en Congress Reaches Deal To Keep Government Open Through September <p>One of the biggest political overhangs facing the market may have just been removed, when moments ago AP and other newswires reported that House Democrats and Republicans are said to have reached a $1 trillion spending deal to keep the government - which is currently operating thanks to a last minute one-week stopgap measure enacted on Friday - open until October 1. </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">BREAKING: Congressional Republicans, Democrats reach agreement on $1T measure to fund government until Oct. 1.</p> <p>— AP Politics (@AP_Politics) <a href="">May 1, 2017</a></p></blockquote> <script src="//"></script><p>According to <a href="">Washington Post</a>, negotiators from both parties reached an agreement on a spending package to fund the government through the end of September, alleviating fears of a government shutdown later this week. Congress is expected to vote early this week on the package, <strong>with the bipartisan agreement expected to include increases for military spending and border security, a major priority for GOP leaders in Congress</strong>.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The agreement follows weeks of tense negotiations between Democrats and GOP leaders after President Trump insisted that the deal include funds to begin construction of a wall along the U.S. border with Mexico. Trump eventually dropped that demand, leaving Congress to resolve lingering issues over several unrelated policy measures.</p> </blockquote> <p>There is a non-trivial chance the Sunday night announcement is merely a trial balloon, because as the WaPo adds "the details of the agreement were not yet clear on Sunday night" which would suggest that there is a high likelihood that whatever tentative deal was reached, ultimately falls through.</p> <p>For now, however, this is good news, and it has sent both the pound and yen sliding, and the dollar rising on hopes that politics will not be a major risk factor for at least 5 months.</p> <p>House Republicans have struggled in recent weeks to keep their members focused on spending as White House officials and conservatives pressed leaders to revive plans for a vote on health-care legislation. The health-care fight became tangled last week with the spending talks as leaders worried that forcing a vote to repeal the Affordable Care Act risked angering Democrats whose votes are necessary to avoid a government shutdown. </p> <p>Another possible threat is that the GOP pushes on with Obamacare repeal, a gambit which may prompt Democrats to withdraw any support they voiced for Sunday's "deal."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>GOP leaders worked last week to determine if there are enough votes in the House to pass a revised health-care bill brokered by the White House, the head of the conservative House Freedom Caucus and a top member of the moderate Tuesday Group. House Speaker Paul D. Ryan (R-Wis.) and his top lieutenants announced Thursday that they did not have sufficient votes to be sure the health-care bill would pass but vowed to press on.</p> <p>&nbsp;</p> <p>“We’re still educating members,” House Majority Leader Kevin McCarthy (R-Calif.) told reporters after a late-night health care meeting last week. “We’ve been making great progress. As soon as we have the votes, we’ll vote on it.”</p> </blockquote> <p>And now, in the spirit of trial balloons everywhere, we await the denial from yet other "unnamed sources."</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="1150" height="647" alt="" src="" /> </div> </div> </div> Business Congress Continuing Appropriations Resolution Democratic Party Donald Trump Efforts to repeal the Patient Protection and Affordable Care Act Government shutdowns in the United States Internal Revenue Code Mexico Obamacare Patient Protection and Affordable Care Act Patient Protection and Affordable Care Act replacement proposals Politics Politics of the United States Presidency of Barack Obama Republican Party Statutory law United States White House White House Yen Mon, 01 May 2017 02:02:44 +0000 Tyler Durden 594970 at North Korea Threatens To Sink "Doomed" US Nuclear Submarine <p>North Korea threatened to sink a US nuclear sub currently deployed in South Korean waters if the US take provocative action, responding to a statement from Donald Trump that the president won’t be “happy” if Pyongyang conducts another nuclear test. </p> <p><img src="" width="500" height="324" /></p> <p>After the US deployed a nuclear-powered submarine and an aircraft carrier to South Korean waters amid high Korean tensions, <a href="">Yonhap reported </a>that North Korea on Sunday threatened to sink the submarine, accusing America of stepping up military intimidation.</p> <p><strong>"The moment the USS Michigan tries to budge even a little, it will be doomed to face the miserable fate of becoming a underwater ghost without being able to come to the surface,"</strong> the North's propaganda website Uriminzokkiri wrote in a vivid article. North Korea’s nuclear deterrent will assure that American aircraft carriers, nuclear submarines, and other military hardware will be “<strong>shattered into pieces of molten metal</strong>” if they threaten Pyongyang, the article read.</p> <p>The North warned - once again using its dramatically vivid jingoist language - that "whether it's a nuclear aircraft carrier or a nuclear submarine, they will be turned into a mass of scrap metal in front of our invincible military power centered on the self-defense nuclear deterrence."</p> <p>"The urgent fielding of the nuclear submarine in the waters off the Korean Peninsula, timed to coincide with the deployment of the super aircraft carrier strike group, is intended to further intensify military threats toward our republic," the website further claimed. According to the article, recent statements from the Trump administration indicate that Washington is close to implementing a strategic scenario in which an actual military confrontation is a real possibility.</p> <p>Earlier on Sunday, Donald Trump told CBS that he “will not be happy” if North Korea conducts another nuclear test. When asked to clarify, the US president said: “I would not be happy. If he (North Korean supreme leader, Kim Jong-un) does a nuclear test, I will not be happy.” </p> <p>“And I can tell you also, I don’t believe that the president of China, who is a very respected man, will be happy either,” Trump said, adding that he believes Xi Jinping was also “putting pressure” on North Korea to bring a halt to its nuclear tests.</p> <p>CBS host John Dickerson then directly asked Trump whether US military action was possible, the US president replied: “I don’t know. I mean, we’ll see.”</p> <p>The guided-missile submarine USS Michigan sailed into the South Korean port of Busan on April 25 before heading out to sea four days later. The Ohio-class submarine is reportedly conducting various drills. At the same time, the U.S. has also directed the nuclear-powered aircraft carrier USS Carl Vinson to the waters near South Korea. The supercarrier is currently engaged in a joint exercise with South Korean naval forces of the Korean peninsula.</p> <p>The threat followed North Korea's failed missile launch. On early Saturday, North Korea fired off a ballistic missile which the South Korean military said exploded after flying only 71 kilometers. The launch marks the third missile test in April. </p> <p>Trump told CBS that the failed test wasn’t significant enough to warrant action against North Korea. “This was a small missile. This was not a big missile. This was not a nuclear test, which he was expected to do three days ago. We’ll see what happens,” the president said. </p> <p>Joint US-South Korean naval wargames, Foal Eagle, involving 20,000 Korean and nearly 10,000 American troops kicked off in the region on Sunday.</p> <p>Washington has said that the USS Carl Vinson aircraft carrier and USS Michigan nuclear sub will remain in the area due to the spike in tensions between Washington and Pyongyang.