http://www.zerohedge.com/fullrss2.xml/news/Al-Qaeda%20Prepares%20For%20War%20Against%20Caliphate en How The Elites Betrayed Working-Class America http://www.zerohedge.com/news/2017-07-21/how-elites-betrayed-working-class-america <p><a href="http://www.internationalman.com//articles/how-the-elites-betrayed-working-class-america"><em>Authored by Bill Bonner via InternationalMan.com,</em></a></p> <p><strong>Win-win deals get people more of what they want. Win-lose deals &ndash; usually imposed by government &ndash; bring them less. The few (the insiders) use government to exploit the many (the rest of us).</strong></p> <p>Win-lose deals also depress economic progress for everybody. Partly, this happens for an obvious reason.</p> <p>Dropping the atom bomb on Hiroshima was a technical milestone, but not the kind of progress we&rsquo;re talking about. Progress only makes sense if it means that people are able to get more of what they want.</p> <p>By definition, when a person is forced into a bad deal, he gets less of what he wants.</p> <p><strong>Progress is also a learning process.</strong> You try something. You see what works and what doesn&rsquo;t. As people experiment in this way, they learn&hellip; and the economy accumulates knowledge and wealth.</p> <p>They learn to get to work in the morning, for example&hellip; to say please and thank you&hellip; to save their money&hellip; and to invest it wisely.</p> <p><strong>Win-lose deals interrupt the learning process. That&rsquo;s why welfare programs fail: People get money without learning.</strong></p> <h3><u><strong>Temptation to Cheat</strong></u></h3> <p><strong>That is the real reason the Soviet Union failed, too.</strong></p> <p>Consumers were forced to buy whatever shoddy products were made available to them; producers had no way to learn how to make good ones.</p> <p>Toward the end, products available for purchase in the Soviet Union were worth less than the raw materials and labor that went into them.</p> <p><strong>What do you need for win-win deals?</strong></p> <p>Three things:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>1) People must be free to make choices with their time and money.</p> <p>&nbsp;</p> <p>2) They must have money they can trust.</p> <p>&nbsp;</p> <p>3) They must trust each other to respect their rights and property.</p> </blockquote> <p>These things&nbsp;don&rsquo;t happen smoothly and without interruption.</p> <p><strong>Progress is cyclical. Win-win deals add wealth and move society forward. But they depend on trust.</strong> And as trust increases, so does the temptation to cheat. When everyone leaves his liquor cabinet open, for example, who can resist having a drink?</p> <p>Then trust declines. Barriers go up. Costs increase. Win-win gives way to win-lose. Progress goes into reverse.</p> <h3><u><strong>Money You Could Trust</strong></u></h3> <p><strong>The invention of real money &ndash; based on gold &ndash; gave a boost to win-win deals&hellip; and to progress.</strong></p> <p>Why?</p> <p>It was money you could trust.</p> <p>If you are paid a gold coin for a day&rsquo;s labor, you don&rsquo;t have to trust the person who pays you. You don&rsquo;t have to wonder if he has the money in his account to cover his check&hellip; or what will happen to his money in the future.</p> <p>You don&rsquo;t have to trust him; you put your trust in gold. This allows you to do transactions more freely &ndash; and speeds up economic progress.</p> <p><strong>Gold-backed dollars were trustworthy for nearly 200 years (setting aside Lincoln&rsquo;s phony &ldquo;greenbacks&rdquo;).</strong></p> <p>People became so confident in the integrity of the dollar that they hardly noticed when the gold backing was removed (on March 19, 1968, when President Johnson signed a bill eliminating the &ldquo;gold cover&rdquo; for Federal Reserve notes).</p> <p><strong>But that&rsquo;s the way it works: The more trusting people become, the easier it is to rip them off.</strong></p> <h3><u><strong>Set Up by the Elite</strong></u></h3> <p><strong>Of course, as trust expands and win-win deals proliferate, some people gain more than others.</strong></p> <p>The typical Chinese day laborer makes six times as much today as he did in 1999. The typical American day laborer has gained little.</p> <p>And job competition from overseas made him feel like a loser. Now he wants walls &ndash; to keep out foreigners and foreign-made products. He wants win-lose deals that guarantee to make him a winner again.</p> <p>He has no idea that he was set up by his own elite.</p> <p>Former Fed chiefs Ben Bernanke and Alan Greenspan got their pictures on the cover of&nbsp;<em>Time</em>&nbsp;magazine. Most people think they are heroes, not rascals. Most people think they saved the economy from another Great Depression by dropping interest rates and injecting it with trillions of dollars in quantitative easing (QE) money.</p> <p><strong>Most people &ndash; even the POTUS &ndash; believe we need more fake money to &ldquo;prime the pump&rdquo; and get the economy rolling again.</strong></p> <p><strong>Almost no one realizes it, but it was these stimulating, pump-priming, new credit-based dollars that fueled the trends that ruined America&rsquo;s working-class wage earner.</strong></p> <p>Overseas, his competitors used cheap credit to gain market share and take away his job. At home, the elite imposed their crony boondoggles&hellip; their regulations&hellip; and their win-lose deals &ndash; all financed with fake money.</p> <p>The average American&rsquo;s medical care now costs him more than seven times more than it did in 1980. His household debt rose nearly 12 times since 1980.</p> <h3><u><strong>Subtle &ldquo;Bezzle&rdquo;</strong></u></h3> <p><strong>He blamed the Chinese, the Mexicans, the liberals&hellip; the media&hellip; and the government.</strong></p> <p>He wanted change.</p> <p><strong>But who would have guessed that he had been ripped off by his own untrustworthy money?</strong></p> <p>After you account for inflation, the American worker has not had a significant raise in 40 years &ndash; almost since the new money system was put into place after 1971.</p> <p>But the rich &ndash; as measured by the inflation-adjusted Dow &ndash; are 10 times richer.</p> <p><em><strong>Who would have imagined that after 3,000 years, the elite would have come up with money that betrayed his trust&hellip; a &ldquo;bezzle&rdquo; so subtle that he didn&rsquo;t even notice?</strong></em></p> <p>*&nbsp; *&nbsp; *</p> <p><em>Recently we&rsquo;ve been wondering if it&rsquo;s possible that America could be on the brink of a second civil war. We did some digging&hellip; and while the stuff we found may offend and shock you&hellip; <a href="https://pros.bonnerandpartners.com/m/716384" target="_blank">We recommend you take a look anyway by clicking here.</a></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="284" height="158" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170721_rich.jpg?1500662239" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/how-elites-betrayed-working-class-america#comments Alan Greenspan Anthropology Ben Bernanke Ben Bernanke Economic history of Japan Economic history of the United States Economy Fail Federal Reserve Gold Gold standard Great Depression International trade Market Share Monetary policy Money Quantitative Easing Time Magazine US Federal Reserve Fri, 21 Jul 2017 22:30:00 +0000 Tyler Durden 600247 at http://www.zerohedge.com Auto Stocks Crushed As Autoliv Slashes 2017 Growth Forecast In Half http://www.zerohedge.com/news/2017-07-21/auto-stocks-crushed-autoliv-slashes-2017-growth-forecast-half <p>After seemingly ignoring a whole host of a negative data points over the past several months, from collapsing sales volumes and <a href="http://www.zerohedge.com/news/2017-07-03/gm-reports-record-channel-stuffing-dealer-auto-inventory-highest-june-2007">soaring inventories levels</a> to<a href="http://www.zerohedge.com/news/2017-03-31/heres-why-used-car-prices-may-crash-50"> crashing used car prices</a>, <strong>auto investors apparently couldn't see their way to ignoring Autoliv's abysmal earnings this morning.</strong>&nbsp; </p> <p>A maker of automotive safety systems for various light vehicle platforms around the world, the $9 billion market cap Autoliv missed 2Q 2017 on both revenue ($2.54bn actual vs. $2.57bn expected) and earnings ($1.44 actual vs. $1.49 expected) as shares dropped over 9% in early trading.</p> <p>Of course, it was Autoliv's rather cautious outlook on North American production volumes in 2H 2017 that likely caught investors off-guard.&nbsp; Speaking on their conference call earlier, Autoliv management noted <strong>increasing uncertainty on the stability of auto markets in North America and China and expressed growing concerns on inventory levels in those two markets</strong>...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>We continue to see some uncertainty in the light vehicle market in particular in North America and in China.