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Explaining Bernie-Conomics Using Two Beers / by Tyler Durden on 05/27/2016 15:05

It’s simple really…


Will the U.S. Egg It On? “Russia Is Ready For War” / Pepe Escobar / May 27th, 2016

Editor’s Comment: There is every indication that provocations continue. Generally, war is good for business, but too big of a war could be disastrous even for those pushing for it.

Ridiculous narratives and pretexts for interventions in Syria and Ukraine have accompanied even more ridiculous attempts on the part of the United States and NATO to prod the Russian Bear and stoke just enough conflict to keep defense budgets big, and the population fearful.

But will they ever go all the way, and push for the real thing? The hot war with Russia? It is entirely possible, and there is plenty of evidence to suggest that Putin is all-too-ready for his American counterparts, who would almost certainly find they have bitten off more than they can chew.

Beware what you wish for: Russia is ready for war

by Pepe Escobar

So foreign ministers from the 28 NATO member-nations met in Brussels for a two-day summit, while mighty military power Montenegro was inducted as a new member.

Global Robocop NATO predictably discussed Afghanistan (a war NATO ignominiously lost); Iraq (a war the Pentagon ignominiously lost); Libya (a nation NATO turned into a failed state devastated by militia hell); Syria (a nation NATO, via Turkey, would love to invade, and is already a militia hell).

Afghans must now rest assured that NATO’s Resolute Support mission – plus “financial support for Afghan forces” – will finally assure the success of Operation Enduring Freedom forever.

Libyans must be reassured, in the words of NATO figurehead secretary Jens Stoltenberg, that we “should stand ready to support the new Government of National Accord in Libya.”

And then there’s the icing on the NATO cake, described as “measures against Russia”.


Oregon Senator Warns – The U.S. Government is Dramatically Expanding its Hacking and Surveillance Authority / Michael Krieger / 

The Patriot Act continues to wreak its havoc on civil liberties. Section 213 was included in the Patriot Act over the protests of privacy advocates and granted law enforcement the power to conduct a search while delaying notice to the suspect of the search. Known as a “sneak and peek” warrant, law enforcement was adamant Section 213 was needed to protect against terrorism. But the latest government report detailing the numbers of “sneak and peek” warrants reveals that out of a total of over 11,000 sneak and peek requests, only 51 were used for terrorism. Yet again, terrorism concerns appear to be trampling our civil liberties.

– From the post: More “War on Terror” Abuses – Spying Powers Are Used for Terrorism Only 0.5% of the Time

Ron Wyden, a Senator from Oregon, has been one of the most influential and significant champions of Americans’ embattled 4th Amendment rights in the digital age. Recall that it was Sen. Wyden who caught Director of National Intelligence, James Clapper, lying under oath about government surveillance of U.S. citizens.

Mr. Wyden continues to be a courageous voice for the public when it comes to pushing back against Big Brother spying. His latest post atMedium is a perfect example.

Here it is in full:


Hedge Fund Billionaire Slams Democracy, Says The “Tyranny Of The Majority Is An Unhealthy Development” / by Tyler Durden on 05/27/2016 14:38

In his latest letter to investors, OakTree Capital’s Howard Marks goes political (slamming Trump’s tariffs and Bernie’s minimum wage machinations), shedding some blinding light on the economic reality of America, the dismal failure (and increasing impotence) of central bankers, and the ongoing “tryanny of the majority” warning that if everyone wants to tax-the-rich, soon there will be no rich to tax. As he concludes, short-term fixes simply cannot create wealth out of thin air (see Venezuela), as Churchill once said “for a nation to try to tax [or stimulate or devalue] itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

The billionaire investor highlights eight current policies and proposals by governments, central banks, and potential presidents; and exposes their dismal failures to adhere to the basics of economics:

Central Bank Monetary Stimulus: “In the old days, when cars often failed to start, there were fluids we could squirt into the carburetor to get them going.  But they weren’t fuel for long-term operation.”

Increasing Entitlements and Benefits: “Governments can’t create out of thin air the means with which to make disbursements.”


