http://www.zerohedge.com/fullrss2.xml/component/option%2Ccom_docman/itemid%2C200023/gid%2C397/boombustblog/boombustblog/boombustblog/boombustblog/is-this-the-breaking-of-the-bear.html en The Saudi Power Balance Is On A Knife-Edge http://www.zerohedge.com/news/2017-07-27/saudi-power-balance-knife-edge <p><a href="http://oilprice.com/Geopolitics/International/The-Saudi-Power-Balance-Is-On-A-Knife-Edge.html"><em>Authored by Cyril Widershoven via OilPrice.com,</em></a></p> <p>The sweltering heat of Saudi Arabian summer will feel like a cool breeze<strong> compared to the geopolitical fire that could soon take over the country</strong> if ongoing internal power struggles destabilize the Kingdom&rsquo;s Royal Family and national security in the coming weeks.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_saudi.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_saudi.jpg" style="width: 531px; height: 268px;" /></a></p> <p>After his successful elevation to Crown Prince, Mohammed Bin Salman (MBS) has been appointed by King Salman to be in charge during his holiday to Morocco.<strong> The King&rsquo;s holiday comes at a time of relative instability in the Kingdom</strong>, as the effects of the removal of former Crown Prince Mohammed Bin Nayef at the end of the Ramadan period continue to linger.</p> <p>King Salman&rsquo;s choice to award his son the position of Crown Prince was expected, but <strong>insiders are warning that his predecessor still holds a great deal of influence.</strong> To put MBS in charge during this already very volatile period in the Gulf, as the Saudi-led alliance continues to up the pressure on Arab neighbor Qatar, is feeding into uncertainty.&nbsp;</p> <p><strong>The young Crown Prince also faces some personal pressure. </strong>The lack of progress in the Yemen War (against the Houthi&rsquo;s and Iran), the fledgling Saudi strategy to stabilize the oil market, and the Qatar crisis, have put a major dent in the current GDP growth projections of international rating agencies. The negative impact of these issues is being kept at bay by the enormous financial reserves of Saudi Arabia, but as the list of failing MBS initiated endeavors grows, his position in the Kingdom is under increasing pressure.</p> <p><strong>At the same time, rumors are spreading that the health of King Salman has further deteriorated.</strong> Some Saudi sources have indicated in the media that King Salman is even considering to abdicate in the next few months and put MBS on the throne. The current rule of MBS during the King&rsquo;s holiday could be a taste of things to come.</p> <p>As the MENA region is in peril,<strong> with economic pressure building due to low oil prices, Saudi Arabia is facing a total restructuring of its security apparatus.</strong> MBS is now being charged with removing the old power base of former Crown Prince Mohamed Bin-Nayef, while also dealing with internal and external security threats.</p> <p>In recent weeks, <strong>King Salman has stripped the Interior Ministry of many of its key mandates, including counter-terrorism.</strong> All these powers have been transferred to a newly created body that is fully overseen by the King himself. Former Crown Prince Mohammed Bin Nayef, before his removal, was also Minister of the Interior. The new entity, called the Presidency of State Security, is under the command of the King, who is also the Prime Minister. <em><strong>A royal decree stated that &ldquo;whatever concerns security of the state, including civil and military personnel, budgets, documents, and information will also be transferred to the new authority&rdquo;.</strong></em></p> <p><strong>The sudden and drastic change of the security services however, also indicates that there is still some opposition in the Kingdom to Crown Prince MBS. </strong>The appointment of General Abdulaziz Al Howairini is seen as an attempt to build more support for MBS, as he is perceived as a MBS supporter. At the same time, Al Howairini&rsquo;s appointment is also meant to counter fears in the West that Saudi Arabia is changing its attitude in the global fight against terrorism.&nbsp;</p> <p><u><strong>The main threat, however, still exists inside of the Kingdom itself. </strong></u>The position of MBS is not undisputed, a significant group of the royal family members still seems to oppose the position of MBS in general. Possible opposition exists within the old guard of the MBN led security forces, with Miteb Bin Abdullah, currently head of the Saudi Arabian National Guard, seen as a possible target for removal. The National Guard is regarded, if used by the opposition, as a real threat to MBS in general and is very loyal to former King Abdullah&rsquo;s entourage. The Guards were not mentioned in the latest Royal Decree, a sign of their importance and power within the Kingdom.</p> <p><strong>Several scenarios are currently being discussed both within and outside of the Kingdom.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>It is <strong>expected that MBS will become King within the next year,</strong> although the pretext to such a move is not yet clear. The star of MBS is still rising, while a possible success story to solidify his position is on the horizon.</p> <p>&nbsp;</p> <p>A <strong>second possible scenario is that regional conflicts will blow up, creating the need for drastic change in the Kingdom.</strong> A confrontation with Iran or Qatar would definitely call for a strong young leader to deal with these issues. Looking at the pro-active approach already taken by MBS, his elevation to Crown Prince is a logical one. MBS will also get the support of the main Gulf rulers, such as UAE, Bahrain and Egypt. Kuwait is also currently cuddling up to MBS&rsquo;s views on the region it seems.</p> <p>&nbsp;</p> <p><strong>The most worrying scenario </strong>is that MBS would take an even more aggressive stance use his current power position to change the internal security structures. This move could be successful but would fully depend on the coordination of all Saudi military and security forces. At present, this is not possible without upsetting the National Guard and other internal forces.</p> </blockquote> <p><strong>Over the next weeks, analysts should keep an eye on these developments.</strong> A destabilized Saudi Arabia will put not only the region at risk but also energy supplies. MBS&rsquo; opponents are waiting for a mistake to make a move. Iran and others will be supporting any opposition to remove the Crown Prince from power. Let&rsquo;s hope Riyadh will only be hit by the normal summer heat and not the repercussions of internal power struggles combined with regional aspirations of others. <em><strong>MBS would do well to remember the words of Saladin, who stated that &ldquo;the ability to inspire rather than enforce loyalty is a critical quality of leadership&rdquo;.</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="531" height="268" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170727_saudi.jpg?1501170662" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/saudi-power-balance-knife-edge#comments Crown Prince of Saudi Arabia Government House of Saud Interior Ministry Iran Kings of Saudi Arabia Kuwait MBS Mohammad bin Salman Monarchy Muhammad bin Nayef national security Politics Qatar diplomatic crisis Rating Agencies Royalty Saudi Arabia Saudi Arabia Saudi Arabian National Guard Saudi military Succession to the Saudi Arabian throne Thu, 27 Jul 2017 18:40:09 +0000 Tyler Durden 600608 at http://www.zerohedge.com BAT Is Dead: Republicans Kill Border Adjustment Tax http://www.zerohedge.com/news/2017-07-27/bat-dead-republicans-kill-bordar-adjustment-tax <p>The Trump fiscal agenda - which these days really means tax reform - may be dead, but that does not mean it can't reemerge as a zombie every now and then. That's precisely what happened moments ago when Paul Ryan just announced that after months of speculation whether border adjustment tax will or won't be implemented to help offset Trump's proposed tax cuts, it is now officially dead.