en The Last Remaining Cheap Asset <p><a href="">Authored by Kevin Muir via The Macro Tourist blog,</a></p> <p>There are two things that most men think they are experts at. Ask any man, and chances are, deep down, they believe they are the world&rsquo;s greatest bbq&rsquo;er and lover (probably in that order). Personally, I know not everyone can be the world&rsquo;s greatest lover, so I hope I might be in the top quartile (I am giving myself a boost for all those too-good-looking guys who think they don&rsquo;t even have to try), but god damn it! I know that I am in the top percentile when it comes to barbecuing!</p> <p><strong>My delusions about my mad bbq&rsquo;ng skills are similar to everyone&rsquo;s belief they are contrarians. </strong>Whether it is the NYSE specialist, the Chicago pit local, the Bay Street equity trader, the London credit specialist, or even the guy at home trading in his underwear, we are all consumed by these romantic narratives where we bravely battle the naive masses to nail the next great trade. But the reality is that we can&rsquo;t all be contrarians. If we were, then it wouldn&rsquo;t be contrarian&hellip;</p> <p><strong>Today we face expensive assets everywhere we look. </strong>Whether it is real estate, equities, fixed income - capital is chasing assets at a disturbing pace. Central Banks, with their massive quantitative easing programs and negative rates, have inflated anything with a CUSIP, and those private investors venturing out the risk curve have taken care of everything else.</p> <p><u><em><strong>So what&rsquo;s an investor to do? Is there anything truly cheap anymore?</strong></em></u></p> <p><strong>Well, rest assured, there is absolutely nothing easy left. </strong>Anything with a little bit of meat on the bone has been picked clean. You could try making some money taking the other side of this over valuation, but you need to realize who is on the other side of your trade. Although you might time the occasional squiggle lower, I would rather not fight Central Banks and their unlimited fire power.</p> <p>No, I would rather go looking for something truly forgotten, hated, and cheap.</p> <p><strong>And nothing fits this bill better than grains.</strong></p> <p>I told you this wasn&rsquo;t going to be easy, so <strong>when the idea of buying grains makes you throw up a little in your mouth, don&rsquo;t immediately discount its investment merit.</strong> The grain charts look like death. No two ways about it. As the trader who sits beside me says, &ldquo;going long grains is a hedge against profits.&rdquo;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 444px; width: 600px;" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 444px; width: 600px;" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 444px; width: 600px;" /></a></p> <p>I realize these charts do not represent grain&rsquo;s actual returns due to the problems rolling contracts and the embedded carry (positive/negative depending on the shape of the curve), but it<strong> gives you a sense of the spot market over the past five years. The selling has been relentless, and discouraging.</strong></p> <p>I like to follow agriculture twitter. It&rsquo;s a nice break from all the finance guys bragging about their latest wins or posting pictures of the meat they are bbq&rsquo;ng that evening. The ag people seem a little more humble, but I must admit, I get a kick out of them showing off their latest tractors or combines.</p> <p><strong>The reason I bring this up is to give you a sense of the sentiment within the agriculture trader community.</strong></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 482px; width: 600px;" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 470px; width: 600px;" /></a></p> <p>What&rsquo;s that line legendary strategist Don Coxe likes to use?<em> &ldquo;The most exciting returns are to be had from an asset class where those who know it best, love it least because they have been burnt the worst?&rdquo;</em></p> <p><strong>Well, there can be no doubt that grain longs have been burnt the worse.</strong> If we back up the timeframe on our charts, and then adjust for inflation, you will notice that grain prices are now all ticking all time lows.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 444px; width: 600px;" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 444px; width: 600px;" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 444px; width: 600px;" /></a></p> <p><strong>Grains have been a vicious bear market in real terms. </strong></p> <p><u><strong>Technology </strong></u>has caused grain prices to resemble the price decline of a 80386 microprocessor chip. Whether it be from improvements in fertilizer and pesticides, to the introduction of self driving farm equipment, the modern farmer has become dramatically more efficient over these past few decades.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 400px; width: 600px;" /></a></p> <p>Now maybe you believe these technological improvements will continue. <strong>Have a look at the increase in corn yields over the last 150 years:</strong></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 425px; width: 600px;" /></a></p> <p><u><strong>Could this chart simply continue moving infinitely higher?</strong></u> Sure, never say never. Maybe Monsanto will come up with even better super grain seeds to create the fountain of perpetual food. Maybe we will figure out ways to automate the remaining last few jobs left on the farm to squeeze costs even lower. Then again, maybe Lindsay Lohan doesn&rsquo;t have a drinking problem.</p> <p>I just don&rsquo;t buy that progress can continue at this pace. I have no doubt that farmers will continue improving, but I suspect the large gains are behind us. The moves from here will be incrementally smaller.</p> <p><strong>Over the past few years, the weather has been as close to perfect growing conditions as a farmer could ask. </strong>All of the droughts have been on the West side of the Rockies, with the grain growing conditions on the other side experiencing ideal weather. Although you should always be suspicious when a hedge fund trader starts predicting weather patterns, I wonder how long this can continue. This winter the West Coast experienced a record amount of precipitation, will the opposite now happen in the plains?</p> <p>But you might not even need to get a drought to cause grain prices to rise.</p> <p><strong>This terrible bear market has not gone unnoticed by the speculators. Have a look at the net speculator position in the CBOT wheat contract.</strong></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="height: 444px; width: 600px;" /></a></p> <p><u><strong>Specs have never been this short!</strong></u> Everyone believes prices can only go one way - lower! After all, we are all top performing bbq&rsquo;ers and lovers.</p> <p>I must admit, I have been lugging around a long grain position for the past few years, so I am not sure anyone should listen to my analysis. Yet, while every is all beared up on grains, some smart guys are starting to talk about the investing merits of long positions. Great technicians like Peter Brandt are raising the possibility a long term bottom might be forming. And then, shrewd macro traders like Raoul Pal, are advocating long grain positions from a fundamental perspective.</p> <p>But few are talking about the real reason that grains offer a compelling risk reward from the long side. <strong>If this Central Bank experiment goes off the rails, we could have a return of 1970&rsquo;s style inflation. That happens to coincide with the last great bull market in grains.</strong></p> <p>Yeah, yeah, I know - inflation will never return. I know all the reasons why the absurd amount of Central Bank stimulus will never cause inflation. Trust me, I have been lectured by many a deflationist. Well, I will leave them to buy long term treasury bonds (after a forty year monster bull market), I am going to keep picking away at my long grain positions.</p> <p><strong><em>When you are busy dismissing the possibility of a 1970&rsquo;s style bull market in grains, don&rsquo;t forget - we all want to be contrarians, but it sure is hard. Don&rsquo;t look now, but I think your steak is burning.</em></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="731" height="436" alt="" src="" /> </div> </div> </div> 80386 microprocessor chip Bear Market Business Central Banks Crystallite Crystals Currency Don Coxe fixed Metallurgy Monsanto NG Quantitative Easing Real estate Reality Twitter Twitter United States dollar West Coast Sat, 29 Apr 2017 19:30:00 +0000 Tyler Durden 594844 at 100 Days Of Trump: A Nation Divided <p>An almost inconceivably large amount has been written and said about Donald Trump during his first 100 days as the president of the&nbsp;<a href="" target="_blank">United States</a>. The lion&#39;s share, it must be said, has been negative; especially internationally. But,<a href=""><em> as Statista&#39;s Martin Armstrong details,</em></a> <em>where it matters most for the president, there is a very clear split in opinion</em>.