Today’s News 30th June 2018

• The United States Withdraws From The World

  Authored by Philip Giraldi via The Strategic Culture Foundation,

  The United States has decided to no longer participate in the United Nations 47-member Human Rights Council (UNHRC). The number one reason cited by U.S. Ambassador Nikki Haley was that the council is unfairly critically focused on Israel.

  The United States had already left the U.N.’s cultural organization UNESCO last October, the last straw reportedly being when the organization named the city of Hebron on the West Bank a Palestinian World Heritage site, which Israel declared to be unacceptable. At that time, the number one reason cited by Haley for the withdrawal was that the organization was too critical of Israel.

  Haley has also made a number of other comments relating to the United Nations and Israel. Immediately upon taking office she complained that “nowhere has the U.N.’s failure been more consistent and more outrageous than in its bias against our close ally Israel” and vowed that the “days of Israel bashing are over.” In February 2017, she blocked the appointment of former Palestinian Prime Minister Salam Fayyad to a diplomatic position at the United Nations because he is a Palestinian. In a congressional hearing she was asked about the decision: “Is it this administration’s position that support for Israel and support for the appointment of a well-qualified individual of Palestinian nationality to an appointment at the U.N. are mutually exclusive?” Haley responded yes, that the administration is “supporting Israel” by blocking every Palestinian.

  

  There is clearly a disinclination on the part of the Trump Administration to support multinational bodies, evident in the rejection of climate, trade and non-proliferation agreements. Complete withdrawal from the United Nations is not unthinkable in the current climate, though the Democrats and some moderate Republicans would no doubt strongly resist such a move.

  In my opinion, the United Nations is a dystopian mess but it is better to have it than not as it provides a forum where nations that otherwise cannot meet are able to do so and discuss transnational issues. And it should be conceded that the U.N.’s inability to actually function is largely both structural and bureaucratic due to the veto power given to the Security Council’s five permanent members, a function that Nikki Haley has repeatedly used to stop resolutions that might be offensive to the United States or Israel.

  Beyond that, Haley’s constant citation of concern for Israel gives strength to the suggestion that there is something unnatural about its bilateral “special” relationship with the United States. In the Middle East in particular, Israel would seem to be driving U.S. policy, particularly vis-à-vis Syria, Lebanon and Iran. Israel is intent on continuing political chaos in Syria lest there be a threat to its continued occupation of the Golan Heights and has warned about possible preemptive action in Lebanon to punish Hezbollah. It also wants the United States to deal decisively with Iran. By all accounts, those agendas are proceeding very well as Washington has been regularly threatening Iran and last week vowed to take military action if Damascus seeks to recover territory in the Syrian southwest that until recently was held by terrorists.

  It is difficult to discern what the joint United States-Israeli strategy might be towards the United Nations and other international bodies. Neither has recognized the authority of the International Criminal Court in The Hague for fear that its own senior officials might be arrested and tried for war crimes. To be sure, both countries are protected against any serious challenges in the U.N. itself by the American veto power over the Security Council, which alone has the authority to mandate sanctions or peacekeeping operations.

  But the U.S. withdrawal from U.N. agencies is, if anything, a sign of weakness rather than strength. If Washington were indeed confident in its own brand of international leadership it would welcome the opportunity to sit on panels and help shape the views of other countries with which it has a politically neutral or adversarial relationships.

  That it does not choose to do so suggests that there is an understanding that what Washington is selling no one is buying.

  The complete isolation of the United States at the United Nations and also elsewhere, to include G-7, was exhibited recently during June 1st votes at the U.N. Security Council. A resolution sponsored by Kuwait seeking an inquiry into the Israeli killing of unarmed demonstrators in Gaza and a motion by Haley seeking to blame Hamas for the deaths both were voted on. Haley’s was the only vote against the former and the only vote in favor of the latter. She predictably commented afterwards that “Further proof was not needed, but it is now completely clear that the U.N. is hopelessly biased against Israel.”

  

• Has ET Gone Home? UFO Sightings Slump

  If you’re wondering whether that strange light you saw zipping across the night sky was a UFO, you’re not alone. According to the National UFO Reporting Center, more than 1,300 UFO sightings have been reported so far this year.

  However, that number represents a decline in recent seen in recent years.

  While the organization only recorded 307 sightings back in 1990, they reached a peak of 8,619 in 2014, before falling slightly to 5,516 in 2016.

  

  You will find more infographics at Statista

  But the decline in sightings doesn’t mean interest in UFOs by both the public and the military has fallen off.

  One recently leaked military report revealed fascinating new details about a 2004 incident involving what appears to be a UFO. The incident is better known as “the Tic Tac incident” due to the Tic Tac-like shape of the purported UFO.

  The Department of Defense released three separate videos taken of the AAVs (anomalous aerial vehicles) from the incident after a secret Pentagon program intended to find signs of alien life was revealed by the New York Times to have been defunct since 2012. However, the paper’s sources said the program continues to exist in some form, despite being stripped of its explicit funding.

  And why not? The American military – and the air force in particular – has been investigating incidences of UFOS for decades. In 1947, the Air Fore started investigating more than 12,000 claimed UFO sightings before the project ended in 1969. While the program concluded that most of the sightings involved conventional aircraft of spy planes, more than 700 incidences remained explained.

  Perhaps we’ll learn more after President Trump launches his ‘Space Force’.

  

• How To Survive The Civil Unrest That's Coming To America

  Authored by Daisy Luther via The Organic Prepper blog,

  The rhetoric in the United States is heating up and we’re sounding anything but… well… united. It seems to most media pundits like we are too far down the path to Civil War 2.0 to turn back now. Activists are laying siege to government offices. Threats toward people who disagree are growing in ferocity. It’s ugly and getting uglier. It’s a powder keg that is about to erupt. (Here are some thoughts on what a full-fledged Civil War might look like.)

  

  It is only a matter of time before civil unrest begins to escalate and spread throughout the country. Many people are wondering, how do you keep your family safe during widespread unrest? It’s not about being fearful. It’s about being prepared.

  My thoughts on this manipulated division are fodder for another article. (You can find it here.) This article is apolitical (to the best of my ability, anyway) and focuses strictly on what you need to know to survive should the unrest come to your neighborhood.

  You need to understand how riots unfold.

  First things first, you need to understand how this kind of unrest unfolds so that you can see the warning signs earlier. Never underestimate the power, rage, and motivation of a mob.

  Here’s the pattern:

  • An outrage occurs.

  • Good people react and protest the outrage.

  • Those perpetrating the outrage try to quell the protest because they don’t think that the outrage was actually outrageous.  (And whether it was or not can fluctuate – in some cases, force is necessitated, but in more and more cases, it is flagrantly gratuitous.)

  • Others react to the quelling and join the protest.

