http://www.zerohedge.com/fullrss2.xml/wp-content/plugins/uBillboard/%20%20liker.profile_URL%20%20 en Trump's (Not So) Invisible Hand http://www.zerohedge.com/news/2017-01-18/trumps-not-so-invisible-hand <p><a href="http://info.convergex.com/hubfs/Convergex%20Morning%20Briefing%202017%201%2018-1.pdf?utm_campaign=Morning+Briefing&amp;utm_source=hs_email&amp;utm_medium=email&amp;utm_content=40835346&amp;_hsenc=p2ANqtz-9YQpPQNBihjLmJz-nRxo1p6wfn9N92CSNM9Wk-JfMwE9l2oO5RFpVnOhVbMMB3072xRHMQaSbdfz-d925Tv18_mb0TrA&amp;_hsmi=40835346"><em>Via ConvergEx&#39;s Nicholas Colas,</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Want to know why US stocks feel so fragile?</strong>&nbsp; Perhaps we can blame Wall Street analysts.&nbsp; Even after two months of market buzz about lower taxes, infrastructure spending and less regulation juicing investor expectations for better earnings growth,<strong> they refuse to bump their revenue or earnings estimates for 2017.</strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_colas.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_colas_0.jpg" style="width: 600px; height: 319px;" /></strong></a></p> <p>&nbsp;</p> <p>Our monthly look at revenue expectations for the companies of the Dow shows Street<strong> analysts still cutting their numbers for Q1 &ndash; Q3 of 2017.&nbsp;</strong> About the only bright spot: they do expect revenue growth of 4.0% this year.&nbsp; <strong>As far as earnings expectations go, there is still no change to &ldquo;Bottom up&rdquo; earnings expectations for the S&amp;P 500 of $133/share.&nbsp;</strong> That&rsquo;s right where it&rsquo;s been since before the election.&nbsp; Nearer term, analysts are still cutting their earnings expectations for Q1 2017.&nbsp; Now, markets are often happy to discount changes in Street expectations before they occur.&nbsp; Current valuations of 17x &ndash; high by historical standards &ndash; may be a ceiling on equity prices until both buyside and sellside have more confidence in incremental earnings growth.&nbsp; Next week &ndash; Trump&rsquo;s first days in office &ndash; will be important in building that case.&nbsp; First impressions matter, after all...</p> </blockquote> <p><strong>With just three days to go before the inauguration, we still don&rsquo;t know very much about what will come after January 20th.&nbsp;</strong> That uncertainty is creating the churn we&rsquo;re seeing in capital markets.&nbsp; After the year end 2016 run-up for risk assets, everything seems to have hit a wall.&nbsp; On the other side of the barrier: a new administration that has made a lot of promises and will, naturally, want to start delivering just as soon as the clock strikes noon on Friday.</p> <p><strong>The largest unknown is just how President Elect Trump will prioritize and then negotiate the various pieces of his agenda.&nbsp; </strong>And since Mr. Trump has no track record in government and a very unconventional approach to communicating his thoughts, investors have less information and more questions about the incoming administration than any prior transition.&nbsp; It&rsquo;s only a mild stretch to say that &ldquo;Nobody knows nothing&rdquo;, at least for a few more days.</p> <p><em><strong>Over the years we have written about two off beat personality indicators &ndash; digit ratios and birth order &ndash; and at this point we might as well toss those into the analytical bucket and see what they might tell us about Donald Trump and how he will adapt to his new job as the 45th President of the United States.</strong></em></p> <p>Here is some color on each:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><strong>Digit ratio is the relative length of a person&rsquo;s second (pointer) to fourth (ring) finger.</strong></u> Feel free to look at your own hand right now. Is your ring finger longer than your pointer, or vice versa?&nbsp; (Men tend to have longer ring fingers than pointers, and women the opposite, but many other factors play a role.)</p> <p>&nbsp;</p> <p>Researchers have spent years looking at this ratio in the context of human behavior and found that <strong>people with longer fourth fingers than second fingers are more prone to risk </strong>taking than those with the opposite arrangement.&nbsp; <a href="https://www.psychologytoday.com/blog/naturally-selected/201205/what-do-your-fingers-tell">Here is an article on the topic if you want to read more</a>.</p> <p>&nbsp;</p> <p><strong>There is even one study (cited +250 times in other academic papers) that correlates stock trading abilities with digit ratios.</strong>&nbsp; It found that higher fourth/second finger ratios point to better performance.&nbsp; <a href="http://www.pnas.org/content/106/2/623.full">You can read the paper here</a>.</p> <p>&nbsp;</p> <p><strong>Donald Trump, for what it&rsquo;s worth, has second/fourth fingers of almost identical length, meaning that by this measure he is not naturally inclined to risk taking.&nbsp;</strong> You may recall some discussion of his hands during the primaries, and as a result there are many pictures of them available online.&nbsp; There is also a hand print at Madame Tussaud&rsquo;s in Times Square.&nbsp; The evidence is clear: his second and fourth fingers are of roughly equal length.</p> <p>&nbsp;</p> <p><u><strong>Birth order.</strong></u> Are you an only child?&nbsp; A first born? A later born?&nbsp; The answer may help explain a lot of your personality traits.&nbsp; First borns, for example, tend to feel comfortable supporting the status quo.&nbsp; Growing up, after all, they had the more privileges than later-born children in the same family.&nbsp; Conversely, later-born kids may end up revolting against established societal rules since in childhood they felt disadvantaged relative to their older siblings.</p> <p>&nbsp;</p> <p><strong>Now, this is a controversial theory, with plenty of research work done both to support and disprove the idea.&nbsp; </strong>The best thing you can say about it is that (with few exceptions) everyone is an only, an older, or a younger child in a family.&nbsp; Draw your own conclusions about what that might mean.</p> <p>&nbsp;</p> <p><strong>Donald Trump is the fourth of five children, with nine years between the oldest born and his spot in the birth order.&nbsp;</strong> The first born in the family is Maryanne Trump Barry, now a retired Federal judge.&nbsp; Next in line was Fred Jr, a gregarious airline pilot who died at a young age from alcoholism.&nbsp; Elizabeth comes next in the birth order, followed by Donald.&nbsp; Last in the queue is Robert, best known in NYC circles for an incredibly messy divorce in 2009 from then-wife Blaine.</p> <p>&nbsp;</p> <p><strong>Does that make Donald Trump a natural revolutionary?&nbsp;</strong> Perhaps.&nbsp; Birth order theory is still a work in progress.&nbsp; <a href="http://www.realsimple.com/work-life/family/birth-order-traits">You can read more about it here</a>.</p> </blockquote> <p><strong>Shifting back to the relative terra firma of capital markets, we can say that even if Donald Trump had been a first born with a longer ring finger investors would still want the next few days to fly by as quickly as possible.&nbsp;</strong> If &ldquo;Buy the rumor, sell the news&rdquo; is a long held Wall Street aphorism, it still doesn&rsquo;t address what you should do between the first and second parts of that saying.&nbsp; And that&rsquo;s the position we find ourselves in now.</p> <p><strong>One problem with the post-election rally is that US equity markets have run out ahead of the earnings expectations.</strong>&nbsp; Every month we look at what brokerage analysts have in their financial models for revenue growth inside the 30 companies of the Dow Jones Industrial Average as well as what FactSet&rsquo;s data is showing about sales/earnings expectations for the S&amp;P 500 companies. Our data is below...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_colas1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_colas1_0.jpg" style="width: 600px; height: 369px;" /></a></p> <p><a href="http://insight.factset.com/hubfs/Earnings%20Insight/EarningsInsight_011317.pdf"><em>The latest FactSet Earnings Insight report is available here.</em></a></p> <p><strong>A few points here:</strong></p> <ul> <li><strong>Analysts are clearing waiting for specifics</strong> about incoming President Trump&rsquo;s agenda, and how Congress responds, before changing any of their financial models.</li> <li>FactSet&rsquo;s data shows that Wall Street <strong>analysts haven&rsquo;t really budged off their $133/share earnings number for the S&amp;P 500 for 2017</strong>. That is essentially the same number they had in October of last year, although it declined slightly to about $132.50/share in mid-November before bouncing back at the end of last year. (Page 20 of the report we cite above.)</li> <li><strong>FactSet also shows that analysts are still cutting their Q1 2017 estimates </strong>even as consumer confidence has taken a bit of a post-election bounce and overall Q4 2016 estimates remained static. (also Page 20)</li> <li>As compared to estimates from September 30, FactSet reports that <strong>analysts are slightly less optimistic about 2017 earnings growth now versus then (11.4% versus 11.5%), even though they are a bit cheerier about potential revenue growth (5.9% then, 6.0% now).