</strong> During the second quarter, the inventories remained above normal levels in China and the U.S. due to softer demand than the underlying light vehicle production, while the inventory levels in Europe remained stable based on our internal estimates.</p> </blockquote> <p>...which prompted them to <strong>slash their top line growth forecast for the entire year from their previous guidance of 4% organic growth to just 2%.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Looking now up on the full year on the next slide. Our full year 2017 indications remains unchanged from February 2 for adjusted operating margin. However, <strong>we lowered our organic sales growth indication to about 2% from about 4% mainly due to lower demand in China and North America during the second quarter and the second half of 2017.</strong></p> <p>&nbsp;</p> <p>And summarizing our outlook on the next slide. Our outlook excludes cost for capacity alignment and anti-trust-related matters, and assume mid-July exchange rates. Our net consolidated sales for the third quarter expected to increase up to 2% as the currency translation effect is minimal. The full year 2017 indication is for a net consolidated sales increase of around 3% which remains unchanged from April 20. The lower organic sales growth of around 2% from the 4% earlier indication is offset by a lower currency translation effect of around 2 percentage points. Based on these sales assumptions, we expect an adjusted operating margin in the range of 7.5% to 8% for the third quarter and around 8.5% for the full year 2017.</p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/21/2017.07.21 - ALV 3.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/21/2017.07.21%20-%20ALV%203_0.jpg" style="width: 600px; height: 238px;" /></a></p> <p>&nbsp;</p> <p>Meanwhile, management also noted their expectations for a 7% yoy decline in North American production volumes in Q3...which shouldn't be terribly surprising to our readers in light of all the OEM plant <a href="http://www.zerohedge.com/news/2017-07-18/chevy-forced-extend-shutdown-bolt-plant-after-realizing-literally-no-one-wants-bolt">shutdown extensions</a> we've noted of late.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>For third quarter, the overall global light vehicle production is expected to increase by approximately 2% year-over-year according to the latest IHS figures. This assumes light vehicle production in Asia remained strong where China, Japan and Korea are expected to increase 1%, 5% and 24% respectively.</p> <p>&nbsp;</p> <p><strong>In North America, the light vehicle production is expected to decline 7% in quarter three,</strong> while South America is expected to continue its recovery with a year-over-year increase of 21%.</p> </blockquote> <p>All of which resulted in some carnage, not just for Autoliv investors...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/21/2017.07.21 - ALV 1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/21/2017.07.21%20-%20ALV%201_0.jpg" style="width: 600px; height: 373px;" /></a></p> <p>&nbsp;</p> <p>...but pretty much all of the U.S.-centric suppliers and OEMs.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/21/2017.07.21 - ALV 2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/21/2017.07.21%20-%20ALV%202_0.jpg" style="width: 600px; height: 372px;" /></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="1374" height="854" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.07.21%20-%20ALV%201.jpg?1500655169" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/auto-stocks-crushed-autoliv-slashes-2017-growth-forecast-half#comments 8.5% Autoliv Business China Economy Economy of Sweden Japan Organic food recovery Science and technology in the United States Fri, 21 Jul 2017 22:05:00 +0000 Tyler Durden 600237 at http://www.zerohedge.com This Recovery Isn't All That Resilient, Here's Why http://www.zerohedge.com/news/2017-07-21/recovery-isnt-all-resilient-heres-why <p><a href="https://www.bloomberg.com/view/articles/2017-07-21/this-recovery-isn-t-all-that-resilient?utm_content=economics&amp;utm_campaign=socialflow-organic&amp;utm_source=twitter&amp;utm_medium=social&amp;cmpid%3D=socialflow-twitter-economics"><em>Authored by Danielle DiMartino Booth via Bloomberg.com,</em></a></p> <p><span style="text-decoration: underline;"><em><strong><span class="lede-text-only__highlight">When adjusted for inflation, credit card usage has grown faster than incomes for 18 months...</span></strong></em></span></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/16/20170721_charge2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/16/20170721_charge2.jpg" style="width: 599px; height: 321px;" /></a></p> <p><strong>Are Federal Reserve stress tests leading economic indicators?</strong> That certainly seems to be the case. Just ask Capital One Financial Corp.</p> <p><strong>As of the first quarter, credit card loss provisions at Capital One were above 5 percent, a six-year high. </strong>The company recorded some improvement for the second quarter, yet Fed stress tests of the&nbsp;bank&rsquo;s overall loan portfolio in a deep downturn show losses topping 12 percent. That explains Capital One&rsquo;s &ldquo;conditional&rdquo; passing score, a black eye that prompted a reduced share buyback plan and no increase in its dividend.</p> <p><strong>Most economists today applaud the resilience of the current recovery</strong>, which has stretched into its eighth year, the third-longest in postwar history. <u><strong>Resilience and rising household defaults, though, don&rsquo;t tend to go hand in hand.</strong></u></p> <p>Pressures have been building in the background for some time. When adjusted for inflation, credit card usage has grown faster than incomes for 18 months. According to Fed data, that time frame coincides with the upturn in revolving credit, a proxy for credit card debt.</p> <p><strong>In November 2015, outstanding revolving credit crossed above the $900-billion threshold for the first time since December 2009. By May of this year, annual growth was clocking 8.7 percent. Meanwhile, credit card balances hit $1.02 trillion, the highest level in almost eight years.</strong></p> <p>Whether by choice or force, the aftermath of the financial crisis prompted households to ratchet back their usage of credit cards. As the recovery got underway, frugality prevailed, punctuated by an increase in debit card purchases.<strong><em> It is thus notable that Bank of America data find debit card usage has weakened in recent years as households grew more comfortable rebuilding their credit card balances.</em></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/16/20170721_charge1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/16/20170721_charge1.jpg" style="width: 600px; height: 410px;" /></a></p> <p><strong>&quot;Confidence&quot; is the term most associated with the rising credit card debt. </strong>But it&rsquo;s fair to ask why confident households would choose to pay so dearly for the privilege. At 15.83 percent, the average rate on credit card balances is at a record high.</p> <p>It is more likely that households are increasingly tapping their credit cards to cover the cost of necessities, that they are less confident and more anxious about their future finances.</p> <p>The latest University of Michigan consumer confidence data suggest anxiety is indeed setting in. At 80.2, the expectations component is at the lowest since October and running below the 2016 average of 81.8.</p> <p>According to the University of Michigan:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>The data indicate that hopes for a prolonged period of three percent GDP growth sparked by Trump&rsquo;s victory have largely vanished, aside from a temporary snap back expected in Q2. The declines recorded are now consistent with just above two percent GDP growth in 2017.</strong></em></p> </blockquote> <p>The retail sales report for June corroborates the forecast for continued muted economic growth. In constructing gross domestic product, statisticians net out auto, gasoline and building materials purchases from retail sales to arrive at a &quot;control group.&quot; At 2.4 percent, the annual growth rate of the control group has fallen to the lowest since January 2014.</p> <p><strong>The renewed weakness in consumption prompted the economists at Bank of America Merrill Lynch to reduce their forecast for second-quarter GDP to 1.9 percent. The Atlanta Fed&rsquo;s GDPNow forecast is a bit higher, at 2.4 percent, but that&rsquo;s a far cry from the robust 4.3 percent rate anticipated on May 1.</strong></p> <p>In her recent congressional testimony, Fed Chair Janet Yellen expressed continued optimism for a strong second-quarter rebound in GDP growth. If the Atlanta Fed&rsquo;s forecast pans out, first half growth will stumble in at a 1.9 percent rate, hardly reflective of accelerating economic activity.</p> <p>Even the ebullient homebuilders have begun to concede that there could be more than just a supply shortage at the root of the slowing housing market. Pending home sales have fallen for three straight months and are now 1.7 percent below their year-ago level.