  • A mob mentality erupts. Thugs say, “Hey, it’s a free for all. I’m gonna get some Doritos and while I’m at it, beat the crap out of some folks for fun.”

  • All hell breaks loose.

  • The military gets called in.

  • The city burns, and neighborhoods get destroyed, and no one in the area is safe.

  • Cops act preemptively, out of fear, and for a time, there is no rule of law.

  • If you happen to be stuck there, know this: you’re completely on your own.

  Tess Pennington wrote about societal breakdowns in more detail – read her excellent article for more information on these predictable scenarios.

  Some people are just waiting for the opportunity to behave in this fashion. They’d love to act like that every single day, but they don’t want to spend the rest of their lives in jail. But when a verdict gets rolled out, when a storm takes out the power, when a disaster strikes, they delight in the chance to rob, pillage, loot, and burn.  Who can forget the day before Superstorm Sandy hit the East Coast, when thugs were coordinating looting rampages via Twitter?

  I remember learning about “sublimation” in a high school psychology class.

  Sublimation is a defense mechanism that allows us to act out unacceptable impulses by converting these behaviors into a more acceptable form. For example, a person experiencing extreme anger might take up kickboxing as a means of venting frustration. Freud believed that sublimation was a sign of maturity that allows people to function normally in socially acceptable ways. (source)

  If you believe Freud’s theory, then it’s easy to see that many people look for an excuse to revert to their true natures.  In a situation where “everyone” is doing something, they are able to cast off the normal control of their impulses without much fear of reprisal. The number of looters and thugs far outstrips the number of arrests going on in Baltimore, so there’s a very good chance that someone swept up in that mentality can go burn somebody else’s home or business and completely get away with it.

  Make a flexible plan.

  With situations of civil unrest, it isn’t as clear-cut as disasters like a looming storm or a chemical spill.  It depends on where you live. In a small town, far away from riots and protests, your lockdown area could be much greater than your own home. It could encompass your immediate community, too, and life might go on as it always has for you, aside from the need to stay just a little closer to home than before.

  However, if you live in a city or suburb, it may become essential to make a decision quickly. Do you lock your doors and stay home? Or do you get out of Dodge?  It is a question only you can answer. One thing that is very important is this: if you need to go, do NOT miss your window of opportunity to do so safely. If the entire city feels the same way, you’ll most likely be stuck in traffic and trapped in your car. Protesters have shut down the highways more than once in recent years, and you’ll be far safer behind the brick and mortar of your home than you will be in your car.

  By the way, there’s always someone who chimes in with a snide remark about how cowardly it is to lockdown with your family in order to stay safe. Blah, blah, blah. If you want to go get involved in a battle to make a political point, that’s certainly your prerogative. However, my priority is the safety of my family, and as such, I hope to avoid engaging altogether.

  The first thing you need to do is get home.

  If your area is beginning to devolve, the first thing you’re going to want to do is to get everyone in the family home. (Or if your home is in the thick of things, to a safer secondary location.)

  In a perfect world, we’d all be home, watching the chaos erupt on TV from the safety of our living rooms.  However, reality says that some of us will be at work, at school, or in the car when unrest occurs.  You need to develop a “get-home” plan for all of the members of your family, based on the most likely places that they will be.

  • Devise an efficient route for picking up the kids from school.  Be sure that anyone who might be picking up the children already has permission to do so in the school office.

  • Discuss the plan with older kids – there have been rumors that children could be moved by the schools to a secondary location in the event of a crisis.  Some families have formulated plans for their older kids to leave the school grounds in such an instance and take a designated route home or to another meeting place.

  • Keep a get-home bag in the trunk of your car in case you have to set out on foot.

  • Stash some supplies in the bottom of your child’s backpack – water, a snack, any tools that might be useful, and a map.  Be sure your children understand the importance of OPSEC.

  • Find multiple routes home – map out alternative backroad ways to get home as well as directions if you must go home on foot.

  • Find hiding places along the way.  If you work or go to school a substantial distance from your home, figure out some places to lay low now, before a crisis situation.  Sometimes staying out of sight is the best way to stay safe.

  • Avoid groups of people.  It seems that the mob mentality strikes when large groups of people get together.  Often folks who would never ordinarily riot in the streets get swept up by the mass of people who are doing so.

  • Keep in mind that in many civil disorder situations the authorities are to be avoided every bit as diligently as the angry mobs of looters. Who can forget the scenes of innocent people being pepper sprayed by uniformed thugs in body armor just because they happened to be in the wrong place at the wrong time?

  • Know when to abandon the plan to get home. Sometimes, you just can’t get there. Going through a war zone is not worth it. Find a different place to shelter. Pay attention to your instincts.

  The reality is, family members are likely to be at work or school when things start to break down. You need to have a plan laid out in advance to get everyone together and you need to be flexible enough to know when to go on to Plan B.

  Be ready for lockdown.

  Once you make your way home or to your bug-out location… STAY THERE.

  By staying home, you are minimizing your risk of being caught in the midst of an angry mob or of sitting in stalled traffic while looters run amok.  In most scenarios, you will be far safer at home than you will be in any type of shelter or refugee situation. (Obviously, if there is some type of chemical or natural threat in your immediate neighborhood, like a toxic leak, a flood, or a forest fire, the whole situation changes – you must use common sense before hunkering down.)

  This is when your preparedness supplies will really pay off. If you are ready for minor medical emergencies and illnesses, a grid down scenario, and a no-comm situation, you will be able to stay safely at home with your family and ride out the crisis in moderate comfort.

  Here’s a quick checklist:

  • Check your pantry and fill any gaps in your food preps.

  • Order emergency food buckets

  • Get your water preps in order

  • Get cash in small denominations out of the bank.

  • Make sure you have enough garbage bags, pet supplies, and toiletries.

  • Pick up a copy of a comprehensive preparedness guide like The Prepper’s Blueprint

  • Check your supply of candles, matches, and lighters. (This article has more information)

  • Flashlight and spare batteries and/or dynamo wind up flashlights.

  • Make sure all electronics are fully charged and keep them charged during the lead-up to an event

  • Make sure any cell phone battery packs are fully charged.

  • Fill up your gas tank up to the max.

  • If your vehicle isn’t in a garage park it trunk end in as close to a wall as you can. This makes it harder to get to the tank to either steal the fuel or set fire to it.

  • Check your home security – walk around looking at your property as if you were a burglar and take appropriate action to improve security if required.

  • Have something on hand for the kids to do in case of school closures.

  • Make sure you have a fully stocked first aid kit and enough OTC medications to last the family for at least a month.