</p> <p><a href="" title="Infographic: 100 Days of Trump: A Nation Divided | Statista"><img alt="Infographic: 100 Days of Trump: A Nation Divided | Statista" height="428" src="" width="600" /></a></p> <p><em>You will find more statistics at <a href="">Statista</a></em></p> <p>Trump still enjoys seemingly unwavering support among the people that voted for him back in November. As our infographic shows, a&nbsp;<a href="" target="_blank">recent survey</a>&nbsp;revealed that 85 percent of Trump voters approve of the job he has done so far; it is also possible to find polls where this figure is as high as 97 percent.</p> <p>On the flip side, Trump has so far failed to win around the majority of his detractors. 87 percent of Clinton voters are apparently watching on disapprovingly, while only five percent admit that they are in favor of what the president is doing.</p> <p>While it is normal for approval ratings to be split down party lines, even Obama&#39;s polarizing presidency scored an average Republican&nbsp;<a href="" target="_blank">approval rate of 13 percent</a>.<em> It is early days though, and until he starts to eye a second term these figures are unlikely to faze Trump, or indeed his supporters.</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="664" height="361" alt="" src="" /> </div> </div> </div> American people of German descent Business Climate change skepticism and denial Donald Trump Donald Trump Donald Trump presidential campaign Martin Armstrong Politics Politics of the United States ratings The Apprentice United States United States presidential approval rating WWE Hall of Fame Sat, 29 Apr 2017 19:00:00 +0000 Tyler Durden 594837 at Portland Rose Parade Cancelled Amid Violent Threats From Anti-Fa: "You've Seen How Much Power We Have... Police Can't Stop Us" <p><a href=""><em>Authored by Mac Slavo via,</em></a></p> <p><strong>For a bunch of peace loving, tolerance spewing social justice warriors, it sure does appear that the new &ldquo;progressive&rdquo; movement in America is&nbsp;rapidly turning to Bolshevik tactics to force their will upon a free and non-violent people.</strong></p> <p><a href=""><strong><img alt="" src="" style="width: 544px; height: 303px;" /></strong></a></p> <p><strong>The latest example of a <a href="" target="_blank">society on the brink of civil war</a> comes to us from Portland, Oregon,</strong> where every year the&nbsp;<em>82nd Avenue of Roses Business Association</em> kicks of the city&rsquo;s annual Rose Festival with a family-friendly parade.</p> <p>Except this year, there will be no parade. Organizers have cancelled the event amid threats of violence from groups referring to themselves as&nbsp;&ldquo;Anti-Fascist.&rdquo; According to <a href="" target="_blank">The Washington Post</a>, the reasoning behind the threats is reportedly&nbsp;outrage over the fact that the county&rsquo;s Republican Party was given&nbsp;one of the nearly 100 spots in the parade.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Then came an anonymous and ominous email, according to parade organizers, that instructed them to cancel the GOP group&rsquo;s registration &mdash; or else.</p> <p>&nbsp;</p> <p>&ldquo;You have seen how much power we have downtown and that the police cannot stop us from shutting down roads so please consider your decision wisely,&rdquo; the anonymous email said, referring to the violent riots that hit Portland after the 2016 presidential election,&nbsp;reported the Oregonian. &ldquo;This is nonnegotiable.&rdquo;</p> <p>&nbsp;</p> <p>The email said that 200 people would <strong>&ldquo;rush into the parade&rdquo; and &ldquo;drag and push&rdquo; those marching with the Republican Party</strong>.</p> <p>&nbsp;</p> <p>&ldquo;We will not give one inch to groups who espouse hatred toward LGBT, immigrants, people of color or others,&rdquo; it said.</p> </blockquote> <p>Earlier this month we reported that members of the so-called anti-fascist, left leaning <a href="" target="_blank">progressive movements are preparing for war</a> by organizing combat fighting classes and even going so far as to suggest it&rsquo;s time to start bringing guns to such protests as a show of force:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In short, as predicted, they are <a href="" target="_blank">turning to militancy and mob action</a> by mobilizing individuals and groups to attend combat training seminars, acquiring better equipment like baseball bats and helmets, and of course, if things really go bad&hellip; guns.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><div><strong>Yes, we seemed to have lost today. The alt-right held their ground. If we wanna take action against them, we need to be better organized and better trained. It doesn&rsquo;t help that it&rsquo;s only the far left opposing them, any trump supporter can be radicalized far easier than any liberal.</strong></div> <div><strong>I hope we learn from today</strong></div> <div>&nbsp;</div> <div><strong>&hellip;</strong></div> <div>&nbsp;</div> <div><strong>A shocking number of our <span style="text-decoration: underline;">comrades</span> went in there with absolute no combat training. We need to set up seminars or something of the sort.</strong></div> <p>&nbsp;</p> <p><strong>&hellip;</strong></p> <p>&nbsp;</p> <p><strong>We also need better equipment</strong></p> </blockquote> <p><em>Full report: <a href="" target="_blank">There Will Be Blood: Left Prepares For War After Berkeley Beat Down: &ldquo;Combat Training, Better Equipment, Guns&hellip;&rdquo;</a></em></p> </blockquote> <p>While these folks may think silencing the free speech of political ideologies contrary to theirs through violence is a means to a worthy end, it was&nbsp;the Bolshevik ideology, similar to what we&rsquo;re seeing from &ldquo;comrades&rdquo; &nbsp;in the anti-fascist movement, that eventually gave way to one of the world&rsquo;s most brutal dictators and was responsible for the deaths of, quite literally, over 100 million people in the 20th century.</p> <p>On another and perhaps equally interesting note, we&rsquo;ll mention the fact that for years the Department of Homeland Security and domestic law enforcement agencies had warned Americans that it was lone wolves with conservative values who stockpiled guns, food, bibles and peacefully protested government overreach who were, by officials and congressional members, deemed terrorists.</p> <p><strong>In fact, there were a variety of identifiers used to <a href="" target="_blank">qualify an American citizen as a potential domestic terrorist</a>:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>So how does a person qualify as a potential domestic terrorist? &nbsp;Based on the training I have attended, here are characteristics that qualify:</p> <ul> <li>Expressions of libertarian philosophies (statements, bumper stickers)</li> <li>Second Amendment-oriented views (NRA or gun club membership, holding a CCW permit)</li> <li>Survivalist literature (fictional books such as &ldquo;Patriots&rdquo; and &ldquo;One Second After&rdquo; are mentioned by name)</li> <li>Self-sufficiency (stockpiling food, ammo, hand tools, medical supplies)</li> <li>Fear of economic collapse (buying gold and barter items)</li> <li>Religious views concerning the book of Revelation (apocalypse, anti-Christ)</li> <li>Expressed fears of Big Brother or big government</li> <li>Homeschooling</li> <li>Declarations of Constitutional rights and civil liberties</li> <li>Belief in a New World Order conspiracy</li> </ul> </blockquote> <p><strong><em>We wonder if similar classifications will be assigned to those who threaten families and children at parades?</em></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="544" height="303" alt="" src="" /> </div> </div> </div> Anti-fascism BATS Behavior Crime Department of Homeland Security Dispute resolution Ethics Human behavior NRA Politics Psychology Republican Party Roses Business Association Social conflict Terrorism Violence Sat, 29 Apr 2017 18:30:00 +0000 Tyler Durden 594836 at Duterte Warns Trump: "That Guy Kim Simply Wants To End The World" <p>In a rare comment on the deteriorating North Korean situation, outspoken Philippine president Rodrigo Duterte urged the US to show restraint after North Korea's latest missile test and to avoid playing into the hands of leader Kim Jong Un, who "<strong>wants to end the world</strong>". The notoriously blunt Duterte said on Saturday that the Southeast Asia region was extremely worried about tensions between the United States and North Korea, and said one misstep would be a "catastrophe" and Asia would be the first victim of a nuclear war.