Ep. 669 Rape Culture Hysteria / 

We live in a “rape culture,” according to many feminists these days, in which men are by definition rapists and in which rape is encouraged and considered normal. In fact, rape is punished severely and some people’s lives have been ruined because they were assumed to be guilty when they weren’t, so what could this all be about? Wendy McElroy, author of a new book on the subject, joins me to shed some light.


Weapons and Jihadists For al-Nusra Flowing DAILY From Turkey Into Syria / BY STUART HOOPER / MAY 27, 2016

21st Century Wire says…

While you read this report, keep the fact that Turkey is a NATO ally firmly in mind.

Watch a video of this report below, or here on YouTube:


Alibaba’s SEC Probe: What’s Missing From This Disclosure? / by Probes Reporter on 05/27/2016 14:35

Alibaba’s SEC Probe: What’s Missing From This Disclosure?

Analyst Summary: On 24-May-2016, Alibaba Group disclosed what appears to be an informal SEC investigation. This is the first time this matter has been disclosed. Details are scant, leaving the investor unable to adequately assess the risk it poses. Using the template of who/what/where/when/why, we will examine what is missing. Our conclusion is you are left with a risk that management views as material but you cannot analyze. We generally recommend avoiding such scenarios.

Facts of Interest or Concern: The following is Alibaba Group’s disclosure from the 20-K filed 24-May-2016 –

Earlier this year, the U.S. Securities and Exchange Commission, or SEC, informed us that it was initiating an investigation into whether there have been any violations of the federal securities laws. The SEC has requested that we voluntarily provide it with documents and information relating to, among other things: our consolidation policies and practices (including our accounting for Cainiao Network as an equity method investee), our policies and practices applicable to related party transactions in general, and our reporting of operating data from Singles Day. We are voluntarily disclosing this SEC request for information and cooperating with the SEC and, through our legal counsel, have been providing the SEC with requested documents and information. The SEC advised us that the initiation of a request for information should not be construed as an indication by the SEC or its staff that any violation of the federal securities laws has occurred. This matter is ongoing, and, as with any regulatory proceeding, we cannot predict when it will be concluded. [emphasis added]

We’ve not researched Alibaba Group in the past. Therefore we have no history or documents in our database on this company.


26/5/16: After the Crisis: Why the Slowdown in Productivity Growth? / Constantin Gurdgiev / May 27, 2016

My article for Cayman Financial Review 2Q 2016 is out, covering the structural nature of labour productivity growth decline in post-crisis economy:


The New Oil Traders—–Moms and Millennials / by Wall Street Journal • 

When Erika Cajic woke before dawn one morning in early May and read that wildfires were breaking out in an oil-producing region of Alberta, she sat down on the family room couch with a cup of hot chocolate and her laptop and bought shares of an investment linked to crude.

The 45-year-old full-time parent of two in Mississauga, Ontario, like many investors, reasoned that the production outages would drive up the price of oil. By buying the VelocityShares 3x Long Crude Oil UWTI -0.73 % exchange-traded note, she tripled down on her hunch, as the product uses derivatives that aim to rise and fall at triple the daily change in oil.

Within about four days, she estimated she made about 500 Canadian dollars (US$384) on those trades after converting from U.S. dollars.

“The swings are gigantic lately,” she said of the product, known by its ticker UWTI, and the other energy products she has traded in recent months.

For some individual investors, crude is the new hot trade. Oil in the U.S. fell to its lowest level since 2003 in February but has surged roughly 90% since then. On Thursday, it traded above $50 a barrel for the first time since October. That compares with a stock market that has offered nowhere near that momentum.

“I just thought, let’s throw a couple of hundred dollars in it…and try it out,” said Matt Krasnoff, 26, of New York, who bought shares of UWTI last year after hearing about it from a friend. “I just enjoy the risk and the thrill of the market in general.”


This Week’s Main News From The Oil Sector / by Tyler Durden on 05/27/2016 14:10

For those who need a quick and easy recap of all the main events that took place in the oil and gas services sector, here it is courtesy of Credit Suisse’s James Wicklung who present the various “things we’ve learned this week.

* * *

You Will Get Nothing and Like It. According to Bloomberg, in the final gathering of OPEC officials prior to the June 2 meeting, no discussions of a production cut took place. Officials at the meeting concurred with OPEC’s most recent research report that supply and demand will start to balance in the second half 2016.