</p> <ul> <li>RYAN IS SAID TO BE TELLING REPUBLICANS BORDER TAX IS DEAD: BBG</li> </ul> <p>As Reuters adds: </p> <ul> <li>"BIG SIX" REPUBLICANS IN CONGRESS, TRUMP ADMINISTRATION ANNOUNCE BORDER TAX PROVISION HAS BEEN SET ASIDE IN ORDER TO ADVANCE TAX OVERHAUL</li> </ul> <p>A statement Thursday from the so-called Big Six - Ryan, Brady, White House economic adviser Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch - <strong>said due to the unknowns associated with the border-adjusted tax, the group “had decided to set this policy aside in order to advance tax reform."</strong></p> <p>"While we have debated the pro-growth benefits of border adjustability, <strong>we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform</strong>," </p> <p>"And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base," according to the statement.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady had been telling Republicans prior to the statement’s release that the controversial border-adjusted tax on imports would no longer be part of tax-legislation negotiations, according to four people familiar with the ongoing discussions. </p> <p>&nbsp;</p> <p>The border-adjusted tax, which would replace the current 35 percent corporate rate with a 20 percent levy on companies’ domestic sales and imported goods, had been a centerpiece of the House GOP tax plan endorsed by Brady and Ryan. It was estimated to generate more than $1 trillion over a decade, which would help pay for tax cuts promised by Republicans.</p> </blockquote> <p>As we discussed extensively at the start of the year, when people still gave some credibility to Trump's fiscal agenda, the BAT was under furious attack by retailers and other industries that rely on imported goods, who mounted a campaign saying it would raise prices for working Americans on everyday goods. The end of the BAT, while alreadly largely assumed, should be favorable for retail stocks, as the XRT reveals. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/20170727_XRT.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/20170727_XRT_0.jpg" width="500" height="276" /></a></p> <p>The only problem: with or without BAT, retailers are still doomed as long as AMZN is around. </p> <p>As for BAT being gone, it means that any Trump tax cuts - a generous assumption these days - will be that much smaller as the border adjustment tax was expected to raise <a href="http://www.zerohedge.com/news/2017-02-09/senate-war-against-border-tax-begins">roughly $1.2 trillion </a>in government revenue over the next decade, <strong>offsetting over half of the corporate tax cut over a ten year period. </strong>In other words, so much for corporate tax cuts.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/02/08/BAT%20impact_0.jpg" width="500" height="230" /></p> <p>* * *</p> <p><em>The <a href="https://www.whitehouse.gov/the-press-office/2017/07/27/joint-statement-tax-reform">full Republican statement is below:</a></em></p> <p><strong>Joint Statement on Tax Reform</strong></p> <p>Today, House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX) issued the following joint statement on tax reform:</p> <p>“For the first time in many years, the American people have elected a President and Congress that are fully committed to ensuring that ordinary Americans keep more of their hard-earned money and that our tax policies encourage employers to invest, hire, and grow. And under the leadership of President Trump, the White House and Treasury have met with over 200 members of the House and Senate and hundreds of grassroots and business groups to talk and listen to ideas about tax reform. <br />&nbsp;<br />“We are all united in the belief that the single most important action we can take to grow our economy and help the middle class get ahead is to fix our broken tax code for families, small business, and American job creators competing at home and around the globe. Our shared commitment to fixing America’s broken tax code represents a once-in-a-generation opportunity, and so for three months we have been meeting regularly to develop a shared template for tax reform. <br />&nbsp;<br />“Over many years, the members of the House Ways and Means Committee and the Senate Finance Committee have examined various options for tax reform.&nbsp; During our meetings, the Chairmen of those committees have brought to the table the views and priorities of their committee members. Building on this work, as well as on the efforts of the Administration and input from other stakeholders, we are confident that a shared vision for tax reform exists, and are prepared for the two committees to take the lead and begin producing legislation for the President to sign. <br />&nbsp;<br />“Above all, the mission of the committees is to protect American jobs and make taxes simpler, fairer, and lower for hard-working American families. We have always been in agreement that tax relief for American families should be at the heart of our plan. We also believe there should be a lower tax rate for small businesses so they can compete with larger ones, and lower rates for all American businesses so they can compete with foreign ones. The goal is a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas. And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base.&nbsp; While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.<br />&nbsp;<br />“Given our shared sense of purpose, the time has arrived for the two tax-writing committees to develop and draft legislation that will result in the first comprehensive tax reform in a generation.&nbsp; It will be the responsibility of the members of those committees to produce legislation that achieves the goals shared broadly within Congress, the Administration, and by citizens who have been burdened for too long by an outdated tax system. Our expectation is for this legislation to move through the committees this fall, under regular order, followed by consideration on the House and Senate floors. As the committees work toward this end, our hope is that our friends on the other side of the aisle will participate in this effort. The President fully supports these principles and is committed to this approach. American families are counting on us to deliver historic tax reform. And we will.”</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="645" height="363" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/paul%20ryan%20teaser_5.jpg?1501178902" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/bat-dead-republicans-kill-bordar-adjustment-tax#comments Border-adjustment tax Business Congress Destination-based cash flow tax Donald Trump Economic policy of Donald Trump Economy of the United States IN CONGRESS Kevin Brady Kevin Brady National Economic Council Political debates about the United States federal budget Politics Politics of the United States Republican Party Republicans Reuters Senate Senate Finance Committee Social Issues Steven Mnuchin Tax United States Ways and Means Committee White House White House Thu, 27 Jul 2017 18:19:59 +0000 Tyler Durden 600625 at http://www.zerohedge.com The Fed Remains On Course... To Trouble http://www.zerohedge.com/news/2017-07-27/fed-remains-course-trouble <p><a href="https://mises.org/library/fed-remains-course-%E2%80%93-trouble"><em>Authored by Thorstein Polleit via The Mises Institute,</em></a></p> <div class="body-content embedded-media"> <p><strong>The Federal Reserve (Fed) is widely expected to continue to tighten its monetary policy this year. </strong>According to a latest Reuters Poll, the Fed is likely to start shrinking its US$4 trillion balance sheet in September and, moreover, raise further its key interest rate, which is currently standing in a range of 1.0 to 1.25 percent, in the fourth quarter this year.