  • Check and clean your firearms and be prepared to defend your family if trouble comes to you

  • Pick up some extra ammo

  • Plan to keep pets indoors

  • Make sure you have enough of needed prescription medications to last a few weeks

  Staying home is the number one way to keep yourself safer from during a civil unrest situation. If you find yourself in an area under siege, the odds will be further on your side for every interaction in which you avoid taking part. Every single time you leave the house, you increase your chances of an unpleasant encounter.  Nothing will be accomplished by going out during a chaotic situation.

  Try to stay under the radar.

  Your best defense is avoiding the fight altogether. You want to stay under the radar and not draw attention to yourself.  The extent to which you strive to do this should be based on the severity of the unrest in your area. Some of the following recommendations are not necessary in an everyday grid-down scenario, but could save your life in a more extreme civil unrest scenario.

  • Keep all the doors and windows locked.  Secure sliding doors with a metal bar.  Consider installing decorative gridwork over a door with a large window so that it becomes difficult for someone to smash the glass and reach in to unlock the door.

  • Put dark plastic over the windows. (Heavy duty garbage bags work well.)  If it’s safe to do so, go outside and check to see if any light escapes from the windows. If your home is the only one on the block that is well-lit, it is a beacon to others.

  • Keep pets indoors. Sometimes criminals use an animal in distress to get a homeowner to open the door for them. Sometimes people are just mean and hurt animals for “fun”.  Either way, it’s safer for your furry friends to be inside with you.

  • Don’t answer the door.  Many home invasions start with an innocent-seeming knock at the door to gain access to your house.

  • Keep cooking smells to a minimum.  The goal here is not to draw attention. The meat on your grill will draw people like moths to a flame.

  • Keep the family together.  It’s really best to hang out in one room. Make it a movie night, go into a darkened room at the back of the house, and stay together. This way, if someone does try to breach your door, you know where everyone is who is supposed to be there. As well, you don’t risk one of the kids unknowingly causing a vulnerability with a brightly lit room or an open window.

  • Remember, first responders may be tied up.  If the disorder is widespread, don’t depend on a call to 911 to save you. You must be prepared to save yourself.  Also keep in mind, as mentioned earlier in the article – the cops are not always your friends in these situations.

  Be prepared for defensive action.

  If, despite your best efforts, your property draws the attention of people with ill intent, you must be ready to defend your family. Sometimes despite our best intentions, the fight comes to us.  (Have you seen the movie The Purge?)

  

  Many preppers stockpile weapons and ammunition for just such an event.  I know that I certainly do. Firearms are an equalizer. A small woman can defend herself from multiple large intruders with a firearm if she’s had some training and knows how to use it properly. But put a kitchen knife in her hand against those same intruders, and her odds decrease exponentially.

  When the door of your home is breached, you can be pretty sure the people coming in are not there to make friendly conversation or borrow a cup of sugar.  Make a plan to greet them with a deterring amount of force.

  • Don’t rely on 911. If the disorder is widespread, don’t depend on a call to 911 to save you – you must be prepared to save yourself.  First responders may be tied up, and in some cases, the cops are not always your friends.  In the aftermath of Hurricane Katrina, some officers joined in the crime sprees, and others stomped all over the 2nd Amendment and confiscated people’s legal firearms at a time when they needed them the most.

  • Be armed and keep your firearm on your person.  When the door of your home is breached, you can be pretty sure the people coming in are not there to make friendly conversation over a nice cup of tea.  Make a plan to greet them with a deterring amount of force. Be sure to keep your firearm on your person during this type of situation, because there won’t be time to go get it from your gun safe. Don’t even go to the kitchen to get a snack without it. Home invasions go down in seconds, and you have to be constantly ready.

  • Know how to use your firearm. Whatever your choice of weapon, practice, practice, practice. A weapon you don’t know how to use is more dangerous than having no weapon at all. Here’s some advice from someone who knows a lot more about weapons than I do.

  • Make sure your children are familiar with the rules of gun safety. Of course, it should go without saying that you will have pre-emptively taught your children the rules of gun safety so that no horrifying accidents occur. In fact, it’s my fervent hope that any child old enough to do so has been taught to safely and effectively use a firearm themselves. Knowledge is safety.

  • Be ready for the potential of fire.  Fire is a cowardly attack that doesn’t require any interaction on the part of the arsonist. It flushes out the family inside, leaving you vulnerable to physical assaults. Have fire extinguishers mounted throughout your home. You can buy them in 6 packs from Amazon. Be sure to test them frequently and maintain them properly. (Allstate has a page about fire extinguisher maintenance.) Have fire escape ladders that can be attached to a windowsill in all upper story rooms.  Drill with them so that your kids know how to use them if necessary.

  • Have a safe room established for children or other vulnerable family members. If the worst happens and your home is breached, you need to have a room into which family members can escape. This room needs to have a heavy exterior door instead of a regular hollow core interior door. There should be communications devices in the room so that the person can call for help, as well as a reliable weapon to be used in the unlikely event that the safe room is breached. The family members should be instructed not to come out of that room FOR ANY REASON until you give them the all clear or help has arrived. You can learn more about building a safe room HERE.  Focus the tips for creating a safe room in an apartment to put it together more quickly.

  Again, even if your plan is to bug in, you must be ready to change that plan in the blink of an eye. Plan an escape route.  If the odds are against you, if your house catches on fire, if thugs are kicking in your front door… devise a way to get your family to safety.  Your property is not worth your life. Be wise enough to accept that the situation has changed and move rapidly to Plan B.

  You have to remember that civilization is just a veneer.

  So many times, when interviewed after a disaster, people talk about being “shocked” at the behavior of others.  Their level of cognitive dissonance has lulled them into thinking that we’re safe and that we live in a civilized country.  They are unwilling to accept that civilization is only a glossy veneer, even when the evidence of that is right in front of them, aiming a gun at their faces, lighting their homes on fire, or raping their daughters.

  They refuse to arm themselves and prepare for an uncivilized future.

  Accept it now, and you’ll be a lot better off when the SHTF.

  Look at what happened during the Ferguson riots. Look at the behavior of the stampeding masses on any given Black Friday shopping extravaganza. Look at the horrifying rhetoric espoused by people angry about the politics of our country.

  Then tell me again how “civilized” our country is.

  

• California Passes "Strongest" Data-Privacy Bill Yet, Could Become "Law Of The Land"

  While Democrats like Senator Mark Warner hemmed and hawed late last year about passing legislation that would make it easier for consumers to sue companies like Facebook and Google, California (which benefits from the fact that it’s essentially a one-party state controlled by Democrats) has gone ahead and passed what NBC News described as “the nation’s strongest data privacy law”.

  

  The will require tech firms to disclose what data they collect from their users, and with whom they share that data. That means that companies like Facebook will need to start carefully tracking user data shared with third-party developers, after the Wall Street Journal reported Wednesday that Facebook’s internal probe into potential data misuse has been stymied by the company’s inability to track where much of the data went.

