http://www.zerohedge.com/fullrss2.xml/Banks en Shiller's CAPE – Is There A Better Measure? http://www.zerohedge.com/news/2017-03-27/shillers-cape-%E2%80%93-there-better-measure <p><a href="https://realinvestmentadvice.com/shillers-cape-is-there-a-better-measure/"><em>Authored by Lance Roberts via RealInvestmentAdvice.com,</em></a></p> <p>In <a href="https://realinvestmentadvice.com/shillers-cape-is-it-really-just-b-s-part-i/" target="_blank">&ldquo;Part 1&rdquo; </a>of this series, I discussed at length whether Dr. Robert Shiller&rsquo;s 10-year cyclically adjusted price-earnings ratio was indeed just <em>&ldquo;B.S.&rdquo;</em>&nbsp;&nbsp;The primary message, of course, was simply:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #993300;"><em>&ldquo;Valuation measures are simply just that &ndash; a measure of current valuation. If you &lsquo;overpay&rsquo; for something today, the future net return will be lower than if you had paid a discount for it.</em></span></p> <p>&nbsp;</p> <p><strong><span style="color: #993300;"><em>Valuation models are not, and were never meant to be, &lsquo;market timing indicators.&#39;&rdquo;</em></span></strong></p> </blockquote> <p>With that said, in this missive I want to address some of the current, and valid, arguments <strong>against</strong> a long term smoothed price/earnings model:</p> <ul> <li><em>Beginning in 2009, FASB Rule 157 was &ldquo;temporarily&rdquo; repealed in order to allow banks to &ldquo;value&rdquo; illiquid assets, such as real estate or mortgage-backed securities, <strong>at levels they felt were more appropriate rather than on the last actual &ldquo;sale price&rdquo; of a similar asset.</strong> This was done to keep banks solvent at the time as they were being forced to write down billions of dollars of assets on their books. <strong>This boosted banks profitability and made earnings appear higher than they may have been otherwise.&nbsp;<span style="color: #993300;">The &lsquo;repeal&rdquo; of Rule 157 is still in effect today, and the subsequent &ldquo;mark-to-myth&rdquo; accounting rule is still inflating earnings.</span></strong></em></li> <li><em>The <strong>heavy use of off-balance sheet vehicles</strong> to suppress corporate debt and leverage levels and boost earnings is also a relatively new distortion.</em></li> <li><em>Extensive cost-cutting, productivity enhancements, off-shoring of labor, etc. are all being heavily employed to boost earnings in a relatively weak revenue growth environment. I <a href="https://realinvestmentadvice.com/fade-to-black-03-24-17/">addressed this issue specifically&nbsp;</a>in this past weekend&rsquo;s newsletter:</em></li> </ul> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p style="text-align: justify;"><span style="color: #993300;"><em>&ldquo;What has also been stunning is the surge in corporate profitability despite a lack of revenue growth.&nbsp;<strong>Since 2009, the reported earnings per share of corporations has increased by a total of 221%. This is the sharpest post-recession rise in reported EPS in history. However, that sharp increase in earnings did not come from revenue which is reported at the top line of the income statement. Revenue from sales of goods and services has only increased by a marginal 28% during the same period.&rdquo;</strong></em></span></p> <p style="text-align: justify;">&nbsp;</p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/03/Reported-Earnings-Buybacks-032417.png"><img class="alignnone size-full wp-image-20225" src="http://realinvestmentadvice.com/wp-content/uploads/2017/03/Reported-Earnings-Buybacks-032417.png" style="width: 600px; height: 378px;" /></a></p> </blockquote> <ul> <li><em>The use of share buybacks improves underlying earnings per share which also distorts long-term valuation metrics. As</em>&nbsp;<em>the</em>&nbsp;<a href="http://online.wsj.com/news/articles/SB10000872396390444138104578030353195160818"><em><span style="text-decoration: underline;">WSJ article</span></em></a>&nbsp;stated:</li> </ul> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p><em>&ldquo;If you believe a recent academic study, <strong>one out of five [20%] U.S. finance chiefs have been scrambling to fiddle with their companies&rsquo; earnings. </strong></em></p> <p>&nbsp;</p> <p><em>Not Enron-style, fraudulent fiddles, mind you. <strong>More like clever&mdash;and legal&mdash;exploitations of accounting standards that &lsquo;manage earnings to misrepresent [the company&rsquo;s] economic performance,&rsquo;</strong> according to the study&rsquo;s authors, Ilia Dichev and Shiva Rajgopal of Emory University and John Graham of Duke University. Lightly searing the books rather than cooking them, if you like.&rdquo;</em></p> </blockquote> <p><em>This should not come as a major surprise as it is a rather &ldquo;open secret.&rdquo; Companies manipulate bottom line earnings by utilizing &ldquo;cookie-jar&rdquo; reserves, heavy use of accruals, and other accounting instruments to either flatter, or depress, earnings.</em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;The tricks are well-known: A difficult quarter can be made easier by releasing reserves set aside for a rainy day or recognizing revenues before sales are made, while a good quarter is often the time to hide a big &ldquo;restructuring charge&rdquo; that would otherwise stand out like a sore thumb.</em></p> <p>&nbsp;</p> <p><em><strong>What is more surprising though is CFOs&rsquo; belief that these practices leave a significant mark on companies&rsquo; reported profits and losses</strong>. When asked about the magnitude of the earnings misrepresentation, <strong>the study&rsquo;s respondents said it was around 10% of earnings per share.</strong>&ldquo;</em></p> <p>&nbsp;</p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2016/10/Cooking-The-books-2.png"><img class="alignnone size-full wp-image-17295" src="http://realinvestmentadvice.com/wp-content/uploads/2016/10/Cooking-The-books-2.png" style="width: 600px; height: 666px;" /></a></p> </blockquote> <p><em>As shown, it is not surprising to see that 93% of the respondents pointed to &ldquo;influence on stock price&rdquo; and &ldquo;outside pressure&rdquo; as the reason for manipulating earnings figures.</em></p> </blockquote> <ul> <li><em>The extensive interventions by Central Banks globally are also contributing to the distortion of markets.</em></li> </ul> <p>Due to these extensive changes to the financial markets since the turn of the century, <strong>I do not completely disagree with the argument that using a 10-year average to smooth earnings volatility may be too long of a period.</strong></p> <h2><u><span style="color: #000000;"><strong>Duration Mismatch</strong></span></u></h2> <p>Think about it this way. When constructing a portfolio that contains fixed income one of the most important risks to consider is a <em>&ldquo;duration mismatch.&rdquo;</em>&nbsp; For example, let&rsquo;s assume an individual buys a 20-year bond, but needs the money in 10-years. <strong>Since the purpose of owning a bond was capital preservation and income, the duration mismatch leads to a potential loss of capital if interest rates have risen at the time the bond is sold 10-years prior to maturity.</strong></p> <p>One could reasonably argue, due to the <em>&ldquo;speed of movement&rdquo;</em> in the financial markets, a shortening of business cycles, and increased liquidity, there is a <em>&ldquo;duration mismatch&rdquo;</em> between Shiller&rsquo;s 10-year CAPE and the financial markets currently.</p> <p>The first chart below shows the annual P/E ratio versus the inflation-adjusted (real) S&amp;P 500 index.</p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-Shiller-Monthly-032617.png"><img class="alignnone size-full wp-image-20258" src="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-Shiller-Monthly-032617.png" style="width: 599px; height: 333px;" /></a></p> <p>Importantly, you will notice that during secular bear market periods (green&nbsp;shaded areas) the overall trend of P/E ratios is declining.&nbsp; <strong>This <em>&ldquo;valuation compression</em>&rdquo; is a function of the overall business cycle as <em>&ldquo;over-valuation&rdquo;</em> levels are <em>&ldquo;mean reverted&rdquo;</em> over time.</strong>&nbsp; You will also notice that market prices are generally &ldquo;sideways&rdquo; trending during these periods with increased volatility.