</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="500" height="324" alt="" src="" /> </div> </div> </div> China Donald Trump Foreign relations of North Korea Foreign relations of South Korea International relations KIM Korea Korean conflict Korean Crisis Korea–United States relations Michigan military hardware Military of North Korea North Korea North Korea Nuclear power Nuclear program of North Korea Politics South Korean military Trump Administration USS Carl Vinson War Mon, 01 May 2017 02:01:23 +0000 Tyler Durden 594963 at The Real WMD In Syria - The West's Weapon Of Mass Disorientation <p><em><a href="">Authored by Finian Cunningham via The Strategic Culture Foundation,</a></em></p> <p><a href=""><img height="345" src="" width="600" /></a></p> <p>A senior Rand analyst, inadvertently, gave the game away in a recent article inculpating Syrian President Bashar al Assad over the alleged toxic massacre of civilians on April 4. The Rand Corporation, a longtime conduit for CIA propaganda,&nbsp;<a href="">wrote</a>: <strong><em>&laquo;The use of chemical weapons today provokes international condemnation&hellip; Those who order their deployment risk being charged with war crimes&raquo;.</em></strong></p> <p>The Western objective, as tacitly admitted above, is therefore to <strong>brand the Syrian leader and his government as depraved war criminals, deserving pariah status and excommunication by the &laquo;international community&raquo;.</strong></p> <p><strong>The alleged use of chemical weapons, a particularly odious weapon of mass destruction (WMD), serves as an effective prop to channel Western public outrage against Assad. </strong>Allegedly killing civilians with bullets and bombs just doesn&rsquo;t have the same psychological power to incite public disgust. Poisoning little children with lethal chemicals is a more effective label with which to demonize the alleged perpetrator.</p> <p><strong>But the more pertinent WMD issue here is Weapon of Mass Disorientation.</strong> And in particular how Western governments, their servile corporate-controlled media, like the Rand Corp, New York Times, CNN, BBC, Guardian and France 24, and so on, and local proxy mercenaries inside Syria are covertly deploying deadly chemicals in a series of propaganda stunts. Not only deploying deadly chemicals against civilians in a most cynical and callous way, but getting away with their crimes of murder through an audacious distortion of reality. All made possible because of the West&rsquo;s media weapon of mass disorientation.</p> <p><strong>By massive manipulation of facts and images, the Western public are disorientated to condone the wider criminal agenda that their governments are pushing &ndash; that of regime change. </strong>Part of that disorientation involves the Western public suspending critical thinking over what are otherwise highly dubious circumstances and claims; it also involves an abject manipulation of perception and emotions, whereby some victims of violence are the focus for Western public trauma, while many other victims in Syria and elsewhere are unseen or overlooked with callous indifference. Those anomalies surely speak of a phenomenal disorientation of Western public intelligence, emotion and morals.</p> <p>Immediately following the incident in the militant-held Syrian town of Khan Sheikhoun, in northern Idlib Province, on April 4, Western governments and the corporate news media began accusing the Syrian leader of responsibility for a &laquo;chemical weapon attack&raquo;. The US ambassador the UN Nikki Haley made a dramatic presentation at the Security Council on April 5, holding aloft enlarged photos purportedly of children dying from toxic exposure. Two days later, on April 7, US President Donald Trump ordered a full-scale barrage of cruise missile strikes on a Syrian airbase out of &laquo;revenge&raquo; for the murder of &laquo;beautiful babies&raquo;.</p> <p><strong>Trump&rsquo;s decision to attack Syria was reportedly prompted by his disgust at watching videos of the alleged victims,</strong> and by the emotional angst that his daughter and special advisor Ivanka Trump felt on also watching the same footage. The video and images were, by the way, released to the Western news media solely by militant-aligned sources, the so-called White Helmets, operating at the location of the alleged chemical weapon attack.</p> <p>White House spokesman Sean Spicer later said that<strong> any one &laquo;who gases a baby&raquo; can expect more US military retribution. </strong>Spicer also made the crass claim that Syrian President Assad was &laquo;worse than Hitler&raquo; because of his alleged uniquely barbaric use of chemical weapons on civilians.</p> <p>Meanwhile,<strong> US and British warplanes operating in Syria, Iraq and Yemen are slaughtering at the very same time hundreds of civilians. </strong>In Yemen, thousands of children are dying from starvation due to a US-backed blockade on that country by Saudi Arabia in its war for regime change there. Why aren&rsquo;t Donald Trump, his daughter Ivanka, and his spokesman Sean Spicer traumatized by these deaths? Why is the Western public also not outraged, traumatized?</p> <p><strong>In Syria, on Easter Saturday, April 15, busloads of civilians were murdered by terrorist suicide bombers, whom the Western governments and media refer to as &laquo;rebels&raquo;. </strong>Over 120 civilians were massacred including 68 children. Where was the Western outrage at the images of charred children&rsquo;s bodies hanging out of mangled buses? Indeed, the Western media coverage of that carnage was minimal and was downplayed with insidious words that the victims were &laquo;pro-regime supporters&raquo;.</p> <p>But the victims of the bus attacks were more numerous than those allegedly killed during the chemical weapons incident two weeks before at Khan Sheikhoun.</p> <p><strong>President Trump has condemned Syria&rsquo;s Assad as an &laquo;animal&raquo; due to the alleged use of chemical weapons. </strong>Britain&rsquo;s Foreign Secretary Boris Johnson has also called Assad a &laquo;monster&raquo;. Clearly, the image-projection here is aimed at demonizing and dehumanizing the Syrian leader. Once that image-making is &laquo;successful&raquo; &ndash; and the saturation pejorative Western media coverage is crucial to that success &ndash; then a moral, legalistic mandate is created which allows Washington and its allies to escalate their aggression against Syria. Either through diplomatic sanctions at the United Nations or by military means with direct military force, as seen with Trump&rsquo;s cruise missile barrage on April 7, or with increased support to proxy militant groups inside Syria.</p> <p>All the while that Western governments and media have been demonizing Syria over alleged chemical weapons, the political-media campaign has also been directed at smearing Russia for alleged complicity because of its alliance with Syria.</p> <p><strong>Britain&rsquo;s Johnson said earlier this month that Russian leader Vladimir Putin had &laquo;toxified&raquo; Russia&rsquo;s international reputation by its alliance with Syria. </strong>The British diplomat&rsquo;s choice of words betrayed an overly contrived attempt to push the propaganda theme.</p> <p>In what should be seen as a transparently crude effort, the Western governments tried to splice Russia&rsquo;s support for Syria by hyping up the &laquo;horror&raquo; of chemical weapons. The Western political momentum has since dissipated somewhat, but there was an obvious bid by the West in the days following the incident at Khan Sheikhoun to force an ultimatum on Moscow to abandon the Assad government, and to in effect cede to Western demands for regime change in Damascus.</p> <p>Russia seems to have succeeded in rebuffing this tawdry tactic by holding firm to principles of international law and objective facts.