en Meanwhile, The "Next Big Short" Is Quietly Blowing Up <p>Back in March, <a href="">when we detailed the ongoing catastrophic deterioration in the US retail sector</a>, manifesting itself in empty malls, mass store closures, soaring layoffs and growing bankruptcies - demonstrated most vividly by the overnight bankruptcy of Toys "R" Us, the second largest retail bankruptcy in US history after K-Mart - we said that "just like 10 years ago, when the "big short" was putting on the RMBX trade, and to a smaller extent, its cousin the CMBX, <strong>so now too some are starting to short CMBS through the CMBX</strong>, a CDS index which tracks the values of bonds backed by various commercial properties. They are betting against securities backed by malls in weaker locations where stores could close in quick succession, triggering debt defaults."</p> <p>We dubbed this retail short via CMBX, the next <strong>"Big Short" </strong>trade, and many other promptly followed. </p> <p><a href=""><img src="" width="500" height="261" /></a></p> <p>In a subsequent post just a few days later, we underscored why the correct way to short the great retail collapse was not so much through stocks, but CMBX:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The trade, as we discussed before, is not so much shorting the equities where a persistent threat of a short squeeze has burned the bears on more than one occasion, but going long default risk via CMBX or otherwise shorting the CMBS complex. Based on fundamentals, the trade indeed appears justified: Sold in 2012, the mortgage bonds have a higher concentration of loans to regional malls and shopping centers than similar securities issued since the financial crisis. And because of the way CMBS are structured, the BBB- and BB rated notes are the first to suffer losses when underlying loans go belly up.</p> </blockquote> <p>As we also noted, cracks had started to appear. As of <a href="">mid-March, prices on the BBB- pool </a>of CMBS have slumped from roughly 96 cents on the dollar in late January to 87.08 cents last week, index data compiled by Markit show.</p> <p><a href=""><img src="" width="500" height="264" /></a></p> <p>So fast forward 6 months to today, when Goldman Sachs - a firm known to dabble with prop positions in both RMBS and CMBS in the past - itself takes aim at the CMBX trade, and in a report by Marty Young, writes that the "CMBX market doubts viability of US retail malls," which highlighting the dramatic crash in select CMBX issues we touched upon over half a year ago. </p> <p>Explicitly using the term coined here first, and calling it the next "big short", Goldman writes that while 2017 has generally been a year of low volatility and tight spreads across most asset classes, <strong>the CMBX market has been a notable exception. </strong>Spreads on CMBX 6 BBB- have widened 300bp since the start of the year <strong>and now trade 385bp wide to CDX HY </strong>(Exhibit 1). More notable, the trade appears to be accelearting to the downside, <strong>and in the past six weeks alone, spreads have moved more than 100bp.</strong></p> <p><a href=""><img src="" width="500" height="352" /></a></p> <p>In other words, in a world in which all asset classes appears to be only going up, <strong>CMBX, and specifically the CMBX 6 BBB- tranch, has indeed emerged as this year's "Big Short."</strong></p> <p>What has driven such a significant sell-off, Goldman asks, and then provides the following answer.&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong> A market narrative has emerged that CMBX 6 BBB- is the next “big short” of brick-and-mortar retail. </strong>The “death of retail” story is nothing new, but fresh fears have arisen this year that 2017 marks the tipping point. <strong>Following an inexplicably weak holiday retail season and a raft of store closures and bankruptcies this year, concerns are growing that the pace of deterioration has inflected higher for brick-and-mortar retailers</strong>. Although the disruption from e-commerce has been clearly visible for more than a decade, store-based retailers have been unprepared for the onslaught of online retail (“The Store of the Future,” Profiles in Innovation, August 2, 2017). <strong>The market’s increasing anxiety over regional malls and traditional anchor stores is also evident in retail stocks. </strong>Exhibit 2 shows that as equity markets have grown enthusiastic about the big names in e-commerce, they have grown only more negative on department stores. <strong>These struggling anchors in turn threaten the mall ecosystem</strong>. Markets have been acutely concerned with Sears in&nbsp; particular this year: Exhibit 3 shows that, with a spread level of roughly 3500bp, the CDS market is implicitly pricing a high likelihood that the company experiences distress. </p> <p>&nbsp;</p> <p><a href=""><img src="" width="500" height="221" /></a></p> </blockquote> <p>For those who are unfamiliar with the basis of the trade, Goldman lays them out, as well as providing a detailed perspective on whether this "Big Short" has (much) more room to run. </p> <p>First, what is it?</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>CMBX 6 BBB- is a synthetic, equal-weighted index of 25 CMBS mezzanine bonds <strong>that were rated BBB- at issue and issued between March and December of 2012 </strong>(CMBX 6 has AAA through BB tranches, but in this report we focus on the BBB- layer as it has been the focus of markets this year). Retail is the largest underlying property type (39%), which explains the exposure to negative retail sentiment. Office (27%) and lodging (11%) properties are second- and third-largest property types, respectively. The average loan-to-value (LTV) of the underlying collateral was approximately 64% at origination, with a debt service coverage ratio (DSCR) of approximately 1.9x. While the average deal was comprised of a pool of 64 loans, <strong>the top 10 loans account for nearly 55% of each deal on average, with the largest loan averaging approximately 10</strong>%. Most of these loans have a maturity of ten years, and thus will mature in 2022. </p> <p>&nbsp;</p> <p>The tranched nature of CMBX reference entities is critical from a pricing perspective and distinguishes the product from corporate CDX. Since the most junior tranches in a CMBS deal incur losses first, there is a potential convexity to the spreads on CMBX BBB- as they need to price the possibility that these tranches could be completely wiped out. <strong>Put differently, even though CMBX 6 contains roughly 1,600 loans overall, the performance of the BBB- tranches is tied significantly to the lowest-quality mortgages in the portfolio, which is not offset by a strong performance of the aggregate portfolio. This is what makes CMBX 6 BBB- particularly vulnerable to the headwinds facing regional malls. </strong></p> <p>&nbsp;</p> <p><strong>Exhibit 4 shows in four charts how a unique market narrative has formed around CMBX 6 BBB-. </strong>First, the spread on the BBB- tranche of CMBX series 7 ? a largely similar product comprised of CMBS issued in 2013 ? has also widened meaningful this year, but the move has been far more pronounced for the 6 series. Second, while the spreads on the synthetic index have widened hundreds of basis points since January, the spreads on the CMBS cash bond underliers have widened only a fraction of that. This deviation between cash and index could, to a degree, represent stale pricing marks on the cash bonds, given the limited trading volumes in the bond space. However, there have been enough trade prints in the sector to indicate that the pressure on spreads has been felt more acutely in index than in cash. <strong>Third, when CMBS investors have come under pressure in the past, spreads have widened at every level of the quality spectrum. This time, however, the more junior tranches have clearly underperformed, suggesting markets are pricing a scenario in which distressed assets default en masse. </strong>Fourth,<span style="text-decoration: underline;"><strong> the open interest in CMBX 6 BBB- has increased significantly this year, consistent with the story that this is the new "big short."</strong></span></p> <p><span style="text-decoration: underline;"><strong><br /></strong></span></p> <p><a href=""><img src="" width="500" height="392" /></a></p> </blockquote> <p>Goldman next lays out the "bear case" which as one can imagine, is substantial.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Retail malls face significant pressure from online retail, which continues to grow at roughly 15% each year, as well as fast-fashion chains and off-price retailers. Moreover, many of the anchor stores on which malls depend appear to be experiencing difficulties, and 2017 has seen the big department stores announce a host of store closures. The CDS market appears to be pricing in a high probability of distress at Sears, which would send a tremor through the mall ecosystem. And some malls have co-tenancy clauses that can amplify the impact of the department store distress by allowing other tenants to reduce their rent if an anchor closes. <strong>The slew of store closures is not limited to anchor stores, as malls are grappling with the poor performance of many national retailers. Given its significant retail exposure, CMBX faces the same headwinds that currently plague mall REITs.</strong> </p> <p>&nbsp;</p> <p>The nature of the CMBX product makes it especially vulnerable to a retail downturn. <strong>First, as we noted before, CMBX is a tranched product, which means that if losses for a deal are severe enough (i.e., exceed the tranche detachment point), the recovery rates on the bonds can be 0%. </strong>By comparison, high yield corporate bond defaults usually have material recovery value. Second, the 25 deals that comprise CMBX 6 are not homogenous and the high-risk mall loans are not evenly distributed among them. If the high risk loans were spread evenly across the 25 deals, it is likely that, even if we assumed 100% losses on all of these loans, no one deal would incur sufficient losses to affect CMBX 6 BBB- in the aggregate (i.e., deal-level losses would never reach the attachment points). <strong>However, the high concentration of high-risk loans in a handful of deals threatens large losses on the product as a whole from a relatively small number of defaults. </strong></p> <p>&nbsp;</p> <p><strong>Finally, a popular narrative that has helped drive this year’s spread widening is that Sears – commonly a tenant for many of the weaker malls in CMBX 6 – is itself at risk of imminent default</strong>. The CMBX market is worried that, if Sears defaults, it jeopardizes many of these weaker malls. For example, the Midland Mall in Midland, MI defaulted on its loan last year shortly after the Sears at that location closed. While it is&nbsp; difficult to tie the default directly to the Sears closure, the loss of a large tenant likely increased the pressure on the mall. Earlier this year, J.C. Penney announced plans to close its store at Midland Mall, demonstrating the potential spiral that struggling malls face upon losing a tenant like Sears. <strong>Since many of the at-risk malls in CMBX 6 share the same few large tenants such as Sears, J.C. Penney, and Macy’s, a round of store closures or a bankruptcy filing from a single retailer could do disproportionate damage to the CMBX portfolio.