</p> <p>You can also see the vastly increased valuation swings since the turn of the century, which is one of the primary arguments against Dr. Shiller&rsquo;s 10-Year CAPE ratio.</p> <h2><u><span style="color: #000000;"><strong>Introducing The CAPE-5 Ratio</strong></span></u></h2> <p>The need to smooth earnings volatility is necessary to get a better understanding of what the underlying trend of valuations actually is. <strong>For investor&rsquo;s periods of <em>&ldquo;valuation expansion&rdquo;</em> are where the bulk of the gains in the financial markets have been made over the last 116 years.</strong> History shows, that during periods of <em>&ldquo;valuation compression&rdquo;</em> returns are much more muted and volatile.</p> <p>Therefore, in order to compensate for the potential <em>&ldquo;duration mismatch&rdquo;</em> of a faster moving market environment, I recalculated the CAPE ratio using a 5-year average as shown in the chart below.</p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-CAPE5-1900-Present-032617.png"><img class="alignnone size-full wp-image-20260" src="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-CAPE5-1900-Present-032617.png" style="width: 600px; height: 315px;" /></a></p> <p>There is a high correlation between the movements of the CAPE-5 and the S&amp;P 500 index. However, you will notice that prior to 1950 the movements of valuations were more coincident with the overall index as price movement was a primary driver of the valuation metric. <strong>As earnings growth began to advance much more quickly post-1950, price movement became less of a dominating factor.</strong>&nbsp;Therefore, you can see that the CAPE-5 ratio began to lead overall price changes.</p> <p><strong>A&nbsp;key <em>&ldquo;warning&rdquo;</em> for investors, since 1950, has been a decline in the CAPE-5 ratio which has tended to lead price declines in the overall market.</strong>&nbsp;The recent decline in the CAPE-5, which was directly related to the collapse and recovery in oil prices, has so far been an outlier event. However, complacency <em>&ldquo;this time is different,&rdquo;</em> will likely be misplaced as the corrective trend currently remains intact.</p> <p><strong>To get a better understanding of where valuations are currently relative to past history, we can look at the deviation between current valuation levels and the long-term average.&nbsp;</strong>The importance of deviation is crucial to understand. In order for there to be an <em>&ldquo;average,&rdquo;</em> valuations had to be both above and below that <em>&ldquo;average&rdquo;</em> over history. <strong>These <em>&ldquo;averages&rdquo;</em> provide a gravitational pull on valuations over time which is why the further the deviation is away from the <em>&ldquo;average,&rdquo;</em> the greater the eventual <em>&ldquo;mean reversion&rdquo;</em> will be.</strong></p> <p>The first chart below is the percentage deviation of the CAPE-5 ratio from its long-term average going back to&nbsp;1900.</p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-CAPE5-1900-Present-Deviation-032617.png"><img class="alignnone size-full wp-image-20261" src="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-CAPE5-1900-Present-Deviation-032617.png" style="width: 599px; height: 317px;" /></a></p> <p>Currently, the 56.97% deviation above the long-term CAPE-5 average of 15.86x earnings <strong>puts valuations at levels only witnessed five (5) other times in history.</strong>&nbsp;As stated above, while it is hoped <em>&ldquo;this time will be different,&rdquo;</em> which were the same words uttered during each of the five previous periods, you can clearly see that the eventual results were much less optimal.</p> <p><strong>However, as noted, the changes that have occurred Post-WWII in terms of economic prosperity, changes in operational capacity and productivity warrant a look at just the period from 1944-present.</strong></p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-CAPE5-WWII-Present-Deviation-032617.png"><img class="alignnone size-full wp-image-20262" src="http://realinvestmentadvice.com/wp-content/uploads/2017/03/PE-CAPE5-WWII-Present-Deviation-032617.png" style="width: 600px; height: 318px;" /></a></p> <p>Again, as with the long-term view above, the current deviation is 44.19%&nbsp;above the Post-WWII CAPE-5 average of 17.27x earnings. <strong>Such a level of deviation has only been witnessed three times&nbsp;previously over the last 70 years in 1996, 2005 and 2013.&nbsp;</strong>Again, as with the long-term view above, the resulting <em>&ldquo;reversion&rdquo;</em> was not kind to investors.</p> <p>Is this a better measure than Shiller&rsquo;s CAPE-10 ratio?</p> <p>Maybe, as it adjusts more quickly to a faster moving marketplace. <strong>However, I want to reiterate that neither the Shiller&rsquo;s CAPE-10 ratio or the modified CAPE-5 ratio were ever meant to be <em>&ldquo;market timing&rdquo;</em> indicators.</strong></p> <p><strong>Since valuations determine forward returns, the sole purpose is to denote periods which carry exceptionally high levels of investment risk and resulted in exceptionally poor levels of future returns. </strong></p> <p>Currently, valuation measures are clearly warning the future market returns are going to be substantially lower than they have been over the past eight years.<strong>&nbsp;Therefore,</strong> <strong>if you are expecting the markets to crank out 10% annualized returns over the next 10 years for you to meet your retirement goals, it is likely that you are going to be very disappointed.</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="624" height="235" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170327_shiller.jpg?1490634658" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/shillers-cape-%E2%80%93-there-better-measure#comments B+ B.S. Bear Market Bond Business Central Banks Cyclically adjusted price-to-earnings ratio Duke University Duration Mismatch Economy Emory University ETC Finance Financial economics Financial ratios fixed Fundamental analysis Investment Market Timing Market trends Mean Reversion Mean reversion Money post-1950 Price–earnings ratio Real estate recovery Robert Shiller S&P 500 Valuation Volatility Mon, 27 Mar 2017 20:27:58 +0000 Tyler Durden 591839 at http://www.zerohedge.com Despite Dip-Buying Panic, The Dow Has Not Seen Longer Losing Streak Than This Since 1978 http://www.zerohedge.com/news/2017-03-27/despite-dip-buying-panic-dow-has-not-seen-longer-losing-streak-1978 <p>Don&#39;t play...</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/NHWjlCaIrQo" width="560"></iframe></p> <p>&nbsp;</p> <p>The BTFD&#39;ers were back early on, but once the S&amp;P got within a tick of green, shortly after Europe closed, things stalled, only to ramp again in the last hour, pushing S&amp;P into the green, but that was it...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD13.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD13_0.jpg" style="width: 600px; height: 377px;" /></a></p> <p>&nbsp;</p> <p>It was all about crushing VIX (after tagging 15 overnight, the machines hammered it back to a 12 handle)</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD12.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD12_0.jpg" style="width: 600px; height: 381px;" /></a></p> <p>CNBC&#39;s Bob Pisani - &quot;A very impressive rally&quot; - except Bob we closed red.</p> <p>Nasdaq is the only major index in the green still for March...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD14.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD14_0.jpg" style="width: 600px; height: 339px;" /></a></p> <p>&nbsp;</p> <p>The Dow bounced perfectly off its 50DMA...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD9.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD9_0.jpg" style="width: 600px; height: 323px;" /></a></p> <p>&nbsp;</p> <p>The Dow is down 8 days in a row - the longest losing streak since 2011 - <em><strong>if it hits 9, that will be the worst streak since 1978!!</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170325_dow_1.jpg"><img height="388" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170325_dow_1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Banks were battered...but bounced (Goldman is now down on 14 of the last 16 days) - <strong>this is the worst drop for Goldman since Jan 2016</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD10.