</p> <p><strong>Last week, the UN-affiliated Organization for the Prohibition of Chemical Weapons (OPCW) issued a&nbsp;<a href=";ns_source=inxmail_newsletter&amp;ns_campaign=bbcnewsdaily" target="_blank">statement</a>&nbsp;claiming that there was &laquo;incontrovertible evidence&raquo; that the lethal chemical weapon sarin was used in Khan Sheikhoun on April 4.</strong></p> <p>The<em><u><strong> OPCW did not say who used the alleged sarin.</strong></u></em> But the inference pushed by Western media was that it was the Syrian government.</p> <p>Russia&rsquo;s Foreign Minister Sergey Lavrov deprecated the OPCW as &laquo;discrediting&raquo; itself. The supposedly neutral, scientific organization was basing its conclusions on samples supplied by illegally armed groups, in a dubious chain of &laquo;evidence&raquo; that is neither impartial nor verifiable.</p> <p><strong>The &laquo;sarin conclusion&raquo; announced by the OPCW is in accordance with the assertions made by the US, Britain, France and Turkey. They are not disinterested parties.</strong> They are protagonists for regime change and sponsors of a covert war against the Syrian government since March 2011. Yet, audaciously, their partisan claims are afforded credibility by Western media.</p> <p>Russia&rsquo;s call last week for an impartial, on-site investigation into what actually happened at Sheikhoun was rejected by the Western governments. Russia&rsquo;s demand for an independent probe was also supported by Iran and the Syrian government.</p> <p><em><strong>As Sergey Lavrov&nbsp;<a href="">noted</a>: &laquo;The spreading of false information on the use of chemical weapons by the Syrian government is being used to move away from implementing UN resolutions on finding a peaceful settlement and instead to switch to the long-cherished objective of regime change&raquo;.</strong></em></p> <p>There is abundant evidence that sarin was not the toxic agent used at Khan Sheikhoun on April 4. American MIT professor Theodore Postol, a highly accredited weapons expert, as well as neuroscientist Dr Denis O&rsquo;Brien, are just two of many sources who have&nbsp;<a href="" target="_blank">concluded</a>&nbsp;from the observing the symptoms and circumstances that sarin could not have possibly been used.</p> <p>There is abundant evidence too that the Western-backed regime-change militants in Syria have been involved in fabricating supposed &laquo;chemical weapons&raquo; incidents, creating media-ready videos which the Western news outlets have avidly disseminated and which Western governments have cited as &laquo;evidence&raquo; against Assad. That was the conclusion of the Swedish Doctors for Human Rights, among other reputable sources.</p> <p><strong>Considering that the only &laquo;evidence&raquo; for the latest chemical weapon incident on April 4 comes in the form of unverifiable videos supplied by terrorist-affiliated groups, it is highly plausible that the narrative put out by these groups, the Western governments and media is false. </strong>That narrative is that Syrian warplanes dropped chemical weapons on Khan Sheikhoun, killing over 80 civilians.</p> <p>By contrast, it is plausible that the entire incident is an orchestrated fabrication. That is, that there was no chemical &laquo;weapon of mass destruction&raquo; used at Khan Sheikhoun. If a weapon of that sort were used, as alleged, then one would expect the death toll to be in the hundreds, if not thousands, as happened at Halabja in 1988 when up to 5,000 Kurdish civilians were massacred by the Iraqi dictator Saddam Hussein.</p> <p>Instead, what likely happened in Syria was simply the murder by intoxication of civilians by militants using lethal chemicals, such as cyanide or chlorine. Why were the supposed aid responders of the White Helmets not also poisoned if highly toxic sarin had been used? Why do the &laquo;responders&raquo; seem too preoccupied with making videos instead of actually treating victims with due medical care? Why have no sarin antidotes or decontaminants been requested or sent to Khan Sheikhoun in the days and weeks following the alleged attack?</p> <p><strong>Thus the militants and their media-savvy agents in the White Helmets (who are funded by Western military intelligence) could very well have staged the poisoning of unwitting civilians.</strong> The despicable, cynical act of homicide may not have even happened on the alleged date of April 4, or even in the alleged location of Khan Sheikhoun.</p> <p>Bear in mind that it has been&nbsp;<a href="" target="_blank">reported</a>&nbsp;in the past that US and other Western military forces have &laquo;trained&raquo; the so-called Syrian &laquo;rebels&raquo; (terrorists) on the handling of lethal chemicals. Those Western media reports mendaciously spun the notion that the &laquo;rebels&raquo; were being trained in the event of Assad&rsquo;s &laquo;chemical weapons arsenal being unleashed&raquo;.</p> <p>The Syrian government has repeatedly and categorically denied that its forces used chemical weapons at Khan Sheikhoun earlier this month or in any other incident. It says that all its chemical weapons were destroyed back in 2014 under a Russian-brokered deal, a result that was confirmed at the time by the OPCW.</p> <p><strong>Tenuously, the US Secretary of Defense James Mattis claimed last week that the Syrian government cheated the OPCW and secretly kept a portion of chemical weapons in reserve.</strong></p> <p>The Western narrative of chemical weapons (sarin) used by the Syrian government is riven with anomalies if interrogated with critical thinking. Indeed, when looked at with due skepticism, it is apparent that the Western narrative is not merely a misinformed, erroneous perspective. The whole affair is a deliberate, carefully constructed and delivered Western psychological operation, a false-flag propaganda stunt, to demonize and dehumanize the Syrian government in order to propel the Western agenda of regime change. The American CIA and British MI6 have been trying to implement regime change in Syria&nbsp;<a href="" target="_blank">since 1949</a>&nbsp;in on-off clandestine projects. The chemical weapon of mass destruction allegation is but the latest ploy in a long-running project.</p> <p>Western governments, their military intelligence agencies and the propaganda service of the corporate media have been working on this particular psychological operation for several years in Syria, going back to the first major &laquo;chemical weapon&raquo; incident in East Ghouta, near Damascus, in August 2013. That stunt failed to effectively demonize the Assad government then. But the Western operation has continued and evolved over time until its latest episode at Khan Sheikhoun on April 4. The &laquo;chemical weapon&raquo; nomenclature is spurious from the nature of the injuries inflicted. It is more likely an incident of mass poisoning by militants carried out on hapless victims, which is conveniently broadcast around the world by Western governments and media as a &laquo;chemical weapon of mass destruction&raquo; used by the &laquo;Assad regime&raquo;.</p> <p><strong><u>What is overlooked, however, is the WMD weapon of mass disorientation being used against Western public.</u></strong> The disorientation of critical thinking, emotions and moral standards is deployed in order to more easily manipulate public consent for the Western governments&rsquo; criminal enterprise of regime change in Syria.</p> <p>There is an abominable charade taking place before our very eyes. <strong>A charade in which supposedly &laquo;moral&raquo;, &laquo;law-abiding&raquo;, &laquo;democratic&raquo; Western governments are colluding with the most vile terror groups using the most vile means of deception and murder.</strong> Why this simple glaring truth is not recognized more widely by the Western public is because their own governments have deployed weapons of mass disorientation through dutiful mass media purporting to act as &laquo;news services&raquo;.