en Hillary Claims She "Kept Americans Safe" As SecState, Was "Not Influenced By Any Outside Forces" <p>Last night Hillary was pressed by CNN&#39;s Anderson Cooper on potential conflicts of interest created by the Clinton Foundation during her tenure as Secretary of State.&nbsp; As we pointed out in a recent post (see &quot;<a href="">Over Half Of Hillary&#39;s Private Meetings As Secretary Were With Donors Who Paid $156 Million</a>&quot;), <strong>at least 85 of 154 people from private interests who met or spoke to Clinton while she led the State Department, donated to her family charity.</strong>&nbsp; Moreover, donations by those 85 private interests were found to have donated as much as $156 million in aggregate to the Clinton Foundation.</p> <p>Meanwhile, Trump has grown increasingly critical of the Clinton Foundation&#39;s work in recent days calling for an <strong>&quot;expedited investigation by a special prosecutor.&quot;</strong>&nbsp; Per the <a href="">Washington Post</a>, earlier this week Trump referred to the Clinton Foundation as a &quot;corrupt enterprise&quot; and said that it should &quot;shut down immediately.&quot;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;The Clintons have spent decades as insiders lining their own pockets and taking care of donors instead of the American people.&nbsp; <strong>It is now clear that the Clinton Foundation is the most corrupt enterprise in political history.</strong> What they were doing during Crooked Hillary&rsquo;s time as Secretary of State was wrong then, and it is wrong now. <strong>It must be shut down immediately.&rdquo;</strong></p> </blockquote> <p>Clinton disputed Trump&#39;s claims as &quot;ridiculous&quot; during her interview with CNN saying that her work as Secretary of State was not influenced by &quot;outside forces.&quot;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>What Trump has said is ridiculous.</strong> My <strong>work as secretary of state was not influenced by any outside forces.</strong> I made policies based on what I thought was right.&quot;</p></blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;What we did when I was secretary of state, as I said, went above and beyond anything that was required, anything that any charitable organization has to do.&rdquo;</p> </blockquote> <p>The Clinton&#39;s exacerbated the controversy when the campaign recently announced they would restructure leadership roles at the Clinton Foundation in the event Hillary was elected President.&nbsp; This restructuring, including removing Bill from the Foundation board, has led many to question why the Foundation was not deemed to be a conflict while Hillary served as Secretary of State why implicitly agreeing that it would be a conflict during a Hillary Presidency.&nbsp;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Obviously, If I am president, there will be <strong>some unique circumstances and that&rsquo;s why the foundation has laid out additional, unprecedented steps that it will take if I am elected.&quot;</strong></p> </blockquote> <p>When pressed on whether those &quot;unique circumstances&quot; existed during her tenure as Secretary of State Clinton said there&#39;s &quot;a lot of smoke&quot; but &quot;no fire.&quot;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;No, no. Look, Anderson, <strong>I know there&rsquo;s a lot of smoke and there&rsquo;s no fire.</strong>&rdquo;</p> </blockquote> <p>Given how difficult this interview was for Hillary to navigate (and with a &quot;friendly&quot; network, no less), we&#39;re not surprised that she has elected to skip press conferences for the past 260 days.&nbsp;</p> <p>&nbsp;</p> <p><iframe frameborder="0" height="338" src="" width="600"></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="1280" height="720" alt="" src="" /> </div> </div> </div> Thu, 25 Aug 2016 17:20:00 +0000 Tyler Durden 570583 at Rate Hike Jitters Return In Poor, Tailing 7Y Treasury Auction <p>And just like that the rate market's perception has shifted. Following two stellar auctions earlier this week, namely a blockbuster auction of 2Y and 5Y bonds, which saw such strong demand we concluded that nobody appeared to be concerned about tomorrow's Yellen testimony at least in the primary bond market. That, however changed moments ago when the Treasury sold $28 billion "belly", 7Y bonds, at a yield of 1.423%, tailing the When Issued by 1.3 bps, the first tail in this tenor since February. </p> <p>The internals were comparably ugly, with the Bid to Cover sliding from 2.514 to 2.383, below the 12MMA of 2.51, as Indirects failed to make a strong appearance, taking down only 58.33%, the lowest since March, leaving Dealers holding 31.3% of the take down, the most since February. Directs ended up with 10.39% of the auction. </p> <p>Why the change? Some have pointed out the unexpected Hilsenrath piece in the WSJ earlier, which may be a harbinger of something big to come from Yellen, others are saying it is mostly curve flows, although the sudden shift in sentiment from the previous two auctions is at least on the surface, notable. </p> <p>So will the skeptical 7Y be right, and will Yellen blow out the curve tomorrow if she delivers a far more hawkish statement than 85% on Wall Street expect? The answer will be revealed tomorrow.</p> <p><a href=""><img src="" width="500" height="293" /></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="2062" height="1208" alt="" src="" /> </div> </div> </div> Bond Testimony Thu, 25 Aug 2016 17:12:32 +0000 Tyler Durden 570604 at Could A Lithium Shortage De-Rail The Electric Car Boom? <p><a href=""><em>Submitted by James Stafford via,</em></a></p> <p>We&rsquo;ve gone electric, and there&rsquo;s no going back at this point. Lithium is our new fuel, <strong>but like fossil fuels, the reserves we&rsquo;re currently tapping into are finite</strong> - and that&rsquo;s what investors can take to the bank.</p> <p>You may think lithium got too popular too fast. You may suspect electric vehicles are too much buzz and not enough real future. You may, in short, be a lithium skeptic, one of many. And yet, despite this skepticism, lithium demand is rising steadily and sharply, and indications that a shortage may be looming are very real.</p> <p><strong>It won&rsquo;t be a shortage in terms of &lsquo;peak lithium&rsquo;; rather, it will be a game of catch-up with the electric car boom, with miners hustling to explore and tap into new reserves.