</p> <p><strong>The National Association of Realtors acknowledged that &ldquo;weaker financial and economic confidence could also be playing a role in the slowdown in contract activity.&rdquo;</strong> The NAR added that they had &ldquo;found that fewer renters think it&rsquo;s a good time to buy a home, and respondents overall are less confident about the economy and their financial situation than earlier this year.&rdquo;</p> <p>With rental inflation running 3.9 percent above its year ago rate and homes priced out of their budgets, renters are effectively trapped in a budgetary vise. Housing costs consume about a third of households&rsquo; average budgets and largely dictate consumers&rsquo; wherewithal to finance the discretionary purchases that make the consumption-driven U.S. economy hum.</p> <p><strong>Suffice it to say, when the costs of other necessities such as health care, the food you put on the table, your car payment and mobile-phone bills are also running high, it&rsquo;s difficult to make ends meet. </strong>In a survey conducted by Survata and released in late June, 49 percent of households said they were living paycheck-to-paycheck; six in 10 reported that their rainy-day funds could not cover six months of living expenses.</p> <p><u><strong>What&rsquo;s a household to do under such circumstances? It would appear they&rsquo;ve had to rely on credit cards.</strong></u> The eventual price tag for the economy remains to be seen and won&rsquo;t be known until the next recession has come and gone. As for how high the bill will be in the end, its likely Capital One already has that answer.</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="704" height="377" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170721_charge2.jpg?1500661538" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/recovery-isnt-all-resilient-heres-why#comments Atlanta Fed Bank of America Bank of America Business Capital One Consumer Confidence Consumer confidence Credit card Debit card Economy Economy of the United States Federal Reserve Financial crisis of 2007–2008 Great Recession Gross Domestic Product Gross domestic product Housing Market Janet Yellen Leading Economic Indicators Merrill Merrill Lynch Michigan Money National Association of Realtors Payment systems Recession recovery Subprime mortgage crisis Testimony University Of Michigan University of Michigan US Federal Reserve Fri, 21 Jul 2017 21:40:00 +0000 Tyler Durden 600246 at http://www.zerohedge.com Palestinian President Mahmoud Abbas Cuts Off Diplomatic Ties With Israel http://www.zerohedge.com/news/2017-07-21/palestinian-president-mahmoud-abbas-cuts-diplomatic-ties-israel <p>Palestinian President Mahmoud Abbas said Friday he was freezing contacts with Israel until it <strong>removes metal detectors that were installed recently at the Temple Mount,</strong> one of Islam&rsquo;s holiest sites, after three people died and 200 more were injured during deadly clashes at the site Friday afternoon, according to <a href="http://www.reuters.com/article/us-israel-palestine-idUSKBN1A62IS">Reuters.</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;I declare the suspension of all contacts with the Israeli side on all levels until it cancels its measures at Al-Aqsa mosque and preserves the status quo,&quot; </strong>Abbas said in a brief televised speech after meeting his aides, referring to a mosque forming part of the holy site.</p> </blockquote> <p><strong>Abbas said in a speech that the freeze would stay in place until Israel lifted its stringent measures at <strong>Al-Aqsa mosque </strong>, which Jews call the Temple Mount, </strong>according to the<a href="https://www.dailysabah.com/mideast/2017/07/21/palestinian-leadership-to-freeze-contacts-with-israel-on-all-levels"> Daily Sabah. </a>On the advice of local police and the IDF, Israel&rsquo;s cabinet decided to tighten security around the site after a series of violent terrorist attacks, including one that occurred a week ago, when three assailants somehow smuggled weapons onto the site, according to <a href="http://www.breitbart.com/jerusalem/2017/07/21/three-killed-200-wounded-muslim-rioters-rage-temple-mount/">Breitbart.</a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/2017.07.21Abbas.JPG"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/2017.07.21Abbas_0.JPG" style="width: 500px; height: 410px;" /></a></p> <p><em>Palestinian President Mahmoud Abbas</em></p> <p><strong>Palestinians have been battling with Israeli Defense Forces outside the Temple for days to protest the new security measures &ndash; including metal detectors that have been installed at the Temple&rsquo;s entrances. On Friday, three young men were killed when fighting broke out.</strong></p> <p>Israeli police told the government that &ldquo;extremist elements&rdquo; where planning to <strong>&ldquo;to cause violent disruptions to the public order, and thereby to threaten the public peace, including the [safety] of those coming to pray at the holy sites and other residents of the area,&quot; according to <a href="http://www.breitbart.com/jerusalem/2017/07/21/three-killed-200-wounded-muslim-rioters-rage-temple-mount/">Breitbart</a></strong></p> <p>As a result, Israeli security forces erected checkpoints at main entrances to Jerusalem and blocked several roads leading to the Temple Mount area. Some 3,000 police forces were deployed to Jerusalem&rsquo;s Old City in addition to five Israel Defense Forces battalions that have been put on standby.</p> <p>According to Palestinian medical sources, <strong>Mohammad Mahmoud Sharef, 17, was shot in the neck in the East Jerusalem neighborhood of Ras Al-Amoud. Sharef reportedly and died of his wounds shortly afterwards. The Palestinian reports claimed that the gunfire came from a nearby east Jerusalem Jewish neighborhood called Maala Hazeitim. The other casualty was Mohammad Hassan Abu Ghanem, 19. Later, Palestinian media reported a third Palestinian, 17-year-old Mohammad Laffi, was killed in Abu Dis, a town near the border with Israel.</strong></p> <p>Clashes have erupted across the West Bank. Here&rsquo;s the <a href="http://www.jpost.com/Arab-Israeli-Conflict/Initial-report-Palestinian-shot-dead-by-settler-in-Jerusalem-500326">Jerusalem Post</a> with more:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Israel&#39;s Channel 10 reported that a child of eight had died from tear gas inhalation, but that could not be confirmed.</p> <p>&nbsp;</p> <p>Israeli police also reported disturbances in Ras Al-Amoud, A-Tur, and Wadi Joz, including stone throwing and Molotov cocktails, which resulted in the injury of four police officers.</p> <p>&nbsp;</p> <p>According to the army, <strong>the West Bank checkpoint of Qalandiya as well as Hebron saw the largest riots, with an estimated 600 Palestinians throwing stones at troops at the Qalandiya checkpoint near Jerusalem and hundreds more in Hebron. Troops responded with tear gas and stun grenades in both cases.</strong></p> <p>&nbsp;</p> <p><strong>At least 200 Palestinians threw stones at security forces at Rachel&rsquo;s Tomb in Bethlehem, while more demonstrated in the West Bank town of Jericho. A reported 100 others threw stones at Israeli vehicles near the settlement of Tekoa and some 200 others clashed with troops in Qaddum, </strong>west of Nablus, and Na&rsquo;alin, west of Ramallah. Another 100 Palestinians clashes with troops in Beit Ummar, northwest of Hebron.</p> <p>&nbsp;</p> <p><strong>The Palestinian Maan agency reported that the bodies of both Palestinians were quickly buried on Friday afternoon, out of concern that Israeli authorities would seize them. Maan also reported that Israeli forces raided Makassed Hospital,</strong> although the purpose of the raid has not yet been established.&rdquo;</p> </blockquote> <p>According to <a href="http://www.breitbart.com/jerusalem/2017/07/21/three-killed-200-wounded-muslim-rioters-rage-temple-mount/">Breitbart,</a> the battles erupted after Palestinian protest leaders, a group that includes top Palestinian government officials, told their followers that the metal detectors were part of an Israeli conspiracy to hamper Muslim worship at the Mount. The site is one of the holiest landmarks in Judaism and Islam.&nbsp;</p> <p>The protest leaders &ndash; not to mention Abbas - apparently ignored the fact that the metal detectors help keep all visitors to the site safe, regardless of their religion.<br />&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="487" height="296" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170721_abas.jpg?1500671619" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/palestinian-president-mahmoud-abbas-cuts-diplomatic-ties-israel#comments Al-Aqsa Mosque Arabic architecture army Geography of Asia IDF Islam Israel Israel Israel Defense Forces Israeli police Israeli–Palestinian conflict Mahmoud Abbas Makassed Hospital Mohammad Muhammad Ahmad Hussein Palestinian government Palestinian nationalism Politics Reuters Temple Mount Umayyad architecture War Ziyarat Fri, 21 Jul 2017 21:15:05 +0000 Tyler Durden 600257 at http://www.zerohedge.com CNN Readies Russophobic Show To Scare Suburbia http://www.zerohedge.com/news/2017-07-21/cnn-readies-russophobic-show-scare-suburbia <p><strong><a href="http://www.zerohedge.com/news/2017-07-12/sorry-nyt-middle-america-simply-doesnt-care-about-trump-jr-narrative">Much of the American public no longer cares</a></strong> about Special Counsel Robert Mueller&rsquo;s investigation into whether the Trump campaign colluded with Russia. They also don&rsquo;t care about the Senate investigation, or the House investigation.