</p> <p><strong>According to mainstream economic wisdom, the time has come for the US economy to return to a more normal level of interest rates.</strong> Industrial output is expanding at a decent clip, official unemployment has declined markedly, and prices in the stock and housing market show a sustained upward drift. Considering these circumstances, the US economy can now shoulder a tighter monetary policy, it is said.</p> <p><strong>It should be understood, however, that there will be side-effects, even unintended consequences, if and when the Fed hikes interest rates further. </strong>Most importantly, the Fed doesn&rsquo;t know where the &ldquo;neutral interest rate&rdquo; is. If it does too much, the economy will collapse. If it does not do enough, it will only prolong the artificial boom, causing ongoing malinvestment and, ultimately, another crisis.</p> <p>Admittedly, <u><em><strong>this is nothing new: The Fed has always been a cause of boom and bust. It sets into motion an artificial boom by issuing new fiat money through bank credit expansion</strong></em></u>. Such a boom, however, must sooner rather than later collapse and turn into a bust. It is, therefore, strongly advised to expect nothing good coming out of Fed interventions.</p> <h4><u><strong>Going Through the Numbers</strong></u></h4> <p><strong>This of course holds true for the Fed&rsquo;s plan to start selling securities it has bought during the financial and economic crisis to prop up the economic and financial system.</strong> Back in 2008 and 2009, the Fed provided the US banking system with an enormous cash infusion by granting loans to and purchasing securities from banks.</p> <p>The Fed ramped up banks&#39; cash holdings from US$ 24,9bn to US$ 2,398.1bn from September 2008 to July 2017. It did so by buying Treasuries and mortgage-backed securities (MBS) amounting to US$ 1,908.9bn and US$1,770.3bn, respectively. In the meantime, however, banks have repaid most of the loans provided by the Fed.</p> <p>This, in turn, has reduced banks&#39; cash holdings to US$ 2,398.2bn. As a result, it has become impossible for the Fed to sell all the bonds it has purchased. <u><em><strong>Simply put: The US banking system does currently not have enough base money to pay for the Fed&rsquo;s crisis-related bond purchases of US$3.755.8bn.</strong></em></u></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_fed.jpg"><img height="415" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_fed_0.jpg" width="600" /></a></p> <p><em><strong>If the Fed were to shed just 64 percent of its current bond holdings, the base money supply in the US banking system would be completely wiped out, making the banking sector effectively illiquid. In this process, US interbank interest rates would presumably spike, sending shock waves through the economic and financial system, not only in the US but worldwide.</strong></em></p> <h4><u><strong>Three Options</strong></u></h4> <p>It is safe to assume that the Fed and the banks would want to avoid such a scenario. This leaves the Fed with three options.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Option 1: The Fed sells only a (small) part of its current Treasury and MBS to avoid a liquidity shortage in the interbank money market. In other words: The Fed would have to keep sitting on a significant part of its bond holdings and buy new bonds once they mature.</p> <p>&nbsp;</p> <p>Option 2: The Fed sells off its bond holdings and, at the same time, runs liquidity providing operations to keep banks sufficiently equipped with cash. It purchases, for instance, consumer and/or corporate loans from banks issuing new base money. As a result, the Fed&rsquo;s assets in its balance sheet would see Treasuries and MBS go down, and consumer and corporate loans go up.</p> <p>&nbsp;</p> <p>Option 3: The Fed swaps its Treasury and MBS holdings into short-term maturities and sells these papers over time, thereby reducing the base money supply in the banking system as far as possible. This way, the Fed would reduce its active involvement in the credit markets somewhat, confining it mainly to the short-term end of the market.</p> </blockquote> <h4><u><strong>Interest Rates will Remain Distorted</strong></u></h4> <p><strong>That said, it will be enlightening to see which option the Fed will ultimately choose. </strong>Option 1 and 2 would be indicative of the Fed wanting to retain its powerful grip on the price action and consequently the yields in fixed income markets. Option 3, in turn, would suggest that the Fed allows interest rates in the long-term end of the market to normalize at least to some extent.</p> <p>Whatever option it chooses, however, the Fed will, one way or another, keep distorting interest rates. By issuing new quantities of fiat money through credit expansion, the Fed inevitably wreaks havoc on the economy&#39;s price system. It manipulates the perception of risk and flatters the value of future cash flows.</p> <p>This, in turn, causes many economic and social problems. Most importantly, the Fed&rsquo;s actions debase the purchasing power of the US dollar, thereby destroying much of peoples&#39; life savings. What is more, the Fed&rsquo;s policy coercively redistributes income and wealth, and it also brings about costly boom and busts.</p> <p>Just to be on the safe side: <u><em><strong>The Fed is not the solution to all these problems. It is the actual cause.</strong></em></u> Whatever the US central bank will do: Be assured it will remain on course to trouble. And trouble there will be &ndash; and unfortunately so, whatever the Fed will be doing in terms of setting interest rates and dealing with the bonds it has purchased against issuing new fiat dollars.</p> <p><strong>While this is certainly a gloomy message, it might help investors to make wise decisions.</strong> Because if the Fed causes another round of trouble, it will most likely&nbsp;resort to even lower interest rates and issuing even more fiat money. So whatever happens short-term, there is good reason to expect that the fiat dollar &mdash;&nbsp;and this holds true for all fiat currencies &mdash;&nbsp;will lose value.</p> </div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="658" height="455" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170727_fed.jpg?1501169554" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/fed-remains-course-trouble#comments Banking Bond Business Central bank Economy Federal Reserve Federal Reserve System Finance Financial markets fixed Housing Market Inflation Interbank lending market Mises Institute Mises Institute Monetary Policy Monetary policy Money Money Supply Money supply Price Action Purchasing Power Reuters Unemployment United States housing bubble US central bank US Federal Reserve Thu, 27 Jul 2017 18:13:19 +0000 Tyler Durden 600603 at http://www.zerohedge.com Top 5 Ways to “Back Up” Your Freedom http://www.zerohedge.com/news/2017-07-27/top-5-ways-%E2%80%9Cback-up%E2%80%9D-your-freedom <p><a href="http://www.thedailybell.com/news-analysis/top-5-ways-to-back-up-your-freedom/">Via The Daily Bell</a></p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;">1.