</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="628" height="361" alt="" src="" /> </div> </div> </div> Assad family Assad government Bashar al-Assad Central Intelligence Agency Chemical warfare Crude Donald Trump France Geography of Asia Iran Iraq MIT New York Times Organization for the Prohibition of Chemical Weapons Politics Rand Corporation Reality Saudi Arabia Security Council Strategic Culture Foundation Syria Syria chemical weapons program Syrian Civil War Syrian government Turkey United Nations Use of chemical weapons in the Syrian civil war Vladimir Putin War Western Asia White House White House Mon, 01 May 2017 02:00:00 +0000 Tyler Durden 594957 at Contagion Fears Rise In Aftermath Of Home Capital Group Collapse <p>With the bank run at Home Capital Group hitting a crescendo on Friday, when in one day 36% of the liquidity at Canada's largest non-bank lender escaped through the front door, and only an emergency rescue loan yielding over 20% has prevent a liquidation at HCG so far, suddenly some are wondering if the dreaded "C" word is applicable to what Bloomberg has dubbed "one of the world’s strongest financial systems."</p> <p>The word in question is <em><strong>c</strong>ontagion</em>, and the party casually bringing it up is Mawer Investment Management, one of HCG's largest former investors. Jim Hall recalculating the odds of a contagion widening across one of the world’s strongest financial systems.</p> <p>According to Bloomberg, Mawer CIO Jim Hall is recalculating the odds of a contagion widening across the Canadian financial system. </p> <p>“The probability has gone from infinitesimal to possible -- unlikely, but possible,” said Hall, chief investment officer of the Calgary-based money manager, in an interview Saturday. “<strong>If depositors or bondholders start to lose faith in their banks, well then that becomes systemic.”</strong></p> <p>Mawer is not waiting to find out either way: the company which oversees more than C$40 billion in assets, sold about 2.8 million shares, or a 4.3 percent stake, in Home Capital in the past week, joining another Calgary-based money manager, QV Investors Inc., in exiting its investment amid the imbroglio consuming the Toronto-based lender.</p> <p>Speaking to Bloomberg, Hall said that in his view, the odds that woes at Home Capital - which had C$20.5 billion in assets at the end of 2016, and whose C$15 billion home-loan book represents about 1% of Canada’s C$1.45 trillion mortgage market - spread through Canada’s financial system are low, "<strong>despite a growing chorus of voices speculating such fears in a nation gripped by an overheated housing market and runaway home prices in two of its three biggest real-estate markets: Vancouver and Toronto.</strong>"</p> <p>“It’s a pretty hot fire in one little corner of the forest, and it doesn’t look like it’s spreading,” Hall said. “There are firefighters standing around it right now, so if it starts to move, they’ll put it out.”</p> <p>Unless, of course, the firefighters are just as capable as the rating agencies or the company's investors, the vast majority of whom never saw this coming.</p> <p>As reported last week, after admitting it was the subject of a furious bank run, Home Capital secured a loan to stem dwindling deposits and said it’s weighing a sale, hiring RBC Capital Markets and BMO Capital Markets to advise on financing and “strategic options.” Canada’s banking regulator says it’s closely monitoring the situation and surveying other financial firms to assess their condition.&nbsp; </p> <p>"The assets look, at this point, still reasonably good,” Hall said, adding that Home Capital’s problem is a matter of confidence. “<strong>Confidence was lost in this company and the business model breaks apart. That’s the problem with banks</strong>.”</p> <p>So what would a worst case scenario look like? </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Canada’s financial system has lots of fire breaks, as Hall describes it, to prevent problems from spreading. </p> <p>&nbsp;</p> <p>“Even if a bank gets itself into a confidence issue, it can be effectively bailed out by another bank or by another financial institution or by ultimately the regulator,” Hall said. </p> <p>&nbsp;</p> <p>Bank failures in Canada’s financial system, <strong>deemed the world’s soundest by the World Economic Forum for eight straight years until 2016, are rare</strong>. Canadian banks sidestepped the worst of the 2008 financial crisis, having only a fraction of the $1.95 trillion of writedowns and losses suffered by financial firms worldwide.</p> </blockquote> <p>Ultimately, it is the "safest" financial systems, those that have taken virtually no reserves against a downside case, that end up being most exposed to unexpected shock factors. </p> <p>"In a system that’s well capitalized, there are lots of firefighters around and they’ve got lots of equipment and they’ve got lots of water - that’s kind of where we’re at right now,” Hall said. “But it doesn’t mean it can’t get out of control." As a reminder, in the US stocks surged for months after the US had its own "New Century" moment, hitting all time highs nearly half a year later, when it took months for the market to digest just what the collapse of subprime meant for the US and global economy. </p> <p></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="620" height="349" alt="" src="" /> </div> </div> </div> Bailout Bank Bank Failures Bank Run Banking Business Capital Markets Economic bubbles Economy Finance Financial crisis Financial crisis of 2007–2008 Financial market Global Economy Great Recession Housing Market Money New Century Rating Agencies RBC Capital Markets Systemic risk World Economic Forum Mon, 01 May 2017 01:48:35 +0000 Tyler Durden 594969 at HaPPY MaY DaY 2017... <p><a href="" title="MAY DAY 2017"><img src="" alt="MAY DAY 2017" width="1024" height="784" style="display: block; margin-left: auto; margin-right: auto;" /></a></p> <script src="//"></script> Mon, 01 May 2017 01:45:12 +0000 williambanzai7 594968 at Philly Beverage Tax Blowback: Coca Cola Sales Plunge 32% <p>Just a month after <strong><a href="">PepsiCo said it would lay off 80-100 people</a></strong> due to the &#39;unintended consequences&#39; of Philadelphia&#39;s new soda-tax, <em><strong>Philly Coke, the local Coca-Cola bottler, has cut 40 jobs amid a 32% plunge in sales</strong></em>.</p> <p>Since all of this is taking place as previewed in a recent post: &quot;<a href="">The &#39;Soda Police&#39; Just Learned A Valuable Lesson About Taxes</a>&quot;, <strong>we doubt it would come as a surprise to anyone, although we are confident that Philadelphia city workers will be amazed by these unexpected developments.</strong></p> <p>When Philadelphia became the first US city to <a href="">pass a soda tax last summer</a>, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, one month ago, after the tax went into effect on January 1st we <a href="">showed the tax applied in practice</a>: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since&nbsp; PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.</p> <p><a href=""><img height="446" src="" width="400" /></a></p> <p>What happened next? Precisely what most expected would happen: <strong><em>full blown sticker shock, and a collapse in purchases. </em></strong>According to reports, two months into the city&rsquo;s sweetened-beverage tax, <strong>supermarkets and distributors are reporting a 30% to 50% drop in beverage sales and - </strong>adding insult to injury <strong>- are now planning for layoffs.</strong></p> <p><a href="">A month ago,</a> <span style="text-decoration: underline;"><strong>PepsiCo slashed jobs,</strong></span> blaming the soda tax...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>With<strong> sales slumping because of the new Philadelphia sweetened beverage tax,</strong> Pepsi said that it will lay off 80 to 100 workers at three distribution plants that serve the city.</p> <p>&nbsp;</p> <p>The company, which employs 423 people in the city, sent out notices and said the layoffs would be spread over the next few months. The layoffs come in response to the&nbsp; beverage tax, which has cut sales by 40 percent in the city, PepsiCo Inc. spokesman Dave DeCecco said.