http://www.zerohedge.com/fullrss2.xml/news/grant-williams-simplicity-owning-gold en Here's How Government Pension Funds Are Trying To Close Their $7 Trillion Funding Gap http://www.zerohedge.com/news/2017-08-16/heres-how-government-pension-funds-are-trying-close-their-7-trillion-funding-gap <p><a href="https://www.sovereignman.com/trends/heres-how-a-few-government-pension-funds-are-trying-to-close-their-7-trillion-funding-gap-22250/"><em>Authored by Simon Black via SovereignMan.com,</em></a></p> <p><strong>There may perhaps be no other group of investors that&rsquo;s more DESPERATE today than pension funds.</strong></p> <p>Pensions, of course, are the giant funds responsible for paying out retirement benefits to workers.</p> <p>The idea is that both the employer and the employee typically contribute a set percentage of the employee&rsquo;s salary throughout his or her career with the promise that, upon retirement, he or she will receive a fixed monthly payment.</p> <p>Many state and local governments rely on these &lsquo;defined benefit&rsquo; pension pension plans, as do a handful of large corporations.</p> <p><strong>The reason that these pension fund are so desperate is that the vast majority of them are underfunded.</strong></p> <p>We talk a lot of about how Social Security is rapidly running out of money.</p> <p>But according to Credit-rating agency Moody&rsquo;s,<u><strong> state and local government pension plans are also $7 trillion <em>short in funding.</em></strong></u></p> <p>And corporate pension funds are underfunded by $375 billion.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_pension.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_pension.png" style="width: 600px; height: 313px;" /></a></p> <p><u><strong>The reason is quite simple: </strong></u><strong><em>investment returns are simply too low.</em></strong></p> <p>Pension fund managers invest all of their funds&rsquo; cash in various assets&ndash; stocks, bonds, real estate, etc. with the hope of generating safe investment returns.</p> <p>And that&rsquo;s precisely the problem.</p> <p><strong>With interest rates still hovering near the lowest levels they&rsquo;ve ever been in 5,000+ years of recorded human history, it&rsquo;s very difficult to achieve a significant investment return without taking on substantial risk.</strong></p> <p>Most pension funds require a minimum annual investment return of between 7% to 8% in order to stay solvent and be able to pay out their beneficiaries over the long-term.</p> <p>California Public Employee&rsquo;s Retirement System (CalPERS), for example, is one of the largest pension funds in the world.</p> <p><strong>And over the last 10 years CalPERS&rsquo; investment return has averaged just 5.1%. They need 7% to stay afloat.</strong></p> <p>SAFELY earning 7% is a difficult task today: government bonds in the US yield around 2%. Even junk bonds, which are ultra-risky, yield just 5%.</p> <p>Real estate returns are also falling, with the average apartment building yielding between 3-4% according to the National Association of Real Estate Investment Trusts.</p> <p>In fact the biggest apartment-focused real estate investment trust, Equity Residential, earns less than 3%.</p> <p><u><strong>Bottom line, it&rsquo;s EXTREMELY difficult for very large funds to safely earn 7-8%.</strong></u></p> <p>And this matters&hellip; because they&rsquo;re responsible for YOUR retirement.</p> <p>I write a lot about the need to have a good &lsquo;Plan B&rsquo;&hellip; a backup plan in case the primary option doesn&rsquo;t work out.</p> <p><strong>Well, considering that most federal, state, local, and corporate pensions are VASTLY underfunded AND consistently fail to meet their investment targets, it seems pretty obvious that Plan A for retirement isn&rsquo;t going to work out.</strong></p> <p>Having a retirement Plan B means getting creative and taking matters into your own hands.</p> <p>Part of this includes setting up a better retirement structure.</p> <p>For instance, a self-directed SEP IRA and solo(k) both allow contributing nearly 10x more each year for your retirement than a conventional structure.</p> <p>Moreover, the right retirement structure provides far greater flexibility in where you can invest your savings.</p> <p>Instead of being tethered to overpriced stocks, bonds, and mutual funds, a good retirement structure allows investment in alternative assets like international real estate or cryptocurrency.</p> <p>One type of asset to consider for your retirement is <strong>royalties.</strong></p> <p>A royalty is money that other people pay you in order to use an asset that you own.</p> <p>For example, inventors who own patents receive royalties whenever big companies use their ideas.</p> <p>Songwriters collect royalties whenever their music is streamed on Spotify or used in a TV commercial.</p> <p>Investors who own mineral rights on a property collect royalties whenever a mining company pulls gold or silver out of the ground from that property.</p> <p><strong>Warren Buffett compares a royalty to owning a tollbooth:</strong> after you make an initial investment to build the toll road, the upkeep is minimal.</p> <p>But you collect cash forever as vehicles pay you to use it.</p> <p><u><strong>Royalties are starting to become more popular investments, especially among pension funds.</strong></u></p> <p><strong>Last month the Canada Pension Plan Investment Board committed up to $325 million for a portion of the future royalties in Venetoclax, a cancer drug.</strong></p> <p>Also in July, mining giant Glencore announced it was in talks with Ontario Teachers&rsquo; Pension Plan for a 50:50 venture for its royalty assets (including a royalty for the Antamina copper-zinc mine in Peru, which was expected to fetch around $250 million).</p> <p><strong>Lots of funds have also been launched specifically to invest in music royalties.</strong></p> <p>Round Hill Music Royalty Fund owns rights to more than 4,000 songs from artists like Frank Sinatra, the Beatles, Aerosmith and Billie Holiday.</p> <p>Specifically, they own the rights to <em>Land of a Thousand Dances</em>, a song written by Chris Kenner and popularized by Wilson Pickett in 1966.</p> <p>The song appears in the movie Forrest Gump and various video games, and it generates between $300,000-$400,000 a year, according to the fund&rsquo;s CEO.</p> <p>Another hedge fund, Shamrock Capital, raised $250 million last year to buy the rights to music, movies, TV shows and even video games.</p> <p>I&rsquo;ve even done this myself, buying rights to a country music song.</p> <p>So anytime the song is streamed on Spotify or downloaded in iTunes, I received a royalty.</p> <p>And while the earnings are by no means guaranteed, music royalties can often earn between 10% to 25% or more each year.</p> <p>That&rsquo;s hard to find in today&rsquo;s investment environment.</p> <p><strong>And while the big institutional money is coming into royalties, there are still plenty of opportunities for the small investor. It just takes a little bit of digging.</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="600" height="313" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170816_pension.png?1502908467" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/heres-how-government-pension-funds-are-trying-close-their-7-trillion-funding-gap#comments B+ Business CalPERS Canada Pension Plan Canada Pension Plan Investment Board Economy ETC Fail Finance Financial markets Financial services fixed Funding Gap Glencore Hill Music Royalty Fund Labor Money National Association of Real Estate Investment Trusts Pension Pension fund Pensions Private equity Real estate Royalty fund Social Issues Warren Buffett Wed, 16 Aug 2017 19:40:00 +0000 Tyler Durden 601799 at http://www.zerohedge.com Venezuelans Face 25 Years In Prison For "Hate Or Intolerance" http://www.zerohedge.com/news/2017-08-16/venezuelans-face-25-years-prison-hate-or-intolerance <p>In a harbinger of what - for various reasons - may be coming to the US, Venezuela's brand new "<a href="http://www.dw.com/en/venezuelas-new-constituent-assembly-declares-itself-all-powerful/a-40017220">all-powerful</a>" constituent assembly <strong>is set to pass a bill that will jail anyone who expresses "hate or intolerance" for up to 25 years, </strong>a measure which the local opposition - and everyone else - is certain will be used by Maduro's regime to silence and punish all dissent.