Foot on the Gas. Sunday, Iranian Deputy Oil Minister Rokneddin Javadi noted that the country has no plans to slow oil production, saying, “Currently, Iran’s crude oil exports, excluding gas condensates, have reached 2M bpd; Iran’s crude oil export capacity will reach 2.2M barrels by the middle of summer.” Prior to economic sanctions, Iran produced 4.5M bpd, which is down from peak production of ~7M bpd in the 1970s.

Time for a Change. Volatile oil and natural gas prices have accelerated planning by energy executives to change their business models; KPMG Global Energy Institute said in a May 24 release of annual survey results of US senior energy executives. Of more than 150 executives responding, 94% said commodity pricing coupled with the regulatory environment will require significant changes to their business models in 3-5 years. Executives said their top organizational priorities for the next 2 years are developing new growth strategies and implementing changes to their business models. When asked about mergers and acquisitions, 92% of respondents expect to be involved in a merger or acquisition in 2 years with 38% saying asset acquisitions are more likely than acquiring an entire company. Slightly more than half of oil and gas executives surveyed, about 51%, said they believe restructuring or bankruptcies primarily will drive acquisitions. Companies see the best way to remain competitive is by focusing on capital spending efficiency. “This new lower-for-longer commodity pricing environment has made it necessary for energy executives to devise new ways get access to capital,” said KPMG, adding that executives listed an unstable price environment as the leading factor hindering growth over the next year.


New York Fed 2nd Quarter “Nowcast” Rises to 2.2% Following Housing, Durable Goods Reports / Mike “Mish” Shedlock / May 27, 2016

The New York Fed Nowcast Model for second quarter GDP rose to 2.2% from 1.7% in today’s release.

The increase was largely due to a massive jump in new home sales. Durable goods also added to the strength.

Nowcast Highlights May 27, 2016:

  • The FRBNY Staff Nowcast for GDP growth in 2016:Q2 has increased for the third week in a row and stands now at 2.2%.
  • Positive news came from new single family houses sold and manufacturers’ new orders of durable goods.
  • This week’s second estimate of GDP growth for 2016:Q1 from the Commerce Department was 0.8%. In the advance estimate released last month, GDP growth was 0.5%. The last FRBNY Staff Nowcast for that quarter, computed before the release of the advance estimate, was 0.7%


Andrew Maguire – Ignore The Pullback, Gold To Surge Above $1,400 On The Next Leg Higher / May 27, 2016

Today whistleblower and London metals trader Andrew Maguire told King World News that KWN readers around the world should ignore the pullback in the gold market because the price of gold will surge above $1,400 on the next leg higher.

Andrew Maguire:  “Whenever we see such a synthetic divergence develop between thewholesale physical markets and the paper-centric non-delivery markets, it allows the commercials (and central planners), who have exposure to the physical markets, to not only take the short side of these naked longs, but to do so with impunity…

Continue reading the Andrew Maguire interview below…


Stocks, Bonds Slide As Hawkish Yellen Sends July Rate-Hike Odds To Record Highs / by Tyler Durden on 05/27/2016 14:09

Following Yellen’s uncharacteristicaly hawkish tone, the odds of a July rate-hike have shot higher – now higher than June or September have ever been – to record highs. This has sent short-term bond yields higher, the yield curve dramatically flatter, stocks lower, and gold down…

July Rate hike odds soar… (note these are the odds of a rate hike in that month – which suggests The Fed will be “one more and done”)


Tom Woods: Rothbard Changed My Mind About War

misesmedia, Published on May 27, 2016

It’s Memorial Day weekend, a time when we (hopefully) reflect on war rather than celebrate it. So, it’s the perfect opportunity to revisit an inspiring antiwar talk from our own Senior Fellow Tom Woods. You may not know it, but Tom was once a neocon who considered the libertarian position of noninterventionism unrealistic and naive. But his mind was changed by none other than the late Murray Rothbard, who convinced Tom that peace and liberty cannot be severed, that empire abroad leads to socialism at home, and that foreign policy should be front and center in a libertarian worldview.