&nbsp;<a href="https://www.sovereignman.com/trends/create-more-freedom-now-with-these-three-steps-22159/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Have Physical, Tangible Assets Secured on Hand</a>.</h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Sovereignman tells you why you should buy a safe, and store some cash and silver in there. Don’t be dependent on institutions.</p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;">2. Start Today Towards Obtaining&nbsp;<a href="http://www.thedailybell.com/news-analysis/why-and-how-to-get-a-second-passport/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">a Second Passport</a>, and&nbsp;<a href="http://www.thedailybell.com/news-analysis/why-the-money-in-youre-bank-account-is-not-as-safe-as-you-may-think/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">a Foreign Bank Account</a>.</h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">It is always good to have options. Secure some money out of your government’s hands. Secure your ability to travel without your government’s permission.</p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;">3.&nbsp;<a href="https://getcell411.com/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Use Cell 411 to Secure Your Community</a>. (<a href="http://peacekeeper.org/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Peacekeeper is another option</a>.)</h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Put your safety in trusted hands, not strangers and agents of the state. You can start developing a network of mutual aid today.</p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;">4.&nbsp;<a href="https://anarchywithoutbombs.com/2012/12/22/my-favorite-libertarian-charitable-deductions-this-season/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Support Freedom Causes and Charities</a>.</h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">There are a lot of people out there working towards freedom, in all sorts of ways. Start with the link above to begin looking into the best places to throw your support in the form of dollars.</p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;">5.&nbsp;<a href="https://www.sovereignman.com/reduce-taxes/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Legally Reduce the Amount of Taxes Your Pay</a>.</h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Not only will this help you keep more money, it will help others by defunding the government, one individual at a time.</p> http://www.zerohedge.com/news/2017-07-27/top-5-ways-%E2%80%9Cback-up%E2%80%9D-your-freedom#comments Business Charitable organization Economy Reed Thu, 27 Jul 2017 18:12:19 +0000 TDB 600624 at http://www.zerohedge.com "We May Be Very Close To The Turning Point": Selloff Blamed On This Note From JPM's Marko Kolanovic http://www.zerohedge.com/news/2017-07-27/we-may-be-very-close-turning-point-selloff-blamed-note-jpms-marko-kolanovic <p>While nobody knows what catalyzed for the sharp selloff over the last hour, with Citi blaming it on Acrophobia, or fear of heights, saying&nbsp; that "US equities opened at record highs, key levels were being approached in fixed income while USD enjoyed a bid across the board... However since then, it looks like markets have gotten a small case of cold feet", Bloomberg had a different idea, when it observed that stocks erased gains around 12:30 p.m. as S&amp;P 500 fell 0.5% over 60 minutes to low of 2,469.51. It notes that the "<strong>weakness occurred as traders circulated a note by JPMorgan quant strategist Marko Kolanovic that cautioned investors on the risks of record-low volatility in the equity market." </strong></p> <p>In his latest note, reposted below, Kolanovic, aka the JPM quant "Gandalf" popularized on this website over the past two years writes that "volatility near or at record lows by a handful of measures should “give pause to equity managers,” <strong>and that “low volatility would not be a problem if not for strategies that increase leverage when volatility declines.” </strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>"In what is akin to the law of ‘communicating vessels,’ once inflows in bonds stop, funds are likely to start leaving other risky assets as well, including equities. The FOMC statement yesterday alleviated immediate fears – normalization of balance sheet will start ‘relatively soon,’ but only if ‘the economy evolves broadly as anticipated.’ This reasonably dovish stance pushes this market risk out for a few weeks (the next ECB meeting is Sep 7th, Fed Sep 20th, BoJ Sep 21st). </em><strong><em>This gives volatility sellers and other levered investors a limited window to position for a seasonal pickup in volatility and central bank catalysts in September."</em><br /></strong></p> </blockquote> <p>For the TL/DR crowed, picking up on an article posted here two days ago in which <a href="http://www.zerohedge.com/news/2017-07-25/if-vix-goes-bananas-what-it-might-look">MS explained what would happen if VIX went "<em>bananas</em></a>", Kolanovic writes that <strong>"strategies that boost leverage when volatility declines, such as option hedging, CTAs and risk-parity, share similar features with the dynamic ‘portfolio insurance’ of 1987,” </strong>which “creates a ‘stop-loss order’ that gets larger in size and closer to the current market price as volatility gets lower.”&nbsp; Additionally, growth in short-vol strategies suppresses both implied and realized volatility, and with volatility at all-time lows “<strong>we may be very close to the turning point</strong>.”</p> <p>* * * </p> <p><em>Here is his full note below</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Solid Equity Fundamentals but Threat of Low Volatility and Balance Sheet; Correlation Parallels to '94 and '01</strong></p> <p>&nbsp;</p> <p>It has been a quiet summer so far. In fact, over the past two weeks the VIX closed below 10 every day – marking a period of the lowest volatility in the history of option trading (since 1983). Equity markets are supported by positive fundamental developments in the US and abroad, but are facing two near-term known risks: extremely low volatility and prospects of central banks’ balance sheet reduction. These are discussed below.</p> <p>&nbsp;</p> <p><strong>Positive: Earnings fundamentals</strong></p> <p>&nbsp;</p> <p>Our current forecast for 2017 S&amp;P 500 earnings is $132, which we recently revised up. The ~12% YoY increase in S&amp;P 500 earnings is a result of both revenue growth and margin expansion. <strong>A significant positive development was the ~8% decline in the trade-weighted USD, and nearly half of that decline happened in the last month alone</strong>. Higher revenues also reflect stronger global GDP growth (3.1% for 2017 vs 2.6% last year, and 3.6% in Q2 vs 3.0% in Q1), higher interest rates and higher oil prices (relative to last year). In addition to improved macro fundamentals, there is a further upside risk should the Administration make progress on US corporate tax reform; for example, we are currently modeling $9 in earnings upside if the tax rate declines to 28%. These are all positives.