</p> <p>"The question is whether this is the peace he's looking for: <strong>creating a law that gives him and his obedient supreme court judiciary powers to lock up dissidents for 25 years," </strong>Tamara Taraciuk, head Venezuela researcher for Human Rights Watch, <a href="http://www.reuters.com/article/us-venezuela-politics-idUSKCN1AW2A1?il=0">told Reuters in a Wednesday telephone interview</a>. To be sure, less extreme versions of this proposal have cropped up across the developed world, where while "hate or intolerance" - as defined by some arbitrary but very powerful authority - will result if not in jail time, then certainly in loss of freedom of speech or worse. </p> <p>As for Venezuela, the "the proposal includes incredibly vague language that would allow them to jail anyone for almost anything," she added, a blueprint for how crackdown against dissent in "developed" countries may materialize.&nbsp; It gets worse: straight out of "1984", <strong>Venezuela's assembly is scheduled later on Wednesday to empanel a "Truth Commission" headed by Maduro loyalist and former Foreign Minister Delcy Rodriguez, to prosecute those responsible for violent anti-government protests</strong>. </p> <p>Over the past month, in his attempt to copycat Turkey's president Erdogan and seize supreme power, President Nicolas Maduro installed a 545-member assembly stacked with Socialist Party allies earlier this month, who provide him with a greenlight to do virtually anything. The president defends the new legislative superbody as Venezuela's only hope for peace and prosperity.</p> <p>Separately, local rights group Penal Forum estimated that Maduro's government was holding 676 political prisoners as of Wednesday, a number that could rise once a crackdown against hate crimes - however the ruling regime defines these - becomes law. For now the definition is simple: no disagreement with Maduro:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"Anyone who goes out into the streets to express intolerance and hatred will be captured and will be tried and punished with sentences of 15, 20, 25 years of jail," Maduro recently told the assembly, drawing a standing ovation. </p> </blockquote> <p>Meanwhile the assembly has wasted no time in usurping power. Just days after firing Venezuela's top prosecutor Luisa Ortega, the assembly on Tuesday ordered that cases of protesters detained this year be held in civilian rather than military courts. The Geneva-based International Commission of Jurists said in a report on Wednesday that Ortega's dismissal "removes one of the last remaining institutional checks on executive authority." </p> <p>As for Ortega, she is likely going to prison too: the country's new chief prosecutor, Maduro's former "human rights ombudsman" Tarek Saab, on <strong>Wednesday outlined corruption accusations against his predecessor Ortega, her husband and members of her team of prosecutors. </strong>She is unlikely to find any support in the current regime: the opposition, in control of the traditional congress, boycotted the election of the assembly, <strong>meaning that all candidates for the new body were Maduro allies</strong>. <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="696" height="359" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/maduro%20teaser%20red.jpg?1502911482" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/venezuelans-face-25-years-prison-hate-or-intolerance#comments 2014–17 Venezuelan protests Americas Corruption Greenlight Human Rights Watch International Commission of Jurists Maduro's government Moors Nicolás Maduro Politics Politics of Venezuela Reuters Saab Socialist Party Tarek Saab Truth Commission Venezuela Venezuelan Constitutional Assembly election Venezuelan protests Wed, 16 Aug 2017 19:25:38 +0000 Tyler Durden 601803 at http://www.zerohedge.com Iran's Supreme Leader Mocks Trump In Tweet About Charlottesville http://www.zerohedge.com/news/2017-08-16/irans-supreme-leader-mocks-trump-tweet-about-charlottesville <p>At least two times over the past week, Iran's military has seemingly provoked the U.S. Navy by using its Sadegh drones to shadow the USS Nimizt aircraft carrier operating in the Persian Gulf while creating a "dangerous" operating environment for F/A-18 pilots in the area (we noted the encounters <a href="http://www.zerohedge.com/news/2017-08-08/iranian-drone-flies-within-100-feet-us-f-18-persian-gulf">here </a>and <a href="http://www.zerohedge.com/news/2017-08-14/uss-nimitz-reports-another-dangerous-interraction-iranian-drone">here</a>). &nbsp; </p> <p>But this morning, Iran's supreme leader Ayatollah Ali Khamenei decided to take a shot at the U.S. via a medium much more familiar to the Trump White House: Twitter.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"If US has any power,they better manage their country,tackle <a href="https://twitter.com/hashtag/WhiteSupremacy?src=hash">#WhiteSupremacy</a> rather than meddle in nations’ affairs. <a href="https://twitter.com/hashtag/Charlottesville?src=hash">#Charlottesville"</a></strong></p> </blockquote> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">If US has any power,they better manage their country,tackle <a href="https://twitter.com/hashtag/WhiteSupremacy?src=hash">#WhiteSupremacy</a> rather than meddle in nations’ affairs. <a href="https://twitter.com/hashtag/Charlottesville?src=hash">#Charlottesville</a><br />13/4/94 <a href="https://t.co/x3fE5qMcNj">pic.twitter.com/x3fE5qMcNj</a></p> <p>— Khamenei.ir (@khamenei_ir) <a href="https://twitter.com/khamenei_ir/status/897810749309026305">August 16, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>Of course, this is rich coming from a guy who referred to Israel as a <strong>"cancerous tumor of a state" that should be "annihilated"</strong> and <strong>constantly subjects female activists to prison time and "lashings"</strong> for having the audacity to speak out about gender bias, an action which Khamenei says only serves to <strong>"corrupt the role of women in society."</strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Ayatollah Khamenei: Israel Is A Hideous Entity In the Middle East Which Will Undoubtedly Be Annihilated <a href="http://twitpic.com/2kkrj6" title="http://twitpic.com/2kkrj6">http://twitpic.com/2kkrj6</a></p> <p>— Khamenei.ir (@khamenei_ir) <a href="https://twitter.com/khamenei_ir/status/22815824658">September 2, 2010</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>But, we're sure the irony will be lost on CNN when they inevitably decide to use the Supreme Leader's tweet at some point today to mock Trump.