</strong> (Page 17)</li> <li><strong>Our own data from Street estimates for the 30 Dow names shows a similar trend.</strong> Analysts are cutting their revenue expectations, most recently to 4.0% on average.&nbsp; This compares to almost 5.0% expected growth just before the election last October.</li> <li>The same trend is in evidence for Q1 and Q2 2017, where<strong> analysts now expect just 5.7%/3.7% growth versus +8%/+4% last October.</strong></li> </ul> <p><strong>Now, capital markets are not always beholden to what Wall Street analysts print in their models.&nbsp;</strong> If investors believe in future revenue and earnings growth they are happy to run out ahead of the Street.&nbsp; The problem here may well be as simple as valuations.&nbsp; At 17x earnings, US stocks already discount some improvement in earnings (most of which was expected no matter which candidate won the presidency).</p> <p><strong>It may well be that markets simply need to see what happens after the clock strikes noon on Friday.&nbsp; </strong>The bright spot is that none of what President Elect Trump has promised/proposed is yet in any Wall Street numbers.&nbsp; As those measures come into tangible existence, equities should respond.</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="962" height="512" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170118_colas.jpg?1484763314" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/trumps-not-so-invisible-hand#comments Business Capital Markets Climate change skepticism and denial Congress Conservatism in the United States Consumer Confidence Donald Trump Donald Trump Dow 30 Dow Jones Industrial Average Economy Equity Markets FactSet Finance Fundamental analysis Money None S&P 500 Stock market The Apprentice Valuation WWE Hall of Fame Wed, 18 Jan 2017 22:15:00 +0000 Tyler Durden 585765 at http://www.zerohedge.com Obama: "This Whole Notion Of 'Voter Fraud' Is 'Fake News'" http://www.zerohedge.com/news/2017-01-18/obama-whole-notion-voter-fraud-fake-news <p>Speaking at his <a href="http://www.zerohedge.com/news/2017-01-18/live-stream-last-obama-lovefest-aka-press-conference">final press conference from the White House</a>, Obama decided to tackle the prickly topic of "voter fraud" saying that the notion that "<strong>there are a whole bunch of people out there who are <span style="text-decoration: underline;">not eligible to vote</span> and want to vote" </strong>is just "fake news".<strong><br /></strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"This whole notion of <strong>voting fraud, this is something that has constantly been disproved.&nbsp; This is 'fake news'."&nbsp; </strong></p> <p>&nbsp;</p> <p><strong>"The notion that there are a whole bunch of people out there who are not eligible to vote and want to vote.</strong>&nbsp; We have the opposite problem.&nbsp; We have a bunch of people who are eligible to vote, who don't vote."</p> </blockquote> <p><iframe src="https://www.youtube.com/embed/slFhQxrOQW0" width="600" height="337" frameborder="0"></iframe></p> <p>&nbsp;</p> <p>Which would be true, if not for the<strong> inconvenient fact that numerous Democratic operatives</strong>, including <a href="http://www.zerohedge.com/news/2016-10-18/robert-creamer">Bob Creamer, a "consultant" who visted the White House 200 times during Obama's administration</a>, <strong>are on film admitting to mass voter fraud</strong>.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“It’s a very easy thing for Republicans to say, “Well, they’re bussing people in.” Well, you know what? <strong>We’ve been bussing people in to deal with you fucking assholes for fifty years and we’re not going to stop now, we’re just going to find a different way to do it."</strong></p> <p>&nbsp;</p> <p>“When I do this I think as an investigator first – I used to do the investigations. I think backwards from how they would prosecute, if they could, and then try to build out the method to avoid that.”</p> </blockquote> <p><iframe src="https://www.youtube.com/embed/hDc8PVCvfKs" width="600" height="337" frameborder="0"></iframe></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="717" height="470" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/Obama%20Sad_0.JPG?1484770971" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/obama-whole-notion-voter-fraud-fake-news#comments Electoral fraud Obama's administration Politics Voter suppression White House White House Wed, 18 Jan 2017 21:50:51 +0000 Tyler Durden 585783 at http://www.zerohedge.com Oil Unsure As Huge Gasoline Inventory Build Offsets Crude Draw http://www.zerohedge.com/news/2017-01-18/crude-chaotic-inventory-data-shows-huge-gasoline-build-crude-draw <p>Following last week&#39;s surge in crude and product inventories, API reported a <strong>much bigger than expected drawdown in crude </strong>inventories ( versus -1mm expectations). While this spiked WTO prices, they fell back amid <strong>massive builds in gasoline (9.75mm)</strong> and distillates.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>API</strong></span></p> <ul> <li>Crude -5.042mm (-1mm exp)</li> <li>Cushing -1.01mm (-500k exp)</li> <li>Gasoline +9.75mm</li> <li>Distillates +1.17mm</li> </ul> <p>Another massive build in gasoline inventories offsets the exuberant price action from a big draw in crude and cushing... (though notably there is a seasonal norm here)</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_API2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_API2_0.jpg" style="width: 600px; height: 321px;" /></a></p> <p>&nbsp;</p> <p>WTI had slipped to a $51 handle before the NYMEX close today on USD strength, and whipsawed wildly on the API print...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_API1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_API1_0.jpg" style="width: 600px; height: 345px;" /></a></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="1305" height="751" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170118_API1.jpg?1484775481" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/crude-chaotic-inventory-data-shows-huge-gasoline-build-crude-draw#comments API Brookfield Place Business Commodity markets Crude Distillates Economy Finance New York Mercantile Exchange NYMEX Price Action World Trade Organization Wed, 18 Jan 2017 21:40:10 +0000 Tyler Durden 585795 at http://www.zerohedge.com Foreign Central Banks Liquidate Record $405 Billion In US Treasuries As China Sells Most US Paper Since 2011 http://www.zerohedge.com/news/2017-01-18/china-sells-most-us-treasuries-2011 <p>The wholesale liquidation of US Treasuries continued in November, when according to the <a href="https://www.treasury.gov/press-center/press-releases/Pages/jl0711.aspx">just released TIC data</a>, foreign central banks sold another $936 million in US paper in November 2016, which due to an offset of $892 million in buying one year ago, means that for the 12 month period ended November, <strong>foreign central banks have now sold a new all time high of $405 million in the past 12 months, up from a record $403 million in LTM sales as of one month ago.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/Central%20banks%20Jan%202016.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/Central%20banks%20Jan%202016_0.jpg" width="500" height="302" /></a></p> <p>Where did the selling come from? </p> <p>While Japan sold about $23 billion in November, its fourth month of consecutive selling, it was China which drove the selloff,<strong> dumping a whopping $66.4 billion in US Treasuries in its 6th consecutive monthly sale of US paper, and the biggest monthly selloff since December 2011</strong>. The monthly sale also brings China's total Treasury holdings to the lowest level since early 2010.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/20170118_HOLDCH.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/20170118_HOLDCH_0.jpg" width="500" height="251" /></a></p> <p>When combining China's with the Belgian holdings, an offshore center used by China to mask its purchases (and over the past two years sales) the correlation between combined Treasury holdings and China's total reserves suggests that this is where the action is at. And considering the reduction in reserves has continued into December, it is safe to assume that China continued to sell US paper to match the reduction of its foreign reserves which as a reminder declined, officially, by another $41 billion last month.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/china%20belgium%20holdings%20jan%202017_1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/china%20belgium%20holdings%20jan%202017_1_0.jpg" width="500" height="361" /></a></p> <p>Curiously, reversing its recent trend, Saudi Arabia bought just over $3 billion in Treasury, and has added $10.7 billion in US paper in the past 2 months, the most since July 2006. </p> <p>But most troubling was neither Japan's, nor China's selling, but all foreign holders of US Treasurys combined, which sold $70.8 billion, the most in one month ever, bringing their total holdings to 3.771 trillion, far below the $4.117 trillion held one year ago. <strong>On an annual basis, the drop was -8.4%, the biggest decline on record</strong> (don't blame Russia: "Putin" actually bought $12 billion in US paper in November). </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/20170118_HOLDTSY.