</p> <p>&nbsp;</p> <p><em><strong>&ldquo;Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles,&rdquo; </strong></em>DeCecco said.</p> <p>&nbsp;</p> <p>Outside of the North Philadelphia plant Wednesday, Ed Langdon, a 40-year employee&nbsp; who shuttles products between warehouses, said <strong>the cuts are the most drastic he&#39;s seen in his time at Pepsi. </strong>Langdon said the writing was on the wall: Some colleagues who are paid on commission were seeing drastic cuts in weekly pay. <strong>&quot;The trucks are going out and they&#39;re coming back with the soda on it,&quot; he said. &quot;No one&#39;s buying it. It&#39;s just not happening.&quot;</strong></p> </blockquote> <p>And on Friday, <a href=""><em>as reports,</em></a> <span style="text-decoration: underline;"><strong>Coke did the same...</strong></span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Philadelphia&rsquo;s new sweetened-beverage tax has led to the loss of 40 Coca-Cola jobs and a 32 percent drop in sales, the company said Friday.</strong></p> <p>&nbsp;</p> <p>Fran McGorry, president and general manager of Philly Coke, the local Coca-Cola bottler, said in a news release that the job losses are due to commission-based employees leaving the company, not layoffs.</p> <p>&nbsp;</p> <p><strong>&ldquo;We are not able to replace those positions right now,&rdquo; </strong>he said. &ldquo;In total, we have fewer people working in the city while more people are now working outside Philadelphia due to increased demand there. We have also made the decision not to hire seasonal employees for the summer months due to the negative impact the tax is having on our business.&rdquo;</p> </blockquote> <p>Lauren Hitt,<strong> spokeswoman for Mayor Kenney, stressed that fact when responding to the job losses and said the industry is &ldquo;looking for opportunities&rdquo; to make the tax a scapegoat. </strong>The Kenney administration lambasted the news, pointing to the industry&#39;s overall profits and the benefits of the expanded pre-K program that the 1.5-cent-per-ounce tax funds.</p> <p>Anthony Campisi, a spokesman for a coalition of retailers, bottlers, and unions opposed to the tax, said it was unfair for the city to blame the companies for the job loss.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;It&rsquo;s the mayor who&rsquo;s to blame for the economic and human impact of the tax,&rdquo; Campisi said. &ldquo;And its offensive to blame the impact on Philadelphia businesses that are no longer sustainable because of it.&quot;</strong></p> </blockquote> <p>The beverage industry is suing to strike down the tax.</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="720" height="392" alt="" src="" /> </div> </div> </div> Business Coca-Cola Excises Food and drink Health Kenney administration Labor Obesity Patent medicines Pepsi PepsiCo Personal life Public health Soda Police Soft drinks Sugary drinks tax The Coca-Cola Company Mon, 01 May 2017 01:30:00 +0000 Tyler Durden 594956 at Detroit Is A Stark Reminder Peak America Was Over 50 Years Ago <p><em>Submitted by <a href="">Stock Board Asset</a></em></p> <p>The most common saying amongst the baby boomer generation is “America is not like it was when I was growing up”. Have you ever wondered what that means?</p> <p>Let’s first examine Jefferson Avenue and Conner, 1949-2010. As quickly as the city had grown, Detroit started to decay in the 1960’s. East Jefferson Avenue was once home to some of Detroit’s most prestigious industrial plants, including Chalmers, Hudson, Briggs, and Continental. The loss of many of these plants started in the 1960’s and had a devastating impact on the neighborhoods nearby, leading to a mass exodus of residents.</p> <p><a href=""><img src="" width="500" height="368" /></a></p> <p>The Strauss–Howe generational theory, authored by William Strauss and Neil Howe may explain why Detroit started unraveling in the mid-1960’s. This was due to the late phase of the generation shift called the ‘American High’, which lasted from 1946 to 1964. This was a period of massive expansion of birth rates, industry, and infrastructure — America had it all.</p> <p>The ‘American High’ ended in 1964 giving way to the next generational shift called the ‘Consciousness Revolution’ 1964 to 1984. During this period, Detroit started to fall ill to a disease called globalism. This is where global elites shifted capital from Detroit, and or other American cities to manufactures overseas on the basis of a human instinct called greed. In the process, many communities were destroyed as industry left producing third world conditions for the remaining few.</p> <p><a href=""><img src="" width="500" height="302" /></a></p> <p>During the ‘American High’ (1946-1964), Detroit was the epicenter of the world’s auto industry. With the hard lead-in into the ‘Consciousness Revolution’ (1964-1984) globalism started to deplete US car production.</p> <p><a href=""><img src="" width="500" height="228" /></a></p> <p>Here are a few examples of cheap labor overseas hallowing out the American auto industry:</p> <p><em>US Car Production vs Japan Car Production<br /></em><a href=""><img src="" width="500" height="230" /></a></p> <p><em>US Car Production vs Mexico Car Production<br /><img src="" width="500" height="228" /></em></p> <p>From Baltimore to Detroit, i’ve surveyed the worst zip codes America has to offer. With-in these zip codes, the rhyming factor is globalism, which forced industry to leave sending the communities around it on a downward spiral.</p> <p>So, here is an Uber drive to remember touring through the most dangerous neighborhoods in Detroit, Michigan. I was armed with a drone, I-phone 7, and an Uber.&nbsp; The area of focus is the zip code 48204 area ranked Michigan Radio’s top six most dangerous neighborhoods in Michigan.</p> <p><img src="" width="500" height="589" /></p> <p>Alastair Williamson tours the most dangerous neighborhoods in Detroit, Michigan armed with a drone, I-Phone7, and an Uber. He comes across crumbling neighborhoods, climate change protests, and a touching interview at the end. His overall thoughts include, “the end results of globalism has been detrimental to the area. The industry and neighborhoods left decades ago, and what’s left are the artifacts of a civilization from the ‘American High'”.</p> <p><iframe src="" width="500" height="281" frameborder="0"></iframe></p> <p>It has a median real estate value of $39,372 due to a significant volume of vacant commercial and residential structures. A majority of residential real estate structures in the area are worth &lt; $62,000 making the area almost impossible to hold value, as well as attract new buyers to the area.<br /><a href=""><img src="" width="500" height="250" /></a></p> <p>Real estate never recovered, but flatlined after the Great Recession<br /><a href=""><img src="" width="500" height="280" /></a></p> <p>Conclusion: We have no-one else to blame but the global elites along with government officials who sold out America’s prosperity many decades ago. The elites prospered tremendously off this tectonic shift of capital overseas leaving the American middle class hallowed out. America needs her industry back, without it, we’re just an empire in decay.&nbsp; </p> <p><em>Bonus:&nbsp; Millennials in the next 8 years, according to Gordon T. Long will be 75% of the US workforce. What millennials don’t realize is that decades of decaying US cities or even just Detroit will be a massive uphill battle to produce a sustainable economy. Challenging times are ahead.</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="553" height="328" alt="" src="" /> </div> </div> </div> Culture of Detroit Demographics Demography Detroit Detroit Detroit River Japan Metro Detroit Mexico Michigan Millennials Neil Howe Real estate Recession Strauss–Howe generational theory Uber William Strauss Mon, 01 May 2017 00:58:29 +0000 Tyler Durden 594966 at 5 Head Scratchers <p><em style="line-height: 20.8px;"><span style="color: #800000;">By Chris at&nbsp;<a href=""></a></span></em></p> <p><em>Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.