</p> <p>&nbsp;</p> <p><strong>Risk: Extreme low volatility</strong></p> <p>&nbsp;</p> <p>It is safe to say that volatility has reached all-time lows, and this should give pause to equity managers. Low volatility would not be a problem if not for strategies that increase leverage when volatility declines. Many of these strategies (option hedging, Volatility targeting, CTAs, Risk Parity, etc.) share similar features with the dynamic ‘portfolio insurance’ of 1987. While these strategies include concepts like ‘risk control,’ ‘crisis alpha,’ etc., in various degrees they rely on selling into market weakness to cut losses. This creates a ‘stop loss order’ that gets larger in size and closer to the current market price as volatility gets lower. Additionally, <strong>growth in short volatility strategies in a self-fulfilling manner suppresses both implied and realized volatility. This in turn prompts other investors to increase leverage, and those that hedge with options lose out and eventually throw in the towel. The fact that we had many volatility cycles since 1983, and are now at all-time lows in volatility, indicates that we may be very close to the turning point.</strong></p> <p>&nbsp;</p> <p><strong>Risk: Extreme monetary accommodation</strong></p> <p>&nbsp;</p> <p>Global central banks are likely to commence reducing their balance sheet accommodation (level for Fed, and inflows for ECB/BOJ) in the near future. We wrote about the impact of this ‘receding tide’ on market volatility and valuations (see <a href="https://jpmm.com/research/content/GPS-2330000-0">here</a>). In what is akin to the law of ‘communicating vessels,’ once inflows in bonds stop, funds are likely to start leaving other risky assets as well, including equities. The FOMC statement yesterday alleviated immediate fears – normalization of balance sheet will start ‘relatively soon,’ but only if ‘the economy evolves broadly as anticipated.’ This reasonably dovish stance pushes this market risk out for a few weeks (the next ECB meeting is Sep 7th, Fed Sep 20th, BoJ Sep 21st). <strong>This gives volatility sellers and other levered investors a limited window to position for a seasonal pickup in volatility and central bank catalysts in September.</strong></p> <p>&nbsp;</p> <p>Taking into account the solid equity fundamentals, but increased risks that are building for September – we suggest investors hedge their long equity exposure. One can take advantage of two current extremes in the derivatives market: a record low level of option volatility, and <a href="https://jpmm.com/research/content/GPS-2354311-0">nearly record high level of option ‘skew</a>’ (relative price of out-of-the-money options). An equity hedge that incorporates these extremes is “1 by 2 put spreads.” Investors can buy one S&amp;P 500 2450 strike put and sell two 2300 strike put options that expire in January 2018 at nearly no cost (~20bps cost). This gives protection if the market drops below ~2450 (but also commits investor to double down below ~2150).</p> <p>&nbsp;</p> <p><strong>Decline in correlations and parallels to 1994 and 2001</strong></p> <p>&nbsp;</p> <p>Over the past year, correlation of stocks and sectors declined at an unprecedented speed and magnitude (see figure below). A similar decorrelation occurred on only two other occasions over the last 30 years: in 1993 and 2000. Both of those episodes led to subsequent market weakness and an increase in volatility (in 1994, and 2001). The current decline in market correlations started following the US elections and was largely driven by macro (rather than stock-specific) forces. Expectation of fiscal measures, deregulation and higher interest rates set in motion large equity sector and style rotations. For instance, the correlation between Financials and Technology dropped to all-time lows (similar level during the tech bubble). The correlation between equity styles also dropped (e.g., Value was lifted by rates, and Low Volatility was impacted negatively). Declining correlations pushed market volatility lower (see <a href="https://jpmm.com/research/content/GPS-2260005-0">here</a>), and the ~25% market rally further suppressed correlations and volatility. To investigate what are potential implications for the future price action, we look at the 1993 and 2000 decorrelation events.</p> <ul> <li><strong>1993/1994: </strong>Following the 1990-91 recession, interest rates declined and the market rallied. By late 1993, the market reached its highs (60% above recession lows) and volatility plummeted (VIX hit a record low on 12/22/1993). This also marked the low point of equity correlations. As interest rates increased in 1994, the market experienced a ~10% correction and posted a negative return for the year. Volatility and correlation increased, but the crisis was contained given the acceleration of growth (US GDP increased from 2.6% to 4.3% in the first half of 1994), and subsequent decline in bond yields.</li> <li><strong>2000/2001: </strong>Following the 1998 crisis (LTCM, Russia), the market recovered and continued to rally. When the internet bubble was inflated, the market was 60% above 1998 lows. This period was marked with a strong decoupling of sectors (e.g., tech vs. financials), distorted valuations, elevated volatility and gradually rising interest rates. It ended with the tech bubble in March 2001, which marked the low point of equity correlation and start of recession. Subsequently, the market declined ~30%, bottoming in late 2002.</li> </ul> <p>&nbsp;</p> <p><strong>The current episode of correlation decline shares some similar features with both 1993 and 2000. </strong>The decline of correlation was in part driven by the market rally and elevated valuations; after a period of falling, interest rates are expected to rise (as in 1993), sector valuations (e.g., Internet) and sector rotations play an outsized role in market price action (similar to 2000), and record low levels of volatility increased the level of risk taking (as in 1993). <strong>Normalization of monetary policy will most likely lead to an increase of correlations and volatility, and that will at some point result in market weakness. </strong>While it seems that the 1993/1994 analogy is more appropriate (implying an orderly price action), <strong>investors should be aware of hidden leverage and tail risk of a more significant correction, such as the one in 2001.</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/kolan%20july%202017_0.jpg" width="500" height="392" /></p> </blockquote> <p>* * * </p> <p>Not scary enough? Then read: <strong><a href="http://www.zerohedge.com/news/2017-07-25/if-vix-goes-bananas-what-it-might-look">"If The VIX Goes Bananas" This Is What It Will Look Like</a></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="593" height="465" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/kolan%20july%202017.jpg?1501177849" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/we-may-be-very-close-turning-point-selloff-blamed-note-jpms-marko-kolanovic#comments Alpha Applied mathematics Bank of Japan Bond Business Central Banks Equity Markets ETC European Central Bank Finance Financial ratios Financial risk fixed Leverage Market risk Mathematical finance Monetary Policy Money Options Price Action Recession S&P 500 Technical analysis US Federal Reserve VIX Volatility Volatility Thu, 27 Jul 2017 17:52:07 +0000 Tyler Durden 600622 at http://www.zerohedge.com UBS: "One Of The Most Surprising Charts Of The Year Got Slightly Less Surprising" http://www.zerohedge.com/news/2017-07-27/ubs-one-most-surprising-charts-year-got-slightly-less-surprising <p>Having emerged as one of the most macro saavy UBS strategists, Arend Kapteyn - who several months ago first highlighted the <a href="http://www.zerohedge.com/news/2017-06-12/ubs-has-some-very-bad-news-global-economy">unprecedented crash in China's credit </a>impulse - points out something he first highlighted several months ago: a "surprising" paradox in which despite "signs of economic strength" across the developed markets, these same markets had yet to register any pick up in imports, or as Kapteyn puts it, <strong>"one of the most surprising charts of the year, for us at least, has been the one below: </strong>despite the strength of growth in the Eurozone, Japan and other parts of DM, there had literally been zero pick up in aggregate DM import volume growth through April."