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/20170118_HOLDTSY_0.jpg" width="500" height="250" /></a></p> <p>* * * </p> <p>As we pointed out one month ago, what has become increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a troubling pace, something which in light of the recent surge in yields, appears to have been a prudent move.</p> <p>In some cases, like China, this is to offset devaluation pressure; in others such as various petroleum exporting nations - but curiously not Saudi Arabia in the past 2 months -&nbsp; it is to provide the funds needed to offset the drop in the petrodollar, and to backstop the country's soaring budget deficit. In all cases, it may suggest concerns about a spike in future debt issuance by the US, especially now under the pro-fiscal stimulus Trump administration.</p> <p>Who are they selling to? The answer, at least until August, was private demand, in other words just like in the stock market the retail investor is the final bagholder, so when it comes to US Treasuries, "private investors" both foreign and domestic are soaking up hundreds of billions in central bank holdings. As we said two months ago when we observed this great rotation in Treasuries out of official holders into private hands, "we wonder if they would [keep buying] knowing who is selling to them." Well, svereal months ago this changed, and after private investors had been happily snapping up bonds for 4 straight months, in September "other foreign investors" sold a whopping $31 billion, bringing the total outflow between public and private foreign holdings to $76.6 billion, the second highest number on record. In October, while foreign official entities sold another $45 billion, at least the pace of selling by private entities moderated somewhat, to "only" $18.3 billion. However, in November the trend appears to have reversed again, and private foreign buyers picked up some $731 million. Maybe they know something central banks do not?</p> <p>Meanwhile, while just five months ago yields had tumbled to near all time lows, suddenly the picture is inverted, and long-yields are once again rising on concerns that not only could the ECB and the BOJ soon taper their purchases of the long end, but that Donald Trump is about to unleash a $1 trillion debt tsunami at a time when the Fed will not be available to monetize it, now that the Fed is again hiking rates.</p> <p>While it is unclear under what conditions foreign buyers will come back - after all TSY yields have already jumped high enough to where US paper should be more than attractive to foreign official institutions - one thing is clear: as of this moment the selling strike not only continues but is accelerating, and should the foreign liquidation of Treasuries fail to slow, Yellen will soon have to plan how to not only abort the current rate experiment which continues to pressure yields higher around the globe, but to start thinking how to soak up all the excess supply instead.</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="1059" height="639" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Central%20banks%20Jan%202016.jpg?1484774531" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/china-sells-most-us-treasuries-2011#comments Asia Bank of Japan Budget Deficit Business Central Banks China Donald Trump Economy European Central Bank Fail Finance Foreign Central Banks Foreign-exchange reserves Japan Money Saudi Arabia Saudi Arabia State Administration of Foreign Exchange Trump Administration United States Treasury security US Federal Reserve Wed, 18 Jan 2017 21:38:12 +0000 Tyler Durden 585794 at http://www.zerohedge.com Angela Merkel's EU Army Poses the Greatest Threat to World Peace in 2017 http://www.zerohedge.com/news/2017-01-18/angela-merkels-eu-army-poses-greatest-threat-world-peace-2017 <h5 style="clear: both; margin-top: 0px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;"><span style="font-size: 16px; font-weight: normal;">This article was orignally posted at <a href="http://disobedientmedia.com/angela-merkels-eu-army-poses-the-greatest-threat-to-world-peace-in-2017/" target="_blank">www.disobedientmedia.com</a></span></h5> <h5 style="clear: both; margin-top: 0px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;">Abstract</h5> <h5 style="clear: both; margin-top: 0px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;"> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">German Chancellor Angela Merkel and other Europhile politicians have pushed forward with an aggressive campaign to militarize the European Union. These plans have at times been kept from European citizens in certain states. The new EU Army appears to be supplied at least in part by NATO which is currently being affected by corruption scandals and the death of its Chief Auditor under suspicious circumstances.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">Germany has been responsible for a recent spike&nbsp;in anti-American and UK rhetoric. Their combative stance, and desperate attempts to prevent sovereign nations from deciding if they will continue to be members of the EU raise questions about the true purpose of the new EU Army.</p> </h5> <h5 style="clear: both; margin-top: 56px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;">I. The EU Army</h5> <h5 style="clear: both; margin-top: 0px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;"> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">Calls&nbsp;for an EU Army pre-exist&nbsp;current&nbsp;trends among Europeans and Americans to reject international institutionalism for a more nationalistic, sovereign state oriented model of governance.&nbsp;<a href="https://archive.fo/k08N1" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">The Guardian</a>&nbsp;was reporting in 2015 that European Commission President Jean-Claude Juncker was calling for an EU Army to show Russia that the bloc was "serious about defending its values." The shock result of Brexit merely accelerated plans within the EU that were already in progress.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">There are some indications that the EU Army's formation has occurred far more rapidly than the public realizes, and in some cases is actively concealed. In 2015 European People's Party president Joseph Daul&nbsp;<a href="https://archive.fo/fppvG" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">told journalists</a>&nbsp;that “We are going to move towards an EU army much faster than people believe.”&nbsp;<a href="https://archive.fo/8PtLf" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">The Times</a>&nbsp;reported on May 27, 2016 that news of plans for the acceleration of the EU Army formation had been kept from voters in the UK until the day after the Brexit referendum.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">In September 2016, German newspaper&nbsp;<a href="https://archive.fo/dlI03" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Süddeutsche Zeitung</a>&nbsp;published a paper which had been jointly authored by&nbsp;French and German Defense Ministers Jean-Yves Le Drian and&nbsp;Ursula von der Leyen. The document called for the establishment of a "common and permanent" European military headquarters, in addition to the creation of EU military structures, including an EU Logistics Command and an EU Medical Command. That same month the&nbsp;<a href="http://archive.is/2PmUV" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">BBC</a>&nbsp;carried public comments by Jean-Claude Jucker calling for the establishment of a headquarters for the EU to operate out of. These calls for an established chain of command and control structures&nbsp;would seem odd if the EU Army had not been already formed and equipped to some extent. Citing the victory of Euroskeptic Donald Trump in the 2016 U.S. Presidential Election,&nbsp;<a href="http://archive.is/qTfi6" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Germany has stated</a>&nbsp;their desire to accelerate plans for the EU Army even more so than before.</p> </h5> <h5 style="clear: both; margin-top: 56px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;">II. NATO Arms/Vehicles May Be Being Used to Covertly Equip the EU Army</h5> <h5 style="clear: both; margin-top: 0px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;"> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><strong>A. Buildup of Arms and Equipment in NATO Member States</strong></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">Quite a bit of media attention has been given to recent NATO efforts to posture itself militarily for the purpose of standing up to "Russian aggression.” A great deal of&nbsp;weaponry and heavily machinery has been moved into the EU and Eastern Europe/the V4 (<a href="https://archive.fo/FPTXF" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Visegrad Group</a>). These movements are part of&nbsp;<a href="https://www.defense.gov/Portals/1/features/2014/0514_atlanticresolve/docs/Operation_Atlantic_Resolve_Fact_Sheet_31_DEC_2015.pdf" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Operation Atlantic Resolve</a>, which was initiated by the U.S.