</strong></p> <p>Consider the number of battery gigafactories that are being built around the world. We have all heard about <em>Tesla&rsquo;s </em>Nevada <a href="">facility</a> that will at full capacity <a href="">produce enough batteries</a> to power 500,000 electric cars per year by 2020.</p> <p>This, as the carmaker proudly notes, is more than the global total lithium ion battery production for 2013. That&rsquo;s a pretty impressive rate of demand growth over just three years&mdash;but this growth also represents the culmination of a sea change in the way we think.</p> <p><strong>Lithium is powering pretty much everything upon which our present depends on and our future is being built.</strong> It&rsquo;s a viable alternative to petrol and in consumer electronics market segment alone, there is no sign of contraction&mdash;only expansion. Think the Internet of things, or smart houses, or smart cities, eventually. All these fascinating ideas are powered in some way by lithium.</p> <p>But the real and present coup has been launched by electric vehicles. Forecasts from market research firms seem to be unanimous: EVs are on the rise, EVs are hot, and EVs will be increasingly in demand as people all over the world are eagerly encouraged to cut their carbon footprint. According to <a href="">Lux Research</a>, the EV market will grow to $10 billion within the next four years. <a href="">Navigant Research</a> forecasts EV sales will rise from 2.6 million last year to more than 6 million in 2024. So, whether we like it or not, EVs are coming&mdash;and in force.</p> <p>Indeed, says Nevada Energy Metals executive Malcolm Bell, <strong><em>&ldquo;It may be time to start worrying about a shortage, but it&rsquo;s not a question of whether we have enough lithium&mdash;it&rsquo;s a question of tapping into new reserves. Those who don&rsquo;t see the supply wall looming, will hit with a resounding thud. Those who start tapping into new reserves will be extremely well-positioned for the future.&rdquo;</em></strong></p> <p>From where everyone is standing right now, it may seem that the world&rsquo;s got a fair amount of lithium. According to global estimates by the <a href="">U.S. Geological Survey</a>, <strong>there is enough lithium in the world &ndash; 13.5 million metric tons of it &ndash; to last us over 350 years in batteries.</strong></p> <p>What&rsquo;s missing from this prediction, however, is &hellip; the future, and indeed, the present. This calculation takes into account only the current rate of lithium ion battery usage. It does not account for the entrance of EVs into the mainstream. It does not account for Tesla, not to mention the growing ranks of Tesla rivals. And it most certainly doesn&rsquo;t account for what is by all means a pending energy revolution that sees lithium as its leader.</p> <p><strong>Already, the present is clear: <a href="">Demand is growing fast</a>, faster than production, and for now this new demand is coming increasingly from the electric vehicle industry.</strong></p> <p>Tesla&rsquo;s is by no means the only battery gigafactory out there. There are others being built around the world (<a href="">at least 12</a>, according to Benchmark Mineral Intelligence) and these gigafactories will raise the global demand for lithium batteries to some <a href="">122 GWh</a> by 2020. That&rsquo;s up from 35 GWh currently. It&rsquo;s a phenomenal rise over a very short period of time.</p> <p><em><strong>In the U.S., there is already one gigafactory&mdash;Tesla&rsquo;s, in Nevada&mdash;operating. A second gigafactory is in the works, courtesy of <a href="">LG Chem</a>. Brine-based lithium production in the country is concentrated in one place only, at least for now, and this place is Nevada. </strong></em>That&rsquo;s because it is the only confirmed place with lithium deposits. The biggest actively mined area is the Clayton Valley, with presence from both mining majors like Albermarle (<a href="">NYSE: ALB</a>) and smaller, pure-play lithium miners such as Nevada Energy Metals. This makes Clayton Valley ground zero for the U.S. lithium rush and everyone wants to be there, but it&rsquo;s the pure play miners who are set to explode onto this scene from an investors&rsquo; perspective.</p> <p><a href="">Clayton Valley</a> can hardly contain the lithium rush, and it is already time to look in the surrounding areas to secure future supply for soaring demand predictions. Those with enough foresight are diversifying their Nevada holdings and banking on geological clues that suggest there&rsquo;s plenty more lithium in Tesla&rsquo;s backyard, and whoever gets to it first will be far ahead of the game.</p> <p><strong><em>&ldquo;When everyone starts paying attention to Nevada&rsquo;s geology, we&rsquo;ll see a land rush that makes the current one pale by comparison,&rdquo;</em></strong> says Bell, who heads of acquisitions for <a href="">Nevada Energy Metals</a>, one of the pure play movers in this playing field that sees the wider lithium potential in Nevada.</p> <p>&ldquo;Nevada&rsquo;s geothermal footprints are large and extend well beyond the Clayton Valley. If you put a mirror up to Clayton Valley, there is endless opportunity here. The real race here is to create the next U.S. lithium powerhouse,&rdquo; says Bell.</p> <p><u><strong>How to Play Lithium</strong></u></p> <p>Look everywhere, and then look again. Securing an investment in Clayton Valley is a good place to start&mdash;but it&rsquo;s also potentially only a flash in the pan. The best way to secure a foothold in lithium right now is to think outside the box and look for those companies who see the bigger picture but are also smart enough to keep one foot in the proven lithium hunting grounds.</p> <p><strong><em>But you also have to understand the supply and demand picture here.</em></strong></p> <p><a href="">Macquarie Research</a> estimates that<strong> in 2015 demand for lithium already exceeded supply, while this year, lithium output will again fall short of demand.</strong></p> <p>In 2017, thanks to so much new production capacity the metal&rsquo;s fundamentals will near an equilibrium, which will last for about a year before deficit rears its head once again&mdash;but this time the deficit will stick. Despite new efforts to ramp up supply, it will take a while before supply corresponds to the demand.