</p> <p>"There seems to be two countries playing with their toys and those toys are not really to entertain," the president said <a href="">quoted by Reuters </a>during a news conference after the ASEAN summit in Manila, referring to Washington and Pyongyang. “One miscalculation of a missile, whether or not a nuclear warhead or an ordinary bomb, <strong>one explosion there that would hit somebody would cause a catastrophe."</strong></p> <p><a href=""><img src="" width="500" height="375" /></a></p> <p>Duterte also warned the United States, Japan, South Korea and China that they are sparring with a man who was excited about the prospect of firing missiles. Duterte's speech, which was delivered in his capacity as chairman of ASEAN, was due to speak by telephone to U.S. President Donald Trump later on Saturday. <strong>He said he would urge Trump not to get into a confrontation with Kim.</strong> </p> <p>"You know that they are playing with somebody who relishes letting go of missiles and everything.<strong> I would not want to go into his (Kim's) mind because I really do not know what's inside but he's putting mother earth, the planet to an edge.</strong>" </p> <p><a href=""><img src="" width="500" height="330" /></a></p> <p>Ahead of his phone call with the US president, Duterte appealed to Trump saying it was incumbent upon the US as the a responsible country to not rise to Kim's provocations. He said he was sure Trump had cautioned his military not to allow the situation to spiral out of control; what Duterte may have ignored is that it may be precisely Trump's intent to provoke Kim into a first move, giving the US a carte blanche to retaliate.&nbsp; "Who am I to say that you should stop? But I would say 'Mr. President, please see to it that there is no war because my region will suffer immensely'," Duterte said. "I will just communicate to (Trump), 'just let him play... do not play into his hands'."</p> <p>He added: <strong>"The guy (Kim) simply wants to end the world, that is why he is very happy. He is always smiling. But he really wants to finish everything and he wants to drag us all down."</strong></p> <p>Ironically, Duterte has joined China and Russia in pleading with the leaders of North Korea and the U.S. to tone down their nuclear brinksmanship, <strong>even as he agreed with Japanese Prime Minister Shinzo Abe that negotiations to end the standoff would be useless</strong>.</p> <p><a href=""><img src="" width="500" height="312" /></a></p> <p>“We have to caution everybody including those who’d give the advice to the two players because you have nuclear warheads to just show restraint,” Duterte said.</p> <p>Meanwhile, speaking in London, Japan's Prime Minister Abe said talks with North Korea shouldn’t be tried while the communist nation continues its “provocative acts.” In a briefing for reporters in London, Abe described the missile as a “grave threat” that “can absolutely not be tolerated.”</p> <p>China, which accounts for the vast majority of North Korean trade, has an important role to play, Abe added. Tillerson told the UN Security Council Friday that countries that fail to implement economic sanctions on Kim’s regime “fully discredit this body.” Trump said in a Twitter message Friday that the missile launch disrespected Chinese President Xi Jinping.</p> <p>And speaking of China, Beijing's official news agency, Xinhua, urged President Donald Trump to “tread cautiously” with the U.S. and North Korea locked in a “tit-for-tat” vicious cycle. According to <a href=";utm_content=business&amp;utm_campaign=socialflow-organic&amp;utm_source=twitter&amp;utm_medium=social">Bloomberg</a>, in a commentary distributed by Xinhua, the official China news agency said the U.S. and North Korea “need to tread cautiously not to ignite another war in the region<strong>.” The U.S. needs to “terminate the state of war” on the peninsula while North Korea needs to offer a “solid reason” for the U.S. to change its policy</strong>, Xinhua said in the commentary.</p> <p>During his speech at the UN, Tillerson said that the U.S. goal isn’t to overthrow Kim’s regime but ruled out talks unless the North Korean leader takes “concrete steps to reduce the threat that illegal weapons programs pose to the United States and our allies.” As the meeting concluded, Tillerson reiterated that the U.S. wouldn’t agree to talks unless North Korea abides by existing Security Council resolutions.</p> <p>Several hours later, Kim test-fired (unsuccessfully) his latest, sixth, ballistic missile of 2017.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="595" height="335" alt="" src="" /> </div> </div> </div> Association of Southeast Asian Nations China Donald Trump Donald Trump Fail Foreign policy of Donald Trump Foreign policy of the Donald Trump administration Government Japan KIM North Korea North Korea–United States relations Politics Politics Reuters Rex Tillerson Rodrigo Duterte Security Council Shinz? Abe Southeast Asia Twitter Twitter U.N. Security Council United Nations United States Visayan people Sat, 29 Apr 2017 18:03:41 +0000 Tyler Durden 594846 at Economic Depression And Denial: "We Want To Believe We Aren't Japan" <p><a href=""><em>Authored by Jeffrey Snider via Alhambra Investment Partners,</em></a></p> <p><span style="color: #000000;"><strong>Back on March 10, the New York Fed&rsquo;s attempt at real-time GDP forecasting predicted that the Q1 2017 estimate would be 3.2%.</strong> That would have qualified as another decent quarter, the second out of the past three and somewhat in keeping with &ldquo;reflation.&rdquo; As we know today, the advance figure calculated by the Commerce Department amounted to just 0.69% growth in Q1.</span></p> <p><span style="color: #000000;">The point is not to cherry pick the highest quarterly prediction and make fun of FRBNY. At the same time in mid-March the Atlanta Fed&rsquo;s GDPNow competing model had already collapsed below 1%. Like the New York version, the Atlanta tracker had early on projected better than 3% growth for the quarter. It was at one time in early February just shy of 3.5%, higher than at any point for the other one.</span></p> <p><a href=""><img height="315" src="" width="600" /></a></p> <p><strong><span style="color: #000000;">The New York Fed&rsquo;s parsimonious statement today tersely explained:</span></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #000000;">Today&rsquo;s advance estimate of GDP growth for 2017:Q1 from the Commerce Department was 0.7%, substantially weaker than the latest FRBNY Staff Nowcast of 2.7%.</span></p> </blockquote> <p><span style="color: #000000;">While that was of no value, pointing out merely the obvious, the <strong>regular weekly report gives us a clue ironically in trying to explain why we should readily trust its methods.</strong></span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #000000;">Extensive back-testing of the model, research, and practical experience have shown that the platform is able to approximate best practices in macroeconomic forecasts. The model produces forecasts that are as accurate as, and strongly correlated with, predictions based on best judgment.</span></p> </blockquote> <p><span style="color: #000000;"><strong>There is a whole lot to that statement covered underneath statistical jargon and buzzwords.</strong> That they attempt to &ldquo;approximate best practices&rdquo; rather than the results of those practices is especially significant. The New York Fed is trying to model the economy that &ldquo;should be&rdquo; rather that the Atlanta Fed&rsquo;s model of the economy as it actually is. Very important to the former is sentiment, one reason why monetary policy builds itself philosophically around rational expectations and the institutional expectation for successfully manipulating them.</span></p> <p><span style="color: #000000;"><u><strong>The major disconnect is in the latest quarter entirely one of that area.</strong></u> PMI&rsquo;s and other measures of business attitudes were through the roof, as were the various indices attempting to gauge consumer confidence. Yet, <strong>neither form of sentiment or confidence translated.</strong> The difference on the consumer side was especially important given the <a href="">weight of risks</a> for the future economic trajectory as well as the majority basis for this quarter&rsquo;s (repeat) disappointment.</span></p> <p><img class="aligncenter size-full wp-image-44603" src="" style="width: 600px; height: 727px;" /></p> <p><span style="color: #000000;"><strong>None of this is new, of course, as the discrepancy emerged as far back as 2013.