&nbsp;<span class="s1">in an effort to reassure NATO allies in the wake of&nbsp;Russian interference in Ukraine. Here are a number of news articles outlining shipments of NATO heavy vehicles and equipment to various states in Europe:</span></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><a href="http://archive.is/9yPDX" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Russia Today</a>&nbsp;on March 9, 2015 reporting the shipment of&nbsp;<span class="s1">120 armored units, including M1A2 Abrams tanks and M2A3 Bradley armored vehicles, to Latvia.</span></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><a href="http://archive.is/aYmxr" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">CBS News</a>&nbsp;on&nbsp;<span class="s1">June 23, 2015 carried statements from Secretary of Defense Ash Carter announcing plans to station tanks and heavy weapons in new NATO member states for the first time since the end of the Cold War.&nbsp;</span></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><a href="http://archive.is/S3AQN" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Daily Mail</a>&nbsp;and&nbsp;<a href="http://archive.is/R0VP6" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">CNN</a>&nbsp;both reported in February 2016 that&nbsp;<span class="s1">the United States was to deploy tanks and other equipment within a Cold War era cave system in Norway.&nbsp;</span><span class="s1">The six-cave facility is classified but was used by the United States as an arms depot in 1981 during the Cold War. The cave system was reported to contain enough equipment to support more than 15,000 Marines. A portion of the equipment was used in last year's&nbsp;<a href="http://archive.is/bLkSS" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Cold Response 16</a>&nbsp;exercises.</span></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><a href="http://archive.is/tvrjb" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">BBC News</a>&nbsp;reported on January 6, 2017 that 120+ tanks and heavy vehicles were being moved through Germany along with 3,500 troops for deployment on Europe's eastern frontier.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><strong>B. NATO Secretary General Jens Stoltenberg's Ties to Corruption</strong></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">There is some indication that NATO's shipments of weapons and vehicles to Europe&nbsp;are not being sent for the purpose of providing deterrence against Russia.&nbsp;<a href="http://disobedientmedia.com/the-clinton-global-initiative-closed-down-in-wake-of-several-related-international-corruption-scandals/" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Disobedient Media</a>&nbsp;has already reported that the current Secretary General of NATO, Jens Stoltenberg, may have been appointed to the position after&nbsp;a series of&nbsp;scandals where it was revealed&nbsp;that under his tenure as Prime Minister from 2005 to 2013 Norway sent over 584 million Kroner over a period of years to the Clinton Foundation. Stoltenberg was appointed as the Secretary General of NATO after retiring as head of the Norwegian Labor Party.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">Given his ties to corruption and the Clinton Foundation, it is plausible that Stoltenberg would have been willing to collaborate with Angela Merkel, another ally of the Clintons. He is responsible for&nbsp;<a href="https://archive.fo/XeCEP" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">massively increasing NATO’s budget</a>&nbsp;over the last few years.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><strong>C. Suspicious Death of NATO Chief Auditor and its Significance</strong></p> <p class="p1" style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><span class="s1">Yves Chandelon, the Chief Auditor at NATO, was found dead in the city of Andenne in the Belgian Ardennes on December 16, 2016. His death appears to have been first reported by French newspaper&nbsp;<a href="https://archive.fo/6Ajzq" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">La Meuse</a>.&nbsp;</span><span class="s1">It was picked up the next day by Luxembourgian paper&nbsp;<a href="https://archive.fo/imjLp" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;"><span class="s2">Tageblatt</span></a><em>.</em></span></p> <p class="p1" style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><span class="s1">On December 22nd, Russian publication&nbsp;<a href="https://archive.fo/SIZl3" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;"><span class="s2">Pravda</span></a>&nbsp;ran the story in English, reporting that Chandelon’s body was detected 140km (87 miles) away from his work, and 100km (62 miles) away from his home in the city of Lens.&nbsp; The article stated that he&nbsp;owned three registered weapons, but that the gun used in the suicide was not registered. &nbsp;It also noted that he had been receiving strange phone calls. &nbsp;</span><span class="s1">The same day, LaMeuse carried two reports with additional facts about Chandelon’s death.&nbsp;<a href="https://archive.fo/joYL6" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;"><span class="s2">The first</span></a>&nbsp;stated that a “farewell letter” was found in Chandelon’s car.&nbsp;<a href="https://archive.fo/QOBG6" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;"><span class="s2">The second</span></a>&nbsp;stated that the gun used in the apparent suicide was found in his right hand, despite the fact that Chandelon was left-handed.</span></p> <p class="p1" style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><span class="s1">Also emerging on December 22nd was a report by Flemish newspaper&nbsp;<a href="https://archive.fo/PyBeO" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;"><span class="s2">De Morgen</span></a>. De Morgen wrote that the family of Chandelon contested the verdict of a suicide. The&nbsp;family said that Chandelon had told them he felt he was being followed, and that he was receiving strange phone calls prior to his death. &nbsp;The family stated&nbsp;that he was a happy individual and had made several plans for the New Year. Even more strangely, on December 26th,&nbsp;<a href="http://archive.is/rK7Ij" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">The Express</a>&nbsp;reported that the gun which caused Chandelon's death as actually found in his glove box. The story has received no coverage by mainstream media outlets in the United States whatsoever.</span></p> <p class="p1" style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">The death of Mr. Chandelon, and the apparently strange circumstances in which it occurred is significant because of his position in NATO. As Chief Auditor, one of Mr. Chandelon's duties would have been&nbsp;to make sure goods are actually delivered to their destination. Revenue cannot be recognized until service is performed, so it would have been necessary to ensure that shipments of munitions, weapons and vehicles were actually&nbsp;being delivered. Mr. Chandelon's death&nbsp;raises the question of whether or not his untimely demise&nbsp;had any relation to the recent increase in shipments of arms and vehicles to NATO states and the acceleration of efforts to form the EU Army.</p> </h5> <h5 style="clear: both; margin-top: 56px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;">III. The Three Pronged PR Campaign to Sell the EU Army to Europe</h5> <h5 style="clear: both; margin-top: 0px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;"> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">The EU Army is being sold to Europe using what appears to be a three pronged Public Relations approach:&nbsp;stoking fears of internal threats, making the EU Army synonymous with calls for European unity, and lashing out the US as unable to protect Europe from external threats. In some cases, public figures have&nbsp;struck&nbsp;out at nations attempting to hold referendums on EU membership in 2017 which might result in more member states leaving the Union along with Britain. Such combative rhetoric is concerning when the militarization of the European Union is taken into consideration.