  According to the law, tech companies must safeguard users’ data or risk a hefty fine (the bill also allows for the creation of a “Consumer Privacy Fund” that will help fund enforcement of the law). And while tech firms wouldn’t face penalties for violations in other states, it’s expected that California’s law will effectively be enforced for all US users, as changes – like the “opt-out” feature – will probably be rolled out nationwide.

  The law, passed by the state legislature on Tuesday and signed by Gov. Jerry Brown, requires companies to disclose the types of data they collect about consumers and with whom they share that information. Companies will be forced to let consumers opt-out of having their data sold. The law will also prohibit companies from charging a consumer or treating them differently because they opted out of having their data sold.

  While NBC says the “spirit of the law” is similar to Europe’s General Data Protection Regulation, which took effect last month, the law doesn’t go quite as far. In response to that law, US tech firms adjusted their privacy policies and allowed users more control over what data they collect.

  But the law falls short of a ballot measure entitled Mactaggart’s Californians for Consumer Privacy bill – proposed by Alastair Mactaggart, a wealthy real estate developer – which would’ve given consumers more power, including the ability to sue companies that have mishandled their data privacy. However, Mactaggart threatened to pull the measure if the consumer privacy act passed, which it did.

  James Steyer, the founder and CEO of nonprofit tech watchdog Common Sense, said the bill’s passage is a “huge victory”, though he admitted it isn’t perfect. Personally, Steyer says he’d like to see legislation requiring an “opt-in” for users to approve sharing of their data. Still, “California’s law will become the law of the land,” Steyer said. “Waiting for Congress and this current executive breach to be functional is like a joke.” Facebook CEO Mark Zuckerberg memorably argued during testimony before Congress in April that consumers often prefer to share their data, because it helps social media firms target their ads so that they reflect the users’ interests. With this in mind, perhaps it’s not so surprising that Facebook’s Sheryl Sandberg told employees Thursday morning that the company supported the law.

  

• Irrational Beliefs Are Ruling Markets

  Authored by Alasdair Macleod via GoldMoney.com,

  To understand the consequences of the credit cycle, we must dismiss pure opinion, and examine the evidence rationally. This article assesses the fate of the dollar on the next credit crisis, a subject of increasing topicality. It concludes that the late stage of the credit cycle has important similarities with 1927, when the Fed eased monetary policy, following evidence of a mild recession.

  

  Contemporary financial markets are inherently emotional, mainly because they are awash with government-issued currencies. Investors and speculators would never be as careless with sound money as they are with infinitely-elastic fiat. Instead, they are ready to gamble with it, partly because they know that standing still guarantees a loss of purchasing power and partly because rising asset prices, which is actually the reflection of a falling currency, makes selling currency for assets an appealing proposition. Furthermore, credit for speculation is freely available through futures and options.

  Financial markets are also irrational due to modern economics, the explanation for it all, having become a belief system. If all central banks pursue economic beliefs, as an investor you will probably do so as well, otherwise you are out of step in a world that follows trends. That works until it doesn’t. Central bankers pursue policies which are a mishmash of neo-Keynesianism and monetarism, the balance between the two setting the fashion of the day, with an overriding assumption that unregulated markets are the source of all our economic and systemic troubles. But there is one element of monetary policy that does not change, and that is a conviction that everything can be cured by monetary inflation.

  Is this condemnation of monetary policy over the top? Well, only last week Mark Carney, Governor of the Bank of England, was authorised by the UK Treasury to issue a further £1.2bn of capital, which according to press reports will allow the Bank of England to create further loans totalling more than £750bn. Nice work if you can get it: create some sterling by a few strokes on a keyboard and gear up on it by issuing a further 625 times as much, only backed by the myth that the central bank’s capital is real. What is the purpose? To banish all risk emanating from the private sector, of course.

  You can only justify monetary policies of this sort by supposing they are the right thing to do. But it tells us something important: deflation, however you define it, is not the problem.

  Deflation is ill-defined

  Commentators and analysts appear to be in general agreement that deflation is the greatest risk facing us today, and every time a statistic falls short of market expectations, the walking shadow of deflation flits across the financial stage. We are all becoming nervously aware of the accumulation of debt, and the risk that consumers and businesses are teetering on the edge of another credit crisis.

  In 1933, the economist Irving Fisher described how when loans start to go bad, banks liquidate collateral, thereby driving down asset prices and leading to widespread bankruptcies. According to Fisher, a cycle of debt liquidation and falling asset prices interact in a vicious self-feeding collapse, suppressing demand, resulting in falling commodity prices and unsold goods. Nearly everyone is terrified of this risk, forgetting it is something that can only happen with sound money, because sound money retains its purchasing power. In the 1930s, the dollar was exchangeable for gold, until Roosevelt made gold ownership illegal for US citizens and devalued the dollar. Today the monetary landscape is vastly different: gold has been banished from the fiat money system and today’s government-issued unbacked currencies are as unsound as they get.

  Therefore, deflation is an inappropriate way of describing any economic condition when central banks are prepared to pump unlimited fiat currency into their economies at the first sign of trouble. Wrongly, deflation has become the catch-all description for nearly all forms of economic failure. Instead, we should understand that economic failure, short of wars and plagues, is always associated with monetary inflation, and the undermining of a currency’s purchasing power.

  Consider the economic effects of an inflationary monetary policy, such as that of the Argentinian central bank. The government presides over an economy where price inflation is officially running at 26%, but prices are estimated to be actually rising at three times that, based on estimates of purchasing power parity.

  Argentina’s economy is growing at 2% in 2018, according to a recent report from the OECD. But realistically, the Argentine economy is contracting severely when you take into account the true loss of the currency’s purchasing power, in which GDP numbers are measured. So, from the OECD we have a neo-Keynesian commentary claiming marginal economic growth, when the reality can also be described in today’s loose economic parlance as intensely deflationary, because real GDP growth adjusted for inflation is strongly negative.

  

  It is not deflation. Argentina is suffering from severe price inflation, the consequence of monetary policy. The inflationary situation in the US and elsewhere is no different, just less intense. Like the Argentines, the US through official statistics underreports inflation, in this case at only 2.8%, and even that is ignored by the Fed. A more realistic rate of price increases, according to Shadowstats.com, currently exceeds 10%. This leaves the real Fed Funds Rate adjusted for an approximation of actual price inflation at minus eight per cent, which by any sensible definition is not deflationary.

  Despite the monetary reality, the financial community, with an eye only on the overhang of debt, persists in thinking that deflation, not inflation, is the greater risk. This conclusion can only be the result of imprecise economic definitions, which allow the monetary establishment to fool itself along with us all into accepting their inflationary monetary policies are valid.