</p> <p>So it&rsquo;s unsurprising that CNN, in a semingly blatant example of suburban scaremongering, will attempt to revive the anti-Russia hysteria that permeated the political climate just a few months ago, by preparing to debut &ldquo;The Spies Next Door: Operation Ghost Stories.&quot; <strong>The documentary focuses on the story of undercover Russian sleeper living in the US. The show details &ldquo;one of the largest counterintelligence investigations in the history of the FBI,&quot;</strong> reads a release from the network via <a href="http://thehill.com/homenews/media/343082-new-cnn-series-focuses-on-russian-spies-posing-as-your-neighbor-in-the-us">the Hill.</a></p> <p>The series airs Saturday nights at 9:00 pm EST and is hosted by former Republican Rep. Mike Rogers. Rogers was, until recently, a contender to succeed James Comey as FBI director.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/2017.07.20cnndoc.JPG"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/2017.07.20cnndoc_0.JPG" style="width: 500px; height: 336px;" /></a></p> <p>In an interview with the Hill, Rogers touches on why the documentary could inflame tensions with leftists who see Russian operatives around every corner.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;These were Russian spies with American sounding names who were posing as your neighbor, your work colleague, your friend. Having the possibility of a spy living next door draws people in who are not only interested in spy stories,</strong> but also those who are interested in learning more about how the Russians intelligence services operate after being exposed to the current news about their activities in the U.S.,&quot; Rogers added.</p> </blockquote> <p><strong>Rogers is also apparently a fan of FX&rsquo;s popular drama &quot;The Americans,&quot; about two KGB spies posing as an American couple in suburban Washington DC during the Reagan administration. </strong>&quot;The Americans&quot; mirrors the plot of the documentary in many ways.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;My wife and I love it. I can say that the spy tradecraft you see is fairly accurate,&quot; Rogers said.</p> </blockquote> <p><a href="http://thehill.com/homenews/media/343082-new-cnn-series-focuses-on-russian-spies-posing-as-your-neighbor-in-the-us">The Hill,</a> in a tone verging on tongue in cheek, also noted that &quot;The Spies Next Door&quot; is premiering as investigations into Russian meddling in the 2016 presidential election and possible collusion with members of Trump campaign <strong>frequently receives heavy coverage on CNN and other broadcast news outlets.</strong></p> <p>The series will air in eight parts and will run through Labor Day Weekend.<br />&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="575" height="386" alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017.07.20cnndoc.JPG?1500653196" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/cnn-readies-russophobic-show-scare-suburbia#comments Donald Trump Espionage FBI Federal Bureau of Investigation Federal Bureau of Investigation Illegals Program James Comey KGB Mike Rogers Politics Reagan Administration Russian interference in the 2016 United States elections Russia–United States relations Senate SPY Spy fiction The Americans United States United States intelligence agencies Fri, 21 Jul 2017 20:55:34 +0000 Tyler Durden 600232 at http://www.zerohedge.com Weekend Reading: Charge Of The Light Brigade http://www.zerohedge.com/news/2017-07-21/weekend-reading-charge-light-brigade <p><a href="https://realinvestmentadvice.com/weekend-reading-charge-of-the-light-brigade/"><em>Authored by Lance Roberts via RealInvestmentAdvice.com,</em></a></p> <p>As you I discussed <a href="https://realinvestmentadvice.com/bulls-run-on-yellens-easy-money-07-14-17/" rel="noopener" target="_blank">last week</a>, we added risk exposure to portfolios with the breakout to new highs that came in conjunction with a short-term <em>&ldquo;buy signal&rdquo;</em> as shown below.</p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/07/SP500-MarketUpdate-071917.png"><img class="alignnone size-full wp-image-22396" src="http://realinvestmentadvice.com/wp-content/uploads/2017/07/SP500-MarketUpdate-071917.png" style="width: 600px; height: 449px;" /></a></p> <p>However, when we zoom out a bit, a different picture emerges. Note that in all 3-cases, there was a <em>&ldquo;Stage-1 Advance&rdquo;</em> followed by a correction which led to a <em>&ldquo;Stage-2 Advance.&rdquo;</em> The correction that followed then provided for the final bullish advance which I call the <em>&ldquo;Charge Of The Light Brigade.&rdquo;</em></p> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/07/SP500-MarketUpdate-071917-2.png"><img class="alignnone size-full wp-image-22398" src="http://realinvestmentadvice.com/wp-content/uploads/2017/07/SP500-MarketUpdate-071917-2.png" style="width: 600px; height: 449px;" /></a></p> <p><strong>The <em>&ldquo;Charge of the Light Brigade&rdquo;</em> was a&nbsp;charge&nbsp;of British&nbsp;light cavalry&nbsp;led by&nbsp;Lord Cardigan&nbsp;against Russian forces during the&nbsp;Battle of Balaclava&nbsp;in 1854, during the&nbsp;Crimean War.</strong>&nbsp;Lord Raglan, the overall commander of the British forces, had intended to send the Light Brigade to prevent the Russians removing captured guns from overrun Turkish positions, a task well-suited to light cavalry. <strong>However, due to miscommunication in the&nbsp;chain of command, the Light Brigade was instead sent on a&nbsp;frontal assault&nbsp;against a different artillery battery, one well-prepared with excellent fields of defensive fire.</strong></p> <p>Although the Light Brigade reached the battery under withering&nbsp;direct fire&nbsp;and scattered some of the gunners, the badly mauled brigade was forced to retreat immediately. Thus, the assault ended with very high British casualties and no decisive gains.&nbsp;War correspondent&nbsp;William Russell, who witnessed the battle, declared:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #993300;"><strong><em>&ldquo;Our Light Brigade was annihilated by their own rashness, and by the brutality of a ferocious enemy.&rdquo;</em></strong></span></p> </blockquote> <p>This current set up is very much like what faced the British Calvary. A market is that overly bullish, overly complacent and overly valued has already had horrible outcomes for those that charged headlong into it.</p> <p><a href="http://www.marketwatch.com/story/investors-should-brace-themselves-for-a-tumultuous-lost-year-2017-07-19?siteid=yhoof2&amp;yptr=yahoo" rel="noopener" target="_blank">Simon Maierhofer </a>recently noted much the same in a recent article:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #993300;"><em>&ldquo;The blue arrows in the updated chart below show where the S&amp;P 500 is currently within the larger bull market cycle.&rdquo;</em></span></p> </blockquote> <p><a href="http://realinvestmentadvice.com/wp-content/uploads/2017/07/SP500-Elliot-Wave-Count.png"><img class="alignnone size-full wp-image-22399" src="http://realinvestmentadvice.com/wp-content/uploads/2017/07/SP500-Elliot-Wave-Count.png" style="width: 601px; height: 389px;" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #993300;"><em>&ldquo;Regardless of where exactly the market&rsquo;s at, a correction is getting closer. The initial correction will likely be a wave 4 correction (see labels). Waves 4 are notoriously choppy and frustrating. This choppy correction should be followed by another rally (wave 5) and a more pronounced drop (likely late 2017 or early 2018).</em></span></p> <p><span style="color: #993300;"><em>In a nutshell, although the S&amp;P 500 is unlikely to make net progress in the coming year, there will be an opportunity for investors to lock in profits (at higher prices) and avoid a significant draw down.&rdquo;</em></span></p> </blockquote> <p>I agree with Simon. Whether it is sooner, or later, the current run-up in stocks will end very much the same as they always have with investors <strong><em>&ldquo;annihilated by their own rashness and the brutality of a ferocious enemy.&rdquo;</em></strong></p> <p>For now, investors race forward with swords drawn, shouting the <em>&ldquo;bull market passive indexing&rdquo;</em> battle cry in the face of insurmountable odds solely with a conviction of invincibility.</p> <p><strong>But such is the nature of every bull market cycle in throughout history.</strong></p> <p>In the meantime, this is what I am reading.