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><strong>A. Internal Threats</strong></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">Part of Merkel's incentive to whip up fear among the populace is personal - her public advocacy of Germany's policy towards migrants fleeing the Middle East has landed her in political hot water after Germany was hit by a&nbsp;<a href="http://disobedientmedia.com/germany-fails-to-prevent-isis-attacks-and-infiltration-of-its-intelligence-bodies-in-2016-as-bamf-documents-show-a-history-of-allowing-at-risk-migrants-to-enter-the-country-as-informants/" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">series of intelligence and anti-terror failures</a>&nbsp;resulting in the deaths of German citizens and infiltration of German intelligence. &nbsp;Merkel&nbsp;was trying to justify her pro immigrant policy to Germany as late as August 2016:</p> <blockquote style="border-left: 4px solid #1a1a1a; color: #686868; font-style: italic; line-height: 1.47368; margin-bottom: 28px; overflow: hidden; padding-left: 24px; margin-left: -28px; font-weight: normal;"><p><span class="s1">"The phenomenon of the Islamist terrorism of ISIS is not a phenomenon that has come to us through refugees but rather one which we've already had here before" - Angela Merkel, August 18, 2016,&nbsp;<a href="http://web.archive.org/web/20170117233732/https://www.washingtonpost.com/news/worldviews/wp/2016/08/18/angela-merkel-says-germanys-terror-problem-predates-the-refugee-crisis/?utm_term=.67e214236061" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Washington Post</a></span></p> </blockquote> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">After the string of terror attacks and intelligence failures in 2016,&nbsp;Merkel has been forced to alter her lenient views on migrants and terror in Germany in the face of&nbsp;<a href="http://archive.is/bVXw0" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">public criticism</a>. Pundits were&nbsp;<a href="http://archive.is/hCJ2U" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">speculating</a>&nbsp;within days of the Berlin&nbsp;tragedy that Merkel's enemies on the political right would&nbsp;capitalize on the failures of her lenient policies. Merkel's response to growing pressure from her opponents has largely been to double down on stern rhetoric by calling for a&nbsp;<a href="http://archive.is/VL1I6" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">ban on burkhas</a>&nbsp;and finally&nbsp;<a href="http://archive.is/8nfMb" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">declaring</a>&nbsp;on December 31, 2016 that Islamic terror was Germany's greatest threat.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">At the same time that Germany has tried to downplay the threat of Islamic extremism and the effect that the migrant crisis has on its prevalence in 2016, they have been engaged in efforts to keep the public's attention on "far right extremist groups" who pose an increasing political threat to Merkel. Russian news source&nbsp;<a href="http://archive.is/TQl3m" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Sputnik</a>&nbsp;has highlighted Germany's efforts to crack down on far right groups, especially those who have been seeking to acquire weapons to defend themselves against perceived threats from migrants.&nbsp;<a href="http://archive.is/cI6Bv" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">German media</a>&nbsp;has a history of labeling growing politically right groups such as Alternative füer Deutscheland (AfD) as having neo-Nazi inclinations in an attempt to discredit them.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">Internal threats, both real and perceived, provide Angela Merkel with an ideal way to sow fear amongst the population and encourage demand for the EU Army and European unification.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><strong>B. Calls for EU Unity</strong></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">With the shock result of Brexit, EU leadership has been scrambling to discourage other states from holding similar referendums on continuing their membership in the European Union. Jean-Claude Juncker has&nbsp;<a href="http://archive.is/oPWSN" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">branded</a>&nbsp;attempts to hold "in-out" referendums as "unwise" due to the likelihood that more votes to leave the EU would severely weaken the Union. He has also&nbsp;<a href="http://archive.is/0JJd6" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">threatened Britain</a>&nbsp;with "consequences" for Brexit. Leaders of smaller EU member states have&nbsp;<a href="http://archive.is/gGS3N" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">similarly urged</a>&nbsp;that countries no longer hold referendums, since this would likely cause economic damage&nbsp;to weaker members. Rather than taking steps to slow the accelerated interconnectivity of the EU which has bothered European citizens, politicians in Brussels have gone the opposite direction and made the formation of the EU Army central to&nbsp;their&nbsp;<a href="http://archive.is/Fwbv2" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">efforts to promote closer European unity</a>. American news outlets such as the&nbsp;<a href="http://archive.is/86N8H" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">New York Times</a>&nbsp;have expressed confusion at such efforts given that voters appear to be far more concerned about internal threats posed by groups such as ISIS.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">By making the EU military&nbsp;an indispensable element of future plans for the European Union, Angela Merkel leaves citizens who are uncertain about a future without the Union no choice but to accept plans for militarization.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><strong>C. Claiming the US/NATO is Ineffective Compared to&nbsp;the European Union and its Army</strong></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">The most concerning development to come out of the European Union over the past several years has been a recent rise in rampant anti-American rhetoric from Angela Merkel.&nbsp;Merkel, a staunch&nbsp;<a href="https://archive.fo/LVogg#selection-1379.106-1379.115" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">supporter of Hillary Clinton</a>&nbsp;was perhaps hoping that her EU Army&nbsp;buildup&nbsp;would have been less complex had her friend won the executive office of the United States.&nbsp;<a href="http://archive.is/zCzlS" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Reports</a>&nbsp;indicate that Donald Trump's transition team may have&nbsp;already been in contact with EU leadership to express their desire that states wishing to leave the Union be allowed to do so. The incoming U.S. Ambassador to the EU&nbsp;<a href="http://archive.is/SxtkM" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">has warned</a>&nbsp;that Mr. Trump will not stand for an EU Army during his Presidency, as the financial strains it would place on European states would interfere with their pre-existing financial obligations to NATO.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">In an apparent response to Trump's moves to consolidate European defense spending on NATO rather than&nbsp;the EU Army, Angela Merkel made a January 13, 2017 speech where&nbsp;<a href="http://archive.is/4rHFZ" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">she railed</a>&nbsp;against the United States and UK as having become "weak" and called for the remaining states of the EU to move ahead even more rapidly towards what she described as a "<span class="s1">Defense Union." This new, confrontational style of rhetoric is concerning from a nation at the forefront of a Union pushing militarization whilst simultaneously keeping certain voter blocs ignorant about the exact progress of those efforts.</span></p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">Just what a "Defense Union" is needed to guard against is unclear, though the most likely justification is the ever present Russian menace touted by bureaucrats throughout Europe. The Russian narrative is often used as a cover story for whatever political purpose the actor who pushes it supports. Whether it is to discredit Wikileaks, delegitimize Donald Trump's victory in the U.S. Presidential election or, bizarrely,&nbsp;<a href="http://archive.is/f2dMV" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">accuse Russia of planting child porn on American government computers</a>,&nbsp;the supposed threat of Russia has been pushed to exhaustion by&nbsp;different&nbsp;leadership figures for a plethora of reasons.&nbsp;In the case of the EU, the Russia narrative is used to justify&nbsp;the formation and equipping of the EU Army.&nbsp;<a href="http://archive.is/Gbd4A" target="_blank" style="box-shadow: currentcolor 0px 1px 0px 0px; color: #007acc;">Just this week</a>, EU supporting European leaders were attempting to frame Donald Trump's comments about the need to reform NATO as a sign that he would abandon important US allies in the theoretical event of military conflict with Russia.</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">How a European Union military force will be more efficient or desirable than the current arrangement with NATO is unclear. Given the recent rise of&nbsp;Islamic extremism in Europe and increasing numbers of states seeking to leave the European Union, it appears far more likely that Merkel's new army would be deployed domestically. With Germany feeling the political and economic squeeze of the UK's Brexit vote and likely several more "Leave" results in EU membership referendums Angela Merkel becomes more desperate and isolated by the day. Throwing additional military power into the mix seems unnecessary at best and incredibly dangerous at worst. Her decision to begin lashing out at the US and Euroskeptic European states indicates that the latter possibility may be more likely.