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD10_0.jpg" style="width: 600px; height: 396px;" /></a></p> <p>&nbsp;</p> <p>Banks dipped red for the year, Tech leads and Energy is the big laggard...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD5_0.jpg" style="width: 600px; height: 333px;" /></a></p> <p>&nbsp;</p> <p>March&#39;s great rotation from Goldman To safe-haven Snapchat...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD8_0.jpg" style="width: 600px; height: 474px;" /></a></p> <p>&nbsp;</p> <p>Across asset classes the moves were similar - all inflected at the US Open - but net net - the dollar is lower, yields lower, stocks flat, and gold higher...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD11.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD11_0.jpg" style="width: 600px; height: 484px;" /></a></p> <p>&nbsp;</p> <p><strong>Gold remains 2017&#39;s big winner </strong>as financials dipped into the red YTD today...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD4_0.jpg" style="width: 600px; height: 334px;" /></a></p> <p>&nbsp;</p> <p>Notably bond yields broke first, then stocks followed, recoupling shortly after the European close</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD2_0.jpg" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>Treasury yields were lower on the day, leaving <strong>all but 2Y yields lower on the year... 30Y &lt;3.00%, 10Y &lt;2.40%</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD3_0.jpg" style="width: 600px; height: 318px;" /></a></p> <p>&nbsp;</p> <p>Yen weakness ignited the rebound in the Dollar Index around the US Open...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD6_0.jpg" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>Gold and Silver gained again (pushing the former into the green for March). Copper spiked but crude slipped lower...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD7.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD7_0.jpg" style="width: 600px; height: 361px;" /></a></p> <p>&nbsp;</p> <p>While gold gained on the day, Bitcoin bounced back above $1000...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_EOD1_0.jpg" style="width: 600px; height: 319px;" /></a></p> <p>&nbsp;</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="90" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170327_EOD.jpg?1490643869" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/despite-dip-buying-panic-dow-has-not-seen-longer-losing-streak-1978#comments Bitcoin Bob Pisani Bond Business CNBC Copper Crude Dow 30 Economy Mathematical finance NASDAQ Recoupling S&P Technical analysis Television Television in the United States VIX Yen Mon, 27 Mar 2017 20:02:50 +0000 Tyler Durden 591849 at http://www.zerohedge.com Italian Officials Call For Investigation Of Soros-Supported NGO Migrant Fleet http://www.zerohedge.com/news/2017-03-27/italian-officials-call-investigation-george-soros-supported-ngo-migrant-fleet <div> <p><em>Authored by William Craddick via <a href="http://disobedientmedia.com/italian-officials-call-for-investigation-of-george-soros-supported-ngo-migrant-fleet/" target="_blank">Disobedient Media,</a></em></p> <p>Italian authorities are calling for <strong>monitoring of the funding of an NGO fleet bussing migrants into the EU from the North African coast</strong> after a report released the European Border and Coast Guard Agency&nbsp;has determined that&nbsp;the members of the fleet are acting as <strong>accomplices to people smugglers</strong> and directly contributing&nbsp;to the risk of death migrants face when attempting to enter the EU.</p> <p>The report from regulatory agency&nbsp;<a href="http://frontex.europa.eu/assets/Publications/Risk_Analysis/Annual_Risk_Analysis_2017.pdf" target="_blank">Frontex</a>&nbsp;suggests that NGOs sponsoring &nbsp;ships in the fleet are now acting as veritable accomplices to people smugglers due to their service which, in effect, <strong>provides a reliable shuttle service for migrants from North Africa to Italy</strong>. The fleet lowers smugglers&#39; costs, as it all but eliminates the need to procure seaworthy vessels capable making a full voyage across the Mediterranean to the European coastline. Traffickers are also able to operate with much less risk of arrest by European law enforcement officers. Frontex specifically noted that traffickers have intentionally sought to alter their strategy,&nbsp;sending&nbsp;their vessels to ships run by the NGO fleet rather than the Italian and EU military.</p> <p>On March 25th, 2017, Italian news source&nbsp;<a href="http://archive.is/vwrLa" target="_blank">Il Giornale</a>&nbsp;carried remarks from Carmelo Zuccaro, the&nbsp;chief prosecutor of Catania (Sicily) calling for monitoring of the funding behind the NGO groups engaged in operating the migrant fleet. <strong>He stated that &quot;the facilitation of illegal immigration is a punishable offense regardless of the intention.&rdquo; </strong>While it is not a crime to&nbsp;enter&nbsp;the waters of a foreign country and pick them migrants, NGOs are supposed to land them at the nearest port of call, which would have been somewhere along the North African coast instead of in Italy.&nbsp;The chief prosecutor also noted that Italy is investigating Islamic radicalization occurring in prisons and camps where immigrants are hired off the books.</p> <p><strong>Italy has for some months been reeling under the pressure of massive numbers of migrants who have been moving from North Africa into the southern states of the European Union. </strong>In December 2016,&nbsp;<a href="http://archive.is/zYYx4" target="_blank">The Express</a>&nbsp;cited comments made by Virginia Raggi, the mayor of Vatican City, stating that Rome was on the verge of a &quot;war&quot; between migrants and poor Italians. The wave of migrants has also caused issues in southern Italy, where<strong> the&nbsp;<a href="http://archive.is/vGSvG" target="_blank">Sicilian Cosa Nostra</a>&nbsp;has declared a &quot;war on migrants&quot; last year amid reports that the Italian mafia had begun fighting with North African crime gangs who entered the EU among migrant populations.</strong></p> <div class="mceTemp"> <dl id="attachment_2132"> <dt><img height="357" src="http://disobedientmedia.com/wp-content/uploads/2017/03/8c86fd0d6018bb26a53d804a75b7271c53379ec9.jpg" width="634" /></dt> <dt><em>CCTV footage showing an Italian gang leader, Emanuele Rubino, retrieve a handgun (circled) before shooting Gambian Yusapha Susso in a turf war last year</em></dt> </dl> </div> <p>In February 2016,&nbsp;<a href="http://disobedientmedia.com/ngo-fleet-bussing-migrants-into-the-eu-has-ties-to-george-soros-hillary-clinton-donors/" target="_blank">Disobedient Media</a>&nbsp;published research indicating that<strong> multiple ships operating in the fleet mentioned by Frontex are sponsored by NGO groups with financial ties to organizations run by George Soros and donors to Hillary Clinton.</strong></p> <p><a href="http://archive.is/MS04q" target="_blank">Reports</a>&nbsp;have also emerged citing a study&nbsp;by counter-extremism group Quilliam which states that <strong>ISIS now controls the human trafficking scene in North Africa</strong> and is actively recruiting from the migrant population. In addition to acting as de facto accomplices of human traffickers, the NGO&#39;s criticized by Frontex may also be contributing to the&nbsp;<a href="http://disobedientmedia.com/research-indicates-massive-isis-networks-in-europe-while-europol-warns-of-imminent-attacks/" target="_blank">worsening terror situation</a>&nbsp;in Europe though their actions.</p> </div> <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="593" height="327" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170325_italy.jpg?1490624333" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/italian-officials-call-investigation-george-soros-supported-ngo-migrant-fleet#comments Cultural globalization Demography European Border and Coast Guard Agency European migrant crisis European Union European Union Frontex George Soros Government Human migration Illegal immigration Italy Mediterranean Non-governmental organization North Africa Politics Social Issues Southern Italy Mon, 27 Mar 2017 19:55:00 +0000 Tyler Durden 591820 at http://www.zerohedge.com Coming To An Inner-City Uprising Near You: The "Ultimate Riot Control Truck" Of The Future http://www.zerohedge.com/news/2017-03-27/coming-inner-city-uprising-near-you-ultimate-riot-control-truck-future <p>One upon a time, the benevolent future was supposed to bemuse with hoverboards, flying cars and interplanetary travel. Instead, according to the folks at <a href="http://www.bozena.eu/bozena-riot-new/">Slovakia's Bozena Riot Security Systems</a>, the dystopian future has arrived, and it is made of armored plates and riot gear.