Democrats Made AR-15 Popular: Gun Sales “Driven By The Ban Concept” / Mac Slavo / May 27th, 2016

Ever wonder if all the anti-gun rhetoric isn’t just a grand reverse-psychology trick?

After all, perhaps there is a reason that Barack Obama has been branded the world’s greatest gun salesman.

That’s the feeling that gun dealer, historian and author Martin KA Morgan has developed – after watching Americans turn feverishly towards buying up semi-automatic “assault weapons” in the wake of Clinton’s 1994 assault weapons ban.

Before that? Hardly anybody was focused on or buying these guns, and there wasn’t much to say about them.

via the London Guardian:

US author and historian says allure of the taboo may explain why measures such as the 1994 assault weapon ban led to an explosion in popularity

When Martin KA Morgan was a kid in the 1970s, military-style rifles were only a “small sliver” of the firearms market in the United States.

More than twenty years later, Morgan said, American firearm ownership has been radically transformed. “Semi-automatic, magazine-fed rifles – they dominate the market,” he said.


Death By A Theta Cuts / by Jim Strugger of MKM Partners on 05/27/2016 13:30

Death by Theta

Even the most skeptical among us have to be impressed by the rip higher in U.S. equities over the past week. Absent an obvious positive catalyst, the S&P 500 Index (SPX, 2090.10) jumped 2.5% after flirting with lows since March and a potential test of the 200-day moving average.

More broadly, the SPX is just revisiting the top end of its range back to late 2014 while equity volatility has shifted back to a trough though importantly without having descended to a level that suggests a structural change in the high-volatility regime.

Still, there is little doubt that if stocks do manage to break out and sustain fresh highs than the broad swath of volatility metrics will collapse to levels more indicative of a low-volatility cycle. The period dating back to last August will have been an anomaly relative to historical regimes that have lasted upwards of five years.



The joke practically writes itself here.

As part of the #ManEnoughforHillary campaign, Hillary supporters just hired this guy below to do their new supposed-to-be manly “I’m with her” ads.


The premise here is that he’s man enough to vote for a woman… so according to the campaign, other men should feel like they aren’t “man enough” unless, like this manly bearded man with manly tattoos, they too vote for Hillary.

But this man is also manly enough to appear in giant syphilis ads plastered on public buses all over Portland, Oregon.


The SEC’s Cracking Down on All This Adjusted Earnings B.S. / by John Del Vecchio • 

For the past several months, the Securities and Exchange Commission (SEC) has been working to crack down on the use of adjusted earnings practices.

They’re threatening to tighten regulations and force companies to be more transparent.

That word always comes with a sting. Regulations – the dreaded “R” word. It’s perhaps the most hated word in all of finance.

Indeed, new regulations could pose a major problem for thousands of U.S. companies. Investors might finally realize the emperor has no clothes.

Last week, The Wall Street Journal published an article stating that the SEC will continue to expand its recent policy. Beyond the increased use of adjusted earnings per share, companies have also been relying on non-GAAP measures of accounting. The SEC realizes that’s got to stop.

GAAP stands for “generally accepted accounting principles.” So, non-GAAP basically stands for “free-for-all.”


Stocks Soar On Hawkish Fed As Gold Suffers Worst Week In 6 Months / by Tyler Durden on 05/27/2016 16:02


So despite weaker than expected GDP, and tumbling GDP expectations…

Yellen has jawboned rate hike expectations up to record highs for July…


Trump’s Secret Weapon——-Massive Hillbama Premium Increases Coming Soon / by Wall Street Journal • 

Big health plans stung by losses in the first few years of the U.S. health law’s implementation are seeking hefty premium increases for individual plans sold through insurance exchanges in more than a dozen states.

The insurers’ proposed rates for individual coverage in states that have made their 2017 requests public largely bear out health plans’ grim predictions about their challenges under the health-care overhaul.

According to the insurers’ filings with regulators, large plans in states including New York, Pennsylvania and Georgia are seeking to raise rates by 20% or more.

In states such as Florida and Maryland, insurers are seeking to raise premiums by percentage averages that are markedly above 10%. Among those that have published so far, only in Vermont do big insurers’ requests fall below 10%.