</strong> But it found another level importantly in 2014, particularly with respect to consumer confidence. Just when the BLS started reporting the &ldquo;best jobs market in decades&rdquo;, the various indices recorded a similar surge in positive consumer emotion. The University of Michigan&rsquo;s Index of Consumer Confidence was in July 2014 barely above 80, but by January 2015 it was nearly 100 and suggesting normalcy at long last. Taken together, the labor statistics as well as confidence was a powerful mix for mainstream interpretation. Is shouldn&rsquo;t have been that way.</span></p> <p><img class="aligncenter size-full wp-image-44645" src="" style="width: 600px; height: 413px;" /></p> <p><span style="color: #000000;">Consumer confidence relatedly did not fall much as the economy clearly did through the &ldquo;rising dollar&rdquo; period. As &ldquo;reflation&rdquo; after it has taken hold, it is right back again at multi-year highs; in the UoM format just less than 100 like the days of the housing bubble. That means confidence remained high even though consumer spending seriously decelerated (retail sales were in 2015 and early 2016 among the worst in the entire data series).</span></p> <p><span style="color: #000000;"><strong>Other parts of the UofM survey did register significant pessimism that more closely matched the trajectory of consumer spending as the economy overall. </strong></span></p> <p><img class="aligncenter size-full wp-image-44643" src="" style="width: 600px; height: 394px;" /></p> <p><span style="color: #000000;"><strong>Inflation expectations, longer-term expectations in particular, clearly showed a hard change</strong> and one that occurred at the exact same moment the whole survey was claiming confidence was surging.</span></p> <p><img class="aligncenter size-full wp-image-44646" src="" style="width: 600px; height: 394px;" /></p> <p><span style="color: #000000;"><strong>How do we make sense of what is clearly a contradiction?</strong> I think the answer lies in the space between the New York Fed&rsquo;s NowCast model and the Atlanta Fed&rsquo;s GDPNow alternate. Consumer confidence indices appear to be reflecting expectations for the economy that &ldquo;should be&rdquo; while inflation expectations might better exhibit the pessimism of how things haven&rsquo;t changed, and are in further danger of remaining that way more permanently. <strong>It is reminiscent of the huge divergence between the stock market and the bond market, and surely the latter has to some degree affected consumer thoughts on the &ldquo;should be&rdquo; side.</strong></span></p> <p><img class="aligncenter size-full wp-image-44620" src="" style="width: 600px; height: 351px;" /></p> <p><span style="color: #000000;"><u><strong>The weight of evidence, such as Q1 GDP, remains all in the wrong direction.</strong></u> What&rsquo;s left on that other side is merely unbacked mainstream rhetoric and the hollow assurances that amount to little more than agenda noise.<strong> Yet, confidence persists. It is dissonance, to be sure, but explainable.</strong></span></p> <p><span style="color: #000000;"><strong>I think what we are seeing expressed is this state of disbelief over the length of depression so far, thus its mere existence. </strong>None of us has any experience with a structural dislocation on this scale. Even the Great Inflation, though it lasted for more than fifteen years, was in the opposite direction, meaning that while it was no picnic it was at least characterized by movement and action &ndash; especially in labor. This last decade is nothing more than inaction, an economy apparently frozen deeper and deeper into desperate stasis; the figurative embodiment <a href="">of Dante&rsquo;s Hell</a>.</span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #000000;"><strong>As Japan has shown time and again, the worst case is not recession or even repeated recession. It is stagnation of a kind far more sinister than that of the Great Inflation. </strong>At least in the 1970&rsquo;s there was action and activity. This version is where the economy is simply frozen. In Dante&rsquo;s Inferno, Hell is not hot, it is increasingly cold as each layer is further removed from God&rsquo;s true warmth. Heat is passion and life; cold is where living is further stripped away toward the inanimate. <strong>The bond market is making that same journey, if not in a straight line, further into the lower reaches as the economy grows colder and colder.</strong></span></p> </blockquote> <p><span style="color: #000000;">For most of us, this just cannot be; it cannot be possible that there is so little growth and opportunity after ten years of none. <strong>Even if predicated on just randomness alone, blind dumb luck, the economy should start to correct at some point.</strong> </span></p> <p><img class="aligncenter size-full wp-image-44622" src="" style="width: 600px; height: 348px;" /></p> <p><strong><span style="color: #000000;">It just doesn&rsquo;t seem believable that in the 21st century depression of this magnitude and length could happen.</span></strong></p> <p><img class="aligncenter size-full wp-image-44621" src="" style="width: 601px; height: 363px;" /></p> <p><span style="color: #000000;"><strong>And so the longer it goes on, people seem to believe the greater the chance that something just has to go right.</strong> It is a happy a comforting thought, aided in emotional manipulation by the constant mainstream optimism. In that belief, <strong>every minor uptick is extrapolated far beyond its true significance </strong>as that thing that will surely restore positive balance and order.</span></p> <p><span style="color: #000000;"><u><strong>Like inflation expectations, however, there are lingering doubts.</strong></u> We want to believe it can&rsquo;t be this bad forever, but we also have to live to some degree, unlike policymakers and their regressions, in reality. <strong><em>In the middle of 2014, that meant not only could things be bad for such a long time, as they had been for seven years already by that point, they could actually get worse!</em></strong></span></p> <p><img class="aligncenter size-full wp-image-44647" src="" style="width: 600px; height: 806px;" /></p> <p>&nbsp;</p> <p><img class="aligncenter size-full wp-image-43956" src="" style="width: 601px; height: 357px;" /></p> <p><span style="color: #000000;"><u><strong>This is the legacy of the &ldquo;maestro&rdquo;, where &ldquo;we&rdquo; can&rsquo;t make sense of where we are because it just doesn&rsquo;t seem possible. </strong></u>There is no way that the Federal Reserve, once the standard for all technocratic excellence, could let this happen. Even the QE&rsquo;s to some degree fall under this cultish existence, for trillions in money printing have to show up somewhere at some point. It can&rsquo;t be that all the worst cases merge together; that the Fed could totally strike out like that, and the economy stuck without expansion for a decade and more. <em><strong>Who ever heard of an economy that just shrunk?</strong></em></span></p> <p><img class="aligncenter size-full wp-image-44644" src="" style="width: 600px; height: 394px;" /></p> <p><span style="color: #000000;">Unfortunately, we have been studying one for more than a quarter century, which only adds to the seeming impossibility of it all. <strong>We have known about Japan for all that time, so it can&rsquo;t be that we are following that path being so aware of it</strong>. That might be, though, where a significant proportion of doubt has come from especially in inflation expectations unanchoring (as well as bond rates and eurodollar futures) because the Federal Reserve for all its posturing and assurances did exactly what the Bank of Japan did &ndash; and the results were exactly the same. <u><strong>We want to believe we aren&rsquo;t Japan, and yet, we know on some level that we are.</strong></u></span></p> <p><u><strong><span style="color: #000000;">I have no idea if denial is a stage of depression, but we have here all the evidence for it in economic terms.</span></strong></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="961" height="504" alt="" src="" /> </div> </div> </div> Atlanta Fed Bank of Japan Bank of Japan BLS Bond Business Consumer Consumer Confidence Consumer confidence Department of Commerce Economic indicators Economy EuroDollar Federal Reserve Housing Bubble Inflation Japan Macroeconomics Michigan Monetary Policy Monetary policy New York Fed New York Fed None Polling Reality Recession Recession Structure the University of Michigan Unemployment University Of Michigan US Federal Reserve Sat, 29 Apr 2017 17:38:48 +0000 Tyler Durden 594835 at "We Are Ready, Together" - EU Leaders Proclaim First Brexit Victory, Agree "Firm" Negotiating Stance <p>European Union leaders have unanimously agreed the<strong> negotiating guidelines for Brexit talks with UK will be &quot;firm and fair,&quot;</strong> and will begin on June 8th after the UK general election. <a href=""><em>As The BBC reports,</em></a> EU officials said<strong> leaders burst into applause as the negotiating stance was waved through</strong>, with the EU&#39;s chief negotiator, Michel Barnier, proudly proclaiming: <strong><em>&quot;we are ready... we are together.