</p> <hr /> <h2><span style="color: #000000;"><strong>Politics/Fed/Economy</strong></span></h2> <ul> <li><strong>The Imperial City&rsquo;s Fiscal Waterloo</strong>&nbsp;<a href="https://dailyreckoning.com/imperial-city-fiscal-waterloo/" rel="noopener" target="_blank">by David Stockman via Daily Reckoning</a></li> <li><strong>GDP Growth Rates Continue To Fall</strong>&nbsp;<a href="http://www.capitalspectator.com/us-q2-gdp-growth-outlook-has-been-trimmed-in-recent-weeks/" rel="noopener noreferrer" target="_blank">by James Picerno via Capital Spectator</a></li> <li><strong>Repeal &amp; Replace Falls Flat On Its Face</strong>&nbsp;<a href="http://www.marketwatch.com/story/5-things-republicans-have-forgotten-about-governing-2017-07-18" rel="noopener noreferrer" target="_blank">by Caroline Baum via MarketWatch</a></li> <li><strong>Thoughts On Full Employment &amp; The Asset Based Recovery&nbsp;</strong><a href="https://pro.creditwritedowns.com/2017/07/some-thoughts-on-full-employment-and-this-asset-based-economic-recovery.html" rel="noopener" target="_blank">by Edward Harrison via Credit Writedowns</a></li> <li><strong>Rosenberg: Warning Signs Are Bubbling In The Economy</strong>&nbsp;<a href="http://www.businessinsider.com/david-rosenberg-things-dont-look-too-good-for-us-economy-2017-7" rel="noopener" target="_blank">by David Rosenberg via Gluskin-Sheff</a></li> <li><strong>Is The Economy Really Different This Time</strong> <a href="http://www.alhambrapartners.com/2017/07/16/bi-weekly-economic-review-attention-shoppers/" rel="noopener" target="_blank">by Joe Calhoun via Alhambra Partners</a></li> <li><strong><span style="color: #000000;">4-Signs The Economy Is Stalling&nbsp;</span></strong><a href="http://www.mauldineconomics.com/editorial/4-obvious-signs-the-us-economy-is-stalling-heres-what-to-do" rel="noopener" target="_blank">by Stephen McBride via Mauldin Economics</a></li> <li><strong><span style="color: #000000;">The False Premise Of GOP Tax Cuts&nbsp;</span></strong><a href="https://www.nytimes.com/2017/06/29/opinion/tax-cuts-republican-health-care.html?_r=0" rel="noopener" target="_blank">by Editorial via New York Times</a></li> <li><strong><span style="color: #000000;">The Fed Has Hit The Pause Button&nbsp;</span></strong><a href="https://dailyreckoning.com/fed-hit-pause-button/" rel="noopener" target="_blank">by James Rickards via Daily Reckoning</a></li> <li><strong>Fed Does Brutal Take-Down&nbsp;Of Trump&rsquo;s Budget&nbsp;</strong><a href="http://www.businessinsider.com/fed-community-advisory-committee-focuses-on-deep-us-economic-inequities-2017-7" rel="noopener" target="_blank">by Pedro Da Costa via BI</a></li> <li><span style="color: #000000;"><strong>All Signs Point To Slowdown In Inflation&nbsp;</strong></span><a href="https://www.bloomberg.com/view/articles/2017-07-18/all-signs-point-to-a-cyclical-slowdown-in-inflation" rel="noopener" target="_blank">by Lakshman Achuthan via Bloomberg</a></li> <li><strong>Occupational Hazards</strong> <a href="http://www.zerohedge.com/news/2017-07-19/wal-mart-replaces-more-4000-employees-machines" rel="noopener" target="_blank">by Tyler Durden via ZeroHedge</a></li> <li><strong>The Quiet Demise Of Austerity&nbsp;</strong><a href="https://www.project-syndicate.org/commentary/fiscal-policy-austerity-in-advanced-economies-by-james-mccormack-2017-07" rel="noopener" target="_blank">by James McCormack via Project Syndicate</a></li> </ul> <hr /> <hr /> <h2><span style="color: #000000;"><strong>Markets</strong></span></h2> <ul> <li><strong><span style="color: #000000;">The Smell Of Dry Paint In The Morning&nbsp;</span></strong><a href="http://dimartinobooth.com/smell-dry-paint-morning/" rel="noopener" target="_blank">by Danielle DiMartino-Booth via Money Strong</a></li> <li><strong><span style="color: #000000;">Real Reason Stocks Are Hitting Records</span>&nbsp;</strong><a href="https://dailyreckoning.com/real-reason-stocks-setting-records-2/" rel="noopener noreferrer" target="_blank">by Brian Maher via The Daily Reckoning</a></li> <li><strong>History &amp; Gravity Aren&rsquo;t On The Side Of Stocks</strong> <a href="http://www.marketwatch.com/story/the-stock-market-may-not-be-able-to-defy-gravity-for-much-longer-2017-07-12" rel="noopener" target="_blank">by Sue Chang via MarketWatch</a></li> <li><span style="color: #000000;"><strong>Stock Picking Dying Due To Dearth Of Stocks</strong></span>&nbsp;<a href="https://blogs.wsj.com/moneybeat/2017/06/23/stockpicking-is-dying-because-there-are-no-more-stocks-to-pick/" rel="noopener noreferrer" target="_blank">by Jason Zweig via WSJ</a></li> <li><strong>Perfect Market Indicator Says Sell Now</strong>&nbsp;<a href="http://www.investopedia.com/news/perfect-market-signals-its-time-sell-stocks/" rel="noopener" target="_blank">by Mark Kolakowski via Investopedia</a></li> <li><span style="color: #000000;"><strong>10-Years Later Bull Market Shows No Signs Of Ending&nbsp;</strong></span><a href="http://www.cnbc.com/2017/07/07/10-years-after-the-last-bull-failed-market-shows-few-signs-of-trouble.html" rel="noopener" target="_blank">by Michael Santoli via CNBC</a></li> <li><strong>Forecasting Recessions Can Boost Returns</strong>&nbsp;<a href="https://money.usnews.com/investing/articles/2017-07-19/forecasting-recessions-can-boost-your-investment-returns?ct=t%28Selected_Recent_Stories7_12_2017%29&amp;mc_cid=0c3353d6e6&amp;mc_eid=8f071ddf23" rel="noopener noreferrer" target="_blank">by Simon Constable via US News</a></li> <li><strong>The Single Biggest Market Risk </strong><a href="https://app.hedgeye.com/insights/60576-josh-crumb-answers-the-hedgeye-21?type=macro" rel="noopener" target="_blank">by Hedgeye</a></li> <li><strong><span style="color: #000000;">Bull Market Still Has Legs&nbsp;</span></strong><a href="http://www.barrons.com/articles/the-bull-market-we-love-to-hate-still-has-legs-1500493758" rel="noopener" target="_blank">by Michael Kahn via Barron&rsquo;s</a></li> <li><strong>Market Is Believing The Fed For Now&nbsp;</strong><a href="https://www.nytimes.com/2017/07/14/business/mutfund/the-stock-market-is-believing-the-fed-for-now.html?_r=0" rel="noopener" target="_blank">by Conrad de Aenlle via NT Times</a></li> <li><strong>One Reason Expensive Stocks Can Continue To Climbs&nbsp;</strong><a href="http://www.marketwatch.com/story/heres-one-reason-why-expensive-stocks-can-continue-to-climb-2017-07-11" rel="noopener" target="_blank">by Anora Mahmudova via MarketWatch</a></li> <li><strong><span style="color: #000000;">Stocks Will Top Out In 3-Weeks</span><span style="color: #ff0000;">&nbsp;</span></strong><a href="http://www.marketwatch.com/story/us-stock-market-will-likely-top-out-in-the-next-three-weeks-2017-07-17" rel="noopener" target="_blank">by Avi Gilburt via MarketWatch</a></li> <li><strong>Here&rsquo;s Why The Stock Market Isn&rsquo;t Overpriced&nbsp;</strong><a href="http://www.cnbc.com/2017/07/18/the-stock-market-is-not-overpriced.html" rel="noopener" target="_blank">by Bob Pisani via CNBC</a></li> <li><strong>Stock Market Bulls Are Wrong, It Will End Badly&nbsp;</strong><a href="https://www.thestreet.com/story/14230267/1/shooting-holes-in-arguments-what-makes-a-talking-head-credible-doug-kass-views.html?puc=yahoo&amp;cm_ven=YAHOO&amp;yptr=yahoo" rel="noopener" target="_blank">by Doug Kass via The Street</a></li> </ul> <hr /> <h2><span style="color: #000000;">Research&nbsp;/ Interesting&nbsp;Reads</span></h2> <ul> <li><strong><span style="color: #000000;">Did London Just Press The &ldquo;Brexit&rdquo; Panic Button</span><span style="color: #ff0000;">&nbsp;</span></strong><a href="http://wolfstreet.com/2017/07/19/did-the-city-of-london-just-press-the-panic-button-on-brexit/" rel="noopener" target="_blank">by Wolf Richter via Wolf Street</a></li> <li><strong>The Logic Of Patience (Investing)&nbsp;</strong><a href="http://valueinvestorindia.blogspot.com/2017/07/the-logic-of-patience.html" rel="noopener" target="_blank">by Value Investor India</a></li> <li><strong>Do You Need $1 Million To Retire&nbsp;</strong><a href="https://www.fool.com/retirement/2017/07/16/do-you-need-1-million-to-retire-maybe.aspx" rel="noopener" target="_blank">by Maurie Backman via Motley Fool</a></li> <li><strong>A Chat With Peter Bernstein<span style="color: #ff0000;">&nbsp;</span></strong><a href="http://jasonzweig.com/a-long-chat-with-peter-l-bernstein/" rel="noopener" target="_blank">by Jason Zweig via Intelligent Investor</a></li> <li><span style="color: #000000;"><strong>We&rsquo;re Not Prepared For The Next Recession</strong></span>&nbsp;<a href="http://www.thefiscaltimes.com/Columns/2017/07/17/Here-s-Why-We-re-Not-Prepared-Next-Recession" rel="noopener noreferrer" target="_blank">by Mark Thoma via Fiscal Times</a></li> <li><strong><span style="color: #000000;">7-Habits To Help Your Kids Be Successful&nbsp;</span></strong><a href="https://www.forbes.com/sites/vanessamcgrady/2017/07/17/kids/#213b539177ce" rel="noopener" target="_blank">by Vanessa McGrady via Forbes</a></li> <li><strong>50% Of American Homeowners Have Buyer&rsquo;s Remorse</strong>&nbsp;<a href="http://www.cnbc.com/2017/07/14/almost-half-of-americans-have-buyers-remorse-about-their-house.html" rel="noopener" target="_blank">by Abigail Summerville via CNBC</a></li> <li><span style="color: #000000;"><strong>Economy Set To Break Two Records, Only One Is