</em></p> <p>Welcome to this week’s edition of&nbsp;“World Out Of Whack”&nbsp;where every Wednesday we take time out of our day to laugh, poke fun at and&nbsp;present to you&nbsp;absurdity in global financial markets in all its glorious insanity. </p> <p> While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the&nbsp;“World Out Of Whack”&nbsp;as your double thick armour plated side impact protection system&nbsp;in a financial world littered&nbsp;with&nbsp;drunk drivers. </p> <p> Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.</p> <p>Occasionally we find opportunities where we can buy (or sell) assets&nbsp;for mere cents on the dollar –&nbsp;because, after all, we are capitalists. </p> <h3 style="text-align: center;"><span style="color: #339966;">In this week’s edition of the WOW: 5 head scratchers</span></h3> <p> Today we're going to blast through a few&nbsp;shards of information that have bloodied my windshield recently... but first some context.</p> <p>The world is a web, interconnected at multiple levels but in it's entirety it is one giant capital flow chart. This is why looking at events, trends and prices from multiple angles and with historical context is critical. It means that in order to understand global capital flows and the world at large&nbsp;investors needs to be generalists. Specialisation renders one towards narrow focus by necessity. There is nothing wrong with narrow focus when you need it so long as it can be brought into focus through a broad understanding.</p> <p>Let's therefore look at a number of topics. </p> <h3><span style="color: #339966;"><strong>1:&nbsp;Saudi Arabia&nbsp;Got WHAT??</strong></span></h3> <p> In what I dearly wish was a delayed April fools joke <strong>the United Nations just elected Saudi Arabia to the Woman's Rights Commission.</strong> No isht!</p> <p><img src="" width="550" height="362" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16748" /> </p> <p> A quick reminder: this is the only country in the world which actually bans women from driving cars while implementing Sharia Law, which - for those among you who haven't read the intricacies of - permits, among other heinous things, honour killings. Way to go UN!</p> <p>Question:&nbsp;does this make the UN complicit in crimes against humanity committed by Saudi Arabia's government? Oh, wait... </p> <p> Why do I even mention this?</p> <p>Davos men, the UN, the kleptocrats in Brussels, Washington, and sundry such&nbsp;creatures who muddy the halls of power are slowly losing their grip. This step - electing the fox in to guard the hen house - is a candid, dare I say it, balsy admittance to what we already knew. That they value money more than morals.</p> <p>Why it's important is because, in their desperate desire for riches, they just dealt another&nbsp;blow to the establishment's credibility. Credibility rests on trust, and trust is easily destroyed. What these podium donuts have just done is provided additional kerosene&nbsp;to the anti-establishment fire, which - if they've&nbsp;not looked outside their windows - is smouldering&nbsp;around them. </p> <p> When alternatives for governance are sought, as they are now, it doesn't require a genius to understand that views and beliefs are translated into how capital gets allocated.</p> <p>Ask yourself this.. If Davos Man is increasingly shown to be&nbsp;the morally bankrupt sociopath he is, then at what point does faith in Davos Man's institutions and obligations (sovereign debt, I'm looking at you) get called&nbsp;into question? </p> <h3><span style="color: #339966;"><strong>2:&nbsp;Risk <del>Party</del>... I Mean Parity</strong></span></h3> <p> In case you wondered what it was... </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em><strong>"Risk parity</strong> (or <strong>risk</strong> premia <strong>parity</strong>) is an approach to investment portfolio management which focuses on allocation of <strong>risk</strong>, usually defined as volatility, rather than allocation of capital."</em></p></blockquote> <p> Simplistically risk parity funds buy assets based on their implied volatility. If company X's&nbsp;volatility drops, then the models allocate more capital towards&nbsp;company X. By buying more of&nbsp;company X this has the effect of causing volatility to decline further. You get the picture. I've written about this before when talking about&nbsp;<a href="" target="_blank">a bubble in dumb money.</a> </p> <p> Imagine buying companies not based on their balance sheets, income statements, or any of that boring stuff but purely on how volatile their share prices have been. Imagine... These risk parity funds are completely price insensitive. They don't even know what they're buying and will just as happily buy company X&nbsp;if it's trading at 200x earnings... so long as volatility is low.</p> <p>Now, I would be remiss in mentioning that artificially low interest rates (thanks central banks) have had the effect of suppressing volatility in markets. These ETFs, coupled with sustained idiotic central bank policies, have created truly epic distortions in the markets.</p> <p>And, just to prove that stupidity can last for quite some time, below&nbsp;is an updated chart on where things stand with this fun game. </p> <p> <img src="" width="550" height="306" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16749" /></p> <p>&nbsp;</p> <h3><span style="color: #339966;"><strong>3: Circling Back to the Saudis</strong></span></h3> <p> I don't know about you but I find that when I need to understand something a little better it's often&nbsp;best to let the idea ruminate&nbsp;a little while before revisiting it. This allows it to mulch around in your&nbsp;brain, squeeze out the flatulent useless bits, and present you with what is usually&nbsp;be&nbsp;a better grasp on what really matters.</p> <p>Sticking with this process, let's revisit the first topic of this week's WOW. </p> <p> Curious minds should be asking the question:&nbsp;<strong>why on earth is the UN treating the Saudis like a cross between Mother Theresa and Ghandi?</strong> </p> <p> Call me&nbsp;cynical but I reckon it's <del>usually</del> always about the money. So the fact that grand master Mohammad Bin Salman Al Saud has decided to list a sliver&nbsp;(5%) of Saudi Aramco may well have a little to do with this. </p> <p> We know there are problems in the Kingdom. Serious problems.</p> <p>And no, I'm not referring to the fact their&nbsp;poor citizens&nbsp;are governed by a bunch of psychopaths with medieval beliefs who&nbsp;would still be living in caves if it weren't for the black stuff under their sandals. </p> <p> I'm talking about&nbsp;financial concerns around&nbsp;its now infamous decision in November 2014 to abandon its role as the global swing producer and ramp up production (even as global supplies were increasing and prices were collapsing). </p> <p> Take a look at this:</p> <p><img src="" width="550" height="262" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16751" /> </p> <p> Now take a look at this: </p> <p> <img src="" width="550" height="257" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16752" /> </p> <p> This is what a pegged currency looks like (Saudi riyal vs. USD). </p> <p> I'll let you put two and&nbsp;two together..... </p> <p> Done? </p> <p> Ok.</p> <p>So you're in a cash crunch,&nbsp;running the biggest budget deficits ever,&nbsp;you have to hold your currency peg which means dipping into your foreign exchange reserves, and you're fighting a wall of supply from Iran (a topic for another day but you can go listen to my conversations on Iran&nbsp;<a href="" target="_blank">here</a> and <a href="" target="_blank">here</a>).&nbsp;<span style="font-size: 13.008px;">What do you do?<br /> </span></p> <p><span style="font-size: 13.008px;"><br /> You do what anyone would do. You sell stuff.