</p> <p><img src="https://i.kinja-img.com/gawker-media/image/upload/s--PMI2npFK--/c_scale,fl_progressive,q_80,w_800/cvvjlnngs9g8yutfkttz.jpg" width="500" height="281" /></p> <p>The Bozena Riot can handle virtually any duty when authorities need to put down an uprising: it is a remotely operated, armored vehicle designed to deal with riots and mobs in the streets and urbanized areas. The system offers a solution for both protecting the law-enforcement units in action and controlling the situation whenever peace maintenance is required. </p> <p>The truck right out of RoboCop's OCP Detroit, has three components: a carrier, a 3000 kg adjustable shield, and a water trailer. Two water cannons can send protesters flying from the front or the rear and if that doesn’t do the trick, police can always rely on the "high-pressure tear gas gun" to disperse any riot. </p> <p>As <a href="http://gizmodo.com/this-dystopian-riot-control-truck-is-the-vehicle-of-the-1793656046">Gizmodo points out</a>, the unmanned unit is covered in CCTV cameras assuring full video coverage, while the driver gets to enjoy inner-city riots from a comfortable safe distance courtesy of this virtual cockpit which puts all control options at one’s fingertips:</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/jl9zpfcdwzvvxouzbeib_0.jpg" width="500" height="292" /></p> <p>The truck's shield has six launching ports to fire guns or other rubber projectile launchers while keeping the heavily fortified shooters safe. Furthermore, should the truck's riot police passengers get stuck in an alleyway, the shield has bulldozing capabilities allowing authorities to directly engage with social discontents.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/bozena%20riot.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/bozena%20riot_0.jpg" width="500" height="273" /></a></p> <p>To be sure, the topic of <a href="http://www.newyorker.com/news/news-desk/do-not-resist-and-the-crisis-of-police-militarization">police militarization </a>in the US has been a particularly sensitive one in recent years, so perhaps the country will avoid this tool to quickly and efficiently restore post-riot order. Probably not: as Gizmodo notes, "the combination of an <a href="https://qz.com/933398/in-donald-trumps-america-first-budget-the-american-military-comes-first/">increase </a>in law enforcement spending and Attorney General Jeff Sessions’ pledge to <a href="https://www.nytimes.com/2017/02/28/us/politics/jeff-sessions-crime.html">stop monitoring </a>out-of-control police departments seems to set up just the right environment to make it happen."</p> <p>In any case, no matter on which side of the ideological divide one stands, and whether one roots for the authorities or the rioters who may soon suffer the wrath of the Bozena Riot, there are plenty reasons for everyone to be both delighted and concerned. </p> <p><em>The video below courtesy of Bozena shows the prototype in action.</em></p> <p><iframe src="https://www.youtube.com/embed/E8MK4fNqpkc" width="500" height="281" frameborder="0"></iframe></p> <p>&nbsp;</p> <p><em>For those who enjoy details, or are considering the purchase of one of these robotrucks for their own private neighborhood watch, below is the Bozena Riot's client brochure: <br /></em></p> <p> <iframe src="https://www.scribd.com/embeds/343196809/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-Qm9mvEBYBMy3SFhVlcth&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></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="903" height="493" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/bozena%20riot.jpg?1490637510" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/coming-inner-city-uprising-near-you-ultimate-riot-control-truck-future#comments Detroit Law enforcement Militarization of police Police weapons Riot Riot police RoboCop: The Series War Water cannon Mon, 27 Mar 2017 19:45:42 +0000 Tyler Durden 591844 at http://www.zerohedge.com Paul Ryan "Begged On One Knee" For Obamacare Repeal Vote http://www.zerohedge.com/news/2017-03-27/paul-ryan-begged-one-knee-obamacare-repeal-vote <p>In September 2008, Treasury Secretary <strong>Hank Paulson <a href="http://www.nytimes.com/2008/09/26/business/26bailout.html?_r=1&amp;em&amp;oref=slogin">reportedly </a>begged House speaker Nancy Pelosi on one knee to support his bailout plan.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, <strong>urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support...</strong></p> </blockquote> <p><span style="text-decoration: underline;"><strong>It Worked.</strong></span></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_pelosi.jpg"><img height="348" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_pelosi.jpg" width="528" /></a></p> <p>*&nbsp; *&nbsp; *</p> <p>Nine years later, faced with a crisis of his own, <strong>Speaker Ryan <a href="https://www.washingtonpost.com/powerpost/gop-health-care-plan-hangs-in-balance-as-house-leaders-push-for-thursday-floor-vote/2017/03/23/6e8bf05a-0fbd-11e7-9d5a-a83e627dc120_story.html?utm_term=.a64458cfcbc5">reportedly </a>got down on one knee to plead with Rep. Don Young of Alaska &ndash; the longest-serving Republican in Congress - to support the bill.&nbsp; </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_pelosi2.jpg"><img height="327" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_pelosi2_0.jpg" width="528" /></a></p> <p><span style="text-decoration: underline;"><strong>He was unsuccessful...</strong></span></p> <p><a href="http://thehill.com/homenews/house/325865-report-ryan-pleaded-on-one-knee-for-obamacare-repeal-vote"><em>As The Hill reports,</em></a> <strong>the moments highlighted by the Post during the Republican conference negotiations show what a tough battle Ryan and his deputies faced in whipping the vote</strong>. But they also show the fierce support some offered to leadership -- like freshman Rep. Brian Mast of Florida, who lost both legs in 2010 in Afghanistan and called on colleagues to unite behind the bill as he and his Army colleagues had done on the battlefield.&nbsp;</p> <p><strong>At another point, a Republican shouted, &ldquo;Burn the ships&rdquo; to Majority Whip Steve Scalise</strong>, invoking the command a 16th century Spanish conquistador gave his crew when they landed in Mexico.</p> <p>The message was clear, the Post said &ndash;- <strong>the Republicans felt there was no turning back.</strong></p> <p>The GOP was ultimately unable to coalesce around the party&rsquo;s plan and Ryan pulled the bill from the floor Friday, when it was clear it did not have the votes to pass.</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="912" height="564" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170327_pelosi2.jpg?1490632664" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/paul-ryan-begged-one-knee-obamacare-repeal-vote#comments 114th United States Congress Afghanistan American people of German descent Congress Florida Hank Paulson Hank Paulson Henry Paulson Mexico Nancy Pelosi Nancy Pelosi Obamacare Politics Republican Party Steve Scalise Troubled Asset Relief Program United States United States federal banking legislation United States House of Representatives White House White House Mon, 27 Mar 2017 19:35:00 +0000 Tyler Durden 591836 at http://www.zerohedge.com How To Beat Warren Buffett Working Just 40 Days A Year http://www.zerohedge.com/news/2017-03-27/how-beat-warren-buffett-working-just-40-days-year <p><strong><em>Want to beat Warren Buffett&rsquo;s investment returns? Don&rsquo;t want to spend a lot of time working at it?</em></strong> Bloomberg&#39;s macro strategist Cameron Crise has just the investment process for you...