exceeds $19 trillion, well in excess of 100% of GDP.

  They have to borrow money just to pay interest, and they have entire pension funds that are on the brink of bankruptcy.

  The Federal Reserve’s balance sheet has exploded to $4.5 trillion, and interest rates are barely above zero.

  The government has no means to bail anyone out, including itself. And the Fed has no capacity to print more money and expand its balance sheet without causing a major currency crisis.

  Simply put, the bubble is just as insane as in 2008, but much bigger. And the financial establishment has no ammunition to fight it.

  If you want a more detailed comparison of the 9 most ominous similarities between 2008 and 2016 click here to watch today’s video podcast.

  

  I’ll even tell you about the Danish sex therapist who was actually paid interest to borrow money.

   

  

  

  

  

  

• You Are Here

  Presented with no comment…

  Well almost none… wow!

  

   

  It’s different this time though – at least from here, right?

  

  

  

  

  

• Marc Faber: "I Will Vote For Trump, Because Hillary Will Destroy The Whole World"

  Whenever Marc Faber appears in the financial media, in this case Bloomberg TV, one can expect the usual fire and brimstone sermon of how micromanagement of the global economy by central bankers will lead to disastrous results, something which we agree with wholeheartedly and as of two months ago, so did virtually every billionaire at Davos. Recall that just at the end of January, the WSJ when reporting from Davos said that “The world’s central banks can’t save us anymore. That was the message from some of the world’s most prominent investors at the World Economic Forum in Davos, Switzerland, on Friday. Their mood here was irritated, bordering on affronted, with what they say has been central-bank intervention that has gone on too long.”

  Somehow we doubt these same billionaires are quite as irritated, or quite as negative on central bank intervention two months later when thanks to, drumroll, central bank intervention, the Dow Jones has staged the biggest quarterly rebound from its lows since 1933.

  Anyway, back to Faber, who – sure enough – ponders the idiocy of the IMF’s counterfactual statement today, when Lagarde said the world economy would be worse off without negative interest rates:

  … they will always say, if we hadn’t done this and hadn’t done that, it would be much worse.  They have no proof for this assertion.  In my view, it would have been better to let the crisis, already the first one in 2000, run its course and prevent the colossal credit bubble that was built up that then led to an even bigger crisis, and now they’re doing the same mistake.

  He then goes on to slam NIRP and the upcoming helicopter money:

  … the magicians at central banks, they always come out with a new trick and these negative interest rates that we have today, this is for the first time in recorded human history from the times of Babylon up to today that we have negative interest rates, and it’s not going to end well.  That, I can tell you.  But the sequence of how it will not end well, I’m not so sure.  But they still have a lot of ammunition.  What they can do is helicopter money.  In other words, they can send you and Mr. Bloomberg and me and everybody, say a check for $10,000, and that is like throwing gasoline into a fire…. will it help the economy?  That is the question.  It won’t help in the long run.  You cannot grow an economy by just throwing money at people.

  On what policies he would prefer instead:

  … the less policies, the better it would be.  We all learned at school that the free market and the capitalistic system is the best allocator of resources, and now what we have is the worst allocation of resources because it’s the government that tells you how these resources are allocated and they continuously expand their interventions, and I can tell you, I started to work in 1970.  In the 70’s and early 1980’s, central banks actually never came up in discussions.  They have now become like the messiah, and everybody watches what the central banks do and in the end, in my view, they will have, from a long term perspective, no impact whatsoever.  Now can they move markets short term?  Yes, but maybe not in the direction they want to.

  None of these are necessarily new as Faber’s position on these topics has been well known in advance. However, what surprised us was how clear Faber’s political outlook is.

  This is what he said:

  You can buy the Singapore stock market with a four percent dividend yield. Well, Singapore is a relatively sound economy.  It’s diversified and it’s well run, unlike the U.S., unless, of course, the U.S. is run by Mr. Trump.  Then the U.S. will improve.

   

  HYDE:  But Mr. Faber, I mean, we’re seeing from Donald Trump’s potential policies that he wants to slow international trade between the United States and other countries.  Surely that’s going to be a block upon free markets.