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="592" height="342" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.08.16%20-%20Iran%201.JPG?1502897718" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/irans-supreme-leader-mocks-trump-tweet-about-charlottesville#comments Ali Khamenei Anti-Americanism Government of Iran Iran Iran Iran's military Islam Israel Middle East Persian Gulf Politics Politics of Iran Prison Time Theocrats Twitter Twitter United States Navy White House White House Wed, 16 Aug 2017 19:12:13 +0000 Tyler Durden 601784 at http://www.zerohedge.com Is Historically Low Volatility About To Surge? http://www.zerohedge.com/news/2017-08-16/historically-low-volatility-about-surge <p><a href="http://www.acting-man.com/?p=51145"><em>Authored by Dmitri Speck via Acting-Man.com,</em></a></p> <h3><span style="text-decoration: underline;"><strong>Suspicion Asleep</strong></span></h3> <p>You have probably noticed it already: <strong><em>stock market volatility has recently all but disappeared. </em></strong>This raises an important question for every investor: Has the market established a permanent plateau of low volatility, <em><strong>or is the current period of low volatility just the calm before the storm?</strong></em></p> <p>&nbsp;</p> <p style="text-align: center;"><a href="http://www.acting-man.com/blog/media/2017/08/suspicion-asleep-2.jpg" rel="noopener" target="_blank"><img class="aligncenter wp-image-51151" src="http://www.acting-man.com/blog/media/2017/08/suspicion-asleep-2-1024x621.jpg" style="width: 600px; height: 364px;" /></a></p> <p style="text-align: center;">All quiet on the VIX front&hellip; what can possibly happen? [PT] &ndash; click to enlarge.</p> <p><span id="more-51145">&nbsp;</span></p> <p><strong>When such questions regarding future market trends arise, it is often worthwhile to examine market history.</strong></p> <p>For the purpose of analyzing volatility I have used one of the longest time series available, namely the Dow Jones Industrial Average (DJIA) from 1915 onward &ndash; which represents more than a century of price history. In order to improve comparability, I have removed Saturdays, which used to be trading days in the distant past. I have calculated historical volatility as rolling and overlapping time periods of 21 trading days (equal to approximately one calendar month).</p> <p>&nbsp;</p> <h3><u><strong>By the Standards of the Past 100 Years Volatility is Extremely Low </strong></u></h3> <p>On August 7 volatility measured in this way had declined to just 3.99 percent, which is a very low level indeed. By way of comparison, over the entire period of 25,734 days, volatility amounted to 15.05 percent on average!</p> <p><strong>However, this isn&rsquo;t the first time it stood below the level of 4 percent. Occasionally this has already happened in the past as well, for instance in 1944, 1964/65, 2011/12 and 2014.</strong></p> <p>The chart below shows the rolling 21-day volatility of the DJIA since 1915:</p> <p>&nbsp;</p> <p style="text-align: center;"><img class="aligncenter wp-image-51147 size-full" height="361" src="http://www.acting-man.com/blog/media/2017/08/1-historical-volatility.png" width="601" /></p> <p style="text-align: center;">Dow Jones Industrial Average, 21-day volatility, 1915 to 2017. Volatility is currently extremely low.</p> <p>&nbsp;</p> <h3><u><strong>Volatility Can Easily Reach Much Higher Levels</strong></u></h3> <p><strong>Levels of volatility as low as they are currently nevertheless are very rare occurrences. </strong>Over the past century levels below 4 percent were recorded in just 0.17% of all cases. Conversely, the upside potential is considerable. To merely revert to the long-term mean of 15.05 percent would require more than a tripling from current levels.</p> <p>However, historical peak levels in volatility were much higher than the average: thus in 2.99 percent of all cases volatility reached levels above 50 percent, and in 0.1 percents of all cases it even exceeded 100 percent!</p> <p>The next chart illustrates the distribution of 21-day volatility levels of four percent and higher in the DJIA from 1915 to 2017 in one percentage point increments.</p> <p>&nbsp;</p> <p style="text-align: center;"><a href="http://www.acting-man.com/blog/media/2017/08/2-vol-distribution-past-century.png" rel="noopener" target="_blank"><img class="aligncenter wp-image-51148" src="http://www.acting-man.com/blog/media/2017/08/2-vol-distribution-past-century.png" style="width: 601px; height: 311px;" /></a></p> <p style="text-align: center;">Dow Jones Industrial Average, volatility distribution, 1915 to 2017. There is substantial potential for volatility to expand &ndash; click to enlarge.</p> <p>&nbsp;</p> <p>Once again it can be seen quite clearly how extraordinarily low 21-day volatility levels below 4 percent are.</p> <p>&nbsp;</p> <h3><u><strong>Volatility in the Course of the Year</strong></u></h3> <p><strong>When should a surge in volatility be expected though? In order to find this out, we will examine the seasonal pattern.</strong> The next chart shows the seasonal trends in the 21-day volatility of the DJIA over the entire time period under investigation from 1915 onward.</p> <p>Note: While in the first chart above I have marked out the level of volatility at the end of the respective 21-day rolling time periods (as is usual practice), I have marked them out in the middle of the respective time periods in the chart below, as this shows the seasonal pattern more clearly.</p> <p>&nbsp;</p> <p style="text-align: center;"><img class="aligncenter size-full wp-image-51149" height="362" src="http://www.acting-man.com/blog/media/2017/08/3-vol-seasonals-past-century.png" width="601" /></p> <p style="text-align: center;">Volatility of the Dow Jones Industrial Average, seasonal pattern, 1915 to 2017. Apeak in price volatility is typically reached in October</p> <p>&nbsp;</p> <p><strong>Despite the very long time period under examination with its multitude of data points, there evidently exists a very distinct seasonal pattern in stock market volatility.</strong></p> <p>In July the proverbial summer doldrums can be observed, with volatility levels averaging less than 14 percent. Thereafter volatility typically increases to a peak of almost 19 percent in October.</p> <p>&nbsp;</p> <h3><u><strong>Low volatility is not going to persist forever!</strong></u></h3> <p><strong>Many investors are currently betting on a further decline in volatility.</strong> In view of its already very low level and the negligible additional downside potential it offers relative to the substantial upside potential, this is probably not the best idea ever. Moreover, as shown above, October is the month in which volatility typically reaches a seasonal peak. Taking both of these facts into account, it seems far more sensible to expect an expansion in volatility.</p> <p>&nbsp;</p> <p style="text-align: center;"><img class="aligncenter wp-image-51150" height="500" src="http://www.acting-man.com/blog/media/2017/08/crick.jpg" width="360" /></p> <p style="text-align: center;">That dreaded moment when it suddenly becomes <em>too </em>quiet&hellip; [PT]</p> <p>&nbsp;</p> <p><u><em><strong>PS: it is probably the calm before the storm!</strong></em></u></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="589" height="353" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170816_vol.png?1502899371" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/historically-low-volatility-about-surge#comments DJIA Dow 30 Dow Jones Industrial Average Mathematical finance S&P/ASX 200 VIX Technical analysis VIX Volatility Volatility Wed, 16 Aug 2017 18:56:09 +0000 Tyler Durden 601785 at http://www.zerohedge.com Jamie Dimon's Memo To JPMorgan Employees: "I Strongly Disagree With President Trump's Reaction " http://www.zerohedge.com/news/2017-08-16/jamie-dimons-memo-jpmorgan-employees-i-strongly-disagree-president-trumps-reaction <p>With Trump's key economic advisory forums now disbanded following a mass exodus of corporate CEOs, moments ago JPM CEO Jamie Dimon joined the pile up stating that "the members of the President's Strategic and Policy Forum agreed to disband" and noting that "the group put out its own statement" he wanted "you to understand why I personally supported this decision and how strongly I feel about these issues."