&quot;</em></strong></p> <p><strong><em><a href=""><img height="379" src="" width="600" /></a></em></strong></p> <p><strong><em>&quot;Unity in action,&quot; </em></strong>European Commission President Jean-Claude Juncker said on Twitter as he announced the 27 EU governments - UK PM Theresa May was not present - <strong>rubber-stamped the negotiating strategy in less than 15 minutes at a summit in Brussels.</strong></p> <p>Policy makers arrived declaring that they were united in their approach to Brexit and that <strong>Britain wouldn&rsquo;t be allowed to be better off outside the bloc than inside it</strong>. Prime Minister Theresa May&rsquo;s government was told it will have to agree to pay a financial settlement and resolve the rights of citizens before the EU allows discussions to turn to a future trade deal.</p> <p>French President Francois Hollande said there would <strong>inevitably be &quot;a price and a cost for the UK - it&#39;s the choice that was made&quot;.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>We must not be punitive,</strong> but at the same time it&#39;s clear that Europe knows how to defend its interests, and that Britain the UK will have a less good position tomorrow outside the EU than today in the EU.&quot;</p> </blockquote> <p>Which is very ironic given AFP reported German Chancellor <strong><em>Merkel earlier commented: &quot;no one is allied against Britain.&quot;</em></strong></p> <p><u><strong>The UK response was quick</strong></u> - Brexit Secretary David Davis emailed that:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;There is no doubt that these <strong>negotiations are the most complex</strong> the U.K. has faced in our lifetimes.<strong> They will be tough and, at times even confrontational,&rdquo;</strong></p> </blockquote> <p>And, <a href="">as Bloomberg reports,</a> to Iain Duncan Smith, a former leader of May&rsquo;s Conservative Party who campaigned for Brexit, Europe&rsquo;s approach is nothing more than posturing anyway:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&quot;People go: &lsquo;Oh look they are showing resolve and their strength.&rsquo; Well, what would you expect?&quot; </em></strong>he told Bloomberg.</p> <p>&nbsp;</p> <p><em>&ldquo;They are about to head in to a negotiation. You know, I have been in business. <strong>You always start in your firm position</strong>.&quot;</em></p> </blockquote> <p><u><strong>So what happens next?</strong></u></p> <p>Brexit timetable:</p> <ul> <li>29 April - EU leaders (excluding the UK) meet in Brussels to adopt Brexit negotiating guidelines</li> <li>7 May - French voters decide between Emmanuel Macron and Marine Le Pen as their next president</li> <li><strong>8 June - UK parliamentary election - Brexit talks to start soon after the vote</strong></li> <li>24 September - German parliamentary election, with Mrs Merkel seeking a fourth term</li> <li><strong>29 March 2019 - Deadline for ending talks on UK exit terms (any extension requires agreement of all member states)</strong></li> <li>May or June 2019 - European Parliament election (without UK)</li> <li><strong>Ratification - Any Brexit deal requires ratification by all EU&#39;s national parliaments and European Parliament</strong></li> </ul> <p><a href=""><img alt="" src="" style="width: 600px; height: 1087px;" /></a></p> <p>Of course, this whole charade raises a crucial question - as <a href="">MishTalk&#39;s Mike Shedlock asks <strong><u><em>&quot;Brexit Negotiations - Why Bother?&quot;</em></u></strong></a></p> <p>I keep asking the same question on Brexit and keep coming up with the same answer: Why bother? <strong>There is absolutely no reason the UK should start a negotiation given the repeated EU demands. </strong>Once again, on Thursday, German Chancellor Angela Merkel repeated the EU&rsquo;s &ldquo;not reversible&rdquo; position.</p> <p>...</p> <p>I have read many articles in the Financial Times and on Eurointelligence <strong>expressing optimism on these talks. I fail to see why</strong>. Sure, we have been through countless 11th-hour deals with Greece. But <strong>the UK is not Greece. </strong></p> <p><em>In regards to NAFTA, a reader on my blog commented the other day &ldquo;You would be surprised at how often parties could have reached a win-win agreement only to part ways fighting instead.&rdquo;</em></p> <p><em>I responded &ldquo;I agree with you fully. A critical Brexit opportunity is coming up and I expect it to fail. There is an easy win-win compromise but the desire to punish the UK and set rules in the name of solidarity is too great.&rdquo;</em></p> <p><strong>The EU&rsquo;s first position is the UK has more to lose.</strong> The EU&rsquo;s second position is that the time factor is on the EU&rsquo;s side. Both are Fantasyland positions.</p> <p><strong>This is not a divorce where a one-sided judge sets alimony. This is a treaty that can be canceled at any time by walking away. Unless and until Theresa May lets it be known she will walk away, the EU has the upper hand.</strong></p> <p>The proper response from UK prime minister Theresa May is to inform the EU there will be no discussion as long as the EU insists on a divorce bill negotiated first.</p> <p><em><strong>Only by walking away &ndash; showing a willingness to let time expire &ndash; does the UK have a chance at reasonable negotiations. Even then, I am not sure what the chance is because the &ldquo;EU&rsquo;s desire to punish the UK and set rules in the name of solidarity&rdquo; likely exceeds the desire to walk away with a win-win situation.</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="711" height="449" alt="" src="" /> </div> </div> </div> Aftermath of the United Kingdom European Union membership referendum Brexit conservative party European Commission European Parliament European Union European Union European Union Euroscepticism in the United Kingdom Fail Government Government of the United Kingdom Greece Politics Prime Minister Theresa May’s government Theresa May Twitter Twitter United Kingdom Brexit negotiations United Kingdom invocation of Article 50 of the Treaty on European Union Withdrawal of the United Kingdom from the European Union World World history Sat, 29 Apr 2017 17:05:58 +0000 Tyler Durden 594834 at Violent Riots Break Out In Brazil As First General Strike In 21 Years Paralyzes Nation <p>Less than a year after former president Dilma Rouseff was impeached and ousted for corruption, Brazil's economy continues to deteriorate at an alarming pace, and on Friday Brazilian police tear-gassed demonstrators and rioters burned buses in the violent conclusion of a general strike - the first in 21 years - that shut down transport, schools and banks in protest against the government's austerity reforms. </p> <p><iframe src="" width="500" height="281" frameborder="0"></iframe></p> <p>As <a href="">Reuters reports</a>, what started off as a peaceful protest by several thousand people in central Rio in the afternoon turned violent, with small groups smashing bank windows, erecting barricades and setting fires, including torching at least eight buses.</p> <p><a href=""><img src="" width="500" height="312" /></a><em><br />Buses burn during clashes between demonstrators and riot police in Brazil</em></p> <p>The police responded with barrages of rubber bullets and tear gas, which covered Rio in a suffocating fog that reached all the way to the top floors of local office buildings.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Tram lines blocked in centre of Rio de Janeiro. <a href="">#BrasilEmgreve</a> <a href="">#Rio</a> <a href=""></a></p> <p>— Dude (@jaraparilla) <a href="">April 28, 2017</a></p></blockquote> <script src="//"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="es">PM dispersa ato diante da residencia de Temer <a href=""></a></p> <p>— Carlos Latuff (@LatuffCartoons) <a href="">April 28, 2017</a></p></blockquote> <script src="//"></script><p> Similar disturbances were observed in Sao Paulo, the country's economic powerhouse, where a crowd attempted to march to the private residence of President Michel Temer and clashed with police, who also fired rubber bullets and stun grenades. Protesters hurled rocks, set fires, smashed street lamps and threw concrete blocks into the center of the avenue.