</p> <p>Last week I wrote about a simple model that is surprisingly effective at profiting from the rebalancing tendencies of passive investors. This in turn <strong>brought to mind another well-known instance of behavioral herding that has led to consistent profits -- <a href="http://libertystreeteconomics.newyorkfed.org/2012/07/the-puzzling-pre-fomc-announcement-drift.html">the so-called &ldquo;pre-FOMC drift,&rdquo; </a>wherein U.S. equities tend to rally just before and just after FOMC meetings.</strong></p> <p>What would happen if we combined the rebalancing model with a strategy designed to profit from the pre-FOMC drift? &nbsp;I assessed the performance of<strong> going long the S&amp;P 500 on the close two days before each FOMC meeting and exiting the trade on the close of each FOMC day. </strong>In measuring the historical performance of such a model, it&rsquo;s important that we don&rsquo;t include any forward-looking information. Some of the best daily S&amp;P 500 returns have come on days featuring intra-meeting easings. Alas, we have to exclude them from our study given our inability to pre-position for them.</p> <p><strong>Regardless, the performance of the combined model is still pretty fantastic.</strong> Since 1994, it has generated an annual return of 8.6% with a volatility of 9.3%. That ratio (0.92) trounces the equivalent for a passive investment in the S&amp;P 500, including dividends (0.69).<strong> Not too shabby for 40 days of work per year</strong> (two days a month for the rebalancing model plus 2 days for each of the eight annual Fed meetings)! Given that the rebalancing model in particular is a mean-reversion strategy, it stands to reason that it should be a diversifier against a standard passive portfolio. What happens if we combine a passive allocation in the S&amp;P with an overlay of the rebalancing and Fed strategies?</p> <p><strong>It turns out that the answer is &ldquo;lots of good things.&rdquo; </strong>Combining the behavioral overlay with a passive investment boosts the average annual return of an SPX long from 10.1% to 18.9% over the last 23 years.</p> <p><em><strong>The realized vol of this strategy is higher, but only modestly so; the annualized volatility of the portfolio goes from 14.7% to 16.9%. Notching an extra 8.8% return for an increased vol of just 2.2% is a pretty effective use of a risk budget!</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_buffett1.jpg"><em><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_buffett1_0.jpg" style="width: 600px; height: 249px;" /></strong></em></a></p> <p>The chart shown above plots the cumulative returns of a passive investment in the S&amp;P 500, a passive investment overlaid with the monthly rebalancing model, and a passive investment overlaid with both the rebalance and Fed models.<strong> It also shows the cumulative returns of Warren Buffett&rsquo;s Berkshire Hathaway over the same time frame. </strong>Not only does the passive strategy with behavioral overlay trounce the passive strategy by itself (outperforming in 19 of the 23 years modeled),<strong> it also beats Berkshire (while generating substantially less volatility). </strong>While the combined model only beats Buffett about half of the time, the<strong> most notable successes have come in the last 10-15 years</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_buffett2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_buffett2_0.jpg" style="width: 600px; height: 249px;" /></a></p> <p><u><strong>Obviously there is no guarantee that these behavioral overlays can deliver the same sort of outperformance in the future as they have in recent years. </strong></u>There is often a sort of &ldquo;Heisenberg principle&rdquo; at work, wherein we alter the performance of a market phenomenon merely by observing it. Moreover, the results above do not account for real-world considerations such as transaction costs, etc. (Though those should be modest if futures are employed to implement the behavioral strategy.)</p> <p>Nevertheless, the results portrayed above do suggest that there remains significant alpha to be had from mining the behavioral tendencies of market participants. Warren Buffett likes to sing the praises of Graham and Dodd, but they never won the Nobel Prize for Economics; Kahneman and Tversky did. <strong><em>And if you can trounce both passive investors and Warren Buffett by trading just 40 days a year, that offers plenty of time to research the next market-beating anomaly before the Street catches up.</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="1400" height="581" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170327_buffett1.jpg?1490631728" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/how-beat-warren-buffett-working-just-40-days-year#comments Alpha Berkshire Hathaway Business Economy ETC Federal Open Market Committee Finance Financial services Funds Investment Mathematical finance Money Passive management Rebalancing investments S&P 500 US Federal Reserve Volatility Volatility Warren Buffett Warren Buffett Mon, 27 Mar 2017 19:15:00 +0000 Tyler Durden 591832 at http://www.zerohedge.com Questions Grow Over Devin Nunes' Mystery White House Visit http://www.zerohedge.com/news/2017-03-27/questions-swirl-over-devin-nunes-mystery-white-house-visit <p>The mystery surrounding President Donald Trump's claim that he was wiretapped by Barack Obama during the 2016 election campaign deepened on Monday, when it was revealed that House Intel Committee Chair Devin Nunes was on the White House grounds where he reviewed classified information the day before he announced he had seen intelligence that showed members of President Trump's transition team had been caught up in surveillance operations. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/nunes%20door.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/nunes%20door_0.jpg" width="500" height="301" /></a></p> <p>U.S. Representative Devin Nunes, who has been embroiled in a firestorm of controversy over the past week, visited the White House the night before announcing on Wednesday that he had information that indicated some Trump associates may have been subjected to some level of intelligence activity before Trump took office on Jan. 20. <a href="http://www.thedailybeast.com/articles/2017/03/24/devin-nunes-vanished-the-night-before-he-made-trump-surveillance-claims.html">According to a Daily Beast report</a>, Nunes "went off the grid" that night to meet a source and view dozens of intelligence reports, including accounts of meetings involving President Donald Trump's advisers.</p> <p>Nunes admitted he was on White House grounds, but not in the White House itself, for meetings "to confirm what I already knew," and he noted no one in the White House knew he was there. Nunes then declined to comment further because he didn't want to "compromise sources and methods." </p> <p><strong>Then it gets weirder. </strong></p> <p>As <a href="https://www.bloomberg.com/view/articles/2017-03-27/devin-nunes-explains-his-white-house-visit">Bloomberg's Eli Lake adds</a>, "CNN is reporting that Nunes had in fact slipped off to the White House grounds last Tuesday to view the documents. And then on Wednesday, after briefing reporters on what he had found in those intelligence reports, he went back to the White House to inform the president."</p> <p>One question that has emerged since the details of Nunes' visit were revealed, is why would the Republican Intel Committee Chair need to brief the president on documents he viewed at a facility on White House grounds? The White House directed questions about the episode to Nunes.&nbsp; "We have been made aware through public reports that Chairman Nunes confirmed he was on the White House grounds on Tuesday and any questions concerning his meeting should be directed to the Chairman," the White House said. </p> <p>In an interview Monday, <strong>Nunes told Lake that he ended up meeting his source on the White House grounds because it was the most convenient secure location with a computer connected to the system that included the reports, which are only distributed within the executive branch</strong>. "We don't have networked access to these kinds of reports in Congress," Nunes said. He added that his source was not a White House staffer and was an intelligence official.