</p> <p>The future is pretty clear:<strong> We&rsquo;re looking at a period of shortage, and shortage is where the savvy investors make real money.</strong> The lithium feeding frenzy has only just begun. Consumer electronics keeps it safe and steady, as always; the electric vehicle boom skews the demand picture dramatically, and the future&rsquo;s energy storage and powerwall evolutions take it over the edge.</p> <p><strong>The reserves are there, and there&rsquo;s geologists estimate there&rsquo;s plenty of unproven reserves out there as well&mdash;it&rsquo;s just a matter of who finds them first, and who starts extracting first.</strong></p> <p>Lithium has the purest of fundamentals of any &lsquo;commodity&rsquo; out there, and the next oil barons look set to actually be lithium barons. In fact, in this respect, electric vehicles will likely be the cause of the <a href="">next oil crisis</a>. <strong>Demand and supply are simple and shockingly visible, and that means there&rsquo;s a lot of new money floating around for lithium exploration</strong>. If you&rsquo;re not a believer, the immediate future will sweep you off of your feet.</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="679" height="380" alt="" src="" /> </div> </div> </div> Carbon Footprint Geothermal Thu, 25 Aug 2016 16:55:00 +0000 Tyler Durden 570593 at These Are The Three Things That Will Break The "China Calm" According To UBS <p>There has been no shortage of crises in the Western World lately with heightened concerns over <a href="">Brexit</a>, <a href="">Italian Bank</a><a href="">s</a>, <a href="">Portugal's sovereign debt rating</a>, Fed decisions, etc, all rattling the nerves of investors.&nbsp; But amid all the chaos in the West, Donna Kwok of UBS recently pointed out that China has been relatively "calm".&nbsp; <strong>That said, UBS sees 3 things that could disrupt the relative "calm" in China by the end of the year</strong>.&nbsp; In summary, downside risks remain in China's continued effort to work through sizable inventory overhangs in their real estate market as well as in the restructuring of State Owned Enterprises (SOEs) which need to undergo substantial capacity reductions and management realignments.&nbsp; Failure of property developers to return to the market with new developments and/or an increase in unemployment related to capacity reductions at SOEs could derail the "China Calm."</p> <p><em>With that, here are the details:</em></p> <p>1.&nbsp; <strong>Property developers have lagged on investment in new real estate projects despite the rebound in sales of existing properties.&nbsp; Many believe the lack of new investment is a sign that property developers see a slow down in 2H16.&nbsp;</strong> Despite the strong double-digit growth prints in YTD sales (26%y/y) and new starts (14%y/y), YTD construction and investment have expanded only by around 5%, with little sign of more pipeline momentum to come. <strong>Soft property developer sentiment and caution over the longevity of the sales rebound</strong> is partly to blame, as is a still <strong>sizeable inventory overhang and sharp land price rally so far this year.</strong> </p> <p>UBS currently sees property sales and new starts cooling to a mid/low single digit growth rate for the rest of 2016, and construction and investment growth holding broadly flat. However, it notes that if developer sentiment deteriorates more than expected (e.g. because sales slows much more, or the government tightens more aggressively), then property construction activity go into outright contraction, further dragging down China's heavy industrial activity and investment, overall economic growth and commodity demand.</p> <p><img src="" alt="China Propert" width="600" height="653" /></p> <p>2.&nbsp; While noting that China has been able to manage a modest RMB depreciation while stabilizing FX reserves in recent months UBS points out there is risk of greater market pressures on capital outflows and the currency – due to sudden expectation shifts on US Fed moves or USD strength, and/or concerns for China's domestic economy or asset markets. <strong>Such pressures may lead to higher global investor risk aversion, a revival of China macro concerns and further FX reserve losses, which could negatively impact China's capital markets before the end of 2016.</strong></p> <p><img src="" alt="China Currecy" width="600" height="651" /></p> <p>3.&nbsp; Third, UBS points out that credit spreads have recovered since the April selloff and primary issuance has rebounded but sees further upside in bonds capped by current money market rates while fundamental downside risks remain relative to China's continued restructuring of SOEs. A <strong>sudden liquidity squeeze or temporary credit crunch could be triggered by an unexpected rise in defaults, or a sudden tightening of regulations.</strong> The former could arise from the further worsening of issuer asset quality, or <strong>SOE restructuring and excess capacity reduction events.</strong></p> <p><img src="" alt="China Yields" width="600" height="659" /></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="800" height="600" alt="" src="" /> </div> </div> </div> Capital Markets China ETC Real estate Sovereign Debt Unemployment Thu, 25 Aug 2016 16:34:00 +0000 Tyler Durden 570592 at The Lowest Vol In A Lifetime <p><a href=""><em>Via Macro Man blog,</em></a></p> <p><strong>It says everything you need to know about the nature of this market that yesterday&#39;s 11-point swoon in the SPX felt like a proper downdraft.&nbsp;</strong> If you&#39;ve felt that this month has been unusually quiet, you&#39;re not alone- and with good reason.&nbsp;&nbsp; Macro Man ran a few numbers,&nbsp; and was startled to see that as of Tuesday&#39;s close (i.e., prior to yesterday&#39;s &quot;collapse&quot;) there have been only five prior days <em>in his lifetime</em> where the 30 day historical volatility of the SPX has been lower.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 435px;" /></a></p> <p><em>(For those interested, the five days were January 3-6, 1994 and September 12, 1995.)</em></p> <p><strong>Yesterday&#39;s &quot;crash&quot; nudged the historical vol higher, but not by much; the current 30 day historical vol of 5.4% is the 23rd lowest of all trading days since the start of 1970.