Good&nbsp;</strong></span><a href="http://www.businessinsider.com/us-economic-recovery-one-of-longest-on-record-but-also-one-of-weakest-2017-7" rel="noopener" target="_blank">by Pedro Da Costa via BI</a></li> <li><strong>Every Seven Years&nbsp;</strong><a href="https://www.l2inc.com/daily-insights/no-mercy-no-malice/every-seven-years" rel="noopener" target="_blank">by Scott Galloway via L2 Daily</a></li> <li><strong><span style="color: #000000;">A Fanatic Is Someone Who Won&rsquo;t Change Their Mind&nbsp;</span></strong><a href="https://www.aqr.com/cliffs-perspective/a-fanatic-is-one-who-cant-change-his-mind-and-wont-change-the-subject" rel="noopener" target="_blank">by Cliff Asness via AQR Capital Management</a></li> <li><strong>5-Surprising Facts About &ldquo;Made In America&rdquo; </strong><a href="http://www.cbsnews.com/news/5-things-to-know-about-made-in-america/" rel="noopener" target="_blank">by Irina Ivanova via MoneyWatch</a></li> <li><strong>Tennis Legend &ldquo;Boris Becker&rdquo; Bankrupt</strong>&nbsp;<a href="http://www.zerohedge.com/news/2017-07-19/tennis-legend-boris-becker-bankrupt-burns-%E2%82%AC100mm-fortune-help-nigerian-investments" rel="noopener" target="_blank">by Tyler Durden via ZeroHedge</a></li> <li><strong><span style="color: #000000;">Wrecking Ball&nbsp;</span></strong><a href="https://www.hussmanfunds.com/wmc/wmc170717.htm" rel="noopener" target="_blank">by John Hussman via Hussman Funds</a></li> <li><strong><span style="color: #ff0000;"><span style="color: #000000;">Are Investors Too &ldquo;Bulled&rdquo; Up&nbsp;</span></span></strong><a href="http://jlfmi.tumblr.com/post/163109214980/are-investors-getting-too-bulled-up" rel="noopener" target="_blank">by Dana Lyons via Tumblr</a></li> <li><strong><span style="color: #000000;">Wear Your Twitter Trolls Like A Badge Of Honor&nbsp;</span></strong><a href="https://www.thefelderreport.com/2017/07/14/why-you-should-wear-your-twitter-trolls-like-a-badge-of-honor/" rel="noopener" target="_blank">by&nbsp;Jesse Felder via The Felder Report</a></li> </ul> <hr /> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p><em><span style="color: #993300;"><strong>&nbsp;&ldquo;&ldquo;Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.&rdquo; &ndash; </strong>Sir John Templeton</span></em></p> </blockquote> <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="674" height="323" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170721_charge.jpg?1500660852" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/weekend-reading-charge-light-brigade#comments Behavioral finance Bob Pisani Cliff Asness CNBC David Rosenberg Doug Kass Economy Finance Investment John Hussman Light Brigade Market sentiment Market trend MarketWatch Money NBCUniversal Recession recovery Republican Party Rosenberg S&P 500 Stock market Twitter Twitter Tyler Durden U.S. Route 9W US Federal Reserve Fri, 21 Jul 2017 20:50:26 +0000 Tyler Durden 600245 at http://www.zerohedge.com US Drops Criminal Charges Against JPM "London Whale" Traders As It Is "Unable To Extradite Them" http://www.zerohedge.com/news/2017-07-21/us-drops-criminal-charges-against-jpm-london-whale-traders-it-unable-extradite-them <p>In the latest confirmation that "justice" in the US has become a sordid farce when it comes to the banking elite, moments ago the following two headlines from Reuters hit: </p> <ul> <li>U.S. DECIDES TO DROP CRIMINAL CHARGES AGAINST FORMER JPMORGAN TRADERS JAVIER MARTIN-ARTAJO, JULIEN GROUT IN 'LONDON WHALE' CASE</li> <li><strong>U.S. SAYS DEFENDANTS LIVE OUTSIDE THE COUNTRY AND HAVE REFUSED TO DEFEND THEMSELVES IN NEW YORK, AND EFFORTS TO EXTRADITE THEM HAVE BEEN UNSUCCESSFUL OR DEEMED FUTILE</strong></li> </ul> <p>Er, what: So just because two alleged criminal bankers "live outside the US" (not some 3rd world backwater dictatorship but Spain, with which the US has an extradition treaty) and "voluntarily" refuse to come to New York to defend themselves and - well - go to prison, and because the US is <em>completely powerless </em>to compel Spain to deliver these two men, they get to walk?</p> <p>Yes, pretty much. </p> <p>Here is the <a href="http://www.reuters.com/article/us-jpmorgan-crime-londonwhale-idUSKBN0NM4DN20150501">backstory</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Martin-Artajo and Grout were indicted in 2013 on five counts, including securities fraud, wire fraud and conspiracy</strong>.</p> <p>&nbsp;</p> <p> Prosecutors said the duo hid losses within JPMorgan's chief investment office in London by marking positions in a credit derivatives portfolio at inflated prices. Those losses were part of an overall $6.2 billion trading loss suffered by the bank centered on Bruno Iksil, the former trader known as the London Whale. Martin-Artajo supervised Iksil, while Grout worked for Iksil. Both men deny wrongdoing. In 2013, JPMorgan agreed to pay more than $1 billion to settle U.S. and British regulatory probes into the London Whale losses and admitted wrongdoing. </p> <p>&nbsp;</p> <p>* * *&nbsp; </p> <p>U.S. prosecutors said their efforts to extradite from Spain a former JPMorgan Chase &amp; Co executive charged in connection with the bank's $6.2 billion "London Whale" scandal had hit a dead end. In a filing in Manhattan federal court [in May 2015], prosecutors said Spanish authorities have decided not to appeal an April 23 ruling by a court rejecting the extradition to the United States of Javier Martin-Artajo, a Spanish citizen.</p> <p>&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/artajo_0.jpg" width="500" height="310" /></p> <p><em>Former JPMorgan employee Javier Martin-Artajo (C), indicted by a U.S. grand </em><br /><em>jury in relation to the bank's "London Whale"</em> </p> <p>&nbsp;</p> <p>The filing came in a civil lawsuit brought in 2013 by the U.S. Securities and Exchange Commission against Martin-Artajo and another trader, Julien Grout, who were charged criminally at the same time. The Spanish court's decision effectively has left both men out of U.S. prosecutors' reach. Grout lives in France, which does extradite its own citizens.<strong>&nbsp;</strong> </p> <p>&nbsp;</p> <p>The SEC in its own letter on Thursday said the men, who would likely invoke their Fifth Amendment right against self-incrimination, <strong>are not willing to be deposed, and Martin-Artajo's lawyer has said any deposition must be in Europe. </strong></p> <p>&nbsp;</p> <p><strong>With extradition off the table, prosecutors under Manhattan U.S. Attorney Preet Bharara said they no longer are seeking to delay depositions in the SEC's case. </strong></p> </blockquote> <p>This is the same Preet who was so busy doing everything in his power to <strong>avoid </strong>prosecuting any and all Wall Street bankers, that he is now one of the leaders of the anti-Trump "resistance." </p> <p>Oh, and just to preserve some semblance of credibility as it washes its hands, here is the DOJ scapegoating Bruno Iksil, the original London Whale trader, who <a href="http://londonwhalemarionet.monsite-orange.fr/">recently put up a website laying out his side of the story </a>and who <a href="http://www.reuters.com/article/us-jpmorgan-londonwhale-idUSKBN19A2UA">blamed Jamie Dimon </a>for the London Whale fiasco.</p> <p>U.S. SAYS NO LONGER BELIEVES IT CAN RELY ON TESTIMONY OF BRUNO IKSIL, A FORMER JPMORGAN COLLEAGUE, IN PROSECUTING MARTIN-ARTAJO AND GROUT</p> <p>Because anytime someone dares to break away from the "syndicate", and tells the <em>actual truth, </em>they can no longer be relied upon.</p> <p>Meanwhile, we hope Kim Dot Com is paying attention...</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="619" height="384" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/artajo.jpg?1500668239" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/us-drops-criminal-charges-against-jpm-london-whale-traders-it-unable-extradite-them#comments Artajo Chase Bank DOJ Economy of the United States Finance Financial services France headlines House of Morgan Jamie Dimon Jamie Dimon JPMorgan Chase JPMorgan Chase JPMorgan Chase trading loss KIM Law Money Preet Bharara Primary dealers Reuters Securities and Exchange Commission Securities Fraud Separation of investment and retail banking Spanish court Systemic risk Testimony U.S. Securities and Exchange Commission Fri, 21 Jul 2017 20:23:59 +0000 Tyler Durden 600252 at http://www.zerohedge.com "The Swarm Effect": Every Trader Today Has Just Two Choices http://www.zerohedge.com/news/2017-07-21/swarm-effect-every-trader-today-has-just-these-two-choices <p>Few have dedicated as much time and effort into explaining the behavioral aspects of trading in a time of central planning (or "<a href="http://www.zerohedge.com/news/2017-06-17/kocic-markets-current-metastability-will-lead-cataclysmic-events">metastability</a>") as Deutsche Bank's whimsical derivatives-philosopher, Aleksandar Kocic. </p> <p>Three weeks after becoming the first Wall Street strategist to <a href="http://www.zerohedge.com/news/2017-07-02/deutsche-market-broke-2012">quantify (and qualify) the concept of market "complacency</a>", and one week after explaining that the Fed has effectively created a state of "permanent