   

  FABER:  Well, I agree that it is negative if you have restrictions on a free market.  That, I agree entirely.  But you have to equally see that the U.S. has essentially given in on a lot of things that benefit other countries.  If you look at, say, the growth, 2000 to today, which countries have done relatively well?  The emerging markets have done fantastically well.  Their GDP has gone up substantially.  The standards of living have gone up substantially.  They have accumulated large reserves, and so forth.  The U.S. and Europe and Japan, relatively speaking, have been declining, and that, the statistics are visible from industrial production in emerging economies.  It’s doubled in the last 12 years.  Global trade, you look at the share of emerging markets, it’s gone up.  The developed world, the U.S., Europe, Japan, it’s gone down and so forth.  So I think that maybe we have to find a way to have a more balanced approach to global trade.  I’m not saying protectionism, but the more balanced approach that is fair to the developed world.

   

  BARTON:  Are you really a fan of Mr. Trump, Marc?  Do you really believe…?

   

  FABER:  It is all relative.  Given the alternatives, I would vote for Mr. Trump, because he may only destroy the U.S. economy, but Hillary Clinton will destroy the whole world. Look at her nation building in the Middle East, how successful that has been. 

  He is right.

  (If the video below does not work, click here)

  

  

  

  

  

• Subprime Auto Delinquencies Soar Past Crisis Levels, Now Highest In 20 Years

  On Thursday night, we brought you a first-hand account of what’s really going on in subprime auto.

  According to a reader who works in the industry, the securitization machine may be grinding to a halt for deals that are stuffed with loans to borrowers with low (or no) FICOs. Here’s an excerpt:

  “I work for a smaller but fast growing auto finance company [and] we grew from opening the doors in 2013 to having a $250 million portfolio as of today. Things for the last 3 years have been booming and it seemed like there would be no end to our growth. We were rated by S&P in January and were ready to start securitizing our portfolio.

   

  On March 1st I came into the office to find out that they had started layoffs. These people were fairly new and were in departments that the executive staff has now deemed unnecessary.

   

  I had a meeting with my boss who told me my job is safe but due to us not being able to securitize we were freezing hiring going forward but we were hopefully done with layoffs.”

  So why would a company not be able to securitize the loans on its book? Well presumably because someone, somewhere gets the feeling that demand for auto-backed ABS is going to dry up in the months ahead.

  There’s evidence from both Experian and the NY Fed (see here) to suggest that the market is getting riskier. More auto loan originations are going to borrowers with shoddy credit and loan terms are looking more and more stretched by the quarter. Investors may fear that the credit cycle is about to turn and when it does, you don’t want to be anywhere near the double B tranches in subprime auto – even if you can get 9%.

  With all of the above in mind, we bring you the following chart from Deutsche Bank which shows that 60+ day delinquencies for subprime auto ABS have now risen above crisis levels to 5.16% – levels we haven’t seen since 1996.

  

  But don’t worry, even though Deutsche Bank does admit that it “raises eyebrows” when delinquencies for subprime are at their highest levels in two decades even as unemployment has plunged (so maybe those “jobs” people are getting aren’t that great after all), you shouldn’t worry, because it’s all about overcollateralization these days:

  While it does raise eyebrows to see delinquencies exceed levels seen during the financial crisis at a time when unemployment is below 5%, we think subprime auto ABS structures remain well protected due to robust levels of hard credit enhancement, and structural features that increase credit enhancement as the transactions pay down.

  For reference, 2015 saw about $25 billion in subprime auto ABS supply.

  

  

  

  

  

• This Simply Does Not Compute: If Caterpillar Data Is Right, The Industrial Depression Has Never Been Worse

  It has been over half a year since we first downgraded the industrial recession to an all-out global depression by using Caterpillar retail sales data, which have been so counterintuitive to what the company’s earnings have been reporting that last September we had to ask “What On Earth Is Going On With Caterpillar Sales?.”

  Today, we must admit that something simply does not compute.

  On one hand, CAT stock has soared by over 30% from its 2016 lows….

  

  … despite warning just yesterday that the pain will continue after the company guided even lower to already depressed expectations.

  But what makes no sense at all is that according to the just released CAT retail sales data, the industrial recession since downgraded to a depression, just fell out of the bottom, when the heavy industrial equipment company reported that February world sales crashed by 21%, after falling “only” 15% in January, led by double digit drops in every single market:

  • US down 11% after sliding 7% in January
  • China and Asia/PAC down 26% after being down 22%
  • EAME down 23% after sliding 14% the month before
  • Latin Marica imploding by 45% after a 36% drop one month ago, and one of the worst monthly drops on record.

  Visually, this is as follows:

  

  And what is more confusing is that CAT has not only not had a positive monthly increase in retail sales in a record 39 months, or more than double the length of the Financial Crisis’ 19 months and the longest in history, but the February drop was the biggest one month decline in 5 years!