&nbsp; </strong>The days when &quot;market volatility&quot; served as the excuse <em>du jour </em>for Fed inaction suddenly seem like a long, long time ago.</p> <p>US markets are hardly alone in experiencing a decline in volatility, of course; realized vol throughout global equity markets has tumbled this month.&nbsp; That being said, vol in the US <em>is</em> unusually low by global standards (as well as its own.)&nbsp; Amusingly, the other market that has experienced exceptionally low volatility recently has been the UK, another excuse <em>du jour </em>for standing pat.&nbsp; Tellingly, the current trough in SX5E vol is only a little lower than the post-Brexit <strong>peak</strong> in SPX realized vol.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 435px;" /></a></p> <p><strong>In times gone by, of course, exceptionally low financial market volatility was a source of concern for policymakers.&nbsp;</strong>&nbsp; Such conditions, they knew, were unlikely to last but might encourage behaviour that could threaten financial stability when the volatility regime and market risk premia normalized.</p> <p>Fast forward to today, and while there has been the occasional brief mention of the reach for yield, <em><strong>there&#39;s been nary a mention of the potentially pernicious problems posed by low volatility.&nbsp;</strong></em> The phenomenon is a relatively recent one, which no doubt explains much of the radio silence.&nbsp; Then again, global central banks&#39; own policies and reaction functions have a more or less explicit goal of dampening market volatility.&nbsp; To paraphrase our old friend Holmes, we can put this down the the curious episode of market volatility.&nbsp; (The curious aspect being that there isn&#39;t any.)</p> <p><strong>Meanwhile, we are now treated to<a href=""> stories</a> of state pensions in Hawaii and South Carolina implementing systematic put selling programs.</strong>&nbsp; While the VIX currently offers a tasty premium to realized vol, one need not possess a PhD in finance to understand how this can go badly awry.&nbsp;&nbsp; (Actually, given the financial history of the past couple of decades, perhaps we should say that one needs to not have a PhD to comprehend the risks of such a systematic strategy?)</p> <p><u><strong>And for what?</strong></u>&nbsp; Global central banks continue to chase the elusive bogey of arbitrary inflation targets while offering little empirical evidence that such targets can be met.&nbsp; <strong>The whole idea of the Fed&#39;s potentially raising the inflation target is frankly a farce.&nbsp;</strong> There is a veritable Everest of empirical evidence that the sort of impact that the Fed and others can have is woefully insufficient to meaningfully and permanently move the needle on inflation.</p> <p>Quite possibly Macro Man&#39;s favourite finance-related fun fact, which he trots out every so often, is this:&nbsp; <em><u><strong>there have been exactly two months in this millennium when the 10y average of the core PCE deflator has been two percent or above</strong></u></em>.&nbsp; Those two months were January and February of 2000.&nbsp; The Fed has spent most of the ensuing period in ultra-easy mode; see if you can spot on the chart below where they are having an impact and where they are not.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 435px;" /></a></p> <p>Like Tantalus, <strong>the Fed (and BOJ, etc.) seem doomed to forever strive to reach the forbidden fruit of an arbitrary inflation target while falling just short</strong>.&nbsp;</p> <p>In the meantime, the negative externalities of these attempts via artificially compressing risk premia and volatility while influencing certain actors to engage in irrationally stupid behaviours <strong>may yet condemn many in the modern central banking community to a new level of the Inferno.</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="640" height="464" alt="" src="" /> </div> </div> </div> Central Banks Equity Markets ETC South Carolina Volatility Thu, 25 Aug 2016 16:15:32 +0000 Tyler Durden 570591 at "The Great Unraveling" - Hilsenrath Slams The Fed: "Years Of Fed Missteps" Foster US Populism, Disillusion <p>For years we have argued that the main reasons for rising social anger, populist sentiment, and general disillusion with the US economy boils down to one thing: the Federal Reserve, which as we have argued since 2009, has approached the crisis aftermath in a wrong way, generated unprecedented wealth inequality through its monetary policy favoring a tiny fraction of the population - those invested in risk assets - and instead of reflating another debt bubble, should have allowed the system to undergo a debt purge and start afresh. </p> <p>For this we have been branded perpetual conspiracy theorists and permabears. </p> <p>Moments ago, none other than the WSJ's Fed "whisperer", Jon Hilsenrath admitted these allegations have been correct in an article titled "<a href="">Years of Fed Missteps Fueled Disillusion With the Economy and Washington</a>", and which as the WSJ notes "<strong>helps explain one of the US's most unpredictable, populist political years</strong>." </p> <p>In other words, it is the Fed's policies that have led to the current failed economic regime (as noted again <a href="">yesterday by Citi's Matt King </a>and today by <a href="">former Fed governor Kevin Warsh</a>), and which are responsible for the rise of such candidates as Donald Trump. Which, incidentally, is also something we have predicted over the years would happen. As such we are delighted that one of the most popular establishment Fed watchers now agrees with our assessment.</p> <p>This is what Hilsenrath writes:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In the 1990s, a period known in economics as the “Great Moderation,” it seemed the Fed could do no wrong. Policy makers and voters saw it as a machine, with buttons officials could push to heat or cool the economy as needed. </p> <p>&nbsp;</p> <p>Now, after more than a decade of economic disappointment, <strong>the central bank confronts hardened public skepticism and growing self-doubt about its own understanding of how the U.S. economy works, a development that helps explain one of the most unpredictable and populist political seasons in modern history</strong>.