</strong></p> </blockquote> <p>To be sure, Goldman then goes through the bull case, and looks at the remittance data, which - so far - show no major signs of trouble (readers can bother their friendly Goldman sales coverage for the full report), suggesting that it is possible that the CMBX market may be getting ahead of itself. Or perhaps, like in the case of TOYS bonds, which snapped from par to 20 cents in the matter of days, what the market is underestimating is the risk of a sharp, downward inflection point as the economy, and especially US consumer, slows down further, resulting in another step wise spike in defaults. </p> <p>Goldman's analyst reports as much and notes, that while the CMBX "big short" may work, it will require an inflection in performance. Here is the conclusion.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Brick-and-mortar retailers have been fighting competition from e-commerce for years. This long-running trend is visible in the rising e-commerce share of retail sales, declining same-store sales numbers, and increasing numbers of store closures. These trends, combined with the highly leveraged nature of CMBS deal structures, have fueled a bearish market narrative that has repriced the mezzanine tranches of CMBX significantly wider. <strong>This view has been particularly focused on scenarios where a subset of the lowest-quality malls generate a large number of mortgage defaults. </strong></p> <p>&nbsp;</p> <p>So far, such a deterioration in mortgage quality is not yet visible in recent vintage delinquency performance data. <strong>We find the bearish narrative persuasive, but to realize the defaults being priced by CMBX 6 BBB- will require a future deterioration in mortgage performance, which our analysis suggests would be a departure from historical predictive relationships. </strong>In our view, this “top-down” assessment highlights the critical importance of modeling the “bottom-up” credit stories. As described above, it is not hard to construct scenarios with significantly higher default losses than what we find using our narrative-free statistical analyses, and structured CMBS bonds would be highly exposed to such a collapse of the retail sector.</p> </blockquote> <p>What Goldman is effecitvely saying is that absent a recession, or a market crash, the trade may have little widening left. Which, of course is ironic, <a href="">because just several days ago, it was <strong>also Goldman </strong>that calculated </a>that <strong>the risk of a market crash has soared to roughly 67%, </strong><span style="text-decoration: underline;">as high as it was before the dot com and Global Financial Crisis crashes</span>:</p> <p><strong>&nbsp;</strong> </p> <p><a href=""><img src="" width="500" height="359" /></a></p> <p>One final "hedging" observation from Goldman: in case the cautiously optimistic outlook is unwarranted, will a potential implosion in the CMBX 6 result in systemic risk? Here is Goldman's answer:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The spread widening in mezzanine CMBX tranches – and not in more senior tranches – is pointing to an expectation of high default rates on a small number of low-quality malls. <strong>If this bear case were to be realized, it would not likely cause a systemic risk event comparable to 2008, due to the low amount of mall debt relative to the amount of residential mortgage debt outstanding prior to the financial crisis</strong>. If commercial mortgage losses were to occur due to severe declines in commercial property price across all sectors – including retail, office, apartment and hotel – the impacts could be greater, given the large amount of commercial real estate exposure on US bank balance sheets. But this is not the risk scenario that CMBX markets seem to be pricing.</p> </blockquote> <p>Of course, if a Goldman is wrong, and a terminal collapse in CMBX 6 does prompt the next systemic crisis - which of course won't be catalyzed by the losses in this segment of the Commercial Real Estate market but due to a sharper deterioration in the broader economy, all that would result in is another bailout from the Fed because as Deutsche Bank said earlier today: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"... by continually using stimulus to deal with crises and not letting<br /> creative destruction take over, you make a subsequent crisis more likely<br /> by passing the problem along to some other part of the global financial<br /> system, and usually in bigger size. <strong>In a fiat currency world,<br /> intervention and money creation is the path of least resistance</strong>. In a<br /> Gold standard world, mining new gold was the only stable way of<br /> increasing the money supply. we think this leaves the current global economy particularly prone to a cycle of booms, busts, heavy intervention, recovery and the cycle starting again. <strong>There is no natural point where a purge of the excesses is forced by a restriction on credit creation."</strong></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="512" height="265" alt="" src="" /> </div> </div> </div> Bond Business CDS CDS Commercial mortgage-backed security Commercial Real Estate Convexity default Deutsche Bank Economy Equity Markets Finance Financial crisis of 2007–2008 Global Economy goldman sachs Goldman Sachs High Yield Market Crash Markit Money Money Supply Mortgage-backed security Real estate Recession recovery REITs Retail Retailing Sears Sears Holdings Shopping mall Structured finance Systemic risk US Federal Reserve Volatility Tue, 19 Sep 2017 17:04:03 +0000 Tyler Durden 603785 at Small-Town American Budgets Devastated By Opioid Crisis As 41 States Subpoena Big Pharma <p>A surge in Opioid consumption, primarily prescription painkillers, heroin and fentanyl - a drug 50 to 100 times more powerful than morphine - and the resulting spike in overdose related deaths is devastating families in rural America.&nbsp; But the opioid epidemic is laying waste to more than just the broken families it counts among its victims, as <a href="">Reuters </a>points out today, <strong>rural municipalities are finding it nearly impossible to fund the surging costs associated with overdoses</strong> which come in the form of <strong>emergency call volumes, medical examiner and coroner bills, and overcrowded jails and courtrooms. &nbsp;</strong></p> <p>As an example, Ross County, Ohio, a town of only 77,000, says its <strong>budget for child services has doubled in just 5 years</strong> and 75% of the children place into protection come from homes where parents have opioid addictions.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Ross County, a largely rural region of 77,000 people an hour south of Columbus, Ohio, is wrestling with an explosion in opioid-related deaths - 44 last year compared to 19 in 2009. The drug addiction epidemic is shattering not just lives but also stressing the county budget.</p> <p>&nbsp;</p> <p><strong>About 75 percent of the 200 children placed into state care in the county have parents with opioid addictions, </strong>up from about 40 percent five years ago, local officials say. Their care is more expensive because they need specialist counseling, longer stays and therapy.</p> <p>&nbsp;</p> <p>That has caused a near <strong>doubling in the county’s child services budget to almost $2.4 million from $1.3 million</strong>, said Doug Corcoran, a county commissioner.</p> <p>&nbsp;</p> <p>For a county with a general fund of just $23 million, that is a big financial burden, Corcoran said. He and his colleagues are now exploring what they might cut to pay for the growing costs of the epidemic, such as youth programs and economic development schemes.</p> </blockquote> <p><img src="" alt="Opioid" width="600" height="333" /></p> <p>&nbsp;</p> <p>But it's not just the cost of child services that is wreaking havoc on municipal budgets as everything from autopsy and toxicology costs to court fees and jail expenses are surging throughout rural America.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Autopsy and toxicology costs there have nearly doubled in six years,</strong> from about $89,000 in 2010 to $165,000 in 2016, county data shows.</p> <p>&nbsp;</p> <p><strong>Court costs are soaring, </strong>mainly because of the expense of prosecuting opioid-related crimes and providing accused with a public defender, local officials say.</p> <p>&nbsp;</p> <p>The county is using contingency funds to pay for the added coroner costs, said Mike Baker, the county’s top government official. Last year, the county drew $63,000 from those funds, up from $19,000 in 2014, he said. In 2014, the county saw 10 drug-related deaths. In 2016, the number had grown to 53.</p> <p>&nbsp;</p> <p>In Mercer County, West Virginia, 300 miles (483 km) to the south of Indiana County, opioid-related jail costs are carving into the small annual budget of $12 million for the community of 62,000 people.</p> <p>&nbsp;</p> <p><strong>The county’s jail expenses are on course to increase by $100,000 this year, compared to 2015.</strong> The county pays $48.50 per inmate per day to the jail, and this year the jail is on course to have over 2,000 more “inmate days” compared to 2015, according to county data.</p> <p>&nbsp;</p> <p><strong>“At least 90 percent of those extra jail costs are opioid-related,” </strong>said Greg Puckett, a county commissioner who sits on a national county opioid task force. “We spend more in one month on our jail bill than we spend per month on economic development, our health department and our emergency services combined.”</p> </blockquote> <p>Meanwhile, as Bloomberg has just noted, attorneys general from 41 states are broadening their investigation into the opioid industry and have served subpoenas to five pharma companies that make the most powerful prescription painkillers.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>They announced Tuesday that they had<strong> served subpoenas requesting information from five companies that make powerful prescription painkillers and three distributors.</strong> Forty-one attorneys general are involved.</p> <p>&nbsp;</p> <p>The investigation into marketing and sales practices seeks to find out whether the industry's own actions worsened the epidemic.</p> <p>&nbsp;</p> <p><strong>If the industry cooperates, the investigation could lead to a national settlement.</strong></p> <p>&nbsp;</p> <p>The Healthcare Distribution Alliance said in a statement that it's not responsible for the volume of opioid prescribing but that it does want to work on solving the public health crisis.</p> <p>&nbsp;</p> <p>Dozens of local and state governments have already filed, announced or publicly considered lawsuits against drugmakers or distributors.