  

  Of course, on its face, this data would explain why over the past month first the BOJ, then the PBOC, then the ECB and finally the Fed all surprised with not only more dovishness but much more outright easing as central banks panic to halt what at least according to this one indicator confirms the global economy has not been worse in nearly half a decade.

  Source

  

  

  

  

  

• Fed Sparks "QE Trade" As Stocks, Bonds, Gold Soar

  What happens next?

   

  Well it's been another week… As Goldman said this was the 4th most dovish Fed surprise since 2008

  Surprises at FOMC meetings with the “dot plot” in the Summary of Economic Projections have on average been almost twice the size of pre-crisis norms.

  Which enabled the 5th weekly S&P rise in a row – just like into the Nov 2015 highs…(before it all collapsed) – Trannies up 5% on the week!!

  

  Perfect close:

  • S&P 2049.46
  • Dow 17,599.42

  Trannies are up 9 weeks in a row – and this was the biggest week since the Bullard Bounce in Oct 2014.

  Financials are up 5 weeks in a row for the first time since Sept 2014 right before plunging only to be saved by Bullard…

  

   

  But we just wonder…

  

   

  Post-Fed, Silver soared but gold was coincidentally marked down the last 2 days to ensure it did not make stocks look terrible and signal policy error…

  

   

  Most-Shorted stocks were monkey-hammered higher after The Fed – back to unch ish on the week…

  

   

  Note that the "weakest momo" stocks have soared in this rally…

  

   

  Crushing market-neutral funds once again… the worst Quarter for Market-Neutral funds since Q3 2011

  

   

  Treasury yields tumbled post-Fed with a yuuge 17bps plunge in 2Y Yields…(the biggest 2Y yield drop since Bullard Oct 2014)

  

   

  The USD Index tumbled on the week – driven by The Fed and follow through in Asia – but notably stable again now for the last 24-36 hours..

  

   

  This is the lowest weekly close in 5 months… and USD is down 3% YoY

  

   

  The entire week for commodities pivoted around The Fed, with everything higher…

  

   

  Crude managed its 5th weekly rise in a row, but things fell apart a little into the week's close (April back below $40)…

  

   

  And finally, as a reminder – You Are Here…

  

   

  Charts: Bloomberg

  

  

  

  

• Weekend Reading: Did The Fed Just Cage The Bear?

  Submitted by Lance Roberts via RealInvestmentAdvice.com,

   

  

  The past two week’s have been full of Central Bank interventions starting with the ECB last week and culminating with a more accommodative Fed and BOJ interventions this week.

  As stated earlier this week:

  “The Fed currently finds itself in a tough spot from a “data dependent” standpoint. Last December, when the Fed Funds rate was increased, the Fed discussed the potential for further rate hikes in 2016 as inflation and employment data strengthened. With that data improving, along with the strong rebound in the financial markets, the Fed runs the risk of losing credibility if they DO NOT hike rates again on Wednesday OR give a very strong indication they will do so at the next meeting.”  

  I was wrong. The Fed jumped into the boat with the ECB this week by not only ignoring the recent spate of stronger employment and inflationary pressures, but by lowering economic forecasts and reducing the number of rate hikes this year from 4 to 2. This was, in effect, “Yellen’s Bazooka.” Given the more “accommodative posture,” it is not surprising the financial markets decide to jump into the boat with her.

  With the markets currently trading above the 200-dma, the next big resistance levels will be the downtrend that started last summer as shown below. Not surprisingly, this rally is occurring with both fundamental and economic data substantially weaker which continues to restrain the Fed from a further tightening of monetary policy. Or, “bad news” is “good news” for now.

  

  With that, this week’s reading list takes a look at various the Fed’s recent actions and whether Yellen has been able to “cage the bear” for now.

  ---

  1) Janet Yellen Still Operating In Denial by Stephen Gandel via Forbes

  “On Wednesday, the Federal Reserve decided to keep rates where they were for another month, and indicated that it was only likely to raise rates twice in the next year and four times in 2017. The change brings the Fed’s own rate expectations closer in line to what the market was predicting before this week’s FOMC meeting.

   

  Nonetheless, the Fed has a history of tricking it self into believing the economy is stronger than it really is—something that has happened a lot during this recovery. And there is reason to believe it is doing so again. If that’s the case, the Fed could be living in denial about its ability to raise interest rates.”