</p> </blockquote> <p>Some highlights from the piece focus on the Fed's own admissions:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“There are a lot of things that we thought we knew that haven’t turned out quite as we expected,” said Eric Rosengren, president of the Federal Reserve Bank of Boston. “The economy and financial markets are not as stable as we previously assumed.”</p> </blockquote> <p>... The rise of Trump:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>For anyone seeking to explain one of the most unpredictable political seasons in modern history, with the rise of Donald Trump and Bernie Sanders, <strong>a prime suspect is public dismay in institutions guiding the economy and government</strong>. The Fed in particular is a case study in how the conventional wisdom of the late 1990s on a wide range of economic issues, including trade, technology and central banking, has since slowly unraveled.</p> </blockquote> <p>Here, unwittingly, Hilsenrath admits that by perpetuating the status quo policies, Yellen is explicitly furthering Hillary's presidential campaign. </p> <p>Meanwhile, revulsion against the Fed is rising:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Once admired globally for their command of the economic system, central bankers now are blamed by the left and right for bailouts during the financial crisis and for failing to foresee and manage forces suffocating the global economy in its aftermath. </p> <p>&nbsp;</p> <p>Populist protest movements called “Fed Up,” “End the Fed” and “Occupy Wall Street” lashed out at the bank’s policies, and in the case of End the Fed, its very existence. Lawmakers of both parties want to subject it to more scrutiny or curb its powers.</p> </blockquote> <p>Confidence in the Fed - and all other US institutions - has collapsed, for good reason:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“I certainly myself couldn’t have imagined six, seven years ago that we would be employing the policies we are now,” </strong>Fed Chairwoman Janet Yellen said to a packed ballroom in New York earlier this year. She lamented the government has leaned so heavily on the Fed to stimulate the economy while tax and spending policies were stymied by disagreements between Congress and the White House.<br />...</p> <p>Confidence in the central bank’s leadership has dropped. An April Gallup poll found <strong>38% of Americans had a great deal or fair amount of confidence in Ms. Yellen, while 35% had little or none</strong>. In the early 2000s, confidence in Chairman Alan Greenspan often exceeded 70%.</p> <p>&nbsp;</p> <p><img src="" width="500" height="333" /></p> </blockquote> <p>&nbsp;</p> <p>Even the Fed now admits it no longer knows what it is doing, with the main culprit being the massive debt overhang:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“What was missing to me was the in-depth understanding of how much risk and leverage had grown in the financial system and basically how lacking in resilience the financial system as a whole was to this kind of shock,” Mr. Williams said in a recent interview.</p> </blockquote> <p>And then there is the question of what happens if the Fed loses control, something one of its staffers earlier this week <a href="">said would require another $4 trillion or more in QE</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Still looming is potentially the biggest reversal of all in the modern conventions of central banking. If another recession hits, it isn’t clear the Fed has the tools available to mend the economy, a subject Ms. Yellen could address in Jackson Hole.</p> <p>&nbsp;</p> <p>Traditionally the Fed cuts interest rates in a downturn. With its benchmark short-term rate near zero, it can’t be pushed much lower. If recession hits, the Fed will likely resort to unpopular tools used after the financial crisis, including Treasury-bond purchases and more promises to keep short-term rates low far into the future.<strong> </strong></p> <p>&nbsp;</p> <p><strong>“We should be extremely worried,” Mr. Summers said. “We are essentially on a fairly dangerous battlefield with very little ammunition.”</strong></p> </blockquote> <p>* * * </p> <p>But why put this "stunning" admission out now, one day before Jackson Hole, and why confirm that the Fed is losing control in its "fight for the economy", and is responsible for the current sad state of affairs? <strong>Simple: this is the grand pivot to push for "fiscal stimulus."</strong> The irony: "fiscal stimulus" is merely a phrase for <em><strong>issue more debt</strong></em>, <a href="">at least a trillion dollars more, </a>according to a Reuters analysis. </p> <p>And all that debt will ultimately need to be purchased, or monetized, by someone. Someone like the Fed.</p> <p>In other words, all this Hilsenrath <em>mea culpa, </em>which most certainly was greenlighted by the Fed, seeks to achieve is to give the Fed ammunition to ultimately double down on the same policies that even it admits have not worked, where following the brief infatuation with a rate hike, it will once again resort to monetizing, what else, more debt. </p> <p>The real conclusion? As Matt King pointed out yesterday, when he correctly predicted that all central banks will do, is "<strong>double up"...</strong></p> <p><a href=""><img src="" width="500" height="321" /></a></p> <p><strong>...&nbsp; is that "the distortions will get even bigger."</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="620" height="465" alt="" src="" /> </div> </div> </div> Alan Greenspan Bernie Sanders Central Banks Donald Trump Fed Governor Kevin Warsh Federal Reserve Federal Reserve Bank Federal Reserve Bank Of Boston Gallup Global Economy Janet Yellen Monetary Policy None Recession Reuters Warsh White House Thu, 25 Aug 2016 15:52:07 +0000 Tyler Durden 570589 at Uber & Out? nuTonomy Launches First Driverless Taxi Service In Asia <p>Last week we noted Uber&#39;s intention to launch &quot;semi-autonomous&quot; taxis in Pittsburgh (see &quot;<a href="">Uber Determines Pittsburgh Lives Most Expendable; Plans To Unleash Autonomous Vehicles There Within Weeks</a>&quot;).&nbsp; For now, the Uber cars will still have an engineer in the driver&#39;s seat ready to grab the wheels at anytime as they <strong>continue to work out &quot;bugs&quot; like the inability to cross bridges with one engineer noting that &quot;bridges are really hard.