</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/import%20volumes.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/import%20volumes_0.jpg" width="500" height="330" /></a></p> <p> In fact, he continues, "it appeared as if the entire global trade volume recovery was being driven by emerging markets<strong>. And a good chunk of that was China, where the collapse in the credit impulse and the property market slowdown is already leading to less importintensive growth </strong>(i.e. some rotation away from investment to consumption). <strong>That's a big problem if you're a reflationary optimist: perhaps the most important 'hard' data point that seemed to be confirming the strength in the 'soft' surveys looked to be built on very thin ice</strong>." </p> <p>That changed this week, when UBS received the latest, May data.</p> <p>According to CPB's Global Trade Monitor released Tuesday, DM import demand jumped higher in May (2.98%MoM) — the largest monthly jump since May 2010—and corrected somewhat the earlier weakness. There is still a large EM/DM gap but now less extreme, largely thanks to an improvement in the Eurozone import data. There was a similarly large gap back in 2013 but that was in the midst of the Eurozone crisis, when DM faced a massive negative fiscal impulse, and before EM growth had been dragged down by a negative terms of trade shock. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/UBS%20chart%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/UBS%20chart%202_0.jpg" width="500" height="408" /></a></p> <p>The problem, however, is that as UBS writes, the global trade recovery is right at the point where export deflators are turning from tailwinds to headwinds: "that effect should dominate the volume rotation from EM to DM and we expect nominal trade (values) to lose momentum in H2-2017."</p> <p>So what happens next, and <strong>why if the DM import volume demand is finally improving (with some rotation from EM to DM), is UBS "still gloomy about the global trade outlook</strong>?" Here is the explanation: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Largely because the bulk of improvement in EM exports since the -15%YoY trough (in August 2015) was being driven by a diminished drag from export deflators, not volumes (figure 8 &amp; 9), and those deflators are going to turn into headwinds.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/ibs%20chart%203.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/ibs%20chart%203_0.jpg" width="500" height="192" /></a></p> <p>&nbsp;</p> <p>Figure 4 shows how a simple model of global commodity prices (CRB Metals index, CRB food index, and Brent oil) and the USD NEER can explain 83% of the variation in the global export price deflator.</p> <p>&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/ibs%20chart%204_0.jpg" width="500" height="205" /></p> <p>&nbsp;</p> <p>Figure 5 shows the breakdown by component: two thirds of the 2014-2016 trade weakness was simply a USD effect and the other one third a simultaneous decline in food, metals and oil prices. As those drags diminished we had a large nominal recovery but unless we see materially more USD weakness or commodity price strength the deflators will ultimately converge back to zero. <strong>We estimate that we are already past 'peak export deflator support</strong>' (our model suggest an imminent 6% drop in global export prices), though we should get a last gasp deflator recovery again later this year thanks to food price and USD base effects.</p> <p>&nbsp;</p> <p>After that, ceteris paribus, global trade growth should fall back to mid-single digit range, unless we finally see the DM import demand recovery becoming more broad-based and more investment intensive.</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="804" height="531" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/import%20volumes.jpg?1501177210" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/ubs-one-most-surprising-charts-year-got-slightly-less-surprising#comments Business China CRB Deflator Economic data Economy European debt crisis Eurozone Finance Financial crises Food prices Inflation Japan Money Price indices Price of oil recovery UBS Thu, 27 Jul 2017 17:41:23 +0000 Tyler Durden 600620 at http://www.zerohedge.com VIX Spikes To 11 As Equity Market Liquidity Dries Up http://www.zerohedge.com/news/2017-07-27/vix-spikes-above-11-equity-market-liquidity-dries <p><strong>The plunge in US equity markets continues</strong> - led by big tech names...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq3_0.jpg" style="width: 600px; height: 309px;" /></a></p> <p>&nbsp;</p> <p>Sending VIX soaring to 11 for the first time in 3 weeks.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq1.jpg"><img height="310" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>As stocks slip, and VIX spikes, liquidity is also disappearing from futures markets, <strong><em>setting ETFs up for a potentail flash-crash...</em></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq.jpg"><img height="424" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq_0.jpg" width="600" /></a></p> <p><a href="https://twitter.com/nanexllc/status/890624867430653953"><em>Source: Nanex</em></a></p> <p>Trannies are down over 3%...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/27/20170727_liq2_0.jpg" style="width: 600px; height: 363px;" /></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="1146" height="591" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170727_liq3.jpg?1501177074" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/vix-spikes-above-11-equity-market-liquidity-dries#comments Economic history of the Netherlands Economy Equity Markets Finance Financial markets flash Futures contract Market liquidity Mathematical finance Money Nanex Stock market Technical analysis VIX Thu, 27 Jul 2017 17:36:04 +0000 Tyler Durden 600619 at http://www.zerohedge.com The Toxic Fruit Of Financialization: Risk Is For Those At The Bottom http://www.zerohedge.com/news/2017-07-27/toxic-fruit-financialization-risk-those-bottom <p><a href="http://charleshughsmith.blogspot.com/2017/07/the-toxic-fruit-of-financialization.html"><em>Authored by Charles Hugh Smith via OfTwoMinds blog,</em></a></p> <p><em>Those who have pushed the risk down the wealth-power pyramid are confident the Federal Reserve will continue to limit the risks of speculative financialization. </em></p> <p><strong>One of the most pernicious consequences of financialization is the shifting of risk from the top of the wealth-power pyramid to the bottom:</strong> those who benefit the most from financialization&#39;s leveraged, speculative credit bubbles protect themselves from losses while those at the bottom of the pyramid (the bottom 99.5%) face the full fury of financialization&#39;s formidable risk.</p> <p>Longtime correspondent Chad D. and I recently exchanged emails exploring how the higher debt loads and higher interest payments of financialization inhibits people at the bottom of the wealth-power pyramid (i.e. debt-serfs) from taking risks such as starting a small business.</p> <p>But this is only one serving of financialization&#39;s toxic banquet of risk-related consequences. Chad summarized how <strong>those at the apex of the wealth-power pyramid protect themselves from risk and losses.