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Nunes, it should be said, has a history of cultivating independent sources inside the intelligence community. He made contact, for example, with the U.S. intelligence contractors who ended up saving most of the Americans stuck in the Benghazi outpost when it was attacked on Sept. 11, 2012. More recently, Nunes has reached out to his network of whistleblowers to learn about pressure inside the military's Central Command on analysts to write positive reports on the U.S. campaign against the Islamic State. </p> <p>&nbsp;</p> <p>In this case, Nunes had been hearing for more than a month about intelligence reports that included details on the Trump transition team, and had been trying to view them himself. <strong>He told me that when he finally saw the documents last Tuesday evening, he made sure to copy down their identifying numbers so he could request access to them formally for the rest of the committee. </strong></p> </blockquote> <p>Confirming Lake's account, Nunes spokesman Jack Langer said in a statement that Nunes "met with his source at the White House grounds in order to have proximity to a secure location where he could view the information provided by the source."</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Comment from Chairman Nunes' spox about his whereabouts the day before his announcement Trump/associates may be swept up in surveillance <a href="https://t.co/OZ06gSejbH">pic.twitter.com/OZ06gSejbH</a></p> <p>— Alex Moe (@AlexNBCNews) <a href="https://twitter.com/AlexNBCNews/status/846368043353681921">March 27, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>As <a href="http://www.reuters.com/article/us-usa-trump-russia-idUSKBN16Y1H6">Reuters&nbsp; adds</a>, it was the latest twist in a saga that began on March 4 when Trump said on Twitter that he "just found out that Obama had my 'wires tapped' in Trump Tower just before the victory." FBI Director James Comey told Congress last Monday he had seen no evidence to support the claim. Trump's mention of wiretapping drew attention away from U.S. intelligence agencies having said that Russia tried to help Trump in the election against Democrat Hillary Clinton by hacking leading Democrats and spreading disinformation. Moscow denies any such activities. Trump has also dismissed them.</p> <p>Nunes told reporters on Wednesday that he had briefed Trump "on the concerns I had about incidental collection and how it relates to President-elect Trump and his transition team and the concerns that I have." After an uproar over the allegations and the fact that he briefed Trump first before members of his own committee, Nunes apologized on Thursday for the way he handled the information. A congressional source said congressional investigators have questioned agencies directly to try to find out what intelligence reports and intercepts Nunes is referring to, but that as of Monday the agencies were still saying they did not know what Nunes was talking about. </p> <p>Earlier on Monday, the Washington Post reported that Nunes was on his way to an event late Tuesday when he left his staff and went to review classified intelligence files brought to his attention by his source, whom he has not identified.</p> <p>* * * </p> <p>Meanwhile, the White House has seized on Nunes' remarks to bolster Trump's unproven assertion that Obama wiretapped his campaign headquarters in Manhattan's Trump Tower. Nunes and some other Republicans have focused much of their concern over the investigation about the possibility that some Americans' names have been improperly "unmasked" and released to the public in leaks about the investigation of whether Trump's campaign colluded with Moscow. Nunes spokesman Langer cited concerns about the exposure of citizens' names in his statement.</p> <p>"The chairman is extremely concerned by the possible improper unmasking of names of U.S. citizens, and he began looking into this issue even before President Trump tweeted his assertion that Trump Tower had been wiretapped," Langer said.</p> <p>Democrats have questioned, given his actions, whether he can remain independent during the Intelligence Committee's own investigation of Russian meddling. </p> <p>It remains unknown who was Nunes' source and whether he was doing the White House's bidding in saying the transition team has been surveilled. Nunes said last week that the surveillance was not related to Russia and that the Trump officials had been caught up in legal snooping. </p> <p>Previously, CNN reported that Nunes was with a staff member at the White House when he reviewed the intelligence. A spokesman said the intelligence could not have been taken to the House. </p> <p><strong>“The information comprised executive branch documents that have not been provided to Congress,”</strong> a Nunes spokesman said. “Because of classification rules, the source could not simply put the documents in a backpack and walk them over to the House Intelligence Committee space. <strong>The White House grounds was the best location to safeguard the proper chain of custody and classification of these documents, so the Chairman could view them in a legal way."</strong></p> <p>* * * </p> <p>Going back to Lake, the Bloomberg reporter said that "Nunes told me these reports were sent to the Obama White House among other executive branch agencies. Nunes until now had only said the reports he viewed were widely distributed inside the government. "<strong>The reports included details about the Trump transition, meetings of Trump and senior advisers, they were distributed throughout the intelligence community and to the White House</strong>," Nunes said. "<strong>In some cases, there was additional unmasking of Trump transition team officials."</strong> </p> <p>As Lake concludes, "this is suggestive, though not yet proof, <strong>that White House officials privy to the Russia investigation wanted keep tabs on Trump and his advisers in the period after the election and before his inauguration. </strong>It also fits together with other facts in this story as well. For example, on March 1, the New York Times reported that Obama White House officials sought to preserve intelligence in the final days and weeks of his presidency on Team Trump's connections to Russia and Russia's campaign to influence the election. Though Nunes says the reports he viewed had nothing to do with Russia."</p> <p>The implications are two-fold as per Lake:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The good news is that we will soon get a second and third opinion. Nunes told me that he expects that his committee's members, including Democrats, will be able to read these documents themselves at secure locations outside of Congress as soon as this week. </p> <p>&nbsp;</p> <p>If it turns out that intelligence about the Trump transition was included in dozens of reports that were sent to the White House, then the House Intelligence Committee really has two investigations. <strong>The first is of course a probe into how the Russian state meddled in the election and whether it did so with the aid of Trump's associates or campaign. The second is about whether the Obama White House inappropriately spied on Trump and his advisers during the transition to power.</strong></p> </blockquote> <p>While incomplete information and partisan innuendo continues to swirl, both sides are accusing each other of conducting a misdirection campaign meant to cover up either Trump's links to Russia, or Obama's surveillance of Trump for reasons still unknown. If Lake is correct, the mystery over Nunes' White House visit will soon be resolved. As to whether Trump is an alleged puppet of Putin, or if Obama was actively spying on Trump, sadly that particular inquiry is only just starting.