&quot;</strong></p> <p>Now, <strong>nuTonomy&#39;s &quot;semi-autonomous&quot; vehicles are hitting the streets in Singapore.</strong>&nbsp; The company has invited a select group of people to use the service during this initial &quot;test phase&quot; and expects to launch full service by 2018.&nbsp; Per an interview with <a href="">Reuters</a>, nuTonomy executive Doug Parker sees autonomous vehicles <strong>changing &quot;how cities are built, how we really look at our surroundings.&quot;&nbsp; </strong>Unlike Uber which partnered with Volvo, nuTonomy rides will be conducted in the stylish Mitsubishi i-MiEv electric vehicle.&nbsp;</p> <p><iframe frameborder="0" height="281" scrolling="no" src="" width="500"></iframe></p> <p>&nbsp;</p> <p>As we pointed out in a post last week, to the extent the technology works consistently, avoiding the nasty consequences of death and mayhem in the event of failure, autonomous vehicles are worth big money to taxi services and consumers...though not so much for the automotive OEMs (see &quot;<a href="">Ford Announces Plans To Self-Destruct Starting In 2021</a>&quot;).&nbsp; As we pointed out, the cost of paying drivers is a substantial portion of the ~$1.00 per mile charge paid by taxi riders.&nbsp; To the extent that cost can be removed from the equation then fares charged by companies like Uber and nuTonomy will decline materially.&nbsp; The auto OEMs, on the other hand, could suffer as truly autonomous cars could result in substantial increases in passenger car utilization rates and, therefore, declines in annual car sales.&nbsp;</p> <p>That said, as <a href="">Bloomberg </a>pointed out this morning, developing autonomous vehicles is not cheap as <strong>Uber is now expected to have lost $1.3BN in 1H16.</strong>&nbsp; Moreover, Uber&#39;s losses seem to be growing as they are expected to have posted EBITDA of $(520)mm in 1Q 2016 and $(750)mm in 2Q 2016.&nbsp; EBITDA for Uber&#39;s U.S. operations also turned negative in 2Q at $(100)mm after they were expected to have been profitable in the U.S. in Q1.&nbsp; NYU Professor, Aswath Damodaran, for one, is astounded by how much money Uber has been able to lose, saying:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>You won&#39;t find too many technology companies that could lose this much money, this quickly.</strong>&nbsp; For a private business to raise as much capital as Uber has been able to is unprecedented.&quot;</p> </blockquote> <p>As Bloomberg pointed out, the<strong> amount of cash being burned by Uber is fairly unprecedented</strong>, even in the tech world.&nbsp; Even Amazon&#39;s largest loss was $1.4BN back in 2000 and Uber is eclipsing that by a large margin.&nbsp; <strong>In total, Uber has raised $16BN in equity and debt</strong> and is valued at $69BN. Hey, no one ever &quot;disrupted&quot; a market without losing a few billion first.&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="670" height="468" alt="" src="" /> </div> </div> </div> Ford Reuters Volvo Thu, 25 Aug 2016 15:24:07 +0000 Tyler Durden 570577 at CNN Yesterday: Hillary Health Concerns 'Sexist'; CNN Today: Questions Trump's Health <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog,</em></a></p> <p><strong>So which is it CNN? Is it legitimate, or is it sexist?</strong></p> <p><span style="text-decoration: underline;"><strong>Yesterday</strong></span>,<em>&nbsp;<a href="" target="_blank">The Hill</a></em> reported the following:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>New CNN political analyst Kirsten Powers says questioning&nbsp;<span class="rollover-people">Hillary Clinton</span>&lsquo;s health has &ldquo;an element of sexism to it.&rdquo;</em></strong></p> <p>&nbsp;</p> <p><em>Powers, a former Democratic strategist who just came to CNN following a long stint as a Fox News contributor, told &ldquo;New Day&rdquo; co-host Alisyn Camerota that there&rsquo;s nothing to indicate the Democratic presidential nominee is not in good health. </em></p> <p>&nbsp;</p> <p><em><strong>&ldquo;Honestly, I think there&rsquo;s an element of sexism to this,&rdquo; Powers said.</strong> &ldquo;The way that they&rsquo;ve talked about her, you know, the way you watch Drudge [Report] posting things about granny and grandma.&nbsp;</em></p> </blockquote> <p><span style="text-decoration: underline;"><strong>Now today,</strong></span> we see CNN&rsquo;s resident doctor, Sanjay Gupta, questioning Trump&rsquo;s health. I suppose it&rsquo;s ok because he&rsquo;s a man.</p> <p>Also from <a href="" target="_blank"><em>The Hill</em></a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>CNN&rsquo;s Sanjay Gupta is casting doubt&nbsp;<span class="rollover-people">Donald Trump</span>&lsquo;s health, even asking whether the GOP presidential nominee is at risk of heart disease.</em></strong></p> <p>&nbsp;</p> <p><em>&ldquo;I don&rsquo;t even know what to make of this letter,&rdquo; Gupta told CNN&rsquo;s Ashleigh Banfield on Tuesday, referring to a letter from Dr. Harold Bornstein, who examined Trump last December. &ldquo;Whether you are a doctor or not, that degree of hyperbole and these words being used is very unusual. People don&rsquo;t write like that. &lsquo;Strength and stamina are extraordinary.&rsquo; What does that mean, exactly?&rdquo;</em></p> <p>&nbsp;</p> <p><em>During&nbsp;<span class="rollover-people">Bill Clinton</span>&lsquo;s time as president, Gupta served as a healthcare adviser to&nbsp;<span class="rollover-people">Hillary Clinton</span>, Trump&rsquo;s Democratic opponent in the 2016 election.</em></p> <p>&nbsp;</p> <p><strong><em>On Wednesday, the neurosurgeon went even further in questioning Trump&rsquo;s health during an appearance on CNN&rsquo;s morning program, &ldquo;New Day.&rdquo;</em></strong></p> <p>&nbsp;</p> <p><em>&ldquo;Here you have a lot of language&nbsp;with not a lot of data to back it up,&rdquo; he told host Chris Cuomo while analyzing Bornstein&rsquo;s letter. &ldquo;They say he&rsquo;s on a statin. What&rsquo;s his cholesterol? You&rsquo;ve indicated in some way that he has some these types of medicines he&rsquo;s taking &mdash; for what, exactly? Does he have a risk of heart disease?&rdquo;</em></p> <p>&nbsp;</p> <p><strong><em>Gupta did not voice his concerns on CNN after the Bornstein letter was released by the Trump campaign late last year. &nbsp;Gupta has turned his focus to Trump, however, after the billionaire and his surrogates have questioned Hillary Clinton&rsquo;s health.