state of exception" from conventional asset relations (and logic), one in which everyone is incentivized to perpetuate the "exception" (i.e., sticking their head in the sand and just BTFDing), where QE has become "<a href="http://www.zerohedge.com/news/2017-07-15/deutsche-fed-has-created-universal-basic-income-rich-and-now-it-cant-get-out">universal basic Income for the rich</a>", and as a result the Fed is terrified to unwind 8 years of monetary policies, today Kocic released his latest meta-financial <em>stream-of-consciousness </em>explainer, which highlights the choices faced by the current crop of traders every single day. </p> <p>Picking up on a <a href="http://www.zerohedge.com/news/2017-07-19/one-banks-surprising-finding-its-not-complacency-paralysis">tangent touched upon </a>by Canaccord's Brian Reynolds on Wednesday, who wrote that the relentless lack of volume in recent years "<strong>is more reflective of paralysis than complacency among equity investors</strong>", and then pointing to the sharp rise in NYSE short interest, countered that "investors are not complacent. Their stances range from extremely aggressive to bearish", Kocic takes the analysis one step further and writes that "<strong>the current mode of market functioning is really not so much about complacency as a result of willful blindness or ignorance as it is about difficult choices and high costs associated with those choices." </strong></p> <p>Referencing one of our favorite psychological tropes, <a href="https://en.wikipedia.org/wiki/Learned_helplessness">namely the "learned helplessness" experimental framework</a>, Kocic writes that "<strong>more than eight years of monetary stimulus and forced status quo have created a situation where change has become impossible." </strong>And adds that "to facilitate a change that would improve market conditions, there have to be multiple concessions to those forces against which change is directed. This has set in place the <span style="text-decoration: underline;"><strong>swarm effect</strong></span>: <strong>You can say no, but it is inconsequential."</strong></p> <p>Never one to shy away from expanding a market analogy into the ontological arena, Kocic, in attempting another explanation for why the market volatility is so low, then writes that "<strong>the resulting calm of the markets we have been experiencing lately has a special quality to it, like the calm one sees in people who have been talked into believing that they have found their peace.</strong>"</p> <p>Just think of going deeper into your cave until you find your power animal... </p> <p><img src="http://i.imgur.com/mKoF1VW.gif" width="444" height="184" /></p> <p>To be sure, it is an uneasy calm:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Markets are calm, but they are not content. Although nominally things do not look bad, there is no joy when it comes to the state of the US economy. Despite tapering of Fed purchases, rate hikes and&nbsp; announcement of balance sheet unwind, financial conditions have not tightened. This triggers flashbacks of the troubling aftermath of the 2004-2007 tightening cycle. Then, why is vol so low? This question continues to puzzle market players and inspire its commentators. <strong>We know there will be tears at the end, but can we be certain that if we internalize this message and “do the right thing” along the way, there won’t be tears in the meantime?</strong></p> </blockquote> <p>This, in turn forces traders to make a decision: be aligned with the crowd (which is making money), or stay separate and continue suffering an indefinite, slow bleed:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Being long convexity means that your prospects are inversely correlated with the fate of the market. </strong>You will monetize only in an adverse scenario, when the rest of the market posts losses – your profits have negative correlation to the profits of the market. This is the main feature of an insurance policy - and a reason convexity carries a premium relative to other assets. <strong>By selling vol, your prospects are positively correlated with everyone else’s. Those assets generally trade at a discount -- you get paid to sell convexity. At the end, it is all about the decision whether to aligning your prospects with or against everyone else’s.</strong></p> </blockquote> <p>Kocic's punchline follows: a look into the mindset of today's traders. This is how Kocic breaks it down:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>At the moment, investors face a difficult choice. On one side, you are tempted to join the crowd. </strong>After all, the Fed is the “guarantor” so, despite the downsides, embracing the carry trade might not be a totally unsafe option (and you get rewarded for that). For most people who operate over a short time horizon, this is the only option. However, <strong>it is well known that collective IQ is always considerably lower than the average IQ </strong>(the evidence is purely empirical, but supporting examples are convincing). <strong>So, there is some wisdom in not joining the crowds (2008 financial crisis is a good example). </strong>If you can endure time decay and&nbsp; negative carry and are looking over a long time horizon, why not go against the consensus?</p> </blockquote> <p>From a practical standpoint, this results in just two possible decision "choices":</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Framed as a financial decision problem, one faces a choice between two scenarios: 1) A small probability of losing all of your money all at once at an undisclosed time in the future, or 2) A high probability of gradually losing small amounts over an indefinitely long period of time, keeping in mind that persistent small losses over an indefinite time period could lead to large cumulative losses.</strong></p> </blockquote> <p>From this perspective, one can see why Canaccord's take of pervasive trader "paralysis" amid a background or pervasive bearishness has merit.</p> <p>So what are traders to do? Kocic may have just the right trade for you. Read on below for the full excerpt, as well as what the DB strategist believes is the right trade for this environment:</p> <p>* * * </p> <p><span style="text-decoration: underline;"><strong>The swarm effect: What to do when choices become difficult?</strong></span></p> <p><strong>Markets are calm, but they are not content</strong>. Although nominally things do not look bad, there is no joy when it comes to the state of the US economy. Despite tapering of Fed purchases, rate hikes and announcement of balance sheet unwind, financial conditions have not tightened. This triggers flashbacks of the troubling aftermath of the 2004-2007 tightening cycle. Then, why is vol so low? This question continues to puzzle market players and inspire its commentators. <strong>We know there will be tears at the end, but can we be certain that if we internalize this message and “do the right thing” along the way, there won’t be tears in the meantime</strong>? The <strong>current mode of market functioning is really not so much about complacency as a result of willful blindness or ignorance as it is about difficult choices and high costs associated with those choices</strong>. More than eight years of monetary stimulus and forced status quo have created a situation where <span style="text-decoration: underline;"><strong>change has become impossible</strong></span>. To facilitate a change that would improve market conditions, there have to be multiple concessions to those forces against which change is directed. This has set in place the swarm effect: You can say no, but it is inconsequential.<strong> The resulting calm of the markets we have been&nbsp; experiencing lately has a special quality to it, like the calm one sees in people who have been talked into believing that they have found their peace.</strong></p> <p><strong>Safety third (after looking good and having fun)</strong></p> <p>The stakes are high, but what is one to do when nothing can be done? <strong>It is instructive to take a trip down memory lane once more, back to the early days of QE, around 2009 (it feels more distant than just eight years ago). </strong>Shortly after the Fed started its purchasing program, a select number of macro players, mostly non-rates specialists, came up with a theme that would keep most of the rates vol desks busy for over a year. <strong>The trade was high strike payers as a macro hedge against (“inevitable”) sell off in rates due to inflationary effects of excessive liquidity injection</strong>. The new macro theme was a welcoming development for the business that had lost its main customer and the street was happy to provide liquidity in times of stressed supply and strict risk management. For about a year, there was near euphoria about high strike payers. Everyone wanted to have a position. A typical structure, which the street saw a lot of, was 5Y30Y payers struck at 6%. With forwards around 4.50%, this was at the time a 150bp OTM, with premium trading in the 700bp range. Vol, although off of its all-time highs, was still elevated, about twice as high as today, and the skew about three times wider. But what had been conceived as a conceptually meaningful hedge in terms of delta, became a (troubling) vega and time decay exposure, that eventually drifted away from the strike, resulting in massive MTM losses. <strong>Currently, these strikes on 5Y30Y trade around 80c.