</span></p> <p></p> <p><span style="font-size: 13.008px;">The "Kingdom" had their first ever bond sale last year and now they're flogging Aramco to the world. The problem with all of these things is that you're needing to interact with the rest of the world a tad&nbsp;more and that still requires "legitimacy". A "credible" seat at the UN should help, no?<br /> </span></p> <p><span style="font-size: 13.008px;"><br /> I wonder how much they paid the bankers for that seat at the UN?<br /> </span></p> <p><span style="font-size: 13.008px;"><br /> We'll probably get some insight&nbsp;when we see where Aramco's shares get listed, and by whom.</span></p> <h3><span style="color: #339966;"><strong>4: The Wisdom of Age</strong></span></h3> <p> Just in case we think we can fathom what the future holds. </p> <p> <img src="" width="550" height="609" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16750" /></p> <p>How much of what Emma witnessed in her 117 years on this ball of dirt could she have&nbsp;seen coming in her life?</p> <p>The answer is not likely many things. But... identifying just one of the completely asymmetric changes that took place would have definitely been very, very well worthwhile for Emma. Imagine having had the ability and foresight to have invested in just one of the items <a href="" target="_blank">Sprezza</a> lists&nbsp;in its early phase... and hung on. </p> <p> Identifying the trends could have been done but I dare say hanging on is likely the hardest thing for us humans to do. </p> <h3><span style="color: #339966;">5: And Lastly But by No Means Least</span></h3> <p> Did you see the massive rally in the euro? </p> <p> <img src="" width="550" height="254" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16753" /></p> <p>I've a great number of thoughts on this which I share with <a href="" target="_blank">Insider members</a> this week, including what I think is a wonderful setup. I'd encourage you to join us.</p> <p>After all, there are just a few days left in April, which means you can gain access to membership at the inaugural price... before the price goes up. </p> <p> Until next time,&nbsp;have a good weekend. </p> <p> - Chris </p> <p> <em><strong>"</strong>The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply that an asset has become more expensive and is a poorer, not better, investment."<strong>&nbsp;—</strong></em>&nbsp;Ray Dalio, Founder, Bridgewater Associates</p> <p style="text-align: center;"><span style="font-size: 13.008px; line-height: 20.0063px;">--------------------------------------</span></p> <p style="text-align: center;">Liked this article?&nbsp;<a href="">Don't miss our future missives and podcasts, and</a></p> <p style="text-align: center;"><a href="">get access</a>&nbsp;<a href="" style="line-height: 20.8px; font-size: 1em;">to free subscriber-only content here.</a></p> <p style="text-align: center;"><span style="font-size: 13.008px; line-height: 20.0063px;">--------------------------------------</span></p> Actuarial science Bond Bridgewater Central Banks Currency Peg Davos Dumb Money Economy Finance Financial markets Implied volatility Iran Mathematical finance Mohammad Money Ray Dalio Risk Risk parity Risk Party Saudi Arabia Saudi Arabia Saudi Arabia's government Sovereign Debt Technical analysis United Nations Volatility Volatility Woman's Rights Commission Mon, 01 May 2017 00:57:23 +0000 Capitalist Exploits 594967 at Here Is The Simplest Reason Why The Reflation Trade Is About To Fizzle <p>Forget Trump, forget China, forget oil, forget central banks unwinding their balance sheets, forget Reuters trial balloons: there is a far simpler reason why the 'reflation trade' is about to hit a major pothole. </p> <p><a href="">Back in October</a>, when the "credible" media gave Trump about 5% odds of becoming president and when there was approximately $12 trillion in negative yielding bonds around the globe, we said inflation was about to spike for a very simple reason: energy prices were about to anniversary their multi-year lows, and as a result of the base effect, headline CPI would surge dramatically around the globe for the next 6 months. It did just that, in many cases spilling over into core CPI, and in other cases confusing central bankers and traders into believing that inflation had returned. </p> <p>Now it's time for the hangover.</p> <p>As SocGen writes in previewing tomorrow's Headline and Core PCE deflators numbers, after spending nearly five years missing to the downside on the inflation target, the Fed finally achieved its goal as the yoy headline PCE deflator hit 2.1% in February. Unfortunately, Fed officials cannot take a victory lap, because they will be right back to missing the target again when the March figures are released. The data in hand from the PPI and CPI suggest that the headline PCE deflator likely fell by 0.164% in March, which would result in the yoy rate falling from 2.1% to 1.9% (1.885% un-rounded). </p> <p>Energy prices - now virtually unchanged from a year ago - in the CPI fell by 3.2% last month, and these likely flowed through into the PCE as well. However, given the smaller weight of energy in the PCE gauge, the drop in energy prices will result in a smaller drag on the headline PCE index (almost a tenth less than in the CPI). Meanwhile, the CPI’s food index increased by 0.34% in March (that being said, the PCE food index is broader, and the food indexes in the PCE not present in the CPI have been a bit volatile of late).</p> <p><a href=""><img src="" width="500" height="181" /></a></p> <p>So aside from anniversarying the unchanged Y/Y base effect, here is what else SocGen expects from tomorrow's anti-reflationary PCE prints: the core PCE deflator looks to have declined by 0.1% in March (-0.072% un-rounded). <strong>A reading in line with our forecast would lead the yoy core rate to fall from 1.8% in February to 1.6% in March, which would be the weakest print in nine months.</strong></p> <p>It's not just energy however: recall that one of the biggest drivers behind the CPI miss earlier this month was the sharp drop in wireless telecom services in the CPI, which will now flow into the PCE and subtract around 0.075 percentage points (pp) from the monthly change in the core PCE (which is less than the 0.15 pp drag in the core CPI given the lower weight of this index in the core PCE). In other words, the core PCE would have been flat if not for the wireless telecom services index.</p> <p>Offsetting some of this drag will be a positive contribution from health care. Data from the PPI suggests that the health care index may have advanced by around 0.2% last month, marking its biggest rise in five months. Data within the Q1 GDP report suggests that the gain may be closer to 0.3% in March. In any case, core services prices in March look to have been essentially unchanged, while core goods prices may have fallen by 0.3%. </p> <p>It goes without saying that the implications for the reflation trade - and for continued hawkish central bank sentiment - absent a sharp rebound in the price of oil in the coming weeks, are broadly negative.</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="574" height="413" alt="" src="" /> </div> </div> </div> Business Central Banks China Consumer price index Core CPI Core inflation CPI CPI’s food Deflator Economy Inflation PCE Personal consumption expenditures price index Price indices Reuters SocGen United States Consumer Price Index US Federal Reserve Mon, 01 May 2017 00:32:16 +0000 Tyler Durden 594965 at Welcome To The Corporatocracy <p><a href=""><em>Authored by Robert Gore via Straight Line Logic blog,</em></a></p> <p><u><em><strong>The interests of Washington and large corporations have merged so completely they are now inseparable.</strong></em></u></p> <p><strong><em><a href=""><img height="405" src="" width="592" /></a></em></strong></p> <p><strong>America&rsquo;s large corporations and its government have merged. </strong>Or was it an acquisition? If the latter, who acquired whom? Unfortunately, the labels affixed to purely corporate combinations lose their analytical usefulness here. While the two retain their own distinct legal structures and managements, so to speak, such a close community of interest has evolved that it&rsquo;s no longer possible to separate them or delineate their individual contours. Political labels are no help; the ones most often used have become hopelessly imprecise. The Wikipedia definition of &ldquo;fascism&rdquo; is over 8,000 words, with 43 notes and 16 references.