</em></strong></p> <p>&nbsp;</p> <p><em>In a related item, a;<a href="" target="_blank">story</a>&nbsp;by political reporter Gregory Krieg on Wednesday concludes in a headline that &ldquo;Clinton&rsquo;s health is fine&rdquo; and asks &ldquo;but what about Trump?&rdquo;</em></p> </blockquote> <div style="float: none; margin: 10px 0 10px 0; text-align: center;"> <div class="lbk-banner-center">&nbsp;</div> </div> <p>I published a lengthy thought piece just yesterday highlighting the absurdity of the above-mentioned&nbsp;piece by Gregory Krieg. Here it is in case you missed it:&nbsp;<strong><a href="" rel="bookmark" target="_blank" title="Permanent Link to Questioning Hillary’s Health is Not Conspiracy Theory">Questioning Hillary&rsquo;s Health is Not Conspiracy Theory</a></strong>.</p> <p><strong>They don&rsquo;t call it the Clinton News Network for nothing.</strong></p> <p><img height="312" src="" width="500" /></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="267" height="175" alt="" src="" /> </div> </div> </div> Donald Trump Fox News Thu, 25 Aug 2016 15:06:09 +0000 Tyler Durden 570586 at Mylan CEO: "The US Healthcare System Bubble Is Going To Burst; This Is No Different Than The Subprime Crisis" <p>As noted earlier, following a feverish push by Congress and Hillary Clinton to scapegoat Mylan, and its CEO, Heather Bresch, as "greedy" examples of corporatism (even though it is not Mylan's fault it is a <em>de facto </em>monopoly and thus has unlimited pricing ability), the EpiPen maker on Thursday announced plans to boost access to its EpiPen Auto-Injector by expanding already existing programs for patients who are facing higher out-of-pocket costs. The company is reducing the cost of EpiPens through the use of a savings card which will cover up to $300 for the EpiPen 2-Pak.</p> <p>"We recognize the significant burden on patients from continued, rising insurance premiums and being forced increasingly to pay the full list price for medicines at the pharmacy counter," Bresch said in a statement. "Patients deserve increased price transparency and affordable care, particularly as the system shifts significant costs to them."</p> <p>Bresch - whose compensation has increased by 671% from $2.5 million in 2007 to $18.9 million in 2015 - then appeared on CNBC where she took her defence to the public. Here, she correctly noted that while corporate profitability is an issue, and Mylan's price hikes most certainly are not limited only to EpiPen...&nbsp;</p> <p><a href=""><img src="" width="500" height="285" /></a></p> <p>&nbsp;</p> <p>... price is only one part of the problem that Mylan is addressing according to its CEO. "All involved must also take steps to help meaningfully address the U.S. health care crisis," she said, "and we are committed to do our part to drive change in collaboration with policymakers, payors, patients and health care professionals."</p> <p>In other words, the company is at fault, but so is the system.</p> <p>Bresch told CNBC that the healthcare system is in crisis, causing the patient to pay for full retail prices at the drug counter and rising premiums on their health insurance, noting that "only in healthcare" you could have paid $25 yesterday at a pharmacy counter one day and up are paying $600, $1000, $2000 the next day. </p> <p>"No one's more frustrated than me," she said, and then she made a stark warning going to the heart of the problem: stating just how broken the US healthcare system - which allowed Mylan to charge as much as it did in the first place - truly is: </p> <p>"My frustration is, the list price is $608. There is a system. I laid out that there are four or five hands that the product touches, and companies that it goes through before it ever gets to that patient at the counter. Everyone should be frustrated. I'm hoping that this is an inflection point for this country. <strong>Our healthcare is in a crisis, it's no different than the mortgage financial crisis back in 2007. This bubble is going to burst</strong>."</p> <p>Which, incidentally, is what we expected <a href="">yesterday would happen</a>: having been attacked by the same government whose regulations allowed her to charge as much as she does for Mylan drugs, she did the only rational thing possible: take the fight to where it should be waged, namely in Congress. </p> <p>At the end of the day, the truth is inbetween: there is corporate greed which is ultimately capitalism's fundamental profit motive, and then there is Congress, which is happy to collect hundreds of millions in lobby funding from the pharma industry, which generated unprecedented returns on its bribes to politicians.</p> <p>&nbsp;</p> <p><a href=""><img src="" width="498" height="224" /></a></p> <p>Today's crackdown on Mylan may have kicked the can, but absolutely nothing has been fixed, which is why Bresch is absolutely right: sooner or later the bubble will burst, but until then it will be covered by the only way the US government knows: with even more debt. </p> <p><em>Her full interview with CNBS is below, and the key segment is 3:40 mins in.</em></p> <p><iframe src=";byGuid=3000545943&amp;size=530_298" width="530" height="298"></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="558" height="398" alt="" src="" /> </div> </div> </div> fixed Transparency Thu, 25 Aug 2016 14:43:25 +0000 Tyler Durden 570584 at Gold Wins In Three Out Of Four Scenarios, Macquarie Warns "None Of Them Are Good For The Economy" <p><a href=""><em>Submitted by Valentin Schmid via The Epoch Times,</em></a></p> <div id="content"> <p><strong>Warren Buffett claims that gold is worthless because it doesn&rsquo;t produce anything. Fair point, but what if the other sectors of the economy also stop producing?</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;If you <a href="">think of gold</a>, the only way gold loses is if normal business and private sector cycles come back. If that is the case, gold goes back 100 dollars per ounce. The other outcomes, deflation, stagflation, hyperinflation are good for gold,&rdquo; said Viktor Shvets, global strategist for investment bank Macquarie Group. <strong>So gold wins in three out of four scenarios, but none of the three are particularly appealing.