</p> </h5> <h5 style="clear: both; margin-top: 56px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;">IV.&nbsp;The Danger of&nbsp;European Union Internal Incidents&nbsp;to the United States</h5> <h5 style="clear: both; margin-top: 0px; margin-bottom: 28px; font-size: 19px; line-height: 1.10526; color: #1a1a1a; font-family: Merriweather, Georgia, serif;"> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;">A potential conflict anywhere within the EU should cause great concern in the&nbsp;United States. Given the many military installations the United States has throughout Europe, which are now more numerous given NATO's recent shift to posture against Russia with Operation Atlantic Resolve there is a real risk that the U.S. could be drawn&nbsp;militarily&nbsp;into a European conflict, whether caused by state on state disputes or large scale Islamic terror events. The map below shows just a few of the American military installations currently found in Europe:</p> <p style="margin-top: 0px; margin-bottom: 28px; font-size: 16px; font-weight: normal;"><img src="http://disobedientmedia.com/wp-content/uploads/2017/01/1446235994227-1-1024x699.jpg" width="840" height="573" style="height: auto; max-width: 100%; vertical-align: middle; display: block; margin-right: auto; margin-bottom: 28px; margin-left: auto; clear: both;" class="wp-image-759 size-large aligncenter" /></p> </h5> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="1333" height="1000" alt="" src="http://www.zerohedge.com/sites/default/files/images/user240135/imageroot/-%D0%BC%D0%B5%D1%80%D0%BA%D0%B5%D0%BB-2.jpg?1484774732" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/angela-merkels-eu-army-poses-greatest-threat-world-peace-2017#comments American government B+ Brexit Clinton Foundation Corruption Defense Union Donald Trump Eastern Europe Eastern Europe EU Army EU Logistics Command EU Medical Command European Commission European migrant crisis European Union European Union European Union German intelligence Germany International relations Latvia Middle East Middle East Military Military of the European Union NATO NATO–Russia relations New York Times Newspaper North Atlantic Treaty Organization Norway Norwegian Labor Party People ' s Party Politics Ukraine Unification United Kingdom European Union membership referendum War Wed, 18 Jan 2017 21:25:32 +0000 William Craddick 585793 at http://www.zerohedge.com Netflix Soars Despite Slashing Domestic Subscriber Outlook & Record Cash-Burn http://www.zerohedge.com/news/2017-01-18/netflix-soars-despite-slashing-domestic-subscriber-outlook-record-cash-burn <p><strong><em>Forget the negative cash-flow, forget the ongoing and rising cost of content, and forget the fact that Netflix slashed its domestic subscriber growth expectations</em></strong>; buy-the-f##king-record-high because earnings and revenues met expectations but international subscriber growth soared.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_nflx.jpg"><img height="342" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_nflx_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Summary:</p> <ul> <li>*NETFLIX 4Q INTL NET STREAMING ADDS 5.12M, EST. 3.78M</li> <li>*NETFLIX SEES 1Q INTL NET STREAMING ADDS 3.7M, EST. 3.5M</li> <li>Q4 EPS (GAAP):&nbsp;$0.15, to Wall Street forecasts of $0.13, which were inline with&nbsp;Netflix guidance of $0.13.</li> <li>Q4 Revenue:&nbsp;$2.48 billion, to&nbsp;Wall Street estimates of&nbsp;$2.47 billion, up 36% year-over-year.</li> </ul> <p>And then there&#39;s this...</p> <p><u><strong>Slashing domestic subscriber growth expectations...</strong></u></p> <ul> <li><strong><span dir="ltr" id=":6of.co">*NETFLIX SEES 1Q DOMESTIC NET STREAMING ADDS 1.5M, EST. 1.72M</span></strong></li> </ul> <p>And the only chart that really matters...</p> <p><u><strong>Record Cash burn...</strong></u></p> <p><em>Q4 free cash flow totaled -$639 million vs. -$276 million last Q4 and -$506 million in Q3&rsquo;16. The sequential increase was largely due to the timing of content payments, including our growing slate of self-produced originals. Producing more owned content creates some lumpiness in our working capital needs. We expect our FCF to be around -$2 billion in 2017 vs. -$1.7 billion in 2016, with FCF loss improving sequentially in Q1&rsquo;17.</em><br />&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/NFLX%20cash%20burn%20Q4%202016.jpg"><img height="381" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/NFLX%20cash%20burn%20Q4%202016_0.jpg" width="600" /></a></p> <p>And it&#39;s set to get worse...</p> <ul> <li><strong>*NETFLIX SEES FCF AROUND -$2B IN 2017</strong></li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/NFLX%20forecast%20Q4%202016.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/NFLX%20forecast%20Q4%202016_0.jpg" style="width: 600px; height: 555px;" /></strong></a></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="1023" height="650" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/NFLX%20cash%20burn%20Q4%202016.jpg?1484774406" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/netflix-soars-despite-slashing-domestic-subscriber-outlook-record-cash-burn#comments Business Business Free cash flow GAAP Human Interest Netflix Recommender systems Software Wed, 18 Jan 2017 21:20:37 +0000 Tyler Durden 585792 at http://www.zerohedge.com Dow Drops As Dollar, Bond Yields Spike Most Since Election http://www.zerohedge.com/news/2017-01-18/dow-drops-dollar-bond-yields-spike-most-election <p>For Goldman bulls today...</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/M5QGkOGZubQ" width="560"></iframe></p> <p>&nbsp;</p> <p>The Dollar Index surged higher today rebounding from its biggest drop since July with its<strong> biggest spike since the election</strong> today following Trump/Ross comments on NAFTA and extended by Yellen&#39;s comments late on regharding rate hikes... (and we suspect with Xi leaving Davos, China currency strength was unwound)</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD1_1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD1_1_0.jpg" style="width: 600px; height: 317px;" /></a></p> <p>&nbsp;</p> <p>The Dow dropped... <strong><em>(The Dow is down 4 shocking days in a row - the longest losing streak since the election)</em></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD2_0.jpg" style="width: 600px; height: 317px;" /></a></p> <p>&nbsp;</p> <p>As not even Goldman Sachs could rescue bank stocks... <strong><em>(the last two days were the worst for Goldman since Brexit)</em></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD6_0.jpg" style="width: 600px; height: 389px;" /></a></p> <p>&nbsp;</p> <p>And <strong>Bond yields spiked most since the election<em>...(30Y perfectly tagging 3.00%)</em></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD3_0.jpg" style="width: 600px; height: 319px;" /></a></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>While The Dow ended red, Trannies and Small Caps were panic-bid into the close as USDJPY went bananas...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD13.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD13_0.jpg" style="width: 600px; height: 387px;" /></a></p> <p>&nbsp;</p> <p>On the week however, all major US indices remain red...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD12.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD12_0.jpg" style="width: 600px; height: 409px;" /></a></p> <p>&nbsp;</p> <p>VIX spiked to 2-week highs at the open but was quickly slammed lower...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD11.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD11_0.jpg" style="width: 600px; height: 327px;" /></a></p> <p>&nbsp;</p> <p>The entire curve is now higher in yield on the week (led by the belly underperforming)...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD10.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD10_0.jpg" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>The Dollar Index rallied back into the green for the week (led by a collapse in the loonie)...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD9.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD9_0.jpg" style="width: 600px; height: 317px;" /></a></p> <p>&nbsp;</p> <p>As the dollar soared so NAFTA partners currencies plunged...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD4_0.jpg" style="width: 600px; height: 320px;" /></a></p> <p>&nbsp;</p> <p>And it makes one wonder if Yuan strength yesterday was all about face-saving for Xi...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD5_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Gold broke its 7 day winning streak and dropped most in over a month...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD7.