</strong></p> <p><em>At the top levels of the pyramid, members in those groups collect way more interest than they pay out and at the very top, they get a ton of interest and pay little to none. The people at the top can take all sorts of risk, because of this dynamic and further, they also usually have a heavy influence on the financial/political machinery, so they get bailed out by taxpayers when their investments go bad. In addition, because their influence extends to the criminal justice system, they are able to commit fraud and at the same time neutralize regulators and prosecutors, thereby escaping any ramifications from their excessive risk taking and in many cases massive fraud. </em></p> <p><strong>As Chad observed, the wealthy own the income streams from debt (bonds, etc.), while everyone else owes the interest and principal due on debt.</strong> As this chart shows, the wealthy own business equity and financial securities and have a modest slice of debt. The bottom 90% owe most of the debt, and their primary asset is the family home-- an asset that doesn&#39;t generate income while it generates interest income for those who own the mortgage. In other words, it&#39;s less an investment than a form of consumption-- especially when the current housing bubble deflates.</p> <p><img align="middle" border="0" class="wide" src="http://www.oftwominds.com/photos2016/ownership-assets2-16.jpg" /></p> <p><strong>The asymmetry of risk and exposure to loss resulting from financialization is about to become consequential.</strong> Financialization has reached the top of the S-curve and is now in the decline phase. As noted on this graph, what worked so effortlessly in the boost phase of financialization not only no longer works, it actively boosts the risks of sudden, catastrophic losses.</p> <p><img align="middle" border="0" class="wide" src="http://www.oftwominds.com/photos2017/Scurve2-17.png" /></p> <p><strong>Those who have pushed the risk down the wealth-power pyramid are confident the Federal Reserve will continue to limit the risks of speculative financialization.</strong> The S-curve is a pattern of Nature. If you&#39;re confident the Fed is now the ultimate power in the Universe, then you&#39;re betting that the Fed and Treasury will always absorb all the risk and all the losses, with zero consequences.</p> <p>The S-Curve suggests that bet isn&#39;t as low-risk as those at the top of the wealth-power pyramid currently believe.</p> <p><img align="middle" border="0" class="wide" src="http://www.oftwominds.com/photos10/wealth-pyramid2.gif" /></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="384" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170727_S.jpg?1501155261" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/toxic-fruit-financialization-risk-those-bottom#comments Bottom of the pyramid Business Capital Economic bubble Economy ETC Federal Reserve Finance Financial crises Financial risk Financialization Housing Bubble Money None Risk US Federal Reserve Thu, 27 Jul 2017 17:20:00 +0000 Tyler Durden 600580 at http://www.zerohedge.com Far Left Militia Training For Guerrilla Warfare Using ‘Sabotage, Kidnapping, Executions, and Terrorism’ http://www.zerohedge.com/news/2017-07-27/far-left-militia-training-guerrilla-warfare-using-%E2%80%98sabotage-kidnapping-executions-an <p><em><a href="https://farleftwatch.com/" target="_blank">Far Left Watch</a></em> is out with a fascinating read on left-wing militant groups training for violent civil war with conservatives. Reprinted with permission.</p> <p>-----</p> <p><img width="600" style="margin-right: auto; margin-left: auto; display: block;" src="https://ibankcoin.com/zeropointnow/files/2017/07/redneckrevolt2-1.png" height="301" /></p> <p>Right wing radio personality, Dana Loesch and The National Rifle Association recently came under fire for launching a “controversial” ad. There was an immediate backlash from <a href="http://www.motherjones.com/kevin-drum/2017/06/nra-declares-war-on-half-of-america/" target="_blank">numerous left leaning publications</a> claiming that the video was a call to violence. Interestingly enough, the recent spike in political violence has come <a href="http://www.miamiherald.com/news/nation-world/national/article156285584.html" target="_blank">overwhelmingly from the left</a>. Even more concerning is the the growth of far left organizations openly advocating for “armed struggle”, especially considering the recent <a href="https://www.nytimes.com/2017/06/14/us/steve-scalise-congress-shot-alexandria-virginia.html" target="_blank">targeted shooting</a> of Republican House Majority Whip Steve Scalise and three others by a deranged left wing activist.</p> <p>One of the largest and fasted growing organizations that fits this description is <a href="https://www.redneckrevolt.org/about" target="_blank">Redneck Revolt</a>, a self described “above ground militant formation” founded in June of 2016 that claims to have 30+ vetted branches nationwide.</p> <p><img class=" size-full wp-image-156 aligncenter" style="border: 0px currentColor; border-image: none; height: auto; clear: both; margin-right: auto; margin-left: auto; display: block; max-width: 100%; box-sizing: inherit;" src="http://ibankcoin.com/zeropointnow/files/2017/07/30chapters.png" alt="30chapters" /></p> <p>Redneck Revolt’s <a href="https://www.redneckrevolt.org/principles" target="_blank">organizing principles</a> mirror much of what you would see on any other far left organizing platform. They begin with their very reasonable, very east to support, opposition to “white supremacy”. They then dive into class theory, anti-capitalist, and anti-wealth rhetoric that could have been copied directly from The Communist Manifesto. And finally, they wrap up with open calls for “militant resistance” and “revolution”.</p> <p>Since their inception, Redneck Revolt has been very busy <a href="https://shadowproof.com/2017/06/20/redneck-revolt-builds-anti-racist-anti-capitalist-movement-working-class-whites/" target="_blank">recruiting at gun shows</a> and community events, <a href="https://video.vice.com/en_us/video/this-armed-group-is-trying-to-be-the-new-face-of-left-wing-activism/59248b03880725b52fcc2e59" target="_blank">advocating for class war</a>, contributing to the <a href="https://itsgoingdown.org/author/redneckrevolt/" target="_blank">far left anarchist website It’s Going Down</a>, and conducting <a href="https://www.redneckrevolt.org/single-post/2017/03/28/PHOENIX-MAGA-MARCH-REPORTBACK" target="_blank">armed anti-Trump demonstrations</a>.</p> <p><img class=" size-full wp-image-157 alignnone" style="border: 0px currentColor; border-image: none; height: auto; margin-right: auto; margin-left: auto; display: block; max-width: 100%; box-sizing: inherit;" src="http://ibankcoin.com/zeropointnow/files/2017/07/reportback.png" alt="reportback" /></p> <p>But what’s most alarming are the <a href="http://archive.is/xgfll" target="_blank">resources</a> they provide on their website. They promote several PDFs that endorse “armed struggle” and even offer a 36 page “Mini-Manual Of The Urban Guerrilla” (bottom right of resource page) which pictures left-wing militants using RPGs and outlines tactics for guerrilla warfare including sections on “sabotage”, “kidnapping”, “executions”, “armed propaganda”, and “terrorism”.