  Cross-border flows

  Deflationists seem to believe, in accordance with Irving Fisher’s debt-deflation theory, that debt in a credit crisis will be liquidated, creating demand for currency. This simplistic approach ignores the fact that during an inflation, which perforce leads to far higher nominal interest rates, debt liquidation is an ever-present factor as well. Fisher’s description of how businesses and banks fail in an economic downturn is selective and has been used to justify monetary intervention to prevent borrowers and banks from paying for their mistakes. It changes the private sector from the survival of the fittest to survival of the influential, robbing savers for the benefit of the profligate.

  There is no economic justification for this one-sided view of debt-deflation, but we have to live with it. We can be sure that in the event of a general credit crisis the Fed will issue enough currency to stabilise the domestic economy. That is official policy and the reason the Fed was created and exists. The difficulties for foreign dollar-denominated obligations are a separate and secondary consideration. However, we can assume that the major central banks will extend inflationary swap agreements between themselves to allow them to support their individual financial systems, wherever foreign currency exposure is a risk factor. But that still leaves us with imbalances that are likely to disrupt exchange rates.

  There is a general assumption that the liquidation of cross-border positions will lead to net demand for the dollar, driving it up against other currencies. According to this logic, the superiority of the dollar as the reserve currency will ensure that sales of foreign currency arising from a credit crisis will result in the purchase of dollars.

  After all, these dollar bulls tell us, this is corroborated by the Triffin dilemma. According to Professor Triffin, dollars required for international trade liquidity are supplied by US trade deficits. And if the US goes into recession, the economic contraction will restrict the supply of dollars, forcing the exchange rate higher. We need to unpick this flaky argument to challenge its validity.

  Professor Triffin forecast the end of the Bretton Woods system in his book, Gold and the Dollar Crisis: The Future of Convertibility, published in 1960. In it, he argued that the flood of dollars that went abroad following the Second World War (Marshall plan, Korea, etc.) would lead to the dollar being driven off the gold standard. This actually happened in a series of events, starting with difficulties in the London gold market in the late 1960s, exacerbated by further overseas spending on the Vietnam War, and culminated with the suspension of the Bretton Woods agreement by President Nixon in 1971.

  Triffin argued in his book that the dollar could only stay on the gold standard by running trade surpluses to reverse the tide and absorb loose dollars, which would otherwise be exchanged for gold. This, to an interventionist, was impractical, and exposed the dilemma: an international reserve currency required the issuer to run domestic deficits to provide the liquidity needed for it to act as a reserve currency. Yet, such a policy contained within it the seeds of its own destruction.

  The relationship between trade deficits and reserve currency liquidity led Triffin to advocate a paper gold alternative to the dollar as the reserve currency, which could be expanded or contracted to offset deflationary or inflationary tendencies. This was essentially Keynes’s position in recommending the creation of the bancor, rather than using the dollar as the reserve currency in the Bretton Woods system.

  The relevance today is found in the fact, as Triffin pointed out, that destructive domestic economic and monetary policies to support international liquidity would eventually undermine the reserve currency itself. This is conveniently forgotten by those who claim Triffin’s dilemma ensures demand for the dollar will continue, and that the US can always run trade deficits without undermining the dollar.

  The dollar is oversupplied

  In order to assess the effect of a credit crisis on the dollar, we must therefore gauge how extended the dollar appears to be in terms of its international circulation. The most recent numbers from the US Treasury TIC data is for the position in June last year for foreign ownership of US securities, and for end of year 2016 for US ownership of foreign securities. Putting to one side these timing differences, since 2006, dollar-denominated investments owned by foreigners totalled $8.52 trillion more than US ownership of non-dollar foreign investments, up 275% since 2008. This is illustrated in the following chart.

  

  We cannot say for sure this represents something close to Triffin’s tipping point, where the quantity of dollars in foreign hands will undermine the currency. But according to the World Bank, global GDP has only increased by about 20% since 2008, suggesting that there are, indeed, far too many dollars in foreign hands relative to economic activity, compared with ten years ago.

  This being the case, the dollar could be set to fall on the foreign exchanges during a credit crisis, when investment liquidation pressures increase, and currency hedges are initiated. Importantly, it could also be the desired outcome for the Fed, which is firmly wedded to the idea that falling prices at the retail level must be avoided at all costs, and a lower currency could be used with zero, or even negative interest rates to help support domestic prices. In these circumstances, gold, and perhaps even cryptocurrencies, will be seen by investors as safe-havens from inflationary monetary policies, whose primary purpose will be to contain debt liquidation and protect the commercial banks.

  However, this is not the whole picture with respect to exchange rates.

  It is the nature of fiat currencies that their individual values are inherently uncertain, each one reflecting purely subjective values in the foreign exchanges. There can be little doubt that the current equilibrium between, say, the Argentinian peso and the US dollar would be disturbed in a global credit crisis by undermining the peso. We cannot be so certain of the exchange rates between, say, the euro and the dollar. Nor can we be so certain how official Chinese policy towards dollar investments may change, or indeed the position of other sovereign wealth funds. All we can say is the foreign world outside America is overexposed to dollars, just as it was in the late 1960s, when the remedy was to sell them for gold.

  Stock markets are only indirectly linked to the economy

  Another crude belief is that what happens in financial markets anticipates the economic outlook, when in fact the economic outlook is only one of several factors that feed into asset values. In a pure sound-money environment, there is no systemic risk, only individual investment risks. There are no trade deficits, because there is no expansion of unbacked money to finance them. Changes in the purchasing power of money, when it is gold, do exist, tending to increase over time. However, price variations are generally self-correcting, regulated by gold arbitrage between different economic communities. Unsound money, that is to say unbacked fiat currencies, features systemic risks, price manipulation, statistical untruths and every other form of monetary dishonesty imaginable. The idea that a pure link exists between asset values today and the economic outlook is therefore nonsense.

  With that caveat in mind, we shall proceed to fathom where we might be in the current credit cycle. Our framework for understanding it is that the final pre-crisis stage always leads to an unexpected increase in price inflation, before the non-financial economy begins to finally overheat. When that happens, interest rates rise even more to trigger the credit crisis.

  A key link is money-flows out of financials into non-financial activities. The banks reduce their bond exposures in favour of loans for production and working capital. The money going out of financials undermines financial asset values and enhances productive asset values. However, over recent credit cycles, this clear-cut relationship has become increasingly blurred. The destruction of savings and their replacement by consumer debt has fundamentally altered the characteristics of the credit cycle’s late stages, in addition creating a legacy of an accumulation of unproductive debt in the corporate sector. And not least of the changes in a theoretical credit cycle are the distorting interventions of government as described in the first paragraph of this sub-section.