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD7_0.jpg" style="width: 600px; height: 342px;" /></a></p> <p>&nbsp;</p> <p>Crude also tumbled to a $51 handle (ahead of tonight&#39;s API data)</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170118_EOD8_0.jpg" style="width: 600px; height: 342px;" /></a></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="600" height="66" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170118_EOD.jpg?1484772104" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/dow-drops-dollar-bond-yields-spike-most-election#comments API Bond Business China Crude Davos Dow Dow 30 Economy goldman sachs Goldman Sachs Goldman Sachs Loonie North American Free Trade Agreement Rockefeller Center Subprime mortgage crisis VIX Yuan Wed, 18 Jan 2017 21:02:28 +0000 Tyler Durden 585786 at http://www.zerohedge.com A Huge Potential Tailwind For Bonds? http://www.zerohedge.com/news/2017-01-18/huge-potential-tailwind-bonds <p><a href="http://jlfmi.tumblr.com/post/156010974775/a-huge-potential-tailwind-for-bonds"><em>Via Dana Lyons&#39; Tumblr,</em></a></p> <p><strong><em>A record Speculator short position in 10-Year futures could fuel a substantial short-covering rally.</em></strong></p> <p>One of the most significant developments in the financial markets over the past 6 months is the potential major reversal in the bond market. After 3 and a half decades of falling yields, we may be witnessing the long-awaited bottom in the cycle. Now, obviously that is a very heady statement to make considering we may not have an answer for many, many years. And if the long-term turn higher in yields is indeed upon us, it is still going to unfold in baby steps (<a href="http://jlfmi.tumblr.com/post/155804242360/is-bond-market-entering-a-new-regime" target="_blank">last week</a>, we pointed out what to watch for now, including a major test presently underway for the 10-Year Yield). However, the seeds of such a reversal have arguably been put into place.</p> <p>One of those seeds that we pointed out last <a href="http://jlfmi.tumblr.com/post/145879635030/has-everyone-moved-to-the-bullish-side-of-the-bond" target="_blank">June</a> was an <strong>overwhelming consensus of bullish sentiment towards bonds. </strong>One way this was manifested was in the positioning in 30-Year Bond futures. At the time, the&nbsp;&ldquo;smart money&rdquo; Commercial Hedgers had adopted their largest net-short position in 18 years. On the flip side, Non-Commercial Speculators, often considered the&nbsp;&ldquo;dumb money&rdquo;, were sitting on one of their longest net positions in decades. As is typically the case, that position did not work in the Speculators&rsquo; favor as bonds have spent most of the last 6 months in a free fall.</p> <p>As one might imagine, the collapse in bond prices has had quite an impact on traders&rsquo; sentiment and positioning. In fact, if we shift to the 10-Year T-Note futures market, we find that Speculators have pulled a 180 and now hold their largest net-short position of all-time &ndash; by a lot.<strong> At a net-short position of nearly 400,000 contracts, it is more than 100,000 larger than any other in history.</strong></p> <p><img alt="image" height="374" src="http://68.media.tumblr.com/a4080f69947728c5db247535a46ea0d7/tumblr_inline_ojxxorFmf51sq14jh_500.jpg" width="600" /></p> <p>&nbsp;</p> <p><em><strong>[ZH: Notably, it&#39;s not just 10Y - aggregate positioning across the entire Treasury futures curve has never been this short]</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170117_EOD6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/01/17/20170117_EOD6_0.jpg" style="width: 600px; height: 312px;" /></a></p> <p><strong>As we have mentioned many times, the &ldquo;dumb money&rdquo; moniker does not mean that Speculators are always wrong. </strong>&nbsp;It is that they are typically are wrong at turning points and key junctures in the underlying contract. Indeed, most of the large rallies in the bond market since the financial crisis accelerated in 2008 were preceded by some of the most extreme Speculator net-short positions in the history of the 10-Year. &nbsp;Of course, one of the challenges in this data is identifying what constitutes an extreme. &nbsp;However, in our present case, I think everyone can agree that the largest Speculator net-short position in history &ndash; by a wide margin &ndash; certainly fits the &ldquo;extreme&rdquo; bill.</p> <p>Even so, another caveat that we must always mention when discussing this CFTC Commitment Of Traders analysis is that <strong>it is not foolproof. </strong>&nbsp;A glance at the record net-long Speculator positioning going into the financial crisis is all the evidence one needs to conclude that. That said, their more recent history, as referenced above, has been much less successful. Therefore, we would not be banking on Speculators hitting the jackpot again.</p> <p>So will this huge short position result in a massive short-squeeze induced bond rally? &nbsp;Only time will tell, although it is not necessarily the positioning that will spark the rally. &nbsp;A short-squeeze is only unleashed by rising prices. &nbsp;Therefore it will take a convincing bounce in bonds in order to persuade these folks to unwind their shorts. &nbsp;As we mentioned <a href="http://jlfmi.tumblr.com/post/155804242360/is-bond-market-entering-a-new-regime" target="_blank">last week</a>, a break below the current level in the 10-Year yield, near 2.33%, may indeed result in a sizable pop in bond prices and spur the aforementioned unwind.&nbsp;</p> <p><strong>Thus, this 10-Year test continues to be perhaps the most compelling development across the financial markets at this time.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em><a href="http://jlfmi.tumblr.com/About" target="_blank">More</a> from Dana Lyons, JLFMI and My401kPro.</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="965" height="501" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170117_EOD6.jpg?1484746152" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/huge-potential-tailwind-bonds#comments Bond Bond Commitment of Traders Contango Dumb Money Economy Finance Financial markets Futures contract Futures exchange Futures market Futures markets Hedge Money Short Smart Money Speculation Wed, 18 Jan 2017 20:55:00 +0000 Tyler Durden 585761 at http://www.zerohedge.com Alibaba'a Jack Ma Drops a Redpill in Davos: The U.S. Wasted $14 Trillion on Wars Over the Past 30 Years http://www.zerohedge.com/news/2017-01-18/alibabaa-jack-ma-drops-redpill-us-wasted-14-trillion-wars-over-past-30-years <p>And there it is, the unvarnished, raw, truth about how everything went wrong for middle class America.<br /> &nbsp;<br /> Since the Vietnam war, more than 45 years ago, the US has embarked on a neocon strategy of war in an effort to build a global empire. The result of that strategy has left American infrastructure second rate, its school system in shambles, and its healthcare system a complete and utter joke.<br /> &nbsp;<br /> Just imagine what America could've done with $14t of investable dollars, instead of waging wars.<br /> &nbsp;<br /> Aside from the wars, America spends more than 50% of its discretionary budget on the military, per annum, 16% of its overall budget.<br /> <a href="http://ibankcoin.com/flyblog/files/2017/01/IMG_6134.png"><img src="http://ibankcoin.com/flyblog/files/2017/01/IMG_6134.png" alt="IMG_6134" width="600" height="677" class="alignnone size-full wp-image-63006" /></a><br /> &nbsp;<br /> <a href="http://ibankcoin.com/flyblog/files/2017/01/IMG_6135.png"><img src="http://ibankcoin.com/flyblog/files/2017/01/IMG_6135.png" alt="IMG_6135" width="600" height="620" class="alignnone size-full wp-image-63007" /></a><br /> &nbsp;<br /> That's the main issue, the sordid topic that is rarely discussed in American politics, for fears of crossing the military-industrial complex.<br /> &nbsp;<br /> Jack Ma from Alibaba doesn't share those same fears, being a Chinese national worth $27b of zero fucks<br /> &nbsp;<br /> In a very rare glimpse into what the Chinese really think about American imperialism and how it shaped the global economy, all the better for China might I add, Jack Ma spoke candidly today in an interview with CNBC's Andrew Ross Sorkin.<br /> <iframe width="560" height="315" src="https://www.youtube.com/embed/887_ybYGgRc" frameborder="0" allowfullscreen></iframe><br /> &nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"It's not that other countries steal jobs from you guys," Ma said. "It's your strategy. Distribute the money and things in a proper way."</strong><br /> &nbsp;<br /> <strong>He said the U.S. has wasted over $14 trillion in fighting wars over the past 30 years rather than investing in infrastructure at home.</strong><br /> &nbsp;<br /> To be sure, Ma is not the only critic of the costly U.S. policies of waging war against terrorism and other enemies outside the homeland. Still, Ma said this was the reason America's economic growth had weakened, not China's supposed theft of jobs.<br /> &nbsp;<br /> In fact, Ma called outsourcing a "wonderful" and "perfect" strategy.<br /> &nbsp;<br /> "The American multinational companies made millions and millions of dollars from globalization," Ma said. "The past 30 years, IBM, Cisco, Microsoft, they've made tens of millions — the profits they've made are much more than the four Chinese banks put together. ... But where did the money go?"