</p> </blockquote> <p>To add some context to the scale of the opioid epidemic, the California Department of Public Health recently dropped some staggering statistics showing that there are a remarkable number of counties in California where annual prescriptions for pain killers actually exceed the population. &nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Trinity County is the state’s fourth-smallest, and ended last year with an estimated population of 13,628 people.</strong></p> <p>&nbsp;</p> <p><strong>Its residents also filled prescriptions for oxycodone, hydrocodone and other opioids 18,439 times,</strong> the highest per capita rate in California.</p> <p>&nbsp;</p> <p>Besides Trinity, other counties with more prescriptions than people include Lake, Shasta, Tuolumne and Del Norte counties. In the Sacramento region, El Dorado, Placer and Sacramento counties had prescription rates above the statewide average, with Yolo County slightly below the state average.</p> <p>&nbsp;</p> <p>A county’s prescription total represents all opioids dispensed via prescriptions filled at a pharmacy and tracked by the state. Statewide, 15 percent of Californians were prescribed opioids in 2016, ranging from 7.3 percent of residents in tiny Alpine County to almost 27 percent in Lake County.</p> </blockquote> <p>As might be expected, the scripts per capita are highest in California's more rural northern counties.</p> <p><a href=" - Cali Op 1.JPG"><img src="" style="width: 550px; height: 501px;" /></a></p> <p>&nbsp;</p> <p>So who is participating most in this deadly epidemic?&nbsp; Well, according the Centers for Disease Control and Prevention, the biggest abusers of opioids are high-school educated, unemployed, white people living in small towns...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“The following characteristics were associated with higher amounts of opioids prescribed: <strong>a larger percentage of non-Hispanic whites; higher rates of uninsured and Medicaid enrollment; lower educational attainment; higher rates of unemployment; (small-town) status; more dentists and physicians per capita; a higher prevalence of diagnosed diabetes, arthritis, and disability; and higher suicide rates,”</strong> concluded the authors of a Centers for Disease Control and Prevention study released in July.</p> <p>&nbsp;</p> <p><strong>“What you’re seeing in California is what you’re seeing in many parts of the country, including Oregon,”</strong> Korthuis said.<strong> “There are still a lot of rural counties around the U.S. that are awash in prescription opioids.”</strong></p> </blockquote> <p>Of course, growth in opioid addiction is hardly just a California phenomenon.&nbsp; According to the CDC's <a href="">Annual Surveillance Report of Drug-Related Risks and Outcomes</a>, addiction-related deaths are far more prevalent in the rural 'rust-belt' states of the Midwest.</p> <p><a href=" - Cali Op 4_1.JPG"><img src="" style="width: 600px; height: 325px;" /></a></p> <p>&nbsp;</p> <p>Meanwhile, the epidemic is growing far more severe every year with overdose deaths up 167% across the country since 1999.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The rate of drug overdose deaths increased from 6.1 per 100,000 population in 1999 to 16.3 in 2015; for unintenttional drug overdose deaths, the rate increased from 4.0 per 100,000 in 1999 to 13.8 in 2015; for drug overdose deaths involving any opioid, the rate increased from 2.9 per 100,000 in 1999 to 10.4 in 2015 (p&lt;0.05); for unintenttional drug overdose deaths involving any opioid, the rate increased from 2.1 per 100,000 in 1999 to 9.3 per 100,000 in 2015 (p&lt;0.05). For all four categories of drug overdose deaths, increases in rates were largest from 2013 to 2015, with the rate increasing on average by 9% per year for overall drug overdose deaths (p&lt;0.05), 11% per year for unintenttional drug overdose deaths (p&lt;0.05), 15% per year for drug overdose deaths involving any opioid (p&lt;0.05), and 16% for unintenttional drug overdose deaths involving any opioid (p&lt;0.05).</p> </blockquote> <p><a href=" - Cali Op 3.JPG"><img src="" style="width: 600px; height: 244px;" /></a></p> <p>&nbsp;</p> <p>But don't worry too much because, as Princeton Economist Alan Krueger told us recently, there is a simple solution to the opioid epidemic in the U.S...apparently it can <a href="">all be solved with just a little more Obamacare</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="689" height="384" alt="" src="" /> </div> </div> </div> California Department of Public Health Centers for Disease Control and Prevention Chemistry Drug overdose Euphoriants Healthcare Distribution Alliance Indiana Morphinans Morphine Neurochemistry Neuroscience Obamacare Ohio Opioid Opioid epidemic Organic chemistry Oxycodone Reuters RTT Social Issues Substance dependence Unemployment West Virginia Tue, 19 Sep 2017 16:40:41 +0000 Tyler Durden 603764 at The Dangers Of Performance-Chasing <p><a href=""><em>Authored by Lance Roberts via,</em></a></p> <p>In this&nbsp;<a href="" rel="noopener" target="_blank">past weekend&rsquo;s newsletter,&nbsp;</a>I addressed three of my concerns for the markets going forward.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;Chart 2) One of the hallmarks of a late-stage bull market cycle is the acceleration in price as investors capitulate by &ldquo;jumping in&rdquo;</em>&nbsp;as prices accelerate.<em>&nbsp;While the long-term moving averages currently suggest the bull cycle is intact, we will watch for the crossover to&nbsp;<strong>give us an indication of when to leave.&rdquo;</strong></em></p> </blockquote> <p><a href=""><img class="alignnone size-full wp-image-23510" src="" style="width: 600px; height: 356px;" /></a></p> <p>The acceleration in the increase of prices is a hallmark of <em>&ldquo;exuberance&rdquo;</em> in the markets. Not surprisingly, the sharp increase in asset prices, as the markets broke through successive barriers of 2200, 2300, 2400 and 2500, has spurred investor optimism to the highest levels in 17-years as <a href="" rel="noopener" target="_blank">noted last week:</a></p> <p><a href=""><img class="alignnone size-full wp-image-23415" src="" style="width: 600px; height: 310px;" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;The latest boost in optimism pushes the index almost 100 points higher than the +40 score measured in February 2016. The 98-point hike over the past 18 months is the largest increase in the 20-year history of the index that is not a rebound immediately after a major drop in optimism.</em></p> <p>&nbsp;</p> <p><em>After more than 8-years of a surging bull market, often declared the &lsquo;most hated in history,&rsquo;</em></p> </blockquote> <ul> <li><em><strong>Sixty-eight percent</strong> <strong>now say they are optimistic about the stock market&rsquo;s performance during the next year,</strong> <strong>matching the record high for the question from December 1999 and January 2000.</strong></em></li> <li><em>At least 61% have expressed optimism about the stock market in each of the three surveys this year, <strong>a percentage matched or exceeded only four other times in the 132 times the question has been asked since April 2000.</strong></em></li> <li><em><strong>Twenty-five percent say they are &lsquo;very optimistic,&rsquo; topping the previous record high of 24% from the first quarter of this year</strong>. Only 11% were very optimistic a year ago.</em></li> <li><em>Sixty-one percent of investors now say it is a good time to invest in the stock market, up from 53% two years ago. <strong>Among those saying it&rsquo;s a good time to invest, the main reason is their belief that the market will continue to increase, mentioned by 47%.&rdquo;</strong></em></li> </ul> <p>As Robert Shiller penned <a href=";_r=0" rel="noopener" target="_blank">for the NYT</a>, that surge in optimism is symptomatic of a bigger issue:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="story-body-text story-content"><em>&ldquo;Canny stock investors are like judges in a quirky&nbsp;beauty contest. They aren&rsquo;t looking for real beauty but for qualities that&nbsp;other&nbsp;people believe&nbsp;still&nbsp;other people&nbsp;will find beautiful.</em></p> <p class="story-body-text story-content">&nbsp;</p> <p class="story-body-text story-content"><em>That was the observation of John Maynard Keynes, who suggested that investors do not actually make money by picking the best companies, but by picking stocks that waves of other traders will want to buy.</em></p> <p class="story-body-text story-content">&nbsp;</p> <p class="story-body-text story-content"><em><strong>Investing, in other words, is an exercise in mass psychology.&rdquo;</strong></em></p> </blockquote> <p>The belief that Central Banks have the markets under control is a dangerous one. While many believe that just a few Central Bankers have the foresight and capability to control a market driven by human emotion and frailties, such is unlikely to be the case. This was a point&nbsp;John Mauldin clearly made this past weekend:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;This time is different&nbsp;are the four most dangerous words</strong> any economist or money manager can utter. We learn new things and invent new technologies. Players come and go. <strong>But in the big picture, this time is usually not fundamentally different, because fallible humans are still in charge.</strong> (Ken Rogoff and Carmen Reinhart wrote an important book called&nbsp;This Time Is Different&nbsp;on the 260-odd times that governments have defaulted on their debts; and on each occasion, <strong>up until the moment of collapse, investors kept telling themselves &lsquo;This time is different.&rsquo; It never was.</strong>)&rdquo;</em></p> </blockquote> <p>As shown in the chart below, which is monthly price data, the market is trading 3-standard deviations and nearly 17% above its 3-YEAR moving average. Such extensions and deviations have generally not lasted long, but are evidence of the bullish psychology driving the market.</p> <p><a href=""><img class="alignnone size-full wp-image-23544" src="" style="width: 600px; height: 451px;" /></a></p> <p>I agree with Dr. Shiller <strong>that such does NOT mean</strong> there is a crash coming tomorrow:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="story-body-text story-content"><em>&ldquo;But the result is that while valuations remain very high there just doesn&rsquo;t seem to be much evidence that many investors in the United States stock market are actively worrying today that&nbsp;other&nbsp;investors are on the verge of selling. <strong>Mass opinions may well change,</strong> but for now, in the critical psychological dimension, the stock market does&nbsp;not&nbsp;closely resemble the market in the dangerous years of 1929 or 2000.</em></p> <p class="story-body-text story-content">&nbsp;</p> <p class="story-body-text story-content"><em>That doesn&rsquo;t mean that there is no danger of a crash. <strong>But at the moment, the psychological preconditions for a spiraling downturn don&rsquo;t appear to be in place.