&nbsp; </strong></p> </blockquote> <p>He believes aggressive action by the <a href="">world&rsquo;s central banks</a> after the financial crisis has <strong>covered up a <a href="">lack of private sector productivity</a>.</strong></p> <p>Also, the movements of central banks and governments have replaced private sector investment signals such as earnings and employment data. So everything comes down to confidence in central banks.</p> <div class="pull-quote"> <p class="quote-content"><em><strong>&quot;If people become more confident, gold will ease back. But when the chickens come home to roost, gold will come back,&rdquo;</strong></em> he said. Gold futures have rallied 26 percent this year after the Federal Reserve shook confidence in its ability to manage the economy by raising interest rates last December. <a href="">Junior gold mining stocks</a>, the companies most sensitive to gold price increases rallied 155 percent this year.</p> </div> <div class="wp-caption alignnone" id="attachment_2143530" style="width: 590px;"><a class="light-box" href=""><img alt="Price changes in selected future contracts (" class="size-medium wp-image-2143530" src="" style="width: 500px; height: 742px;" /></a><br /> <div class="wp-caption-text"><em>Price changes in selected future contracts as of August 23, 2016. (</em></div> </div> <p>The lack of success of conventional monetary policies in spurring economic activity has prompted some Fed officials to call for more unconventional methods&nbsp;in case the economy turns south again.</p> <p><strong>&ldquo;Conventional monetary policy has less room to stimulate the economy during an economic downturn,&rdquo; </strong>San Francisco Fed President <a href="">John Williams wrote in an essay.</a> <em>&ldquo;This will necessitate a <strong>greater reliance on unconventional tools like central bank balance sheets, forward guidance, and potentially even negative policy rates. I</strong>n this new normal, recessions will tend to be longer and deeper, recoveries slower and the risks of unacceptably low inflation&hellip;will be higher.&rdquo;&nbsp;</em></p> <p>Especially the topic of negative interest scares some of the most high-profile money managers. Lord Jacob Rothschild, the chairman of Rothschild Investment Trust, <a href="">wrote in a letter to clients</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters, and it is impossible to predict the unintended consequences of very low-interest rates, with some 30 percent of global government debt at negative yields, combined with quantitative easing on a massive scale.&rdquo;</strong></em></p> </blockquote> <p>According to Shvets, this <span style="text-decoration: underline;"><strong>may just be the beginning as investors and citizens reject these policies and are looking for alternatives like gold, physical cash, bitcoin, and real estate.</strong></span></p> <div class="wp-caption alignnone" id="attachment_2143398" style="width: 590px;"><a class="light-box" href=""><img alt="Viktor Shvets, global strategist of Macquarie Group being interviewed by Bloomberg in an undated screenshot. (Bloomberg)" class="size-medium wp-image-2143398" src="" style="width: 500px; height: 281px;" /></a><br /> <div class="wp-caption-text"><em>Viktor Shvets, global strategist of Macquarie Group being interviewed by Bloomberg in an undated screenshot. (Bloomberg)</em></div> </div> <p><em><strong>&ldquo;Bitcoin and gold can both be prohibited by the government. How do you force people to do things they are reluctant to do? The way to do it is to close down alternatives like real estate, cash, and gold. You could force people underground, hoarding cash with warehouse receipts, or warehousing gold illegally,&rdquo;</strong></em> he said.</p> <p>In some ways, this is already happening. When a Swiss pension fund asked one of the bigger Swiss banks to pay out a larger amount of cash to save the negative rate penalty, the bank denied the request, <a href="">according to a report by&nbsp;Schweizer Radio und Fernsehen in March</a>.&nbsp;</p> <p>Where will all this lead? <span style="text-decoration: underline;"><strong>Shvets believes there has to be reset of the financial system to get rid of a couple hundred&nbsp;trillion&nbsp;dollars of debt.</strong></span> <em>&nbsp;</em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;Right now we are still on the U.S. dollar standard. Since the Bretton Woods&nbsp;system ended in 1971, we are on the U.S. dollar standard. How will the monetary system rebase itself? Is it going to be gold, is it going to be a global currency? British economist John Maynard Keynes was already suggesting in 1944 to create a global currency,&rdquo; said Shvets.</em></p> </blockquote> <p>The new global currency could only be the derivative of five international currencies issued by the <a href="">International Monetary Fund (IMF)</a>. It is called <a href="">Special Drawing Rights (SDR)</a>. It represents the right to draw on members of the IMF and get paid in the components of the basket, which is made up of dollar, euro, yen, pound, and as of Oct. 1, 2016, Chinese yuan.</p> <p>Globalist academics, central bankers, as well as the IMF itself and other international organizations have started a <a href="">massive publicity campaign</a> in 2016 to push for the SDR as a global currency. It culminated in the first issuance of a private SDR bond worth $2.8 billion by the World Bank <a href="">in the Chinese bond market in August</a>.</p> <p>Are we going to have a global currency? <em><span style="text-decoration: underline;"><strong>&ldquo;Countries would have to give up their domestic independence. Country&rsquo;s are reluctant to do that. So usually that&rsquo;s done after the war,&rdquo;</strong></span></em> said Shvets. <span style="text-decoration: underline;"><strong>What about a return to the gold standard? Maybe, but also only after the war.&nbsp;</strong></span></p> </div> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="653" height="379" alt="" src="" /> </div> </div> </div> Bitcoin Bond Central Banks Federal Reserve Hyperinflation International Monetary Fund John Maynard Keynes John Williams Maynard Keynes Monetary Policy New Normal None Quantitative Easing Real estate San Francisco Fed Stagflation Swiss Banks Warren Buffett World Bank Yen Yuan Thu, 25 Aug 2016 14:22:04 +0000 Tyler Durden 570582 at