</p> <p>His argument: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>...fanning divisiveness is not the answer. Constructive economic and regulatory policies are not enough and will not matter if we do not address the divisions in our country. It is a leader's role, in business or government, to bring people together, not tear them apart. </p> <p>&nbsp;</p> <p>Racism, intolerance and violence are always wrong. The equal treatment of all people is one of our nation's bedrock principles. There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity.</p> </blockquote> <p><em>The full message from Dimon follows:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>I strongly disagree with President Trump's reaction to the events that took place in Charlottesville over the past several days. Racism, intolerance and violence are always wrong. The equal treatment of all people is one of our nation's bedrock principles</strong>. There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity.</p> <p>&nbsp;</p> <p>As a company and for all business in general, it is critical that we help develop rational, intelligent policies to help expand opportunities for all of our citizens. I know that times are tough for many. The lack of economic growth and opportunity has led to deep and understandable frustration among so many Americans. <strong>But fanning divisiveness is not the answer. Constructive economic and regulatory policies are not enough and will not matter if we do not address the divisions in our country. It is a leader's role, in business or government, to bring people together, not tear them apart.</strong></p> <p>&nbsp;</p> <p>Today, the members of the President's Strategic and Policy Forum agreed to disband. The group put out its own statement. <strong>But I also wanted you to understand why I personally supported this decision and how strongly I feel about these issues.</strong></p> <p>&nbsp;</p> <p>I'm very proud of the 250,000 people working here at JPMorgan Chase. I see your values every day - in how you treat your clients, your communities and each other. I am proud to see so many of you leading by example and not losing sight of the core principles which made our country great. I stand with you.</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="553" height="331" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/dimon%20teaser%205.jpg?1502908519" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/jamie-dimons-memo-jpmorgan-employees-i-strongly-disagree-president-trumps-reaction#comments Business Business Economy of the United States Jamie Dimon JPMorgan Chase Social Issues Wed, 16 Aug 2017 18:36:54 +0000 Tyler Durden 601798 at http://www.zerohedge.com Stocks, Dollar & Yields Sink After Fed Warns Of "Elevated Vulnerabilities" From High Asset Prices http://www.zerohedge.com/news/2017-08-16/stocks-dollar-bond-yields-sink-after-fed-warns-tighter-monetary-policy-otherwise-war <p>The initial reactions wre modest but directionally &#39;correct&#39; given the dovish bias to the Fed Minutes - stocks are up, bonds are up (lower in yield), and the dollar is down. But then traders read the warnings that due to excessively easy financial conditions, &quot;<strong>a tighter monetary policy than otherwise was warranted</strong>&quot;, something Goldman has been warning about for months, and stocks sank.</p> <p>To be sure, there were 3 very dovish quotes:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>1. &quot;Many participants, however, saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.&quot;</p> <p>&nbsp;</p> <p>2. &quot;Participants agreed that a fall in longer-term inflation expectations would be undesirable, but they differed in their assessments of whether inflation expectations were well anchored.&quot;</p> <p>&nbsp;</p> <p>3. &quot;Most Fed officials saw wage-price framework still valid&quot;</p> </blockquote> <p>Bonds and the dollar were following that bias...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMCREACT1.png"><img height="306" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMCREACT1_0.png" width="600" /></a></p> <p>But stock reversed their initial gains...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMCREACT2.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMCREACT2_0.png" style="width: 600px; height: 394px;" /></a></p> <p>As many missed the following comment on <span style="text-decoration: underline;"><strong>why The Fed is tightening</strong></span>...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>According to another view,<strong> recent rises in equity prices might be part of a broad-based adjustment of asset prices to changes in longer-term financial conditions,</strong> importantly including a lower neutral real interest rate, and, therefore, the <strong>recent equity price increases might not provide much additional impetus to aggregate spending on goods and services.</strong></p> <p>&nbsp;</p> <p>According to one view, <strong>the easing of financial conditions meant that the economic effects of the Committee&#39;s actions in gradually removing policy accommodation had been largely offset by other factors influencing financial markets, and that <span style="text-decoration: underline;">a tighter monetary policy than otherwise was warranted.</span></strong></p> </blockquote> <p>Translated: they are tightening because financial conditions are too easy and in an effort to push markets lower... which they&#39;re not worried about as the wealth effect has gone.</p> <p>Certainly, the &#39;tightening&#39; is not working:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC11.png"><img height="319" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC11_0.png" width="600" /></a></p> <p>Finally, and most ominously for bulls, <strong>there was the&nbsp; very explicit warning that an asset bubble is getting bigger:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The staff provided its latest report on potential risks to financial stability, indicating that it continued to judge the vulnerabilities of the U.S financial system as moderate on balance. This overall assessment incorporated the staff&#39;s judgment that, since the April assessment, <u><strong>vulnerabilities associated with asset valuation pressures had edged up from notable to elevated</strong></u>, as asset prices remained high or climbed further, risk spreads narrowed, and expected and actual volatility remained muted in a range of financial markets.</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="1178" height="627" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170816_FOMC11.png?1502907960" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/stocks-dollar-bond-yields-sink-after-fed-warns-tighter-monetary-policy-otherwise-war#comments Bond Business Deflation Economic bubble Economics Economy Federal Reserve System Financial crises Inflation Inflation targeting Interest rate Macroeconomic policy Macroeconomics Monetary Policy Monetary policy Money Public finance Real interest rate US Federal Reserve Volatility Wed, 16 Aug 2017 18:27:02 +0000 Tyler Durden 601797 at http://www.zerohedge.com A Break from the Madness http://www.zerohedge.com/news/2017-08-16/break-madness <p><em>Also check out our travel pictures from <a href="http://www.washingtonsblog.com/2016/10/bali-photolog.html" title="click here">Bali</a>, <a href="http://www.washingtonsblog.com/2017/04/costa-rica-3.html">Costa Rica</a>, and <a href="http://www.washingtonsblog.com/2015/07/france-in-photos-2.html" title="and here">France</a>.</em></p> <p>Charlottesville, North Korea ... things are crazy. These pics from my recent week in Maui will provide a quick break from the madness ...