&rdquo;</strong></em></p> </blockquote> <p>As is always the case in late-stage bull market advances, the need to chase performance overrides the logic of investing for the long-term. More importantly, <strong>mass opinions can change</strong> extremely quickly. <strong>Like a slow leak in the hull of a ship, it will begin slowly, but the eventual rupture will send participants scrambling for the lifeboats.</strong></p> <p>You can&rsquo;t blame individuals really. They are inundated daily by media-driven commentary that pushes them to <em>&ldquo;jump in because they are missing out.&rdquo;</em>&nbsp;This sense of urgency to be invested leads to performance chasing of things that have already done well. As I have shown previously, there is substantial evidence that buying last year&rsquo;s <em>&ldquo;winners,&rdquo;</em> more often than not, turn out to be this year&rsquo;s <em>&ldquo;losers.&rdquo;</em></p> <p>Rob Arnott, Vitali Kalesnik and Lillian Wu of Research Affiliates made a brilliant point about the <a href=";_cldee=anRhbW55QHJlYWxjbGVhcm1hcmtldHMuY29t&amp;recipientid=contact-e6289710c8cbe2119aa70" rel="noopener" target="_blank">danger of performance chasing:</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;Joe Kennedy famously said on the eve of the 1929 stock market crash: &lsquo;When shoeshine boys have tips, the stock market is too popular for its own good.</strong>&lsquo; </em></p> <p>&nbsp;</p> <p><em>The negative relationship between a manager&rsquo;s past and future simple returns means that when your cab driver or bartender (shoeshine boys are less common these days) tells you about an investment with recent double- or triple-digit returns&mdash;beware! <strong>That may just be the signal to stay away from the market, and most particularly, from the winningest funds.</strong> Reciprocally (from repeated personal experience in 1974, 1982, 1987, 2002, and 2009), when you hear reasonably savvy people saying they&rsquo;ll never invest in stocks again, chances are stocks are at extremely low valuations and are a bargain.<span style="font-size: 13.3333px;">&ldquo;</span></em></p> </blockquote> <p><strong>In other words, investing successfully is, in part, learning to do what is uncomfortable in the short-term.</strong></p> <p>As Research Affiliates concludes:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;Because it&rsquo;s impossible to know where the top is, and we don&rsquo;t want to sell too soon, &lsquo;selling high&rsquo; is not easy. When we sell high, and the asset moves higher, we feel foolish. &lsquo;Buying low&rsquo; is even harder.</strong> Anything that&rsquo;s newly cheap has inflicted pain and losses in its path to low prices. It&rsquo;s impossible to know where the bottom is, so buying low inevitably leaves us looking and feeling foolish until the turn. &lsquo;Buy low, sell high&rsquo; is therefore a painful path to success. </em></p> <p>&nbsp;</p> <p><em>Nevertheless, we hope our findings encourage investors to consider joining us in moving out of our respective comfort zones. <strong>The capital markets do not reward comfort. In investing, we generally find our best rewards in our discomfort zone.&rdquo;</strong></em></p> </blockquote> <p>Holding higher levels of cash than normal, trimming back winning positions, and selling losing ones are all steps which <em>&ldquo;go against the grain&rdquo;</em> in the current market. As noted, it&rsquo;s hard to think you are <em>&ldquo;missing out&rdquo;&nbsp;</em>as others may be getting ahead of you.</p> <p>But, investing isn&rsquo;t a competition. There are no winners, just losers when you get it wrong.</p> <p>Just remember the one final chart below.</p> <p><a href=""><img class="alignnone size-full wp-image-23557" src="" style="width: 600px; height: 449px;" /></a></p> <p>From the current levels of <strong>over valuation, excess extension and extreme bullishness</strong> which currently exists, the coming reversion &ldquo;beyond&rdquo; the mean will wipe out the majority of any gains made over the last several years. Such is the case with all reversions throughout history.</p> <p><strong>Worrying about <em>&ldquo;missing out&rdquo;</em> on the current bull market should probably not be at the top of your list.</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="584" height="339" alt="" src="" /> </div> </div> </div> Behavioral finance Business Capital Markets Capitalism Central Banks Economic history of the Netherlands Economy Finance Financial market Investment John Maynard Keynes Market Crash Market trend Maynard Keynes Money Moving Averages Robert Shiller Stock market Stock market crashes Wall Street Crash Tue, 19 Sep 2017 16:21:07 +0000 Tyler Durden 603782 at Trump's "Fiery" United Nations Speech: Full Transcript <p>In a speech that commentators have said "the likes of which have never been heard by a U.S. leader in the United Nations", President Trump did not disappoint expectations that his first appearance at the UN would be a fiery, memorable affair, and while laying out his view for a "nationalist" basis to US foreign policy, focusing on state sovereignty as the framework for the "great revival of nations" and future international relations while vowing to "always put America first", Trump slammed “the scourge of our planet which is a group of rogue regimes" listing North Korea, Iran, Venezuela, while also taking shots at Saudi Arabia and China. </p> <p>In a forceful endorsement of nationalism around the world, Trump called for a "great reawakening of nations, for the revival of their spirits, their pride, their people and their patriotism."</p> <p>Saying that "major portions of the world are in conflict and some, in fact, are going to hell", Trump's most memorable comment was that the United States will be forced to “totally destroy” North Korea unless Pyongyang backs down from its nuclear challenge, mocking North Korean leader Kim Jong Un as a “rocket man” on a suicide mission, a comment which was followed by loud murmuring around the assembly.</p> <p>"If it the US forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket man is on a suicide mission for himself and his regime" adding that North Korea’s pursuit of nuclear weapons and ballistic missiles “threatens the entire world with unthinkable cost of human life.”</p> <p>In his first, 41-minute long appearance at this annual gathering of world leaders, the president also took aim at Iran’s nuclear ambitions and regional influence, Venezuela’s collapsing democracy and the threat of Islamist extremists, while also criticizing the Cuban government. </p> <p>On Iran, which he called an “economically depleted rogue state that exports violence"&nbsp; Trump said the 2015 nuclear deal negotiated by Barack Obama was an embarrassment and hinted that he may not recertify the agreement when it comes up for a mid-October deadline. “I don’t think you’ve heard the last of it."</p> <p>On Venezuela, Trump said the collapsing situation there “completely unacceptable” and said the United States cannot stand by and watch. He warned the United States was considering what further actions it can take. “We cannot stand by and watch."</p> <p>Ultimately Trump reverted back to how he sees America's role in the world order, saying the United States does not seek to impose its will on other nations and will respect other countries’ sovereignty. </p> <p>“I will defend America’s interests above all else. But in fulfilling our obligations to other nations we also realize it’s in everyone’s interest to seek a future where all nations can be sovereign, prosperous and secure.”</p> <p><iframe src="" width="560" height="315" frameborder="0"></iframe></p> <p>Selected speech highlights:</p> <ul> <li>"I will always put America first just like you, the leaders of your countries, should put your countries first."</li> <li>"We meet at a time of immense promise and great peril... It is up to us whether we will lift the world to new heights or let it fall into a valley of disrepair."</li> <li>“The scourge of our planet is a group of rogue regimes"</li> <li><strong>“Rocket man is on a suicide mission for himself and his regime... The U.S. is ready, willing and able to take military action, but “hopefully that won’t be necessary”</strong></li> <li>"If it the US forced to defend itself or its allies, we will have no choice but to totally destroy North Korea"</li> <li>“It’s time for North Korea to realize that de-nuclearization is its only acceptable future" </li> <li>"it’s outrageous that nations would support North Korea and that rogue nation’s pursuit of missiles threatens the whole world"</li> <li>"Problem in Venezuela is not that socialism has been poorly implemented, but that socialism has been faithfully implemented."</li> <li><strong>"Major portions of the world are in conflict and some, in fact, are going to hell"</strong></li> <li>"No nation should have to share a disproportionate share of the burden, militarily or financially"</li> <li>“If the righteous many do not confront the wicked few, then evil will triumph.”</li> <li>"The American people hope that one day soon the United Nations can be a much more accountable and effective advocate for human dignity and freedom around the world."</li> <li>The “righteous many” must confront the “wicked few." </li> </ul> <p>His full speech transcript below:</p> <p><iframe src=";view_mode=scroll&amp;access_key=key-JqTU73orWe8HSE2dOjSB&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <p>&nbsp;</p> <p>And in simple text:</p> <p>Mr. Secretary General, Mr. President, world leaders, and distinguished delegates, welcome to New York. It is a profound honor to stand here in my home city as a representative of the American people to address the people of the world. As millions of our citizens continue to suffer the effects of the devastating hurricanes that have struck our country, I want to begin by expressing my appreciation to every leader in this room who has offered assistance and aid. The American people are strong and resilient, and they will emerge from these hardships more determined than ever before.<br />Fortunately, the United States has done very well since Election Day last November 8. The stock market is at an all-time high, a record. Unemployment is at its lowest level in 16 years, and because of our regulatory and other reforms, we have more people working in the United States today than ever before. Companies are moving back, creating job growth, the likes of which our country has not seen in a very long time, and it has just been announced that we will be spending almost $700 billion on our military and defense. Our military will soon be the strongest it has ever been. For more than 70 years, in times of war and peace, the leaders of nations, movements, and religions have stood before this assembly.