Proposals still have to be approved by state regulators, and a full picture of final approved rates across the entire country likely won’t be known until shortly before and state equivalents reopen for the law’s fourth main enrollment window on Nov. 1.

Nonetheless, the proposed average increases that are available are a vivid indicator this year of how insurers are adapting to the 2010 Affordable Care Act’s transformation of the way health coverage is priced and sold in the U.S.


Big Mac Index and Gold Explained w/ Genevieve Roch-Decter, Goldmoney

GoldMoney, Published on May 27, 2016

Crude Traders Shrug As Oil Rig Count Resumes Decline / by Tyler Durden on 05/27/2016 13:05

Following last week’s unchanged oil rig count – breaking a 21-week streak of declines – as the rig count inflected perfectly with lagged oil prices. However, despite a rise in lagged oil prices, the oil rig count declined 2 to 316 this week – new lows since Oct 2009. Total rig count dropped to 404 – a new record low. Crude traders appear to have left for the day as there was no visible reaction to this data.


Durable Goods Take II: Original Report vs. Revisions / Mike “Mish” Shedlock  / May 27, 2016

I received an Email from a long time “Minyanville” associate who writes under the pen name of “Mr. Practical”.

He emailed an interesting set of charts on durable goods as originally reported by the Census Department vs. revised numbers from the Census Department.

Durable Goods Ex-Transportation New vs. Revised


FRANCE STRIKE: ‘The Workers Fight Back’ / BY Gearoid O Colmain / MAY 27, 2016

All over France strikes and demonstrations are taking place. People are protesting against the French government’s attempt to reform labour laws which would make it easier to hire and fire workers. French labour laws have always been seen as an obstacle to progress by the ruling class due to the modest protection they afford workers.

Since the popular front of 1936 and in particular the National Council of the Resistance formed after the liberation in 1945, French worker made significant gains. These ‘acquis sociaux’ or social gains are now being brutally rolled back by a powerful oligarchy bent on driving down the price of labour and increasing the profits of capitalists.

One of the reasons why French society made such dramatic economic and social progress after the Second World War was due to the strong presence of the French Communist Party (PCF). The PCF played a key role in resisting and overthrowing the Nazi occupation. By the end of the war they were the largest and most powerful party in France. Communists had a significant influence over the policies of the National Council of the Resistance and it was their alliance with the Gaullists that created a strong, industrial state-directed economy; free education, universal health care and modest improvements in the standard of living. However, French communists had never developed a revolutionary strategy capable of seizing power and imposing a dictatorship of the proletariat.

The Communist International had never approved of the nomination of Maurice Thorez as General Secretary of the Communist Party in 1930, as they had correctly judged that he had not grasped the Marxist conception of the state. The deaths of great French communists Henri Barbusse and Fernand Grenier before and during the war also dealt a blow to the prospects of effective revolutionary leadership. Thorez’s speeches and writing reveal that he was closer to Rousseau than Marx; the French communist was more of a petty-bourgeois humanist than a revolutionary Leninist. President De Gaulle is said to have remarked that there would be no communist revolution in France while Thorez was head of the PCF – he was right.


Why Stocks Keep Rising Despite Another Rate Hike On The Horizon: One Explanation / by Tyler Durden on 05/27/2016 12:48

With Janet Yellen due to speak in under an hour (in a speech that will be a big dud because as SocGen notes, “little emphasis on the monetary policy outlook is expected at this event”), a recurring question is why does the market remain so nonchalant about the possibility of a rate hike as soon as one month from now.

One of the better explanations on the matter comes from Citi’s Steven Englander, according to whom it boils down to the market’s sentiment about what happens with the Fed’s hiking path after the first hike.  As the Citi strategist points out, this is merely the latest feedback loop the Fed has found itself trapped in:

Asset markets have done very well since the fed funds market began pricing in a summer hike.The question is why? We think that investors are trading the equation

an extra 2016 hike but very little else  +   better Q2 growth data = stronger asset markets

The question is whether this is a sustainable equation. Better growth, if sustained, is likely to induce more hikes. If we go from ~2.5% GDP in Q2 to 1.5-2% subsequently, we are likely to unwind the recent optimism.