  

  • But Also Read: FOMC Doesn’t Believe Own Data by Jeffrey Snider via Alhambra Partners
  • And Read: Is The Fed’s Tightening Cycle Almost Over? by Matthew Klein via FT AlphaVille
  • Don’t Miss: Yellen’s March Madness by Macro Man
  • More: Was There A G-20 Accord Or What Spooked The Fed by Guy Haselmann via ZH
  • Interesting: Currency War Relief From Fed by Randall Forsyth via Barron’s

  ---

  2)  Private Sector Debt & Slowing Economy by IronMan via Political Calculations

  “The U.S. Federal Reserve released its latest Flow of Funds report for the U.S. economy on 10 March 2016. Let’s run through a short checklist to see what it tells us of the relative health of the U.S. economy….

   

  Falling or negative acceleration of private sector debt?

  Check.

   

  Falling real GDP growth rate?

  Check.

   

  Let’s go to the chart….”

  

  • But Also Read: Stock Crash Coming by Ken Goldberg via The Street
  • And Read: Earnings Estimates Are Still Falling by Eric Bush via GaveKal Research
  • Further Reading: Recessions Lead To Prosperity by John Tamny via Forbes
  • Interesting: Economic Growth Reaching Limits by Gail Tverberg via Our Finite World

  ---

  3) Markets Are Quiet…Too Quiet by Russ Koesterich via Blackrock

  • Over the past four weeks, stocks have staged an impressive rebound from their February lows. The equity rebound of the past month is a classic “relief rally,” where investors are relieved conditions are not as bad as they previously feared.
  • This one has been partly predicated on hopes that China is stabilizing, which helps explain the sharp rise in commodity prices given that China is the biggest commodities consumer.
  • Unfortunately, signs of real improvement in China are scant. While the U.S. appears to be stabilizing, the Chinese economy remains challenged.
  • Given the still uneven pace of global growth and tighter financial market conditions, volatility may too be low. This, in turn, suggests the potential for a rise in volatility — which would imply another bout of stocks selling off.

  • Also Read: Things Aren’t That Bad by Philip Van Doorn via MarketWatch
  • But Also Read: World Headed For Bear Market by Nomi Prins via Daily Reckoning
  • Interesting: Fear Indicator Surges To Record High by Josh Lukeman via ZH

  

  ---

  4) El-Erian: The Road We Are On Is Coming To An End by Ben Moshinsky via BI

  “Policymakers will either watch helplessly as the world sinks into a mire of financial volatility and political collapse, or they’ll find a way to unlock the piles of corporate cash sitting on the sidelines, reinvigorating growth.

   

  At the moment, it’s a coin flip. ‘The road we’re on is coming to an end,'”

  • Also Read: A Look At The Latest JOLTS Report by Tyler Durden via Zero Hedge

  ---

  5) Is The Oil Correction Over by Marc Chandler via Real Clear Markets

  “The losses in the May sweet light crude oil futures today have not done much technical damage to the near-term outlook. The contract has been struggled most of the last week to sustain gains above $40.

   

  A break of last week’s low of $38 a barrel could be an early indication of the three-legged correction since mid-January has run its course.

   

  The first downside target is near $36.75 and then $35.60. Note that the May contract is set to close below the five-day moving average (~$39.40) for the first time since February 24. The RSI is turning, and the MACDs may turn lower in the coming days.“

  

  • And Read: Oil Prices Should Fall, Possibly Hard by Art Berman via Forbes

  ---

  OTHER GOOD READS

  • What Happened To The Invisible Hand by Vitaliy Katsenelson via Contrarian Edge
  • Huge Hendry On China Devaluation by Julia La Roche via Business Insider
  • The Behavioral Aspects Of Planning & Investing by Victor Ricciardi via SSRN
  • Bearishness Strictly For Informed Optimist by John Hussman via Hussman Funds
  • The Fed’s Folly Festers Further by David Stockman via Contra Corner
  • High-Risk Regime’s 6-Month Anniversary by Salil Mehta of Statistical Ideas
  • A Broadening Market Top In Place by Doug Kass via Real Clear Markets
  • Increasingly Inefficient Bubbles by Jeff Snider via Zero Hedge
  • Bridgewater: Biggest Mistake In Investing by Rupert Hargreaves via ValueWalk
  • Robo-Advisors Clinging To Dangerous Dogma by Jesse Felder via The Felder Report
  • Calmer Days Ahead For Oil Prices via Dana Lyons via Tumblr

  ---

  BONUS: INVESTORS INTELLIGENCE GUIDE TO TECHNICAL ANALYSIS

  ---

  “The four most dangerous words in investing: This time is different” – John Templeton

  

  

  

  

  

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