<br />Like them, I intend to address some of the very serious threats before us today, but also the enormous potential waiting to be unleashed. We live in a time of extraordinary opportunity. Breakthroughs in science, technology, and medicine are curing illnesses and solving problems that prior generations thought impossible to solve. But each day also brings news of growing dangers that threaten everything we cherish and value. Terrorists and extremists have gathered strength and spread to every region of the planet. Rogue regimes represented in this body not only support terror but threaten other nations and their own people with the most destructive weapons known to humanity.<br />Authority and authoritarian powers seek to collapse the values, the systems, and alliances, that prevented conflict and tilted the word toward freedom since World War II. International criminal networks traffic drugs, weapons, people, force dislocation and mass migration, threaten our borders and new forms of aggression exploit technology to menace our citizens. To put it simply, we meet at a time of both immense promise and great peril. It is entirely up to us whether we lift the world to new heights, or let it fall into a valley of disrepair. We have it in our power, should we so choose, to lift millions from poverty, to help our citizens realize their dreams, and to ensure that new generations of children are raised free from violence, hatred, and fear.<br />This institution was founded in the aftermath of two world wars, to help shape this better future. It was based on the vision that diverse nations could cooperate to protect their sovereignty, preserve their security, and promote their prosperity. It was in the same period exactly 70 years ago that the United States developed the marshal plan to help restore Europe. Those these beautiful pillars, they are pillars of peace, sovereignty, security, and prosperity. The marshal plan was built on the noble idea that the whole world is safer when nations are strong, independent, and free. As president Truman said in his message to congress at that time, our support of European recovery is in full accord with our support of the united nations.<br />The success of the united nations depends upon the independent strength of its members. To overcome the perils of the present, and to achieve the promise of the future, we must begin with the wisdom of the past. Our success depends on a coalition of strong and independent nations that embrace their sovereignty, to promote security, prosperity and peace, for themselves and for the world. We do not expect diverse countries to share the same cultures, traditions or even systems of government, but we do expect all nations to uphold these two core sovereign duties, to respect the interests of their own people and the rights of every other sovereign nation.<br />This is the beautiful vision of this institution and this is the foundation for cooperation and success. Strong sovereign nations let diverse countries with different values, different cultures, and different dreams, not just coexist, but work side by side on the basis of mutual respect. Strong sovereign nations let their people take ownership of the future and control their own destiny. And strong sovereign nations allow individuals to flourish in the fullness of the life intended by god. In America, we do not seek to impose our way of life on anyone, but rather, to let it shine as an example for everyone to watch.<br />This week gives our country a special reason to take pride in that example. We are celebrating the 230th anniversary of our beloved constitution, the oldest constitution still in use in the world today. This timeless document has been the foundation of peace, prosperity and freedom for the Americans and for countless millions around the globe whose own countries have found inspiration in its respect for human nature, human dignity into, and the rule of law. The greatest in the united States constitution is its first three beautiful words. They are "We the people." Generations of Americans have sacrificed to maintain the promise of those words, the promise of our country and of our great history.<br />In America, the people govern, the people rule, and the people are sovereign. I was elected not to take power, but to give power to the American people where it belongs. In foreign affairs, we are renewing this founding principle of sovereignty. Our government's first duty is to its people, to our citizens, to serve their needs, to ensure their safety, to preserve their rights, and to defend their values. As president of the united States, I will always put America first. Just like you, as the leaders of your countries, will always and should always put your countries first. [ Applause ]<br />All responsible leaders have an obligation to serve their own citizens, and the nation state remains the best vehicle for elevating the human condition. But making a better life for our people also requires us to with work together in close harmony and unity, to create a more safe and peaceful future for all people.<br />The United States will forever be a great friend to the world and especially to its allies. But we can no longer be taken advantage of or enter into a one-sided deal where the united States gets nothing in return. As long as I hold this office, I will defend America's interests above all else, but in fulfilling our obligations to our nations, we also realize that it's in everyone's interests to seek the future where all nations can be sovereign, prosperous and secure.<br />America does more than speak for the values expressed in the united nations charter. Our citizens have paid the ultimate price to defend our freedom and the freedom of many nations represented in this great hall. America's devotion is measured on the battlefields where our young men and women have fought and sacrificed alongside of our allies. From the beaches of Europe, to the deserts of the Middle East, to the jungles of Asia, it is an eternal credit to the American character that even after we and our allies emerge victorious from the bloodiest war in history, we did not seek territorial expansion or attempt to oppose and impose our way of life on others. Instead, we helped build institutions such as this one to defend the sovereignty, security, and prosperity for all. For the diverse nations of the world, this is our hope.<br />We want harmony and friendship, not conflict and strife. We are guided by outcomes, not ideologies. We have a policy of principled realism, rooted in shared goal, interests, and values. That realism forces us to confront the question facing every leader and nation in this room, it is a question we cannot escape or avoid. We will slide down the path of complacency, numb to the challenges, threats, and even wars that we face, or do we have enough strength and pride to confront those dangers today so that our citizens can enjoy peace and prosperity tomorrow.<br />If we desire to lift up our citizens, if we aspire to the approval of history, then we must fulfill our sovereign duties to the people we faithfully represent. We must protect our nations, their interests and their futures. We must reject threats to sovereignty from the Ukraine to the south China sea. We must uphold respect for law, respect for borders, and respect for culture, and the peaceful engagement these allow.<br />And just as the founders of this body intended, we must work together and confront together those who threatens us with chaos, turmoil, and terror. The score of our planet today is small regimes that violate every principles that the united nations is based. They respect neither their own citizens nor the sovereign rights of their countries. If the righteous many do not confront the wicked few, then evil will triumph. When decent people and nations become bystanders to history, the forces of destruction only gather power and strength.<br />No one has shown more contempt for other nations and for the well-being of their own people than the depraved regime in North Korea. It is responsible for the starvation deaths of millions of north Koreans. And for the imprisonment, torture, killing and oppression of countless more. We were all witness to the regime's deadly abuse when an innocent American college student, Otto Warmbier, was returned to America, only to die a few days later.<br />We saw it in the assassination of the dictator's brother, using banned nerve agents in an international airport. We know it kidnapped a sweet 13-year-old Japanese girl from a beach in her own country, to enslave her as a language tutor for North Korea's spies. If this is not twisted enough, now North Korea's reckless pursuit of nuclear weapons and ballistic missiles threatens the entire world with unthinkable loss of human life. It is an outrage that some nations would not only trade with such a regime, but would arm, supply and financially support a country that imperils the world with nuclear conflict.<br />No nation on Earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missiles. The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket man is on a suicide mission for himself and for his regime. The United States is ready, willing and able, but hopefully this will not be necessary. That's what the united nations is all about. That's what the united nations is for. Let's see how they do.<br />It is time for North Korea to realize that the denuclearization is its only acceptable future. The united nations security council recently held two unanimous 15-0 votes adopting hard-hitting resolutions against North Korea, and I want to thank China and Russia for joining the vote to impose sanctions, along with all of the other members of the security council. Thank you to all involved. But we must do much more.<br />It is time for all nations to work together to isolate the Kim regime until it ceases its hostile behavior. We face this decision not only in North Korea, it is far past time for the nations of the world to confront another reckless regime, one that speaks openly of mass murder, vowing death to America, destruction to Israel, and ruin for many leaders and nations in this room.<br />The Iranian government masks a corrupt dictatorship behind the false guise of a democracy. It has turned a wealthy country, with a rich history and culture, into an economically depleted rogue state whose chief exports are violent, bloodshed and chaos. The longest suffering victims of Iran's leaders are, in fact, its own people. Rather than use its resources to improve Iranian live, its oil profits go to fund Hezbollah and other terrorists that kill innocent muslims and attack their peaceful Arab and Israeli neighbors.<br />This wealth, which rightly belongs to Iran's people, also goes to shore up bashar Al Assad's dictatorship, fuel Yemen's civil war, and undermine peace throughout the entire Middle East. We cannot let a murderous regime continue these destabilizing activities while building dangerous missiles and we cannot abide by an agreement if it provides cover for the eventual construction of a nuclear program. The Iran deal was one of the worst and most one-sided transactions the United States has ever entered into. Frankly, that deal is an embarrassment to the United States, and I don't think you've heard the last of it. Believe me.