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="pt">Rio de Janeiro: Na rua Primeiro de Março, um grupo de manifestantes ateia fogo em cadeiras e tapumes. <a href="">#grevegeral</a> <a href="">#BrasilemGreve</a> (<a href="">@erickdau</a>) <a href=""></a></p> <p>— The Intercept Brasil (@TheInterceptBr) <a href="">April 28, 2017</a></p></blockquote> <script src="//"></script><p>While earlier in the day, Brazil reported that its labor market deteriorated even further in March, with the unemployment rate surging to 13.7%, resulting in a record 14.2 million unemployed workers and up from 11.1mn a year ago...</p> <p><a href=""><img src="" width="558" height="353" /></a></p> <p>... what prompted the ugly scenes, associated more frequently with Brazil's imploding neighbor Venezuela, were protests at the government's proposed reforms, especially a steep cut to the generous pension system. </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="pt">Rio de Janeiro: Policiais do Batalhão de Choque atiram bombas contra os manifestantes na Av. Rio Branco. <a href="">#grevegeral</a> <a href="">#BrasilemGreve</a> <a href=""></a></p> <p>— The Intercept Brasil (@TheInterceptBr) <a href="">April 28, 2017</a></p></blockquote> <script src="//"></script><p>The protests came at the close of a day in which unions and leftwing groups managed to paralyze much of Brazil. The metro systems in Sao Paulo, the capital Brasilia and Belo Horizonte, another major city, were shut down. Curitiba, where Brazil's huge "Operation Car Wash" anti-corruption investigation is based, was left without bus services, as was the big northeastern city of Recife, local media reported according to <a href="">AFP</a>. </p> <p><img src="" width="500" height="316" /></p> <p><em>A demonstrator takes part in a protest against Brazils proposed reform</em></p> <p><strong>According to the Forca Sindical union, at least 40 million people had responded to the call for a 24-hour nationwide strike </strong>which started after midnight on Friday, ahead of a long weekend with Labor Day on Monday. The strike had the greatest effect in heavily unionized parts of the economy, including transportation, banks, schools, the post office and some hospital staff. The metallurgical workers' union said 60,000 members downed their tools. </p> <p>The strike had a large impact on auto production in Sao Paulo, which concentrates the bulk of the industry in Brazil. General Motors, Ford Motor, Toyota and Daimler all halted production, according to company officials, <a href="">unions and market analysts</a>. Union officials said most workers at state-run oil producer Petroleo Brasileiro, known as Petrobras, joined the strike, but the company said the stoppage had no significant impact on output. Iron ore miner Vale SA said the strike did not affect its operations. </p> <p>Although a spokesman for the National Civil Aviation Agency told AFP that operations at the airports are functioning normally, there were multiple reports of delayed and canceled flights.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"We can't keep quiet anymore with a government that isn't legitimate, which wasn't elected to dismantle the rights of workers," said Ricardo Jacques, a striking bank employee in Sao Paulo.</p> </blockquote> <p>Assuring that things will get worse before (if) they get better, Temer's center-right government has said that reforms are needed to save Latin America's biggest economy from further damage after more than two years of deep recession. Temer criticized the "unfortunate and serious incidents" during the protests and the curtailing of "freedom of movement for citizens."</p> <p><img src="" width="500" height="307" /><br /><em>Members of Brazil's Movimento dos Sem-Teto (Roofless Movement) throw <br />wooden tables onto a burning barricade</em></p> <p>Deeply unpopular President Temer also said Brazil's economy faces a meltdown without severe fiscal discipline and belt tightening, and while he may be right, he also may not be around long enough to supervise the outcome of his just as unpopular reforms. As noted previously, his most controversial measure has been <strong>to curb pension costs by raising the retirement age to 65 for men and 62 for women, up from the current 60 and 55</strong>. The government is also pushing for a liberalization of labor laws and has succeeded in getting Congress to pass a 20-year freeze on spending increases. </p> <p>Meanwhile, as we expected when discussing the Rouseff impeachment, the popular mood is fast turning against her replacement, Temer, whose days in charge may now be numbered. </p> <p>As Reuters adds, Friday's strikes were one of the biggest protests to hit the Temer administration since he took over from impeached president Dilma Rousseff last August.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Adding fuel to the fire, Rouseff's predecessor and mentor, the former leftist president Luiz Inacio Lula da Silva, praised the strike, Valor Economico website said. </p> <p>&nbsp;</p> <p>"This is a clear demonstration that people are determined to paralyze (the country) in protest against the government's stripping away of their rights," the site quoted him as saying. </p> </blockquote> <p>Still, not all Brazilians agree. Marcelo Faisal, a landscape architect travelling from Sao Paulo to Rio, said "reforms need to take place" and that the general strike did not live up to the hype.</p> <p>"They didn't succeed in getting people to adhere to the strike, so they burned tires to block some points here and there, which just causes some disruption," he said. The economy, for years reliant on China's insatiable commodity appetite, shrank 3.8% in 2015 and is expected to have contracted a further 3.5 percent in 2016, the most painful recession on record; many have <a href="">called it a depression</a>.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en"><a href="">#Brazil</a>: Main access road to Guarulhos Airport is blocked by protesters in <a href="">#SãoPaulo</a>. <a href="">#strike</a> <a href="">#BrasilEmGreve</a> <a href="">#GreveGeral</a> ???? <a href="">@MidiaNINJA</a> <a href=""></a></p> <p>— ubique (@PersonalEscrito) <a href="">April 28, 2017</a></p></blockquote> <script src="//"></script><p>And as the economic collapse accelerates, the political situation remains in turmoil as the economic depression is dovetailing with the country's worst corruption crisis in history. The infamous "Car Wash" probe has uncovered a massive network of embezzlement and bribery at the heart of Brazil's economic and political elite. </p> <p>Having already taken down the previous regime, it threatens to do the same to the current government. </p> <p>In a stark example of how the revolution eats its own, last month the former speaker of the lower house, Eduardo Cunha, who drove the successful impeachment of former President Rousseff and who was forced from his position as speaker in July and was arrested in October on accusations he received millions in bribes from the purchase of an oil field in Benin by state-controlled oil company Petróleo Brasileiro SA, was <a href="">sentenced to more than 15 years in prison </a>for corruption, making him the highest-profile political conviction yet in the "Operation Car Wash" scandal.</p> <p><em><a href=""><img src="" width="500" height="331" /></a><br />Former speaker of Brazil's Lower House of Congress, Eduardo Cunha (C), <br />is escorted by federal police officers</em></p> <p>Meanwhile, eight of Temer's ministers - or nearly a third - are under investigation and the president himself has been accused of chairing a meeting in which his PMDB party negotiated a $40 million bribe from the Odebrecht engineering conglomerate. Temer and his allies deny any wrongdoing. Lula and a host of other leftist figures are also targets of anti-corruption prosecutors.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="3144" height="281" alt="" src="" /> </div> </div> </div> Av Brazil Brazil Brazil's Lower House Brazilian police Cancer survivors Chivalry Congress Corruption Daimler Dilma Rousseff Eduardo Cunha Ford General Motors Impeachment of Dilma Rousseff Latin America Luiz Inácio Lula da Silva Meltdown Michel Temer National Civil Aviation Agency Operation Car Wash Petrobras PMDB party Politics Politics of Brazil Post Office Presidents of Brazil Recession Reuters Roofless Movement Temer administration Toyota Twitter Twitter Unemployment Sat, 29 Apr 2017 16:34:51 +0000 Tyler Durden 594843 at The "Taxation Is Theft" Meme Has Officially Gone Mainstream <p><a href=""><em>Authored by Alice Salles via,</em></a></p> <p>The month of April is a nightmare for anyone with a conscience, as we only have until &ldquo;<a href="" rel="noopener noreferrer" target="_blank">tax day</a>&rdquo; - which usually falls on April 15 - to give the taxman what he says he deserves. <strong><em>So if you pay taxes to Uncle Sam and you&rsquo;re also aware you&rsquo;re paying for mass murder in the Middle East and in U.S. streets due to the drug war, you should also feel sick to your stomach as you write that check.