</p> <p><a href="http://www.1washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender143.jpg"><img alt="FullSizeRender(143)" class="aligncenter size-large wp-image-69041" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender143.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender141.jpg"><img alt="FullSizeRender(141)" class="aligncenter size-large wp-image-69046" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender141.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender90.jpg"><img alt="FullSizeRender(90)" class="aligncenter size-large wp-image-69094" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender90.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender157.jpg"><img alt="FullSizeRender(157)" class="aligncenter size-full wp-image-69029" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender157.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender149.jpg"><img alt="FullSizeRender(149)" class="aligncenter size-large wp-image-69036" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender149.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender115.jpg"><img alt="FullSizeRender(115)" class="aligncenter size-large wp-image-69040" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender115.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender129.jpg"><img alt="FullSizeRender(129)" class="aligncenter size-large wp-image-69064" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender129.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender109.jpg"><img alt="FullSizeRender(109)" class="aligncenter size-large wp-image-69076" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender109.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender98.jpg"><img alt="FullSizeRender(98)" class="aligncenter size-large wp-image-69086" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender98.jpg" /> </a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender103.jpg"><img alt="FullSizeRender(103)" class="aligncenter size-large wp-image-69082" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender103.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender138.jpg"><img alt="FullSizeRender(138)" class="aligncenter size-large wp-image-69049" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender138.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender136.jpg"><img alt="FullSizeRender(136)" class="aligncenter size-large wp-image-69050" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender136.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender142.jpg"><img alt="FullSizeRender(142)" class="aligncenter size-large wp-image-69045" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender142.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender137.jpg"><img alt="FullSizeRender(137)" class="aligncenter size-large wp-image-69052" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender137.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender128.jpg"><img alt="FullSizeRender(128)" class="aligncenter size-large wp-image-69067" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender128.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender118.jpg"><img alt="FullSizeRender(118)" class="aligncenter size-large wp-image-69068" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender118.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender117.jpg"><img alt="FullSizeRender(117)" class="aligncenter size-large wp-image-69069" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender117.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/IMG_5007.jpg"><img alt="IMG_5007" class="aligncenter size-large wp-image-69101" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/IMG_5007.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender110.jpg"><img alt="FullSizeRender(110)" class="aligncenter size-large wp-image-69074" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender110.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender111.jpg"><img alt="FullSizeRender(111)" class="aligncenter size-large wp-image-69070" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender111.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender112.jpg"><img alt="FullSizeRender(112)" class="aligncenter size-large wp-image-69071" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender112.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender114.jpg"><img alt="FullSizeRender(114)" class="aligncenter size-large wp-image-69072" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender114.jpg" /></a> <a 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src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender130.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender102.jpg"><img alt="FullSizeRender(102)" class="aligncenter size-large wp-image-69080" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender102.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender104.jpg"><img alt="FullSizeRender(104)" class="aligncenter size-large wp-image-69081" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender104.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender101.jpg"><img alt="FullSizeRender(101)" class="aligncenter size-large wp-image-69085" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender101.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender99.jpg"><img alt="FullSizeRender(99)" class="aligncenter size-large wp-image-69083" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender99.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender100.jpg"><img alt="FullSizeRender(100)" class="aligncenter size-large wp-image-69084" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender100.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender147.jpg"><img alt="FullSizeRender(147)" class="aligncenter size-large wp-image-69037" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender147.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender145.jpg"><img alt="FullSizeRender(145)" class="aligncenter size-large wp-image-69038" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender145.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender144.jpg"><img alt="FullSizeRender(144)" class="aligncenter size-large wp-image-69039" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender144.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender97.jpg"><img alt="FullSizeRender(97)" class="aligncenter size-large wp-image-69087" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender97.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/IMG_4894.jpg"><img alt="IMG_4894" class="aligncenter size-large wp-image-69089" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/IMG_4894.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender94.jpg"><img alt="FullSizeRender(94)" class="aligncenter size-large wp-image-69090" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender94.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender95.jpg"><img alt="FullSizeRender(95)" class="aligncenter size-large wp-image-69091" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender95.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender92.jpg"><img alt="FullSizeRender(92)" class="aligncenter size-large wp-image-69092" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender92.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender93.jpg"><img alt="FullSizeRender(93)" class="aligncenter size-large wp-image-69096" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender93.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender88.jpg"><img alt="FullSizeRender(88)" class="aligncenter size-large wp-image-69097" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender88.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullRender150.jpg"><img alt="FullRender150" class="aligncenter size-full wp-image-69124" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullRender150.