<br />It is time for the entire world to join us in demanding that Iran's government end its pursuit of death and destruction. It is time for the regime to free all Americans and citizens of other nations that they have unjustly detained. Above all, Iran's government must stop supporting terrorists, begin serving its own people, and respect the sovereign rights of its neighbors. The entire world understands that the good people of Iran want change, and other than the vast military power of the United States, that Iran's people are what their leaders fear the most. This is what causes the regime to restrict internet access, tear down satellite dishes, shoot unarmed student protesters, and imprison political reformers.<br />Oppressive regimes cannot endure forever, and the day will come when the people will face a choice. Will they continue down the path of poverty, bloodshed and terror, or will the Iranian people return to the nation's proud roots as a center of civilization, culture and wealth, where their people can be happy and prosperous once again. The Iranian regime's support for terror is in stark contrast to the recent commitments of many of its neighbors to fight terrorism and halt its finance, and Saudi Arabia early last year, I was greatly honored to address the leaders of more than 50 Arab and Muslim nations. We agreed that all responsible nations must work together to confront terrorists and the islamic extremism that inspires them.<br />We will stop radical islamic terrorism because we cannot allow it to tear up our nation and, indeed, to tear up the entire world. We must deny the terrorists' safe haven, transit, funding, and any form of support for their vile and sinister ideology. We must drive them out of our nation. It is time to expose and hold responsible those countries whose support and fi -- who support and finance terror groups like Al Qaeda, Hezbollah, the Taliban, and others that slaughter innocent people.<br />The United States and our allies are working together throughout the Middle East to crush the loser terrorists and stop the re-emergence of safe havens they use to launch attacks on all of our people. Last month I announced a new strategy for victory in the fight against this evil in Afghanistan. From now on, our security interests will dictate the length and scope of military operation, not arbitrary benchmarks and timetables set up by politicians. I have also totally changed the rules of engagement in our fight against the Taliban. And other terrorist groups.<br />In Syria and Iraq, we have made big gains toward lasting defeat of ISIS. In fact, our country has achieved more against ISIS in the last eight months than it has in many, many years combined. We seek the deescalation of the Syrian conflict, and a political solution that honors the will of the Syrian people. The actions of the criminal regime of Bashar Al Assad, including the use of chemical weapons against his own citizens, even innocent children, shock the conscience of every decent person. No society could be safe if banned chemical weapons are allowed to spread. That is why the United States carried out a missile strike on the air base that launched the attack.<br />We appreciate the efforts of the united nations' agencies that are providing vital humanitarian assistance in areas liberated from ISIS, and we especially thank Jordan, Turkey, and Lebanon for their role in hosting refugees from the Syrian conflict. The United States is a compassionate nation and has spent billions and billions of dollars in helping to support this effort. We seek an approach to refugee resettlement that is designed to help these horribly treated people and which enables their eventual return to their home countries to be part of the rebuilding process. For the cost of resettling one refugee in the United States, we can assist more than ten in their home region.<br />Out of the goodness of our hearts, we offer financial assistance to hosting countries in the region and we support recent agreements of the g-20 nations that will seek to host refugees as close to their home countries as possible. This is the safe, responsible, and humanitarian approach. For decades the United States has dealt with migration challenges, here in the western hemisphere.<br />We have learned that over the long term, uncontrolled migration is deeply unfair to both the sending and the receiving countries. For the sending countries, it reduces domestic pressure to pursue needed political and economic reform and drains them of the human capital necessary to motivate and implement those reforms. For the receiving countries, the substantial costs of uncontrolled migration are born overwhelmingly by low-income citizens whose concerns are often ignored by both media and government.<br />I want to salute the work of the united nations in seeking to address the problems that cause people to flee from their home. The united nations and African union led peacekeeping missions to have invaluable contributions in stabilizing conflict in Africa. The United States continues to lead the world in humanitarian assistance, including famine prevention and relief, in south Sudan, Somalia, and northern Nigeria and Yemen.<br />We have invested in better health and opportunity all over the world through programs like PEPFAR, which funds AIDS relief, the president's malaria initiative, the global health security agenda, the global fund to end modern slavery, and the women entrepreneur's finance initiative, part of our commitment to empowering women all across the globe.<br />We also thank -- [ applause ] We also thank the secretary general for recognizing that the united nations must reform if it is to be an effective partner in confronting threats to sovereignty, security, and prosperity. Too often the focus of this organization has not been on results, but on bureaucracy and process. In some cases, states that seek to subvert this institution's noble end, have hijacked the very systems that are supposed to advance them. For example, it is a massive source of embarrassment to the united nations that some governments with egregious human rights records sit on the U.N. Human rights council.<br />The United States is one out of 193 countries in the united nations, and yet we pay 22% of the entire budget and more. In fact, we pay far more than anybody realizes. The United States bears an unfair cost burden, but to be fair, if it could actually accomplish all of its stated goals, especially the goal of peace, this investment would easily be well worth it. Major portions of the world are in conflict and some, in fact, are going to hell, but the powerful people in this room, under the guidance and auspices of the united nations, can solve many of these vicious and complex problems. The American people hope that one day soon the united nations can be a much more accountable and effective advocate for human dignity and freedom around the world.<br />In the meantime we believe that no nation should have to bear a disproportionate share of the burden, militarily or financially. Nations of the world must take a greater role in promoting secure and prosperous societies in their own region. That is why in the western hemisphere the United States has stood against the corrupt destabilizing regime in Cuba and embraced the enduring dream of the Cuban people to live in freedom.<br />My administration recently announced that we will not lift sanctions on the Cuban government until it makes fundamental reforms. We have also imposed tough calibrated sanctions on the socialist Maduro regime in Venezuela which has brought a once thriving nation to the brink of total collapse. The socialist dictatorship of Nicolas Maduro has inflicted terrible pain and suffering on the good people of that country. This corrupt regime destroyed a prosperous nation -- prosperous nation, by imposing a failed ideology that has produced poverty and misery everywhere it has been tried. To make matters worse, Maduro has defied his own people, stealing power from their elected representatives, to preserve his disastrous rule. The Venezuelan people are starving and their country is collapsing. Their democratic institutions are being destroyed. The situation is completely unacceptable, and we cannot stand by and watch.<br />As a responsible neighbor and friend, we and all others have a goal -- that goal is to help them regain their freedom, recover their country, and restore their democracy. I would like to thank leaders in this room for condemning the regime and providing vital support to the Venezuelan people. The United States has taken important steps to hold the regime accountable. We are prepared to take further action if the government of Venezuela persists on its path to impose authoritarian rule on the Venezuelan people.<br />We are fortunate to have incredibly strong and healthy trade relationships with many of the Latin American countries gathered here today. Our economic bond forms a critical foundation for advancing peace and prosperity for all of our people and all of our neighbors. I ask every country represented here today to be prepared to do more to address this very real crisis. We call for the full restoration of democracy and political freedoms in Venezuela. [ Applause ] The problem in Venezuela is not that socialism has been poorly implemented, but that socialism has been faithfully implemented. [ Applause ]<br />From the soviet union to Cuba to Venezuela, wherever true socialism or communism has been adopted, it has delivered anguish and devastation and failure. Those who preach the tenants of these discredited ideologies, only contribute to the continued suffering of the people who live under these cruel systems. America stands with every person living under a brutal regime. Our respect for sovereignty is also a call for action. All people deserve a government that cares for their safety, their interests, and their well-being, including their prosperity. In America, we seek stronger ties of business and trade with all nations of goodwill, but this trade must be fair and it must be reciprocal.<br />For too long the American people were told that mammoth, multinational trade deals, unaccountable international tribunal and powerful global bureaucracies were the best way to promote their success. But as those promises flowed, millions of jobs vanished and thousands of factories disappeared. Others gamed the system and broke the rules, and our great middle class, once the bedrock of American prosperity, was forgotten and left behind, but they are forgotten no more and they will never be forgotten again.