<br /> &nbsp;<br /> <strong>He said the U.S. is not distributing, or investing, its money properly, and that's why many people in the country feel wracked with economic anxiety. <strong>He said too much money flows to Wall Street and Silicon Valley. Instead, the country should be helping the Midwest, and Americans "not good in schooling," too.</strong><br /> &nbsp;<br /> <strong>"You're supposed to spend money on your own people,"</strong> Ma said. "Not everybody can pass Harvard, like me." In a previous interview, Ma said he had been rejected by Harvard 10 times.<br /> Along those lines, Ma stressed that globalization is a good thing, but it, too, "should be inclusive," with the spoils not just going to the wealthy few.<br /> &nbsp;<br /> "The world needs new leadership, but the new leadership is about working together," Ma said. "As a business person, I want the world to share the prosperity together."</strong></p></blockquote> <p><strong><br /> &nbsp;<br /> Here's why your country is falling apart.<br /> <a href="http://ibankcoin.com/flyblog/files/2017/01/IMG_6136.png"><img src="http://ibankcoin.com/flyblog/files/2017/01/IMG_6136.png" alt="IMG_6136" width="600" height="415" class="alignnone size-full wp-image-63009" /></a></strong></p> <p>The Russians didn't do that.</p> <p>&nbsp;</p> <p>Content originally generated at <a href="https://ibankcoin.com/">iBankCoin.com</a></p> <p></p> http://www.zerohedge.com/news/2017-01-18/alibabaa-jack-ma-drops-redpill-us-wasted-14-trillion-wars-over-past-30-years#comments Alibaba Group Andrew Ross Sorkin Business China Cultural studies Davos Economy Global Economy Globalization Harvard Jack Ma MA Wed, 18 Jan 2017 20:43:40 +0000 The_Real_Fly 585785 at http://www.zerohedge.com RBC On The Treasury Standoff: "Someone Is Going To Get Hurt Badly" http://www.zerohedge.com/news/2017-01-18/rbc-treasury-standoff-someone-going-get-hurt-badly <p>Following up on his <a href="http://www.zerohedge.com/news/2017-01-17/rbc-commence-pain-trade">note from yesterday </a>in which he discussed the unwind of the Trumpflation trade and the beginning of the "<a href="http://www.zerohedge.com/news/2017-01-17/rbc-commence-pain-trade">pain trade</a>", and having received feedback from clients following yesterday's sudden reversal in the US Dollar (which is fading fast following the latest hawkish comments from Janet Yellen), RBC's Charlie McElligott writes that the general tone is "downplaying fear of a larger VaR-episode (see: last Jan / Feb in the market neutral community via an excruciating factor rotation) developing at this point beyond the “now regularly scheduled” January mean-reversion, largely due to the remarkably-tight range now built-into US rates (as they ping between 2.30 and 2.40 for 10s and 2.90 to 3.00 for 30s).&nbsp; </p> <p>That said, he notes that government bond shorts are staying firm as "leveraged funds are impressively adding to shorts last week despite the rally", while ‘real money’ has continued to add duration, forcing a price stalemate.&nbsp; His conclusion "<strong>there is no clearer example of this positioning standoff than by looking at the CFTC 5Y UST futures positioning data-- somebody is going to get hurt badly</strong>"</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%201.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%201.jpg" width="396" height="267" /></a></p> <p><em>Additionally, below we present some additional commentary on other asset classes from the head of RBC's cross-asset strategy.</em></p> <p>* * * </p> <p>As I’ve been stating over the past few weeks, there are multiple fronts with regards to answering the “what inning are we” question and the ‘reflation trade.’&nbsp; Per expectations, we see the ‘slow-to-turn super tanker’ real money community having to get more cyclically-geared for a higher-rate world (recall those CIO discussions in December where many noted that they hadn’t looked at banks / energy / industrials “in years” and certainly not as anything close to overweights).&nbsp; Not surprisingly and true to the YTD theme, last night’s NYSE MOC imbalances AGAIN were led by Financials (largest notional buy imbalance) and Industrials (3rd largest buy imbalance).&nbsp; With bonds, language we continue to hear from overseas real money (“the” demand driver for USTs over the past 5+ years) too is that they’d be sellers of a squeeze towards the 2.20 level.&nbsp; </p> <p>Also, we see smart-beta ETF $$$ flows showing a “slow to get the memo” dynamic, where we see all of the back-half of 2016 equity factor themes perpetuating: ‘Value’ (dwarfing all others) and ‘Size’ (small cap focused) are dominating year-to-date ETF inflows against ‘Low Vol’ and ‘Momentum’ outflows.&nbsp; <strong>Status quo upheld.</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%202.jpg" width="392" height="389" /></p> <p><strong>All of these flows (real money reweighting and smart beta ETFs) are helping neutralize / dampen the effect of tactical traders unwinding their “Trumpflation” bets.&nbsp; </strong></p> <p><em>That said, I think the largest talking-point while making client rounds is that we’re clearly through the ‘easy part’ (one-way markets) of the ‘reflation trade’—and that this is now where we’re going to see the grinding / choppy moves with more frequent volatility and drawdowns.&nbsp; </em></p> <p><strong>Frankly, the “animal spirits” component of the recent blisteringly +++ global data in my mind is what is currently keeping the trade “propped-up,” and likely into the next quarter.&nbsp; PMIs and the consumer and business confidence readings portend an extension of the theme, which is why I think there are still months left to go, with a likely ‘force in’ in stocks to make new highs that will require higher rates.&nbsp; </strong></p> <p>For what it’s worth too, many in the tactical / discretionary macro community are looking at re-engaging on ‘long Dollar’ and ‘long reflation’ into this recent pullback, looking for the same ‘final push’ higher in coming months as the energy base-effect keeps inflation expectations firm (which as I must remind you continue to screen as the largest macro factor input of SPX price drivers) and as perceived reflationary-boosts ‘kick-in’ (wage growth / average hourlies earnings move higher as well).</p> <p><strong>From there though (say out 3-6 months), I believe it’s possible we hit a potential ‘double whammy’: 1) higher data brings higher expectations—which set up for data disappointments (thus the mean-reverting nature of economic surprise indices) and / or 2) increasingly hawkish Fed rhetoric (as exemplified by dove Lael Brainard’s pivot hawkish yesterday) off the higher data leading to accelerated Fed action.</strong></p> <p>Let’s then look-back to the market response post the Dec 14th 2016 Fed meeting: Stocks sold off hard as real rates screamed higher upon acknowledgement of the Fed’s ‘dot plot’ (3 hikes in both ’17 and ’18).&nbsp; Why?&nbsp; <strong><span style="text-decoration: underline;">Because at that point I think the market realized that the significant moves we’ve seen with inflation expectations could set us up for a “pick your poison” scenario, where we see either a 1) stagflationary environment (as inflation surpasses growth) or a 2) ‘Fed behind curve’ error, where we are forced to tighten faster than the economy is growing</span>.</strong></p> <p>These two scenarios will continue to weigh in traders’ minds looking forward.&nbsp; <strong>If we lose the ‘animal spirits’ and the headline data, there will be even more pressure on fiscal-policy (i.e. what NOW with the tax plan / how is it funded without a BAT?) shifts to hold risk-market at lofty levels, which could make the back-half of ’17 look like the first-half of ’16: long duration, long defensives / low vol / divvy yielders / ‘up in quality’ to the front of the pack.&nbsp; “Back to the future” if you will.</strong></p> <p><strong>POPULAR TRADE / ‘JANUARY EFFECT’ UNWINDS HITTING THEIR ZENITH YESTERDAY?: </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%203.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%203.jpg" width="518" height="357" /></a></p> <p><strong>RISK THERMOMETER EXPRESSING SAME REVERSAL:</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%204.png"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%204_0.png" width="518" height="230" /></a></p> <p><strong>THEMATIC EQUITIES MONITOR SHOWING LEADERS LAGGING AND VICE VERSA:</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%205.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%205_0.jpg" width="518" height="280" /></a></p> <p><strong>SECTOR UNWIND:</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%206.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/rbc%20bad%206_0.jpg" width="517" height="180" /></a></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="396" height="267" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/rbc%20bad%201.jpg?1484772030" /> </div> </div> </div> http://www.zerohedge.com/news/2017-01-18/rbc-treasury-standoff-someone-going-get-hurt-badly#comments Bond Business Economy Inflation Janet Yellen Real interest rate Reflation US Federal Reserve Volatility Wed, 18 Jan 2017 20:41:41 +0000 Tyler Durden 585784 at http://www.zerohedge.com