</strong></p> <p>When it comes to trading options, there are many more considerations to take into account besides delta. <strong>Being long convexity means that your prospects are inversely correlated with the fate of the market. You will monetize only in an adverse scenario, when the rest of the market posts losses – your profits have negative correlation to the profits of the market</strong>. This is the main feature of an insurance policy - and a reason convexity carries a premium relative to other assets. <strong>By selling vol, your prospects are positively correlated with everyone else’s.</strong> Those assets generally trade at a discount -- you get paid to sell convexity. <span style="text-decoration: underline;"><strong>At the end, it is all about the decision whether to aligning your prospects with or against everyone else’s.</strong></span></p> <p>At the moment, investors face a difficult choice. On one side, you are tempted to join the crowd. <strong>After all, the Fed is the “guarantor” so, despite the downsides, embracing the carry trade might not be a totally unsafe option (and you get rewarded for that). </strong>For most people who operate over a short time horizon, this is the only option. However, it is well known that collective IQ is always considerably lower than the average IQ (the evidence is purely empirical, but supporting examples are convincing). <strong>So, there is some wisdom in not joining the crowds (2008 financial crisis is a good example). If you can endure time decay and negative carry and are looking over a long time horizon, why not go against the consensus?</strong></p> <p><em><strong>Framed as a financial decision problem, one faces a choice between two scenarios</strong></em>:<em><strong> 1) A small probability of losing all of your money all at once at an undisclosed time in the future, or 2) A high probability of&nbsp; gradually losing small amounts over an indefinitely long period of time, keeping in mind that persistent small losses over an indefinite time period could lead to large cumulative losses.</strong></em></p> <p><strong>The trade: Straddle/strangle switches</strong></p> <p>Assuming we have understood the problem correctly, the key question in our minds is: Can we find a compromise between these two difficult choices? We believe that straddle/strangle switches are a logical way to proceed.</p> <p>As a consequence of vol selling, the market is locally long gamma. This reinforces the local equilibrium, but positioning is different outside of the 25bp move on each side. At this point, we are sellers of gamma locally and are buyers of tails. We would strike 1X2 straddle/strangle switches so as to reduce local gamma exposure, and limit the downside, but adjust the strikes to keep the upside outside of the 50bp range. As a result, we have a high-leverage trade with limited downside, but the same upside as the 50bp wide strangle. We recommend: </p> <ul> <li><strong>Sell $100mn 3M10Y straddles vs. buy $200mn 3M10Y 24bp wide strangles, offer 38c</strong></li> </ul> <p>This is a long gamma position (2K). A 1X2 switch with a flat gamma profile is at struck 50bp wide (it trades at positive takeout), while a costless structure is 32bp wide (it is long gamma, around +1.6K). For comparison, a naked 24bp wide strangle costs 120c. The maximum downside on the trade is loss of premium plus additional 12bp running in case we either rally or sell off 12bp relative to forwards, a total of 147c, which is comparable to the maximum loss on the strangles. By changing the “bottom” profile of the strangles, we have managed to change the risk profile in such a way that we improved the time decay and payoff profile, without substantially changing the downside. This change of the “bottom” profile boils down to a change of P&amp;L distribution across different scenarios. <strong>The straddle/strangle switch makes money either if nothing happens or if we break out of the range. It loses money in case of limited repricing on both sides that remains in the range. A long strangle position monetizes only outside of the range, while anything within amounts to equal losses.</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/kocic%20trade%20strangle_0.jpg" width="600" height="383" /></p> <p>Both trades have a similar time decay (in absolute terms), but the switch has about three times more leverage. 1M carry on both trades is around -40c, although it has less gamma exposure than naked strangle.</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="782" height="499" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/kocic%20trade%20strangle.jpg?1500659841" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/swarm-effect-every-trader-today-has-just-these-two-choices#comments Carry Trade Convexity Convexity Cumulative Losses Economy Market Conditions NYSE Short Interest Options Options strategies Risk Risk Management Short Interest Strangle US Federal Reserve Volatility Fri, 21 Jul 2017 19:57:47 +0000 Tyler Durden 600243 at http://www.zerohedge.com Friday Humor: What's The Difference Between...? http://www.zerohedge.com/news/2017-07-21/friday-humor-whats-difference-between <p>Sometimes you just have to laugh...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/16/20170721_dif.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/16/20170721_dif.jpg" width="571" height="424" /></a></p> <p><a href="https://townhall.com/political-cartoons/2017/07/20/151597"><em>Source: Townhall.com</em></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="571" height="424" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170721_dif.jpg?1500657815" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/friday-humor-whats-difference-between#comments Conservatism in the United States Human Interest Laughter Politics of the United States Technology Townhall Fri, 21 Jul 2017 19:55:00 +0000 Tyler Durden 600239 at http://www.zerohedge.com Treasury "Strangler" Just Made A $10 Million Profit In Under 10 Days http://www.zerohedge.com/news/2017-07-21/treasury <p>On June 12, the rates market was fascinated <a href="http://www.zerohedge.com/news/2017-07-12/someone-just-made-unprecedented-bet-imminent-surge-bond-volatility">with what was then described as an "unprecedented" vol trade</a>: as Bloomberg described at the time, an unknown trader bought $10 million of out-of-the-money puts and calls on 10Y Treasury futs (i.e., a strangle) when the 10Y was yielding 2.38%, which immediately grabbed the market's attention as it involved huge block trades of about 63,500 on either side: "a strangle of that magnitude is rare, and possibly unprecedented" according to several rates traders who spoke to Bloomberg. </p> <p>The theta on the trade was so high that just to recoup the premium, the yield on the 10Y would have to rise or fall about 10 bps from 2.38%, and preferably very soon. Once the 10Y were to move beyond 10bps, gains were unlimited, and the trader "stands to gain about $50 million on a quarter-point move in either direction from the starting level, which would involve approaching this year’s highs and lows for 10-year yields."</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/05/20170712_bond_0.jpg" width="500" height="261" /></p> <p>Just as notable was the trade's short maturity, which expired on the July 21 settlement at 3pm, i.e. moments ago. </p> <p>So where did the trade close? As Bloomberg's Edward Bolingbroke writes, "despite the latest dip from session highs after a $400k/DV01 TY block sale, the underlying September TY futures which closed around 126-10 level represent a profit of around $10m on the strangle."</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/strangler%20profit.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/strangler%20profit_0.jpg" width="500" height="256" /></a></p> <p>With the premium on the August TY 124/126 strangle around $10m as of 2:45pm ET (15 min ahead of options expiry) the trade was worth around $20m, or a profit of $10 million. </p> <p>So congratulations to the unknown trader, who doubled his risk in less than 10 days even without a material volatility event hitting the rates complex, although he was certainly lucky that unlike the EUR, the rates complex did not interpret yesterday's announcement by Mario Draghi as hawkish. It will also be interesting to see if his prompt success spawns various imitators eager to repeat his success.</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="2048" height="1050" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/strangler%20profit.jpg?1500665934" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-21/treasury#comments Bloomberg L.P. Business Economy of New York City Finance New York City Options Strangle Volatility Fri, 21 Jul 2017 19:36:41 +0000 Tyler Durden 600250 at http://www.zerohedge.com