<br />While America will pursue cooperation and commerce with other nations, we are renewing our commitment to the first duty of every government, the duty of our citizens. This bond is the source of America's strength and that of every responsible nation represented here today. If this organization is to have any hope of successfully confronting the challenges before us, it will depend as president Truman said, some 70 years ago, on the independent strength of its members. If we are to embrace the opportunities of the future and overcome the present dangers together, there can be no substantive for strong, sovereign and independent nations, nations that are rooted in the histories and invested in their destiny, nations that seek allies to befriend, not enemies to conquer, and most important of all, nations that are home to men and women who are willing to sacrifice for their countries, their fellow citizens, and for all that is best in the human spirit.<br />In remembering the great victory that led to this body's founding, we must never forget that those heroes who fought against evil, also fought for the nations that they love. Patriotism led the polls to die to save Poland, the French to fight for a free France, and the Brits to stand strong for Britain. Today, if we do not invest ourselves, our hearts, our minds, and our nations, if we will not build strong families, safe communities and healthy societies for ourselves, no one can do it for us.<br />This is the ancient wish of every people and the deepest yearning that lives inside every sacred soul. So let this be our mission and let this be our message to the world. We will fight together, sacrifice together, and stand together for peace, for freedom, for justice, for family, for humanity, and for the all mighty god who made us all. Thank you, god bless you, god bless the nations of the world and god bless the United States of America. Thank you very much. [ Applause ]</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="446" height="257" alt="" src="" /> </div> </div> </div> Afghanistan African Union aggression exploit technology al-Qaeda American people of German descent Barack Obama Bond Business China Climate change skepticism and denial Cuban government Donald Trump Foreign policy of the United States France Group of 20 countries Hizballah International reactions to the United States presidential election International relations Iran Iran's government Iranian government Iraq Israel KIM Middle East Middle East Nationalism North Korea northern Nigeria Nuclear proliferation Poland Politics Politics recovery Rogue state Saudi Arabia Security Council Somalia South China South Sudan Taliban The Apprentice Turkey Ukraine Unemployment United Nations United Nations Security Council United States War WWE Hall of Fame Tue, 19 Sep 2017 16:00:26 +0000 Tyler Durden 603781 at The World Is Creeping Toward De-Dollarization <p><a href=""><em>Authored by Ronald-Peter Stoferle via The Mises Institute,</em></a></p> <div class="body-content clearfix"> <p><strong>The issue of when a global reserve currency begins or ends is not an exact science. </strong>There are no press releases announcing it, and neither are there big international conferences that end with the signing of treaties and a photo shoot. Nevertheless we can say with confidence that the reign of every world reserve currency has to come to and end at some point in time. During a changeover from one global currency to another, gold (and to a lesser extent silver) has always played a decisive role.</p> <p><strong>Central banks and governments have long been aware that the dollar has a sell-by date as a reserve currency. </strong>But it has taken until now for the subject to be discussed openly. The fact that the issue has been on the radar of a powerful bank like JP Morgan for at least five years, should give one pause. Questions regarding the global reserve currency are not exactly discussed on CNBC every day. Most mainstream economists avoid the topic like the plague. The issue is too politically charged. However, that doesn&#39;t make it any less important for investors to look for answers.</p> <p><strong>On the contrary. The following questions need to be asked</strong>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>What indications are there that the world is turning its back on the US dollar?</p> <p>&nbsp;</p> <p>And what are the clues that gold&#39;s role could be strengthened in a new system?</p> </blockquote> <p><strong>The mechanism underlying today&#39;s &ldquo;dollar standard&rdquo; is widely known and the term &ldquo;petrodollar&rdquo; describes it well. </strong>This system is based on an informal agreement the US and Saudi Arabia arrived at in the mid-1970s. The result of this deal: Oil, and consequently all other important commodities, is traded in US dollars &mdash;&nbsp;and only in US dollars. Oil producers then &ldquo;recycle&rdquo; these &ldquo;petrodollars&rdquo; into US treasuries. This circular flow of dollars has enabled the US to pile up a towering mountain of debt of nearly $20 trillion &mdash;&nbsp;without having to worry about its own financial stability. At least, until now.</p> <p>For a long time the basis on which this global currency system rests was poorly documented. Finally, <em>Bloomberg</em> <a href="" target="_blank">published a comprehensive article in May 2016</a>, which provided detailed confirmation of the agreement that was hitherto only known as a rumor. The fact that this article is published now also represents a subtle clue that there are simmering shifts in the global currency system.</p> <p>The trend becomes ever more tangible and can be described by the following term: de-dollarization. <strong>The world is looking for alternatives to the dollar &mdash;&nbsp;and finds them more and more often.</strong> At the same time the big oil producers and the largest exporters have stopped accumulating US debt securities. In one sentence: Since 1973 the dollar standard has been based on &ldquo;usage demand&rdquo; for dollars &mdash;&nbsp;they were needed. But when China and Russia find alternatives for their bilateral trading activity, they need fewer dollars. The same applies to European countries which have adopted the euro since 1999.</p> <p><strong>There have been many attempts by various nations to undermine the dollar&#39;s preeminence in recent decades.</strong></p> <p>Some were nipped in the bud by US interventions &mdash;&nbsp;such as <strong>the plan of Iraq&#39;s former dictator Saddam Hussein to sell oil for euros.</strong></p> <p>Or the <strong>rumored plan of Libya&#39;s eccentric ruler Muammar al-Gaddafi to issue a pan-African gold currency.</strong></p> <p>Others are less well known, but are indeed continuing to &ldquo;bubble&rdquo; below the surface: For example, since 2008, an agreement exists between Saudi Arabia, Kuwait, Bahrain, and Qatar which provides for the creation of a monetary union.<strong> The <a href="" target="_blank">planned new currency is nicknamed &mdash;&nbsp;rather unimaginatively &mdash;&nbsp;the &ldquo;gulfo.&rdquo;</a>&nbsp;</strong>&ldquo;The project is inspired by the European currency union, which is seen as a great success in the Arab world,&rdquo;&nbsp;according to an article by <em>Telegraph</em> journalist Ambrose Evans-Pritchard. He <em>inter alia</em> quotes Nahed Taher, the CEO of Bahrain Gulf One Investment Bank: &ldquo;The US dollar has failed. We need to delink from it.&rdquo;&nbsp;However, it appears the plan has been put on hold in recent years. As recently as mid-2013 a statement was issued according to which the common currency was going to be put in place &ldquo;by 2015 at the latest.&rdquo; Today it is no longer even talked about. Moreover, other potential members such as the United Arab Emirates or Oman have so far failed to join the club. One should nevertheless keep an eye on developments in the Gulf.</p> <p><strong>A clear signal that something is afoot would be the abolition of the Saudi riyal&#39;s peg to the US dollar. </strong>As recently as April of this year economist Nasser Saeedi advised Middle Eastern countries to prepare for a &ldquo;new normal&rdquo; &mdash;&nbsp;and specifically to review the dollar pegs of their currencies:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;By 2025 it is clear that the center of global economic geography is very much in Asia. </strong>What we&rsquo;ve been living in over the past two decades is a very big shift in the political, economic, and financial geography.&rdquo;</p> </blockquote> <p>While the role of oil-producing countries (and particularly Saudi Arabia) shouldn&#39;t be underestimated, <strong>at present the driving forces with regard to de-dollarization are primarily Moscow and Beijing. </strong>We want to take a closer look at this process.</p> <p>There exist numerous political statements in this context which leave no room for doubt. The Russians and Chinese are quite open about their views regarding the role of gold in the current phase of the transition. Thus, Russian prime minister Dimitri Medvedev, at the time president of Russia, held a gold coin up to a camera on occasion of the 2008 G8 meeting in Aquila in Italy. Medvedev said that debates over the reserve currency question had become a permanent fixture of the meetings of government leaders.</p> <p><strong>Almost ten years later, the topic of currencies and gold&nbsp;is on the Sino-Russian agenda again.</strong> In March, Russia&#39;s central bank opened its first office in Beijing. Russia is preparing to place its first renminbi-denominated government bond. Both sides have intensified efforts in recent years to settle bilateral trade not in US dollars, but in rubles and yuan. Gold is considered important by both countries.</p> <p>The gradual move away from the USD to a multi-polar monetary order has several important effects, which only make sense when viewed through this lens. <strong>Contrary to what is asserted in most mainstream reports, oil-producing countries are not so much interested in a much higher oil price in USD terms, but rather in competition for market share.</strong> They are increasingly able to choose in which currencies they want to trade. The most important effect has become evident since 2014: two of the largest holders of US treasuries (China and Saudi Arabia) have abandoned their support of Washington. On the other hand, oil producers have no interest in recycling their revenues as &ldquo;petrodollars.&rdquo;</p> <p><u><em><strong>The process of moving away from the dollar - prepared by Europe and triggered by China and Russia - can no longer be stopped. And as a &ldquo;supra-national&rdquo; reserve asset, gold plays an important role in it.</strong></em></u></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="230" height="149" alt="" src="" /> </div> </div> </div> Bond Business Central Banks China Currency Currency substitution Economic integration Economy European monetary union Evans-Pritchard Finance Foreign exchange market G8 Iraq Italy Khaleeji Kuwait Market Share Mises Institute Mises Institute Monetary hegemony Monetary policy Money New Normal Reserve Currency Reserve currency Russia's central bank Saudi Arabia World currency Yuan Tue, 19 Sep 2017 15:51:04 +0000 Tyler Durden 603774 at Biggest Hedge Fund Manager In The World Warns "Bitcoin Is A Bubble", Says Gold Is Money <p>Bridgewater Associates founder Ray Dalio, the 68-year-old founder of the world&rsquo;s largest hedge fund, said bitcoin is &quot;in a bubble&quot; during an interview on CNBC Tuesday morning, arguing that the so-called currency is too difficult to spend, and too volatile to be a useful store of value.