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender153.jpg"><img alt="FullSizeRender(153)" class="aligncenter size-large wp-image-69033" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender153.jpg" /></a><a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender121.jpg"><img alt="FullSizeRender(121)" class="aligncenter size-large wp-image-69057" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender121.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender119.jpg"><img alt="FullSizeRender(119)" class="aligncenter size-large wp-image-69055" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender119.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender126.jpg"><img alt="FullSizeRender(126)" class="aligncenter size-large wp-image-69062" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender126.jpg" /></a> <a href="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender131-Copy.jpg"><img alt="FullSizeRender(131)" class="aligncenter size-large wp-image-69099" height="1098.41409692" src="http://www.washingtonsblog.com/wp-content/uploads/2017/08/FullSizeRender131-Copy.jpg" width="780" /></a> </p> http://www.zerohedge.com/news/2017-08-16/break-madness#comments Americas Bali Charlottesville, Virginia Costa Rica Forms of government France Geography of Asia Hospitality Maui North Korea Republics Wed, 16 Aug 2017 18:12:08 +0000 George Washington 601795 at http://www.zerohedge.com FOMC Minutes Signal Balance Sheet Normalization Begins In September, Most Saw Inflation Pick Up http://www.zerohedge.com/news/2017-08-16/fomc-minutes-signal-balance-sheet-normalization-begins-september-most-saw-inflation- <p><strong>Since the July 26th &#39;nothingburger&#39; FOMC statement, Nasdaq is down but bonds and bullion are higher </strong>as domestic politics and global war have trumped monetary machinations. All eyes in today&#39;s Minutes will be on any mention of inflation and the balance sheet.<strong> The Fed sees inflation &quot;picking up over the next couple years&quot;</strong> but this came before last week&#39;s dismal CPI/PPI data (and they<strong> noted &quot;downside risks&quot;</strong>), and<strong> confirmed that they will make a balance sheet move &quot;at upcoming meeting.&quot;</strong></p> <p>Additional headlines:</p> <ul> <li><strong>*MOST FED OFFICIALS SAW INFLATION PICK-UP OVER NEXT COUPLE YEARS</strong></li> <li><strong>*MOST FED OFFICIALS BACKED B/SHEET MOVE AT `AN UPCOMING MEETING&#39;</strong></li> </ul> <p>However, The Fed is worried about inflation:</p> <ul> <li><strong>MANY FED OFFICIALS SAW WEAK INFLATION DUE IDIOSYNCRATIC FACTORS</strong></li> <li><strong>SOME OFFICIALS CONCERNED BY WEAK INFLATION, ARGUE FOR PATIENCE</strong></li> </ul> <p>The key segments, courtesy of Bloomberg:</p> <p><strong>On the start of balance sheet unwind:</strong></p> <ul> <li>&quot;Although several participants were prepared to announce a starting date for the program at the current meeting, most preferred to defer that decision until an upcoming meeting while accumulating additional information on the economic outlook and developments potentially affecting financial markets.&quot;</li> </ul> <p><strong>More on timing:</strong></p> <ul> <li>&quot;Participants generally agreed that, in light of their current assessment of economic conditions and the outlook, it was appropriate to signal that implementation of the program likely would begin relatively soon, absent significant adverse developments in the economy or in financial markets. Many noted that the program was expected to contribute only modestly to the reduction in policy accommodation.&quot;</li> </ul> <p><strong>On inflation: </strong></p> <ul> <li>&quot;Most participants indicated that they expected inflation to pick up over the next couple of years from its current low level and to stabilize around the Committee&rsquo;s 2 percent objective over the medium term.&quot;</li> <li>&quot;Many participants, however, saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.&quot;</li> <li>&quot;Many participants noted that much of the recent decline in inflation had probably reflected idiosyncratic factors.&quot;</li> <li>&quot;Participants agreed that a fall in longer-term inflation expectations would be undesirable, but they differed in their assessments of whether inflation expectations were well anchored.&quot;</li> <li>&quot;A few participants cited evidence suggesting that this framework was not particularly useful in forecasting inflation. However, most participants thought that the framework remained valid, notwithstanding the recent absence of a pickup in inflation in the face of a tightening labor market and real GDP growth in excess of their estimates of its potential rate.&quot;</li> <li>&quot;Some participants expressed concern about the recent decline in inflation, which had occurred even as resource utilization had tightened, and noted their increased uncertainty about the outlook for inflation.&quot;</li> </ul> <p><strong>On a possible overshoot in the labor market:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;A few participants expressed concerns about the possibility of substantially overshooting full employment, with one citing past difficulties in achieving a soft landing.&quot;</p> </blockquote> <p><strong>On rising lending risks:</strong></p> <ul> <li>&quot;A couple of participants expressed concern that smaller banks could be assuming significant risks in efforts to expand their CRE lending.&quot;</li> </ul> <p><strong>On policy uncertainty:</strong></p> <ul> <li>&quot;Several participants noted that uncertainty about the course of federal government policy, including in the areas of fiscal policy, trade, and health care, was tending to weigh down firms&rsquo; spending and hiring plans.&quot;</li> <li>&quot;It was also observed that the budgets of some state and local governments were under strain, limiting growth in their expenditures. In contrast, the prospects for U.S. exports had been boosted by a brighter international economic outlook.&quot;</li> </ul> <p><strong>The now traditional commentary on equity markets and financial conditions.</strong></p> <ul> <li><strong>Several participants noted that the further increases in equity prices, together with continued low longer-term interest rates, had led to an easing of financial conditions.</strong> However, different assessments were expressed about the implications of this development for the outlook for aggregate demand and, consequently, appropriate monetary policy.</li> <li><strong>According to another view, recent rises in equity prices might be part of a broad-based adjustment of asset prices to changes in longer-term financial conditions, importantly including a lower neutral real interest rate, and, therefore, the recent equity price increases might not provide much additional impetus to aggregate spending on goods and services.</strong></li> </ul> <p><strong>On equity valuations:</strong></p> <ul> <li><strong>&quot;Participants also considered equity valuations in their discussion of financial stability. </strong>A couple of participants noted that favorable macroeconomic factors provided backing for current equity valuations; in addition, as recent equity price increases did not seem to stem importantly from greater use of leverage by investors, these increases might not pose appreciable risks to financial stability.&quot;</li> </ul> <p><strong>And the punchline as regards to stocks, confirming that the Fed may have to hike just to burst the stock bubble:</strong></p> <ul> <li><strong>According to one view, the easing of financial conditions meant that the economic effects of the Committee&#39;s actions in gradually removing policy accommodation had been largely offset by other factors influencing financial markets, <u>and that a tighter monetary policy than otherwise was warranted</u>.