  Therefore, determining where we are in the credit cycle is consequently becoming an increasingly subjective exercise. Stock markets appear to have now peaked and could be entering a new bear phase. Increasingly, investors are concerned that the very modest rises in interest rates seen so far are slowing the US economy too much, which according to Jerome Powell, the Fed’s Chairman, is actually growing with increased industrial investment. His position, which accords with our own credit cycle theory, was declared as recently as the press conference following the last FOMC meeting.

  However, investors have become very sensitive to the high levels of consumer, business and government debt, which cannot easily bear the burden of higher interest rates. Furthermore, the negative consequences of President Trump’s trade tariff policies are becoming apparent. Some US manufacturers are now talking of cutting back on US investment and diverting it abroad, to escape tariff penalties on US manufactured goods and remain competitive in overseas markets. Jerome Powell has similarly rowed back slightly on his bullish view by admitting to the potential slowdown in business investment from trade tariffs.

  Trade tariffs are increasingly becoming an issue for markets, but they are an uncertain political, rather than an economic issue for now. The only hard statistics are of money supply, and these suggest a slow-down is actually happening. Commentators point out that growth in US M2 is easing, growing only 4.3% in the year to 11 June. Furthermore, American business loan growth is also slowing, having picked up recently. However, over successive credit cycles, production of goods relative to services has declined, perhaps reducing the importance of this indicator, because services generally require less capital investment. Furthermore, with up to $2.6 trillion of accumulated overseas profits being repatriated following President Trump’s tax concession, we have no idea how much of it is being invested in US-based production, because it is not reflected in bank loan statistics.

  With bond prices also rallying, it is hard to avoid the conclusion the economy may be in for a late-cycle stall. The betting on two further rate rises this year has receded in favour of one, or perhaps none at all. There is a precedent for this, and that was in 1927, when there was an unexpected mild recession in the US. At that time, the Fed decided there was no overvaluation of stock markets (which was its primary indicator at the time) and shifted towards easing. Consequently, the Dow rose further into record territory before the 1929 crash.

  Today, the uncertainties over President Trump’s tariff policies are likely to be causing a slowdown in business investment, as Jerome Powell recently noted. Furthermore, the dollar’s recent rally will be judged to be mildly deflationary. This outcome is likely to provide some relief to the Fed, at least temporarily, given concerns over the cost of higher interest rates to overindebted borrowers. Anything to suggest a softening in the economy, and therefore that further interest rate increases may be deferred, should be welcomed by policymakers. However, with price inflation already picking up, pressure to raise interest rates will only be temporarily deferred.

  Therefore, there could still be another, last-gasp, late 1920s-style run up in equities before the crash happens. The key indicator, perhaps, is the rally in US Treasury bond prices, which so long as it remains intact, should defray debt-deflation worries.

  The initial destruction of wealth after equity markets peak could then coincide with and exacerbate the credit crisis. But those that think it will be a deflationary event have not been paying attention to the evolution of monetary policy since the days of Paul Volker, who was the last Fed chairman with the guts to jack up interest rates to bring price inflation under control. Nor do they understand that deflation doesn’t actually exist, and they are misled by official statistics and imprecise economic definitions.

  

• "Girl From The Bronx" Ocasio-Cortez Called Out In Fact Check; Actually Grew Up In Wealthy Enclave

  The Democratic Party’s rising socialist icon – Alexandria Ocasio-Cortez, has been on an intense media junket since her upset primary victory over establishment Democrat Joe Crowley this week – doing her darnedest to project her “girl from the Bronx” working-class image.

  

  “Well, you know, the president is from Queens, and with all due respect — half of my district is from Queens — I don’t think he knows how to deal with a girl from the Bronx,” Ocasio-Cortez told Stephen Colbert during an appearance on The Late Show. 

  The socialist phenom also told the Washington Post “I wasn’t born to a wealthy or powerful family — mother from Puerto Rico, dad from the South Bronx. I was born in a place where your Zip code determines your destiny.”

  Except Ocasio-Cortez isn’t quite the blue-collar champion she’s branding herself as. Breitbart‘s Josh Caplan is out with a “fact check” on the Democratic Socialist’s background – only to find she grew up in one of the richest counties in the United States. 

  Around the age of five, Alexandria’s architect father Sergio Ocasio moved the family from the “planned community” of Parkchester in the Bronx to a home in Yorktown Heights, a wealthy suburb in Westchester County. The New York Times describes her childhood home as “a modest two-bedroom house on a quiet street.” In a 1999 profile of the area, when Ocasio-Cortez would have been ten years old, the Times lauded Yorktown Heights’ “diversity of housing in a scenic setting” – complete with two golf courses.

  The paper quoted Linda Cooper, the town supervisor, describing Yorktown as ”a folksy area where people can come, kick off their shoes, wander around, sit in a cafe, listen to a concert in the park, or go to the theater.”

  …

  Westchester County – which the Washington Post, in a glowing profile on Ocasio-Cortez, describes as only “middle class” – ranks #8 in the nation for the counties with the “highest average incomes among the wealthiest one percent of residents.” According to the Economic Policy Institute, the county’s average annual income of the top one percent is a staggering $4,326,049.

  Yorktown Heights, specifically, offers a sharp contrast from Bronx living. According to USA.com, the town’s population is 81 percent white, and median household income is $96,413 – nearly double the average for both New York state and the nation, according to data from 2010-2014.

  Not exactly Jenny from the block…

  

  We wonder how long it will take Ocasio-Cortez to ride the “Democratic Socialist” wave until she’s firing off tweets from her third home and making $1 million, two years in a row, like Bernie Sanders.

  Speaking of 1 million, that’s how many Venezuelan Bolivar it costs to buy a Cafe con Leche in Argentina now… (about .29c)

  

  Then again, “Democratic Socialism” is apparently totally not that kind of socialism. 

  

• Moon Fuel: A New Multi-Trillion Dollar Treasure

  Authored by Mining.com  via OilPrice.com,

  India’s space program wants to go where no nation has gone before – to the south side of the moon.

  

  And once it gets there, it will study the potential for mining a source of waste-free nuclear energy that could be worth trillions of dollars.

  The nation’s equivalent of NASA will launch a rover in October to explore virgin territory on the lunar surface and analyze crust samples for signs of water and helium-3. That isotope is limited on Earth yet so abundant on the moon that it theoretically could meet global energy demands for 250 years if harnessed.

  “The countries which have the capacity to bring that source from the moon to Earth will dictate the process,’’ said K. Sivan, chairman of the Indian Space Research Organisation. “I don’t want to be just a part of them, I want to lead them.’’

  The mission would solidify India’s place among the fleet of explorers racing to the moon, Mars and beyond for scientific, commercial or military gains. The governments of the U.S., China, India, Japan and Russia are competing with startups and billionaires Elon Musk, Jeff Bezos and Richard Branson to launch satellites, robotic landers, astronauts and tourists into the cosmos.