</p> <p>However, the conjoined blob is so big, rapacious, and intrusive that akin to Justice Potter Stewart&rsquo;s famous non-definition of obscenity, everybody knows it when they see or otherwise come into contact with it. <strong>This article will use the term &ldquo;corporatocracy.&rdquo; It&rsquo;s less letters, dashes, and words to type than &ldquo;the corporate-government-combination.&rdquo; </strong>No serviceable understanding of either US history or current events is possible without close study of the corporatocracy. Unfortunately, such study, like entomology or cleaning septic tanks, requires a stout constitution. But take heart, entomologists grow to love their creepy crawly things, and septic tank cleaners say that after a few minutes you don&rsquo;t even notice the smell.</p> <p><strong>A cherished delusion of naive liberals holds that big government is a counterweight, not a partner, to big business.</strong> Such a rationale is touted when the righteous demand new regulation, the public and media endorse it, the legislators pass it, and the president signs it into law. However, there are always unpaved stretches on the road to hell&mdash;once regulation is law, the righteous, public, media, legislators, and president, and their ostensibly good intentions, are on to the next cause.</p> <p style="text-align: left;">In the quiet obscurity they relish, regulators and regulated get down to doing what they do best: bending the law to their joint benefit. <strong>Business, whose P&amp;L&rsquo;s can be powerfully affected by regulations, hire armies of lobbyists and lawyers in a never ending effort to tilt the playing field in their direction, and improve bottom lines, stock prices, and executive bonuses.</strong> The return on such investment is far higher than on old fashioned expenditures like research and development, plant and equipment, and job-creating expansion.</p> <p style="text-align: left;">Not-so-naive liberals, professed conservatives, and apolitical opportunists work both sides of the street. The revolving door ensures that all concerned do well. Playing this game isn&rsquo;t cheap, which serves as a barrier to entry to scrappy competitors who compete those old fashioned ways: innovation, hustle, and better products and services at lower prices. Regulation cartelizes industries; look, for instance, at <a href="">banking</a>&nbsp;and <a href="">medicine</a>. <strong>No surprise that regulatory barriers are one of Warren Buffett&rsquo;s favorite &ldquo;moats&rdquo;: deep and hard-to-cross waterways that protect durable commercial advantages.</strong></p> <p><strong>Washington doesn&rsquo;t just fortify favored corporations&rsquo; business plans. </strong>A $4-plus-trillion-a-year enterprise, the government is the world&rsquo;s largest purchaser of goods and services. Procuring those contracts employs more armies of lobbyists and lawyers, and has a powerful effect on policy. The shoddy premises supporting the welfare and warfare states, and their epic waste, are obvious to many of the taxpayers forced to underwrite them. They&rsquo;ve decried them for decades, and voted for candidates promising to cut welfare, waste, war, and taxes. However, beyond voting, taxpayers can devote little time to stopping or slowing the gravy train. Their resources are infinitesimal compared to the resources its passengers expend to keep it running.</p> <p><u><strong>The modus operandi for Washington and big business have converged. </strong></u>Debt, its issuance and marketing, is the pillar of the financial nexus and revolving door between Washington and Wall Street. The government and its central bank artificially pump up the economy and hide its deterioration with debt and machinations: ultra low interest rates, quantitative easing, and debt monetization. Big businesses lever their balance sheets to pump up their stock prices or make acquisitions, machinations that do nothing to improve core businesses but often hide ongoing deterioration.</p> <p>The history of any long-running government program is a catalogue of failures and expanding budgets. Washington cherishes failure, the fountainhead of larger appropriations and more power. Success would put bureaucrats out of work and give politicians less influence to peddle. Likewise in business, failure has become much more acceptable than it was during those bad old days of cutthroat capitalism. Marissa Mayer&rsquo;s undistinguished five-year tenure at Yahoo, while perhaps not a complete failure, certainly can&rsquo;t be termed a success. Nevertheless, <a href="">she&rsquo;s walking away from the company with at least $186 million</a> for her middling endeavors. Given all that discrimination out there against women, one can only imagine what she would have made if she were a man.</p> <p><strong>Silicon Valley puts billions into companies like Uber, AirBnb, Snapchat, and Lyft that lose those billions and will continue to do so for the foreseeable&mdash;and probably the unforeseeable&mdash;future.</strong> Private equity shops load up companies with debt that gets paid out as special dividends to the private equity shops, leaving the indebted and enfeebled companies unable to compete and the rest of us wondering how such rape is legal in our rape-conscious age. This recipe for inevitable failure is now <a href="">playing out in the beleaguered retail sector</a>, which would be nowhere near as beleaguered if it wasn&rsquo;t so beset with debt.</p> <p><strong><em>Tesla, a stock market darling and the quintessence of companies in which failure is the business plan, milks Wall Street for financing and Washington (and a bunch of state and local jurisdictions) for subsidies. It has lost billions during its ten years of existence, but its many admirers sing the praises of CEO Elon Musk, always using the term &ldquo;consummate salesman&rdquo;&mdash;perhaps it&rsquo;s on his business card. Musk and fan club dream of &ldquo;the next big thing&rdquo; and engage in mutual masturbatory fantasies of transforming the world&hellip;and Mars. All this is harmless enough as fodder for dazzling audiovisual presentations and slick speeches, but downright dangerous when real billions, private and public, gets sucked in.</em></strong></p> <p>Meanwhile,<a href=""> the corporatocracy crucifies an old-line, profitable corporation, Volkswagen,</a> that cheated on one of its hundreds of thousands of regulations. It undoubtedly wasn&rsquo;t the cheating that got VW in trouble. Regulations are made to be cheated&mdash;it&rsquo;s impossible to run a business without doing so&mdash;but the proper offerings must be made to the corporatocracy. If that were not the case, there would be Wall Street, Pharma, and Defense Contractor wings at federal penitentiaries. VW didn&rsquo;t kowtow low enough or pay high enough to the bureaucrats and politicians, who retaliated, probably &ldquo;nudged&rdquo; by a VW competitor.</p> <p><strong>As a successful businessman, President Trump knows many of the corporatocracy&rsquo;s skims, scams, and schemes. </strong>Perhaps that will enable him to keep his pledge and drain the swamp. However, it&rsquo;s extensive, fetid, and teems with loathsome creatures, so a bet he&rsquo;ll succeed involves exceedingly long odds. You&rsquo;re probably better off buying Tesla stock.</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="592" height="405" alt="" src="" /> </div> </div> </div> Big business Business Business Corporate law Corporatocracy Economy Elon Musk Legal entities Lobbying Mars Monetization Political corruption Political terminology Politics Private Equity Quantitative Easing Revolving door Volkswagen Warren Buffett Mon, 01 May 2017 00:02:00 +0000 Tyler Durden 594955 at