</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="703" height="367" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/nunes%20teaser%20door.jpg?1490641026" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/questions-swirl-over-devin-nunes-mystery-white-house-visit#comments Barack Obama Central Command Congress Devin Nunes Donald Trump Donald Trump wiretapping claim FBI Federal Bureau of Investigation House Intel Committee House Intelligence Committee Intelligence committee Mike Pence New York Times Politics Presidency of Donald Trump Republican Intel Committee Reuters Russian interference in the 2016 United States elections Trump Tower Twitter Twitter U.S. intelligence United States United States House Permanent Select Committee on Intelligence White House White House Mon, 27 Mar 2017 18:57:30 +0000 Tyler Durden 591848 at http://www.zerohedge.com Rand Plunges Most Since US Election After Zuma Aborts International Investor Roadshow http://www.zerohedge.com/news/2017-03-27/rand-plunges-most-us-election-after-zuma-aborts-international-investor-roadshow <p>The South African Rand erased its advance to become the<strong> worst performer in emerging markets</strong> after <a href="http://www.zerohedge.com/news/2017-03-27/south-africas-zuma-unexpectedly-recalls-gordhan-international-roadshow-rand-tumbles">we detailed earlier that</a> President Jacob <strong>Zuma ordered an international investor roadshow aborted</strong> - serving as a <strong>wake-up call to the country&rsquo;s political risks</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_ZAR1.jpg"><img height="314" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_ZAR1_0.jpg" width="600" /></a></p> <p>Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas, were instructed to pull out of meetings in London and the U.S. with investors and ratings companies, the presidency said in a statement Monday, without giving a reason.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;There are some conclusions now being drawn that there&rsquo;s <strong>possibly an imminent cabinet reshuffle,&rdquo;&nbsp;</strong>said Manisha Morar, an analyst at ETM Analytics in Johannesburg.</p> <p>&nbsp;</p> <p>&nbsp;&ldquo;It puts into question our credit rating and the possibility of a downgrade coming sooner than later.&rdquo;</p> <p>&nbsp;</p> <p><strong>Speculation that Gordhan is on the verge of being fired has swirled for months, </strong>as he clashed with Zuma over the management of state companies and the national tax agency. But those <strong>concerns were overshadowed by an emerging-market rally this year spurred by a decline in the U.S. dollar</strong>.</p> </blockquote> <p>Today&#39;s 3.2% plunge in the Rand is the biggest since the US election.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_ZAR.jpg"><img height="299" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_ZAR_0.jpg" width="600" /></a></p> <p>The government&rsquo;s rand-denominated bonds due 2026 fell, driving the yield 33 basis points higher to 8.7 percent, the biggest jump since August, when Gordhan refused to report to a special police unit to be questioned about alleged irregularities at the national tax agency.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_ZAR2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170327_ZAR2_0.jpg" style="width: 600px; height: 318px;" /></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="960" height="502" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170327_ZAR1.jpg?1490639866" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/rand-plunges-most-us-election-after-zuma-aborts-international-investor-roadshow#comments Africa Business Currency Economy of Africa Jacob Zuma national tax agency Pravin Gordhan ratings South African rand Mon, 27 Mar 2017 18:39:37 +0000 Tyler Durden 591847 at http://www.zerohedge.com AG Sessions Makes Surprise Sanctuary City Announcement; Vows To Withhold Funding http://www.zerohedge.com/news/2017-03-27/ag-sessions-makes-surprise-sanctuary-city-announcement-vows-withhold-funding <p>Moments ago Attorney General Jeff Sessions made a surprise appearance at Sean Spicer's daily White House press briefing to announce that his DOJ will be taking steps to not only require that so-called "sanctuary cities" enforce federal immigration laws but would also be seeking to claw back past DOJ awards granted to those cities if they refuse to certify compliance.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"Today, I'm urging states and local jurisdictions to comply with these federal laws.&nbsp; Moreover, the Department of Justice will require that jurisdictions seeking or applying for DOJ grants to certify compliance with 1373 as a condition for receiving those awards."</strong></p> <p>&nbsp;</p> <p>"This policy is entirely consistent with the DOJ's Office of Justice Programs guidance that was issued just last summer under the previous administration."</p> <p>&nbsp;</p> <p>"This guidance requires jurisdictions to comply and certify compliance with Section 1373 in order to be eligible for OJP grants.&nbsp; It also made clear that failure to remedy violations could result in withholding grants, termination of grants and disbarment or ineligibility for future grants."</p> <p>&nbsp;</p> <p><strong>"The DOJ will also take all lawful steps to claw back any fines awarded to a jurisdiction that willfully violates Section 1373."</strong></p> </blockquote> <p>Sessions also called on states like Maryland and California to scrap their plans for becoming a sanctuary state.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"That would be such a mistake."&nbsp; </p> <p>&nbsp;</p> <p><strong>"I would plead with the people of Maryland to understand this makes the state of Maryland more at risk for violence and crime, that it's not good policy." </strong></p> </blockquote> <p>Sessions' full comments can be viewed below:</p> <blockquote class="twitter-video"><p dir="ltr" lang="en">Attorney General Sessions says sanctuary cities 'cannot continue' <a href="https://t.co/YiS9doT3IE">https://t.co/YiS9doT3IE</a> <a href="https://t.co/nGmICgmiA6">pic.twitter.com/nGmICgmiA6</a></p> <p>— FOX Business (@FoxBusiness) <a href="https://twitter.com/FoxBusiness/status/846422327503962112">March 27, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>* * * </p> <p><span style="text-decoration: underline;"><strong>Update:</strong></span></p> <p>It <strong>didn't take long for New York's Attorney General to<br /> release a statement vowing that he will continue to violate federal<br /> laws.</strong></p> <ul> <li>NY A.G. 'WON'T STOP FIGHTING' TRUMP'S IMMIGRATION POLICIES</li> <li>NY AG: STATE, LOCAL GOVTS HAVE BROAD AUTHORITY TO NOT TAKE PART</li> </ul> <p>* * * </p> <p>For those who missed it, here is an excerpt from our <a href="http://www.zerohedge.com/news/2017-02-05/deplorable-obama-sent-27-billion-taxpayer-money-fund-sanctuary-cities-2016">previous post</a> detailing which sanctuary cities receive the most federal funding.</p> <p>Our organization, American Transparency (website: OpenTheBooks.com) was able to identify that number. <strong>We found nearly $27 billion ($26.74 billion to be exact) in federal funding (FY2016) for America’s 106 Sanctuary Cities.</strong> Our new report, “<a href="https://www.openthebooks.com/assets/1/7/Oversight_FederalFundingofAmericasSanctuaryCities.pdf" target="_blank">Federal Funding of America’s Sanctuary Cites</a>” details federal grants and other forms of federal spending that flow to those cities.</p> <p>Using our OpenTheBooks interactive map,&nbsp;<a href="http://www.openthebooks.com/map/?Map=5900&amp;MapType=Pin" target="_blank">search federal funding</a>&nbsp;by city. <strong>Just click a pin and scroll down to review the municipal agencies and entities</strong> (FY2016).</p> <p><iframe src="http://www.openthebooks.com/map-widget/?Map=5900&amp;MapType=Pin" width="100%" height="460" frameborder="0"></iframe></p> <p><strong>Across America, there are over 300 governmental jurisdictions claiming "sanctuary status."</strong> Of those governments, there are 106 cities, while the rest are states, counties or other units of government.</p> <p><span style="text-decoration: underline;"><strong>Under Trump’s order, mayors defending their sanctuary city status are essentially imposing a defiance tax on local residents. On average, this tax amounts to $500 per man, woman and child.</strong></span> Major cities like Washington, D.C., New York and Chicago have the most to lose, and nearly $27 billion is at stake across the country.</p> <p>Here are the top&nbsp;10 takeaways from our findings:</p> <ol> <li><strong>$26.741 billion in annual federal grants and direct payments flowed into America’s 106 sanctuary cities (FY2016).</strong></li> <li>On average,<strong> the cost of lost federal funding for a family of four residing in one of the 106 sanctuary cities is $1,810 – or $454 per person.</strong> A total population of 46.2 million residents live in the 106 sanctuary cities according to census data.