  The rover landing is one step in an envisioned series for ISRO that includes putting a space station in orbit and, potentially, an Indian crew on the moon. The government has yet to set a timeframe.

  The mission would solidify India’s place among the fleet of explorers racing to the moon, Mars and beyond for scientific, commercial or military gains.

  “We are ready and waiting,’’ said Sivan, an aeronautics engineer who joined ISRO in 1982. “We’ve equipped ourselves to take on this particular program.’’

  China is the only country to put a lander and rover on the moon this century with its Chang’e 3 mission in 2013. The nation plans to return later this year by sending a probe to the unexplored far side.

  In the U.S., President Donald Trump signed a directive calling for astronauts to return to the moon, and NASA’s proposed $19 billion budget this fiscal year calls for launching a lunar orbiter by the early 2020s.

  ISRO’s estimated budget is less than a 10th of that – about $1.7 billion – but accomplishing feats on the cheap has been a hallmark of the agency since the 1960s. The upcoming mission will cost about $125 million – or less than a quarter of Snap Inc. co-founder Evan Spiegel’s compensation last year, the highest for an executive of a publicly traded company, according to the Bloomberg Pay Index.

  This won’t be India’s first moon mission. The Chandrayaan-1 craft, launched in October 2008, completed more than 3,400 orbits and ejected a probe that discovered molecules of water in the surface for the first time.

  The upcoming launch of Chandrayaan-2 includes an orbiter, lander and a rectangular rover. The six-wheeled vehicle, powered by solar energy, will collect information for at least 14 days and cover an area with a 400-meter radius.

  The rover will send images to the lander, and the lander will transmit those back to ISRO for analysis.

  A primary objective, though, is to search for deposits of helium-3. Solar winds have bombarded the moon with immense quantities of helium-3 because it’s not protected by a magnetic field like Earth is.

  The presence of helium-3 was confirmed in moon samples returned by the Apollo missions, and Apollo 17 astronaut Harrison Schmitt, a geologist who walked on the moon in December 1972, is an avid proponent of mining helium-3.

  There are an estimated 1 million metric tons of helium-3 embedded in the moon — enough to meet the world’s current energy demands for at least two, and possibly as many as five, centuries.

  “It is thought that this isotope could provide safer nuclear energy in a fusion reactor, since it is not radioactive and would not produce dangerous waste products,’’ the European Space Agency said.

  There are an estimated 1 million metric tons of helium-3 embedded in the moon, though only about a quarter of that realistically could be brought to Earth, said Gerald Kulcinski, director of the Fusion Technology Institute at the University of Wisconsin-Madison and a former member of the NASA Advisory Council.

  That’s still enough to meet the world’s current energy demands for at least two, and possibly as many as five, centuries, Kulcinski said. He estimated helium-3’s value at about $5 billion a ton, meaning 250,000 tons would be worth in the trillions of dollars.

  To be sure, there are numerous obstacles to overcome before the material can be used – including the logistics of collection and delivery back to Earth and building fusion power plants to convert the material into energy. Those costs would be stratospheric.

  “If that can be cracked, India should be a part of that effort,’’ said Lydia Powell, who runs the Centre for Resources Management at the New Delhi-based Observer Research Foundation think tank. “If the cost makes sense, it will become a game-changer, no doubt about it.’’

  Plus, it won’t be easy to mine the moon. Only the U.S. and Luxembourg have passed legislation allowing commercial entities to hold onto what they have mined from space, said David Todd, head of space content at Northampton, England-based Seradata Ltd. There isn’t any international treaty on the issue.

  “Eventually, it will be like fishing in the sea in international waters,’’ Todd said. “While a nation-state cannot hold international waters, the fish become the property of its fishermen once fished.’’

  India’s government is reacting to the influx of commercial firms in space by drafting legislation to regulate satellite launches, company registrations and liability, said GV Anand Bhushan, a Chennai-based partner at the Shardul Amarchand Mangaldas & Co. law firm. It doesn’t cover moon mining.

  Yet the nation’s only spaceman isn’t fully on board with turning the moon into a place of business.

  Rakesh Sharma, who spent almost eight days aboard a Russian spacecraft in 1984, said nations and private enterprises instead should work together to develop human colonies elsewhere as Earth runs out of resources and faces potential catastrophes such as asteroid strikes.

  “You can’t go to the moon and draw boundaries,’’ Sharma said. “I want India to show that we’re capable of utilizing space technology for the good of people.’’

  

• America's Cheese Stockpile Just Hit A Record High

  The Washington Post reports American warehouses have amassed their most massive stockpile of cheese in more than 100 years since government regulators began tracking dairy products, the result of oversupplied domestic markets and waning consumer demand.

  

  Commercial and government cheese storage facilities now have a whopping 1.39 billion-pound surplus, counted by the Agriculture Department in May and published in a report on June 22. It is a 6 percent y/y and a 16 percent jump since the government launched ‘quantitative cheesing’ to buy excess supply in 2016.

  

  Cheese analysts say record stockpiling is attributed to a decline in consumer demand for milk. When dairy cattle produce too much milk, processors generally convert the milk into cheese, butter, or powder, which is the easiest method for long-term storage.

  Record amounts of cheese, however, comes with a significant drawback: If it is being stored, it is not sold, that leads to margin compression of farmers who make their living from the dairy industry.

  

  h/t johnlund.com

  The Post notes that Trump’s trade war has prompted fears that stockpiles will build further if trade tensions with China and Mexico slice into cheese exports.

  “Milk production continues to trend up, and that milk has to find a home,” said Lucas Fuess, director of market intelligence at HighGround Dairy, a consulting firm.

  “The issue this year is that, with so much supply, it’s going to be tough for a lot of farmers to be profitable.”

  Regarding seasonality, cheese surpluses tend to occur in the summer months. Dairy cattle are at their most productive stage in spring when the days are longer, and the feed is of much higher quality. Better genetics of the cows have also produced more milk. Simultaneously, demand for cheese declines among Americans in the summer months and usually picks back up during the school year.

  “I anticipate that we’ll continue to set these records,” said John Newton, director of market intelligence at the American Farm Bureau Federation.

  “We’re producing more milk. It’s inevitable. That milk needs to get turned into something storable.”

  

  “But the sheer amount of cheese in storage may be causing problems. Cheese prices have fallen in recent weeks,” Fuess said. Since 2014, cash-settled cheese futures have declined by more than -30 percent. Judging by the descending channel, if the upper rail of the structure is rejected, well, the next liquidity gap in the auction could form.

  

  “That fall is problematic,” said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin at Madison, “because the price of cheese is a major factor in the equation that USDA uses to set the price that dairy farmers receive for their milk.”