</p> <p><img class=" size-full wp-image-164 aligncenter" style="border: 0px currentColor; border-image: none; height: auto; clear: both; margin-right: auto; margin-left: auto; display: block; max-width: 100%; box-sizing: inherit;" src="https://farleftwatchblog.files.wordpress.com/2017/07/resources.png?w=712" alt="resources" /></p> <p><img class=" size-full wp-image-155 aligncenter" style="border: 0px currentColor; border-image: none; height: auto; clear: both; margin-right: auto; margin-left: auto; display: block; max-width: 100%; box-sizing: inherit;" src="https://farleftwatchblog.files.wordpress.com/2017/07/guerrilla-warfare1.png?w=712" alt="Guerrilla Warfare" /></p> <p><img class=" size-full wp-image-165 aligncenter" style="border: 0px currentColor; border-image: none; height: auto; clear: both; margin-right: auto; margin-left: auto; display: block; max-width: 100%; box-sizing: inherit;" src="https://farleftwatchblog.files.wordpress.com/2017/07/execution.png?w=712" alt="execution" /></p> <p><img class=" size-full wp-image-166 aligncenter" style="border: 0px currentColor; border-image: none; height: auto; clear: both; margin-right: auto; margin-left: auto; display: block; max-width: 100%; box-sizing: inherit;" src="https://farleftwatchblog.files.wordpress.com/2017/07/terrorism.png?w=712" alt="terrorism" /></p> <p>That’s right. A far left militia claiming to have 30+ vetted branches is providing training materials for violent guerrilla warfare and all of this information is publicly available on their own website. Not surprisingly, the same left-leaning publications that were outraged by the NRA ad I mentioned earlier have not reported on this publicly available information. In fact, some of these publications have even championed the growth of the far left militia movement. In June, Mother Jones published an article <a href="http://archive.is/URSte" target="_blank">praising Redneck Revolt and other left-wing militants</a>. In July, The Guardian published an article with <a href="http://archive.is/7zo9m" target="_blank">similar sentiments</a>.</p> <p>The mission of Far Left Watch is to investigate, expose, and combat far left extremism. Please share this article via Twitter, Facebook, etc. and encourage friendly media and YouTube content creators to report on this breaking information.</p> <p>If you have any tips on far left activities please submit them <a href="https://farleftwatch.com/contact/" target="_blank">here</a>.</p> http://www.zerohedge.com/news/2017-07-27/far-left-militia-training-guerrilla-warfare-using-%E2%80%98sabotage-kidnapping-executions-an#comments Activism Definitions ETC Guerrilla warfare Militant Militia National Rifle Association NRA Politics Structure Twitter Twitter War Thu, 27 Jul 2017 17:19:45 +0000 ZeroPointNow 600618 at http://www.zerohedge.com Paulson Shutters Long-Short Equity Fund Amid Massive Healthcare Losses http://www.zerohedge.com/news/2017-07-27/paulson-shutters-long-short-equity-fund-amid-massive-healthcare-losses <p>After gaining instant fame with his massive subprime bet back in 2008/2009, John Paulson can't seem to buy a clue of late.&nbsp; Over the past couple of years, a series of strategic missteps have resulted in abysmal returns and increasing concern among investors that Paulson may have been nothing more than a "one-trick pony" all along.</p> <p>Of course, as <a href="http://www.zerohedge.com/news/2016-11-04/john-paulson-had-another-terrible-year-how-everyone-else-did">we pointed out back in November</a>, <strong>one of the biggest of those 'missteps' seems to have been the creation of a $500 million, long-short equity fund focused on healthcare about two years ago.&nbsp; </strong></p> <p>The strategy seemed simple enough at the time: make a massive, Paulson-esque bet on the consolidation of large multi-national pharmaceutical businesses, hedge that bet with bearish wagers on the broader markets and sit back and wait for the money to flow in just like with the subprime bet.&nbsp; Unfortunately, exactly the opposite happened in 2016 with the broader markets advancing while Paulson's largest pharma holdings completely collapsed anywhere from 30% - 85%.&nbsp; Oops.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/27/2017.07.27 - Healthcare Stocks.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/07/27/2017.07.27%20-%20Healthcare%20Stocks_0.jpg" style="width: 600px; height: 371px;" /></a></p> <p>&nbsp;</p> <p>Alas, it seems that Paulson is finally willing to admit what the market has been telling him for quite some time now, namely that he just might have been exactly wrong on his healthcare bet. &nbsp; As <a href="https://www.bloomberg.com/news/articles/2017-07-27/paulson-winds-down-long-short-equity-fund-amid-strategy-refocus">Bloomberg </a>points out today, this <strong>inevitable capitulation from Paulson has resulted in a "re-focusing" of his firm and the shuttering his first ever separately managed fund.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Paulson &amp; Co., the investment firm that shot to fame betting on the collapse of the U.S. housing market, is <strong>closing its 2-year-old long-short equity fund in an effort to shift strategies after a steep drop in assets.</strong></p> <p>&nbsp;</p> <p><strong>“We are re-focusing the funds on our core areas of expertise in merger arbitrage and distressed credit, where our assets have been growing,”</strong> founder John Paulson said in a letter to investors seen by Bloomberg News. “We thank the long-short team for their efforts on behalf of the company.”</p> <p>&nbsp;</p> <p>Amid the changes, Jim Wong, the head of the firm’s investor relations, is leaving after 14 years, Paulson told clients in its letter. He will be succeeded on Aug. 1 by Tina Constantinides, who’s been with the company for 13 years.</p> </blockquote> <p>Of course, the healthcare fund in question, the Paulson Long/Short Fund, <strong>was celebrated just over two years ago when it was launched with $500 million in seed capital.&nbsp;</strong> Guy Levy was named the sole portfolio manager of the fund which marked the first (and we suspect the last) time Paulson granted autonomy over a separately manged pool of capital under his umbrella of funds.&nbsp; Per <a href="http://www.cnbc.com/2015/06/26/john-paulson-launches-health-care-fund.html">CNBC</a> back in June 2015:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Billionaire investor John Paulson is looking to make more money on health care.</strong></p> <p>&nbsp;</p> <p>Hedge fund firm Paulson &amp; Co. is launching the Paulson Long/Short Fund to initially focus on health care, pharmaceutical, and related technology and consumer sector investments, according to a letter sent to clients obtained by CNBC.com. The firm, which runs approximately $20 billion overall, is seeding the fund with $500 million.</p> <p>&nbsp;</p> <p>Guy Levy, Paulson's health-care expert, will be portfolio manager of the new fund, according to the communication.</p> <p>&nbsp;</p> <p>"Guy's talent and expertise in health care, pharmaceutical and related sector investing have added significantly to our performance over the past five years, giving me confidence in his abilities to lead this new fund," John Paulson wrote in the letter.</p> </blockquote> <p>While the strategy to "<strong>make more money on health care"</strong> was genius, if we understand it correctly, apparently it didn't go exactly to plan...<strong><br /></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="568" height="306" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/Paulson%202.JPG?1501170037" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/paulson-shutters-long-short-equity-fund-amid-massive-healthcare-losses#comments Alternative investment management companies Bloomberg News Business Economy of the United States Finance Health Hedge fund Henry Paulson Housing Market Jeffrey Tarrant John Paulson John Paulson Money Paulson Paulson & Co. Paulson Long/Short Fund Troubled Asset Relief Program Thu, 27 Jul 2017 17:15:00 +0000 Tyler Durden 600614 at http://www.zerohedge.com