</strong></li> </ul> <p>Of course, any <strong>confusion </strong>in these minutes can always be cleaned up next week at Jackson Hole.</p> <p>* * *</p> <p><u><strong>Key conclusions:</strong></u></p> <ul> <li><strong>As expected, September remains in play for balance-sheet announcement, </strong>though no specific timetable mentioned</li> <li><strong>Most FOMC participants preferred to announce the start of the balance-sheet runoff at &quot;an upcoming meeting,&quot; while &quot;several&quot; were ready to go in July</strong></li> <li><strong>Inflation debate deepens. </strong>Most officials expected inflation to pick up next couple years and stabilize around 2%; many saw chances inflation may stay below that level for longer than expected</li> <li><strong>Some Fed officials see scope for rate-hike patience, </strong>others caution a delay could lead to inflation overshoot</li> <li><strong>FOMC united against a loosening of financial regulations that would allow for risky practices;</strong></li> <li><strong>The Fed is concerned about policy uncertainty </strong>hurting investment</li> <li><strong>FOMC discussed equities, agreed to monitor bank behavior</strong>; some concern expressed about small-banks&#39; risk in commercial real-estate lending</li> </ul> <p>*&nbsp; *&nbsp; *</p> <p>Rate hike odds for December are around 42% - unchanged from the FOMC Statement in July...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC4.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC4_0.png" style="width: 600px; height: 251px;" /></a></p> <p>&nbsp;</p> <p>Not what The Fed was hoping for...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC1.png"><img height="394" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC1_0.png" width="600" /></a></p> <p>&nbsp;</p> <p>The dollar is unchanged but bonds are bid...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC3.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC3_0.png" style="width: 600px; height: 305px;" /></a></p> <p>&nbsp;</p> <p>Why is the FOMC considering raising rates again this year? Bloomberg notes <strong>one reason is concern about asset prices and the potential from the unwinding of a bubble.</strong> This could well have been debated, with, for example, Eric Rosengren of Boston particularly worried about commercial real estate, while Yellen has cited stock prices as being elevated.</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC5_0.png" style="width: 600px; height: 277px;" /></p> <p>&nbsp;</p> <p>Of course, that&#39;s not how the market sees it...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC2.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/14/20170816_FOMC2_0.png" style="width: 600px; height: 411px;" /></a></p> <p>&nbsp;</p> <p>Full FOMC Minutes below:</p> <p>&nbsp;</p> <p><iframe class="scribd_iframe_embed" data-aspect-ratio="0.7729220222793488" data-auto-height="false" frameborder="0" height="600" id="doc_34934" scrolling="no" src="https://www.scribd.com/embeds/356465869/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-WvMFo4s8nJkObdoCezst&amp;show_recommendations=true" width="100%"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="512" height="288" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170816_FOMC.png?1502906143" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/fomc-minutes-signal-balance-sheet-normalization-begins-september-most-saw-inflation-#comments B+ Business Commercial Real Estate Committees CPI CRE CRE Economic bubble Economics Economy Equity Markets Federal Open Market Committee Federal Reserve Bank of New York Federal Reserve System headlines Inflation Inflation targeting Interest rate Interest rates James B. Bullard Macroeconomics Monetary Policy Monetary policy Money NASDAQ Real estate Real interest rate US Federal Reserve Wed, 16 Aug 2017 18:03:57 +0000 Tyler Durden 601794 at http://www.zerohedge.com Dudley Says Raise Rates, Greenspan Says It's A Bond Bubble: Something's Broken http://www.zerohedge.com/news/2017-08-16/dudley-says-raise-rates-greenspan-says-its-bond-bubble-yields-lower-last-crisis-%E2%80%93-so <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">It should be crystal clear to everyone that after 10 years of the most accommodative monetary policy in the worlds history the bond market is significantly overpriced. The bond market still has little to no yield (negative yields in some countries) to offset the abundance of risks &ndash; liquidity, duration and spread risks to name a couple. </span></p> <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">After 10 years, there are managers and firms whose success is in large part to risks taken in one trade &ndash; to be long fixed income and front run central bank policies. &nbsp;But someone forgot to tell them this trade is over. &nbsp;Large balance sheets continue to trade the bond market in a monopolistic, high volume basis hoping for some large issues to drive yields lower and generate pricing gains to offset such limited yields.&nbsp; If investors are hoping for an economic slowdown, lower levels of inflation, geopolitical risk or even a government shutdown to help drive yields, maybe they shouldn&rsquo;t be in the trade to begin with. </span></p> <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">These are the bigger fool theory motivators to lower yields. &nbsp;Yields are now lower than prior cycles of recession, depression, war or pretty much any other risk this country has ever experienced. &nbsp;You can experience any and all of these risks and still have a probability yields shoot higher, not lower. </span></p> <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">But some say inflation is slowing down and that must be good for bonds. &nbsp;Normally bonds trade 200 to 300 basis points &ndash; or 2 to 3% above the level of inflation. &nbsp;Since inflation is currently around 2%, inflation has to go to -1% to bring bonds somewhat close to fair value.&nbsp; &nbsp;With health care and housing costs jumping and expected to continue to show above average price increases, the chances of deflation &ndash; even with all the lower biased adjustments our inflation statistics go through &ndash; is minimal.</span></p> <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">Comically, others say the debt ceiling debate is a source of volatility so own bonds for the flight to quality trade. &nbsp;So we reach our debt ceiling and have difficulties paying our bills &ndash; and that&rsquo;s good for bonds???</span></p> <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">It&rsquo;s apparent that the Fed and other notable officials see the potential of a bond bubble deflating rapidly and the potential impact on the real economy. &nbsp;They have been trying to deflate it slowly by adjusting the Fed Funds rate off of zero and announcing a reduction in accumulated balance sheet. &nbsp;This week, the NY Federal Reserve President William Dudley said that he expects another Federal Funds rate increase this year. &nbsp;And Alan Greenspan, the former Federal Reserve chairman, has continued to express the risks to the markets from the bond bubble that has not corrected.