</em></strong></p> <p>To a restaurant customer, this may have served as enough incentive to remind his server that taxation is always immoral &mdash; but he didn&rsquo;t stop there.</p> <p><strong>Last week, a customer at a Missouri restaurant gave the waitress a &ldquo;personal gift&rdquo; instead of a tip, writing the now popular line &ldquo;<em>Taxation is theft</em>&rdquo; in the tip section of the receipt.</strong></p> <p>In a second note, the fiscally conscious customer added:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><strong>&ldquo;<em>This is not a tip. This is a personal gift and not subject to federal or state income taxes</em>.&rdquo;</strong></u></p> </blockquote> <p><a href=""><img height="719" src="" width="583" /></a></p> <p>With major progressive news outlets like <a href="" rel="noopener noreferrer" target="_blank"><em>ATTN:</em></a> reporting on this story, left-leaning reporters started to debate wages in the food and service industries, discussing the fact that tips end up being factored as wages, meaning they are always taxable.</p> <p>But as that discussion developed, <strong>reporters were quick to realize that when personal gifts are in the mix, the taxman can&rsquo;t take part of those earnings away.</strong> After all, a gift would have to <a href="" rel="noopener noreferrer" target="_blank">exceed</a> $13,000 to be subject to taxation, meaning that even if the customer had spent hundreds, the &ldquo;personal gift&rdquo; would not amount to anything close to the requirements stipulated by the IRS.</p> <p><strong>With that, ladies and gentlemen, it becomes easier to not only tip with class, but also with substance, </strong>giving your waiter a lesson on what&rsquo;s moral and how to legally go around the rules to make sure they enjoy their full tip &mdash; not just the percentage deemed to be fit by the federal government.</p> <p>As this story <a href="" rel="noopener noreferrer" target="_blank">becomes part of the popular movement ignited by libertarians</a>, expect to see more progressive news outlets becoming familiarized with the actual concept of taxation. <strong><em>What&rsquo;s left for us to find out is if they are going to change their tune and start attacking people like this customer when the two-party pendulum swings once again and a fully Democratic slate takes over Washington.</em></strong></p> <p><em>Are they going to remain <a href="" rel="noopener noreferrer" target="_blank">consistent</a> in discussing taxation from the point of view of the worker, or are they going to side with the leech?</em></p> <p><u><strong>Only time will tell.</strong></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="449" height="278" alt="" src="" /> </div> </div> </div> Economy federal government Gratuity Hospitality industry Household income Income tax Income tax in the United States Internal Revenue Service Middle East Middle East Tax Sat, 29 Apr 2017 15:45:18 +0000 Tyler Durden 594833 at ISIS Apologized To Israel For Attacking IDF Soldiers <p>In a curious incident that is certain to provoke questions about the proximity, not to mention fund flow, between Israel and ISIS the former Israeli Defense Minister, cited by the <a href="">Times of Israel</a>, said that&nbsp; Islamic State terrorists have on at least one occasion “apologized” to Israel for mistakenly attacking IDF soldiers in the occupied Golan Heights. The disclosure may also provide some insight into why after reportedly attacking virtually every religion and ethnicity in the region, there have been virtually no documented attacks by the Islamic State on Israel or its citizens. </p> <p><a href=""><img src="" width="500" height="278" /></a></p> <p>Discussing the wider Israeli policy of “neutrality” in Syria, former defense minister Moshe Ya’alon accidentally admitted that Israel has an open communications channel with an Islamic State cell which operates in Gollan Heights. <strong></strong></p> <p><strong>“There was one case recently where Daesh opened fire and apologized,</strong>” Ya’alon said on Saturday, <a href="">quoted by the Times of Israel</a>.</p> <p>Asked to expand on his controversial statement, Ya’alon’s office refused to elaborate. The IDF also declined to comment. Under Israeli law, any communication with terrorists is considered illegal, unless of course the Israel state covertly does not consider ISIS terrorists.</p> <p>Ya’alon served as Israel's Defense Minister from 2013 until his resignation in May 2016, and his comments were reportedly referring to the first direct incident involving clashes between Israel and Islamic State terrorists. In that incident which took place last November, the Shuhada al-Yarmouk cell, which has pledged allegiance to ISIS, exchanged fire with Israeli forces after the IDF's Golani Brigade crossed the security fence with Syria to conduct an “ambush operation.”</p> <p><a href=""><img src="" width="500" height="281" /></a><br /><em>Former Israeli defense minister Moshe 'Bogie' Ya'alon speaks at the Hebrew University</em></p> <p>While the official Israeli position is pursuing neutrality in the Syrian conflict, Tel Aviv has on several occasions engaged Syrian military targets in Syria - <a href="">most recently on Wednesday </a>- usually under the pretext of preventing the alleged transfer of weapons to Hezbollah, considered a terrorist group by Israel. Last month, Tel Aviv confirmed conducting airstrikes on several targets in Syria, after Damascus activated its air defense system against the IDF jets.</p> <p>While Prime Minister Benjamin Netanyahu has justified the repeated incursions, explaining that IDF planes targeted a Hezbollah weapons convoy, Damascus has said that the Israeli strikes only benefit the Islamic State and other terrorist groups. Earlier this month the Syrian President Bashar Assad once again blamed Israel of helping militants terrorizing his country.</p> <p>"You can assume that these terrorists are fighting for Israel. If they aren't part of the regular Israeli army, they're fighting for Israel. Israel has common goals with Turkey, the United States, France, Britain, Saudi Arabia, Qatar and other countries,” <a href=",7340,L-4946010,00.html">Ynet </a>quoted Assad as as saying.</p> <p>“Israel is working on helping these terrorists wherever the Syrian army is advancing. It attacks in one form or another to provide them with assistance, and to stop the Syrian army’s momentum in the face of the terrorists,” the Syrian leader added.</p> <p>In light of Ya'alon's comments, Assad may have been right. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="900" height="500" alt="" src="" /> </div> </div> </div> Anti-Western sentiment Antisemitism in the Arab world Bashar al-Assad France Golan Heights Hebrew University Hezbollah Hizballah IDF IDF's Golani Brigade International relations Islamic terrorism in Lebanon Israel Israel Israel Defense Forces Israeli Army Lebanese nationalism March 8 Alliance Military Moshe Ya'alon Politics Saudi Arabia Syrian army Turkey War Sat, 29 Apr 2017 15:38:16 +0000 Tyler Durden 594767 at The Four Charts That Prompted An Oil Analyst To Declare The OPEC Deal A Failure <p>Two months <a href="">ago we first suggested that OPEC may be fabricating data </a>about its production cuts - and certainly overstating the "success" of the Vienna production cut deal - by looking at the rising Chinese oil imports, and by extension, rising oil deliveries by OPEC nations.</p> <p><a href=""><img src="" width="500" height="267" /></a></p> <p>As <a href="">JPMorgan wrote back in February</a>, while IEA estimated the OPEC crude oil production fell by 1mbd to 32.06mbd in January, suggesting an initial compliance of 90% with the output agreement reached end 2016, the latest oil supply details released by China customs today suggest a reduction of supplies was not yet seen by China, the world’s largest oil importer.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p> In fact, quite the contrary: crude oil shipments from the 11 OPEC nations committed to a 1.2mbd output cut increased by 28% yoy, and more importantly, rose 4% from December 2016 - in a time when production was supposed to be declining - to 4.6mbd in January, accounting for 57% of China’s total oil imports. </p> </blockquote> <p>Fast forward two months <a href="">when Reuters analyst Clyde Russell</a> looks at the same data and asks whether <em>"it is time to call the crude oil output cuts by OPEC and its allies a failure?"