  When Stephenson chatted with The Post, the current price was $15.36 per 100 pounds. From 2017 highs, price prints -7 percent discount and well below the break-even for many farmers. “When inventories get too large, that pushes the prices down,” he said. “And yes, that trickles down to dairy farmers.”

  Michael Dykes, president of the International Dairy Foods Association, told The Post, he is sure Americans will eat through the stockpiles. That is because of stock-to-use ratios, a measure of the amount of cheese taken out of storage, have remained elevated when inventories are high, and prices are depressed.

  

  Dykes warned The Post that mounting trade tensions could grow inventories to crisis levels. Last year, the United States produced 12 billion pounds of cheese and exported more than 341,000 metric tons to countries such as Mexico and China. The fear is if those countries turn to Europe or other countries besides the United States, the stockpile could reach crisis levels. Already, the Department of Agriculture has been prepping cheesemakers for the worst case scenario of much higher inventories.

  “One milking day a week goes to the export market,” Dykes said. “There’s a lot of uncertainty now. I don’t think we really know what will happen yet.”

  So, when does the next round of ‘quantitative cheesing’ come?

  

• Global Stocks Lost Over $10 Trillion In H1, Just Wait For The Second Half

  The Second Half can’t be any worse that the first, right?

   

  H1 2018 was ugly for most…

  WORST

  • Bitcoin Worst Start To A Year Ever

  • German Banks At Lowest Since 1988

  • Onshore Yuan Worst Quarter Since 1994

  • Argentine Peso Worst Start To A Year Since 2002

  • US Financial Conditions Tightened The Most To Start A Year Since 2002

  • Global Systemically Important Banks Worst Start To A Year Since 2008

  • Global Stocks Worst Start To A Year Since 2010

  • China Stocks Worst Start To A Year Since 2010

  • German Stocks Worst Start (In USD Terms) Since 2010

  • Global Economic Data Disappointments Worst Since 2012

  • Emerging Markets, Gold, Silver Worst Start To A Year Since 2013

  • High Yield Bonds Worst Start To A Year Since 2013

  • Offshore Yuan Worst Month Since Aug 2015

  • Global Bonds Worst Start To A Year Since 2015

  • Treasury Yield Curve Down Record 16 Of Last 18 Quarters

  BEST

  • US Tech Stocks Best Start To A Year Relative To Financials Since 2009

  • Dollar Index Best Quarter Since Q4 2016

  • WTI Crude Best Month Since April 2016

  Bloodbath

  

  As the ‘global synchronous recovery’ narrative collapsed with Global Macro Surprise Index collapsing to six year lows at the fastest pace since 2012 (which led The Fed from Operation Twist to QE3…)

  

  And as the economy slowed, US financial conditions tightened dramatically…

  

  *  *  *

  STOCKS

  World Stocks are red to end H1 2018 – they just suffered their worst first-half of a year since 2010…

  

   

  World Stocks have lost almost $10 trillion since their peak in January…

  

   

  China’s Shanghai Composite suffered its worst start to a year since 2010…

  

   

  Europe was mixed in H1 with DAX the biggest loser as trade wars hit the big export economy (and Italy suffering on political crisis)…

  

   

  With German banks back to 30-year lows…

  

   

  In US equity-land, the bounce in the S&P in the last 24 hours (off unchanged for the year) has saved the major US equity market index from its worst start to a year since 2010.

  

  US equity market volatility has been very different in 2018 so far…

  

  Trannies had an ugly month but the rebound of the last 24 hours rescued the rest of the majors into the green for the month… However, The dow (blue below) struggled all afternoon and ended June with swoon…

  

   

  Trannies were worst on the week but all major US equity indices closed red… The Dow managed to make it back to unch briefly midweek before the selling resumed…

  

   

  24,425.84 was the magic number for The Dow to end June green (and 24,330 is the 200DMA) but it failed miserably and closed below the 200DMA for the 4th day in a row

  

   

  Bank stocks were unable to hold their post-CCAR gains…(selling off after Europe closed)

  

   

  Tech outperformed financials by the most to start the year since 2009…

  

   

  Global banks were a bloodbath in H1…

  

   

  *  *  *

  BONDS

  Global Bonds suffered their worst quarter since Q4 2016 (and worst start to a year since 2015)…back into an interesting zone of support/resistance

  

   

  US treasury yields are all higher on the year (though the massive flattening between 2Y and 30Y is very evident)…

  

   

  30Y Yield are actually lower in Q2…

  

  And In June, 10Y and 30Y yields are lower…collapsing at the long-end since The Fed hiked rates…

  

   

  One glance at the above and it is clear that the yield curve is collapsing…

  

   

  In fact Q2 makes the 6th straight quarterly flattening in a row (and 16th quarter in the last 18 that the 2s30s curve has flattened)

  

   

  High yield bonds suffered their worst start to a year since 2013, dramatically underperforming stocks…

  

  But it was investment grade credit that really collapsed…

  

   

  CURRENCIES

  The Dollar Index soared in Q2 – up 5%, its best quarter since Q4 2016 (and breaking a 5 quarter losing streak)…

  

   

  And the biggest driver of the dollar’s spike – a collapsing Yuan… (June was the worst month for offshore Yuan since the Aug 2015 devaluation and Q2 was the worst quarter for the onshore Yuan since 1994)

  

   

  Emerging Markets were a bloodbath…

  

   

  With the Argentine Peso (apart from the black market bolivar) the worst in the world…

  

  

  Cryptos were a bloodbath In Q2 (and in June)…Ripple is 2018’s biggest loser for now – down 79% YTD…

  

   

  An odd week though this week with Bitcoin notably outperforming the rest of the crypto space (maybe finding support around the $6000 level)…

  

   

  Bitcoin worst month since March (down 4 of 6 this year) and down for 2nd quarter in a row

  

   

  This is Bitcoin’s worst start to a year ever…

  

  And HODLers are hoping this is not an echo of Nasdaq 2000…

  

   

  COMMODITIES

  June was the best month for WTI Crude since April 2016 (up 8 of the last 10 months)…

  

  And is up 4 quarters in a row to the highest since Nov 2014

  

  The last two weeks have seen WTI explode higher – the best two weeks since August 2016 – as Copper and PMs have drifted lower…

  

   

  This is the worst start to a year for gold and silver since 2013 (notice how every time silver gets its head above water in 2018, someone hits it).

  

   

  *  *  *

  And finally, the SMART money has reaccelerated its exit of this market in the last month…

  

  And as the SMART money exits, Millennial men are storming in…

  Interesting findings in the US trust insights on wealth and worth: it’s mainly male millenials who moved into stocks in 2018. Looks like testosterone triggered animal spirits.. pic.twitter.com/jGv5BxOAVI

  — D.Schrottenbaum, CFA (@David_Schro) June 27, 2018

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