&nbsp; </span></p> <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">Sadly, bonds have yet to respond. &nbsp;Should the Fed be doing more to prepare the markets? &nbsp;&nbsp;They talked and manipulated yields lower with unprecedented Fed policy. &nbsp;Should they have been doing the opposite years ago when the systemic risks were corrected? &nbsp;The Fed wants to be the life of the party, but not the chaperone. &nbsp;Since they have refused to take the punchbowl away from the party in a reasonable amount of time, the hangover is going to be a bad one this time. &nbsp;</span></p> <p style="margin: 0in 0in 8pt;"><span style="font-family: Calibri; font-size: small;">by Michael Carino, Greenwich Endeavors, 8/16/17</span></p> <p><em><span style="font-size: 11.0pt; line-height: 107%; font-family: &quot;Calibri&quot;,sans-serif; mso-ascii-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-theme-font: minor-bidi; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;">Michael Carino is the CEO of Greenwich Endeavors, a financial service firm, and has been a fund manager and owner for more than 20 years. <span style="mso-spacerun: yes;">&nbsp;</span>He has positions that benefit from a normalized bond market and higher yield</span><strong>&nbsp;</strong>&nbsp;<span style="text-decoration: underline;">&nbsp;</span><span style="text-decoration: line-through;">&nbsp;</span></em></p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="675" height="693" alt="" src="http://www.zerohedge.com/sites/default/files/images/user239916/imageroot/MJC_11.jpg?1502905758" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/dudley-says-raise-rates-greenspan-says-its-bond-bubble-yields-lower-last-crisis-%E2%80%93-so#comments Alan Greenspan Bond Bond Business Debt Ceiling Deflation Economy Federal Reserve Finance Financial markets fixed Fixed income Inflation Monetary Policy Money NY Federal Reserve Real interest rate Recession US Federal Reserve Volatility William Dudley Yield Yield curve Wed, 16 Aug 2017 17:49:33 +0000 Greenwich Endeavors 601793 at http://www.zerohedge.com FBI Unexpectedly Releases Confidential Employee Evaluations Of James Comey http://www.zerohedge.com/news/2017-08-16/fbi-unexpectedly-releases-confidential-employee-evaluations-james-comey <p>In an unexpected, impromptu release, on Tuesday morning the <a href="https://twitter.com/fbirecordsvault?lang=en">FBI's "Records Vault" twitter account </a>released a trove of information, divulging "<strong>Field Office and Headquarters Climate Survey Results</strong>" among which are annual results for the years 2013 through 2017, but more notably, the confidential employee evaluation results for now-former Director James Comey.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">FBI Field Office and Headquarters Climate Survey Results: <a href="https://t.co/bs66406HSv">https://t.co/bs66406HSv</a></p> <p>— FBI Records Vault (@FBIRecordsVault) <a href="https://twitter.com/FBIRecordsVault/status/897820307204980737">August 16, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>It is unclear why the FBI releases this data now, although like on previous occasions, it was likely prompted by an external FOIA request.</p> <p>In the <a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results">description of the survey results</a>, the FBI notes the following:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The FBI Annual Employee Survey (AES) provides an opportunity for employees to anonymously share their perspective on the performance of FBI leaders and the organization.</strong></p> <p>&nbsp;</p> <p>The AES is comprised of two surveys: the Leadership Survey, measuring employees' perceptions of their supervisors' leadership abilities; and the Climate Survey, measuring employees' attitudes about their work, work environment, and the FBI as a whole. The FBI analyzes the data to help improve current leadership, pick new leaders, and encourage employees to express ideas on how management and the FBI can improve.</p> <p>&nbsp;</p> <p>Each survey item is rated on a five-point scale. Each rating is averaged by the number of respondents. The following scoring breakdown is congruent with the scoring ranges identified by Human Resources senior level executive in the Senior Leader selection process:</p> <p>&nbsp;</p> <ul> <li>Average scores between 1.0 and 2.99 indicate potential areas of concern which could worsen if not addressed. A focus on development in these areas would be recommended.</li> <li>Average scores between 3.0 and 3.80 indicate positive feedback in these areas with potential for improvement.</li> <li>Average scores between 3.81 and 5 indicates success in those areas.</li> </ul> <p>&nbsp;</p> <p><a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results%20%282013%29/view">FBI Field Office and Headquarters Climate Survey Results (2013)</a><br /><a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results%20%282014%29/view">FBI Field Office and Headquarters Climate Survey Results (2014)</a><br /><a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results%20%282015%29/view">FBI Field Office and Headquarters Climate Survey Results (2015)</a><br /><a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results%20%282016%29/view">FBI Field Office and Headquarters Climate Survey Results (2016)</a><br /><a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results%20%282017%29/view">FBI Field Office and Headquarters Climate Survey Results (2017)</a><br /><a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results/FBI%20Director%20James%20Comey%20Climate%20Survey%20Results%20%282015-2017%29/view">FBI Director James Comey Climate Survey Results (2015-2017)</a></p> </blockquote> <p>In the charts below, we have summarized the disclosed results from Comey's survey results, broken down across 4 key verticals: i) Personal Characteristics and Values, ii) Leading People, iii) Managing Work and iv( Miscellaneous. While there are not drastic changes over the roughly 3 years during which Comey was FBI Director, there appears to be a notable downward shift in Comey's evaluations by anywhere from 36 respondents (in 2015) and 48 (in 2017). </p> <p>While there are more details in the full evaluations, here is the core breakdown:</p> <p><strong>Personal Characteristics and Values: </strong><br /><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/Comey%20personal%20char.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/Comey%20personal%20char_0.jpg" width="500" height="263" /></a></p> <p><strong>Leading People:</strong><br /><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/comey%20leading%20people.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/comey%20leading%20people_0.jpg" width="500" height="263" /></a></p> <p><strong>Managing Work</strong><br /><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/managing%20work.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/managing%20work_0.jpg" width="500" height="263" /></a></p> <p><strong>Miscellaneous.<br /><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/miscellaneous.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/miscellaneous_0.jpg" width="500" height="263" /></a><br /></strong></p> <p><strong><br />The full Comey Survey Results are below (<a href="https://vault.fbi.gov/FBI%20Field%20Office%20and%20Headquarters%20Climate%20Survey%20Results/FBI%20Director%20James%20Comey%20Climate%20Survey%20Results%20%282015-2017%29/view">link</a>)<br /></strong></p> <p><iframe src="https://www.scribd.com/embeds/356452090/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-aVyOVmvbS78bAqLirxGa&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1200" height="696" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/comey%20bombshell.jpg?1502894931" /> </div> </div> </div> http://www.zerohedge.com/news/2017-08-16/fbi-unexpectedly-releases-confidential-employee-evaluations-james-comey#comments Comey FBI FBI Field Office Federal Bureau of Investigation Federal Bureau of Investigation Field Office FOIA James Comey Law enforcement in the United States Russian interference in the 2016 United States elections Twitter Twitter United States Department of Justice United States federal executive departments United States intelligence agencies Wed, 16 Aug 2017 17:46:01 +0000 Tyler Durden 601778 at http://www.zerohedge.com