</em></p> <p>Echoing what we cautioned two months ago, Russell said that "<strong>certainly there is an increasing disconnect between the rhetoric of OPEC and other producers cutting output on the one hand and the reality of a well-supplied crude oil market and mixed signals on the level of global inventories on the other</strong>."</p> <p>The paradox: on one hand, OPEC and non-OPEC producer nations, including Russia, have been touting the high compliance with the agreement to reduce output by 1.8 million barrels per day (bpd) from January to June. Having failed to boost the price of crude sustainably above $50, OPEC is now set to prolong the deal for another six months, with the announcement expected at a meeting scheduled for May 25. Needless to say, Russell is skeptical that merely extending what (N)OPEC tried before for another six months, will succeed.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>When the deal took effect from Jan. 1, Brent traded in a narrow range for two months, before falling sharply in early March, but the support level of $50 held, with only a brief foray to an intraday low of $49.71 on March 22. </p> <p>&nbsp;</p> <p>But Brent is once again testing the bottom of the post-agreement range, dropping to as low as $51.42 a barrel on Monday, as scepticism mounts over the ultimate effectiveness of the OPEC measures.</p> </blockquote> <p>And it is here that Russell notes that more important for determining the longer-term price outlook is to look at the amount of oil available and the levels of inventories, something we have been skeptical about since the Vienna summit, and certainly since our February article. </p> <p><em><strong>The math is simple:</strong> </em>for OPEC and its allies to achieve their aim of sustainable higher prices, both global supplies and inventories have to be reduced, the so-called market re-balancing. Yet "<strong>it's here that the main evidence of the failure of the OPEC agreement is to be found.</strong>" </p> <p>As the charts below demonstrate, oil shipments by tanker around the globe <strong>were at a record high in April, </strong>according to vessel-tracking data compiled by Thomson Reuters Supply Chain and Commodity forecasts. As of last week, the data shows that an average 50.3 million barrels per day (bpd) of crude is being shipped in April, up from the previous record 46.1 million bpd in January. While the data excludes crude moved by pipelines, it's extremely unlikely that pipeline supplies have been cut by more than seaborne cargoes have increased.</p> <p>Worse, the data also show that <strong>Saudi Arabia, which undertook to make the largest output cut among those producers party to the November deal, is actually increasing tanker shipments in recent months, to levels well above those that prevailed late last year</strong>.</p> <p>In short, <span style="text-decoration: underline;"><strong>OPEC may be producing less - if only believes the OPEC-sourced data - but actual global deliveries of oil have never been higher! </strong></span></p> <p>And here are the four charts in question which prompted Russell to declare the OPEC deal a failure.</p> <p><a href=""><img src="" width="500" height="257" /></a></p> <p>Some more details: <strong>Saudis are expected to ship 8.29 million bpd in April, up from 7.94 million bpd in March, 7.73 million bpd in February and 7.83 million bpd in January</strong>. Furthermore, Chinese customs data released last week showed that the world's biggest crude importer received higher supplies from Saudi Arabia, Russia, Angola, Iran and Iraq in March than it did the previous month.</p> <p>Repeating virtually verbatim what we said two months ago, Reuters then goes on to say that "<strong>the Chinese numbers don't exactly fit in with the narrative of successful output cuts, rather they show the opposite</strong>."</p> <p>For those confused, what the above means is that a picture that emerges in which there is a <strong>gaping difference between reducing output and actually cutting supplies</strong>. As a result, while it is likely the case that OPEC and its allies have been in high compliance with their agreed output cuts, but this hasn't necessarily translated into significantly lower shipments of crude oil. </p> <p>Then there is, of course, the shale wildcard: US producers outside the agreement have been increasing production and shipments. The plentiful supply of oil can be seen in global inventories, with the International Energy Agency saying recently that inventories in industrialised countries were still 10 percent above their five-year average."</p> <p>There is some good news for oil bulls: "barrels stored in less visible places, such as in developing nations and in floating storage, do appear to be drawing down, <strong>but there is a question mark over whether this is happening fast enough to provide a basis for higher oil prices in future months</strong>. But for OPEC and its allies to achieve lasting success, they will actually have to reduce the amount of crude being shipped."</p> <p>So far, not only has that not happened, but the Vienna deal participants have been aggressively boosting deliveries in behind the scenes attempts to capture market share from each other. </p> <p>In a separate report from <a href="">Bloomberg</a>, according to the head of research at Abu Dhabi Investment Authority, Saudi Arabia - the world’s biggest crude exporter - has been rapidly losing market share to Iraq and Iran as a result of OPEC’s agreement to curb supplies to bolster prices,&nbsp; “If you’re talking about winners, you can count Iran and Iraq,” Christof Ruehl said Wednesday at a conference in Dubai.</p> <p>OPEC agreed to production limits for most of its members at a meeting in November and brought 11 other nations on board with the deal in December. <strong>Saudi Arabia, OPEC’s biggest producer, agreed to cut output by 486,000 barrels a day while Iraq said it would cut 210,000 barrels a day. </strong>Iran was permitted to increase output by 90,000 barrels a day, according to the OPEC accord. </p> <p>Ironically, US shale production has increased by almost exactly the amount that Saudi production has declined by, suggesting that Saudi Arabia is losing market share not only to Iraq and Iran, but also to US oil producers. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Saudi Arabia knew it would lose share because Iran’s production was on the rebound, said Robin Mills, founder of Dubai-based consultant Qamar Energy. “The Saudis agreed to production cuts at a time when Iranian production was at a high.” </p> <p>&nbsp;</p> <p>The struggle over market share is most pronounced in Asia, according to Mills and Edward Bell, commodities analyst at Dubai-based lender Emirates NBD PJSC. Iran and Iraq increased crude sales to China last month, while Saudi Arabia slipped behind Russia and Angola as the largest suppliers to the nation, data released Tuesday by the General Administration of Customs show. </p> <p>&nbsp;</p> <p>“The Saudis are losing out because other countries are able to squeeze out more production,” Bell of Emirates NBD said. Saudi Arabia is cutting crude pricing to Asia to hold on to its share, Bell said. The kingdom will likely release its official crude pricing for June next week, with most other regional producers following.</p> </blockquote> <p>The bottom line, according to Russell, is that it doesn't matter how much you talk about reducing output or drawing down producer inventories, <strong>what ultimately matters for the price is the amount of crude that buyers can access. </strong>And right now, the data on crude flows indicates that the OPEC deal is failing, even as Saudi Arabia is facing increasing market share losses, which will sooner or later prompt the kingdom to aggressive undercut its competition once prices fail to rebound materially, sending the price of crude tumbling once again, as OPEC goes back to square one in a world where the real question market is not the future of supply, but what happens to demand. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="2984" height="354" alt="" src="" /> </div> </div> </div> Abu Dhabi Abu Dhabi Investment Authority Business Cartels China Chronology of world oil market events Crude Crude Oil Dubai Economy Energy crisis Energy economics Fail General Administration International Energy Agency International Energy Agency Iran Iraq Market Share OPEC OPEC Organization of Petroleum-Exporting Countries Peak oil Petroleum Petroleum industry Petroleum politics Price of oil Reality Reuters Saudi Arabia World oil market chronology Sat, 29 Apr 2017 15:11:30 +0000 Tyler Durden 594832 at