</li> <li>Washington, D.C., and Chicago, Illinois governments received the highest amount of federal funding per resident and, therefore, have the most to lose by maintaining their sanctuary status.Washington, D.C. municipal government received the highest amount of federal funding on a per capita basis: $3,228 per person; $12,912 per family of four; or $2.09 billion total. The City of Chicago, IL received the second highest amount of federal funding on a per capita basis: $1,942 per person; $7,768 per family of four; or $5.3 billion total.</li> <li>In cities with populations of 100,000 and above, the communities with the least per capita federal dollars ‘at risk’ are St. Paul, Minnesota ($47 per person, $14.2 million total); Downey, California ($36 per person, $4.2 million total) and Miami, Florida ($67 per person, $29.7 million total).</li> <li><strong>$15.983 billion in federal funds flowed into just twelve major American cities where 1 in 5 illegal entrants reside (FY2016).</strong></li> <li>Department of Justice grants to law enforcement – i.e. city police departments – totaled $543.97 million (FY2016). Typically, this funding was only a small percentage of the local law enforcement budgets.</li> <li><strong>$4.23 billion in federal funding of the 106 sanctuary cities flowed via the ‘direct payment’ type.</strong> These payments funded municipal services such as housing, education, community development, and schools.</li> <li>$21.5 billion in federal funding of the 106 sanctuary cities flowed via the ‘grant’ payment mechanism. These payments funded local police and fire departments, schools, housing, and city services.</li> <li><strong>In Los Angeles, fully 1 in 5 city residents (22-percent) are illegal entrants.</strong> However, the amount of federal funding amounts to only $126 per resident; $504 per family of four; or $502.5 million total.</li> <li>In Newark, New Jersey, 19-percent of city residents are undocumented entrants. However, the amount of federal funding amounts to $733 per resident; $2,932 per family of four; or $206.7 million.</li> </ol> <p><strong>The threat of losing nearly $27 billion in federal funding seems to be having an effect on some cities. In fact, Miami already reversed their sanctuary city policy.</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="486" height="191" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170327_war1.jpg?1490638448" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/ag-sessions-makes-surprise-sanctuary-city-announcement-vows-withhold-funding#comments Alabama Department of Justice Department of Justice DOJ Florida Fox Business Illegal immigration to the United States Illinois Immigration Jeff Sessions Law Office of Justice Programs Regulatory compliance Sanctuary city Sean Spicer Social Issues Transparency Twitter Twitter Washington D.C. White House White House Mon, 27 Mar 2017 18:28:43 +0000 Tyler Durden 591845 at http://www.zerohedge.com The Curse Of 'The Thinking Class' http://www.zerohedge.com/news/2017-03-27/curse-thinking-class <p><em><a href="http://kunstler.com/clusterfuck-nation/curse-thinking-class/">Authored by Howard Kunstler via Kunstler.com,</a></em></p> <p>Let&rsquo;s suppose there really is such a thing as The Thinking Class in this country, if it&rsquo;s not too politically incorrect to say so - <strong>since it implies that there is another class, perhaps larger, that operates only on some limbic lizard-brain level of impulse and emotion.</strong> Personally, I believe there is such a Thinking Class, or at least I have dim memories of something like it.</p> <p><strong>The farfetched phenomenon of Trumpism has sent that bunch on a journey to a strange land of the intellect,</strong> a place like the lost island of Kong, where one monster after another rises out of the swampy murk to threaten the frail human adventurers. No one back home would believe the things they&rsquo;re tangling with: giant spiders, reptiles the size of front-end loaders, malevolent aborigines! Will any of the delicate humans survive or make it back home?</p> <p><strong>This is the feeling I get listening to arguments in the public arena these days, but especially from the quarters formerly identified as left-of-center, especially the faction organized around the Democratic Party, which I aligned with long ago (alas, no more). </strong></p> <p>The main question seems to be: <strong><em>who is responsible for all the unrest in this land.</em></strong> Their answer since halfway back in 2016: <strong><em>the Russians.</em></strong></p> <p>I&rsquo;m not comfortable with this hypothesis. Russia has a GDP smaller than Texas. If they are able to project so much influence over what happens in the USA, they must have some supernatural mojo-of-the-mind &mdash; and perhaps they do &mdash; but it raises the question of motive. <strong><em>What might Russia realistically get from the USA if Vladimir Putin was the master hypnotist that Democrats make him out to be?</em></strong></p> <p><em>Do we suppose Putin wants more living space for Russia&rsquo;s people? Hmmmm. Russia&rsquo;s population these days, around 145 million, is less than half the USA&rsquo;s and it&rsquo;s rattling around in the geographically largest nation in the world. Do they want our oil? Maybe, but Russia being the world&rsquo;s top oil producer suggests they&rsquo;ve already got their hands full with their own operations? Do they want Hollywood? The video game industry? The US porn empire? Do they covet our Chick-fil-A chains and Waffle Houses? Our tattoo artists? Would they like to induce the Kardashians to live in Moscow? Is it Nascar they&rsquo;re really after?</em></p> <p><strong>My hypothesis is that Russia would most of all like to be left alone.</strong> Watching NATO move tanks and German troops into Lithuania in January probably makes the Russians nervous, and no doubt that is the very objective of the NATO move &mdash; but let&rsquo;s not forget that most of all NATO is an arm of American foreign policy.<strong> If there are any remnants of the American Thinking Class left at the State Department, they might recall that Russia lost 20 million people in the dust-up known as the Second World War against whom&hellip;? Oh, Germany.</strong></p> <p><strong>Altogether last January the US military deployed thousands of soldiers and heavy weaponry to Poland, the Baltic states and southeastern Europe in its biggest build-up since the Cold War</strong>(<a href="http://www.reuters.com/article/us-nato-russia-germany-idUSKBN15F1IH">Reuters</a>). As they used to say in old film noir Bogart movies: what&rsquo;s the big idea? The State Department would say they big idea was cautioning Russia against annexing anymore neighboring states or regions, as they did in Crimea a few years back. Apparently the public is supposed to forget that the State Department sponsored and engineered the conversion of Ukraine into a failed state, prompting Russia to retain its naval bases in Crimea, its only warm-water outlet to the world&rsquo;s oceans. Ask yourself: <strong><em>if for some reason the state of Virginia were plunged into anarchy by foreign mischief, do you think the US would batten down our naval station in Norfolk?</em></strong></p> <p>I think <strong>the sad truth of the American predicament these day,</strong> including the ascension of a narcissistic ninny to the White House, is that <strong>we&rsquo;re responsible for our own problems</strong> due, most of all, to the destruction of boundaries in virtually all realms of American behavior from the things we put in our bodies to the ridiculous ways that we occupy our waking hours at the expense of getting our own house in order.<strong> I would like to join the party dedicated to getting our house in order. Anybody else out there feel that way?</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="373" height="202" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170327_think.jpg?1490629347" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-27/curse-thinking-class#comments Baltic States Democratic Party Department of State Germany Grand Croix of the Légion d'honneur Lithuania Military NATO North Atlantic Treaty Organization Poland Politics Reuters RT Russo-Georgian War Southeastern Europe Television Ukraine US military Vladimir Putin Vladimir Putin White House White House Mon, 27 Mar 2017 18:00:00 +0000 Tyler Durden 591829 at http://www.zerohedge.com