</p> <p>During the interview, Dalio argued that most investors who buy the digital currency do so with the hope of making a quick speculative profit, undermining bitcoin&rsquo;s functionality as a currency.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;There are two things that are required for a currency. The first thing is that you can transact in it, it&rsquo;s a medium of exchange. The second thing is it&rsquo;s a store of value. Bitcoin today&hellip;you can&rsquo;t spend it very easily. </strong></p> <p>&nbsp;</p> <p><strong>In terms of a storehold of wealth, it&rsquo;s not an effective storehold of wealth because it has volatility to it. Unlike gold, let&rsquo;s say, which reflects the value of money, its more stable than the value of money, bitcoin is a highly speculative market.&rdquo;</strong></p> </blockquote> <p>Dalio added that he doubts that governments will allow bitcoin transactions to remain anonymous in perpetuity. The IRS has sued Coinbase, a popular US bitcoin exchange, demanding records on client transactions &ndash; a decision that many in the community saw as the beginning of the US government&rsquo;s effort to unmask the currency&rsquo;s users. Aleady, using sophisticated blockchain analysis techniques, US authorities have been able to trace bitcoins back to their respective owners, making it more difficult for tax cheats and money launderers to use the digital currency to facilitate their crimes.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;The idea that it will be private in terms of transaction&hellip;in other words people won&rsquo;t know what you&rsquo;re doing and it will be a private currency&hellip;is really questionable.&rdquo;</strong></p> </blockquote> <p>Based on the amount of speculation alone &ndash; the price of a single coin has risen by more than 300% since the beginning of the year &ndash; Dalio argues that the only logical conclusion is that bitcoin is in a bubble.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;We take these criteria, and we define a bubble based on those criteria, bitcoin is a bubble. It&rsquo;s a shame &ndash; it could be a currency, it could work conceptionally, but the amount of speculation that&rsquo;s going on and the lack of transaction, the idea that it will be private in terms of transaction&hellip;is really questionable if you look at what&rsquo;s gone on in terms of governments to examine it.&rdquo;</strong></p> </blockquote> <p>Bitcoin also faces competition from other digital currencies like Ethereum, which compounds the problem of investing in digital currencies, in Dalio&rsquo;s view.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;And then there are other cryptocurrencies. Bitcoin might lose competition to other cryptocurrencies. So is it a bitcoin bet that we&rsquo;re making or a cryptocurrency bet. It&rsquo;s very much speculative people thinking can I sell it at a higher price&hellip;and so it&rsquo;s a bubble.&rdquo;</strong></p> </blockquote> <p><a href=""><iframe allowfullscreen="true" bgcolor="#131313" height="315" src=";byGuid=3000655547&amp;size=530_298" type="application/x-shockwave-flash" width="560"></iframe></a></p> <p><a href="">Bridgewater founder Ray Dalio: Bitcoin is a bubble</a> from <a href="//">CNBC</a></p> <p>Bitcoin reached an all-time high just shy of $5,000 on Sept. 1. But the digital currency pulled back earlier this month amid reports that Chinese regulators were forcing local bitcoin exchanges to shut down as part of a crackdown on ICOs. It&rsquo;s decline accelerated - briefly sending the digital currency below $3,000 a coin, its weakest level since mid-July - after JP Morgan CEO Jamie Dimon proclaimed that bitcoin is &ldquo;a fraud&rdquo; and that he&#39;d fire any JPM trader caught buying it. <strong>Of course, his remarks were followed almost immediately be reports that JPM had&nbsp; beeen one of the biggest buyers of a bitcoin-linked exchange-traded note traded on Nasdaq Stockholm, one of the only bitcoin-focused securities to trade on a public exchange in any market, raising important questions about whether the bank was violating its <a href="">fiduciary duty by assisting clients to transact in an asset that the bank&#39;s CEO believes to be fraudulent. </a></strong></p> <p>However, over the past two years, bitcoin has ripped the face off of every bear who has spoken out against It. Over the summer, billionaire investor <a href="">Howard Marks </a>was forced to recant his bearish view in an investor letter, issuing a now-famous mea culpa. Unlike its response to Dimon&#39;s remarks, bitcoin barely moved after Dalio&#39;s interview aired, and has remained almost unchanged on the day.</p> <p><img alt="" src="" style="width: 500px; height: 319px;" /></p> <p><strong>How long before Dalio and Dimon are forced to do the same?</strong><br />&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="578" height="318" alt="" src="" /> </div> </div> </div> Alternative currencies Bitcoin Bitcoin Blockchains Bridgewater Business Coinbase Cryptocurrencies Currency Digital currencies Economics of bitcoin Finance Howard Marks Internal Revenue Service Jamie Dimon Legality of bitcoin by country or territory Money NASDAQ Ray Dalio US government Volatility Tue, 19 Sep 2017 15:34:09 +0000 Tyler Durden 603778 at There’s always a market in crisis… you just have to look! <p><a href="">Via The Daily Bell</a></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">“You never let a serious crisis go to waste. And what I mean by that is it’s an opportunity to do things you think you could not do before.” Rahm Emanuel, an American politician, was talking about politics when he said this. But he may as well have said it about investing in troubled financial markets.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">If you’re looking to invest when the odds are in your favour then look for a crisis. When asset prices collapse it creates life-changing opportunities to buy (the right) assets on the (very) cheap.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">But if you’re a victim of&nbsp;<a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">home market bias</a>&nbsp;– and you’re over-invested in your “home” market – you might have to wait a long while for a nice ripe crisis. And even once it comes, chances are that you’ll be too caught up in it yourself, unless you were smart or lucky enough to sell early.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">You might have cash to buy cheap assets… but you might have already been holding them on the way down.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Investing in markets or companies in crisis, then, requires leaving what you know, and running towards the fire. (That’s part of what I’ll be doing in our new&nbsp;<a href=";eid=MKT339602&amp;encryptedSnaid=&amp;snaid=&amp;step=start" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">investment research service</a>… lifetime subscribers will have the opportunity to join me on investment research trips to off-the-radar – and big-upside – destinations around the globe.&nbsp;<a href=";eid=MKT339602&amp;encryptedSnaid=&amp;snaid=&amp;step=start" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Find out more here</a>.)</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">What follows are three of my favourite examples of markets in crisis that were fortune-making for savvy investors. The exciting thing is that the “before” part of each of these situations exists today – in some market or sector or company… it’s just a matter of finding it – before it becomes the “after” of the examples below.</p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;"><span style="box-sizing: border-box; font-weight: bold;">Profiting from Spain’s “Return to Europe”</span></h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Today, it’s strange to think of Spain as a fascist dictatorship. However, from the 1930s through the 1970s, its markets and economy were largely isolated from the rest of the world. Europe effectively ended at the Pyrenees, the mountain range separating Spain and Portugal from France.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">When Spain’s longtime dictator, Francisco Franco, died in November 1975, the country’s future was up in the air. For several years, civil war and chaos looked like a real possibility. (I lived in Spain at the time… and though as a pre-adolescent I didn’t realise it, the country was at a true crossroads.)</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">But Spain slowly evolved into a democracy. It adopted a new constitution in 1978, and the government put down a coup attempt in 1981.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The 1982 elections solidified Spain’s transition to democracy and its eventual position in the western military alliance, NATO.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">In 1986, Spain joined the European Economic Community – now the European Union. (People rang in the new year, marking the official entry into the EEC, with the cry, “We’re Europeans!”) At the time, new EEC members received massive infrastructure investments in order to help lift their standard of living to be on par with the rest of the union. These funds fuelled a two-decade economic boom in Spain that only ended with the 2008-2009 global economic crisis.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Investors who saw the opportunity for enormous positive change in Spain in the 1970s could have made returns of 4,300 percent in subsequent years.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><img src="" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; height: auto !important;" /></p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;"><span style="box-sizing: border-box; font-weight: bold;">Profiting from the end of a 26-year civil war</span></h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">In 1983, Sri Lanka, a small island nation south of India, entered a prolonged civil war. The conflict between the Sinhalese ethnic majority and the Tamil ethnic minority lasted 26 years. (It was one of history’s more brutal conflicts… the Tamil Tigers reportedly invented the suicide vest – and pioneered suicide bombing as a war tactic.)</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The long war stunted the country’s economic growth and created political uncertainty. Suicide bombings and other terror tactics by the Tamils posed an ongoing threat to the rest of the island. This fueled a steady migration out of Sri Lanka and strongly deterred foreign investment.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Meanwhile, excessive government spending fostered high inflation and constant budget deficits (when governments spend more money than they take in). As a result, Sri Lanka’s stock market suffered low turnover and minimal foreign interest. Sentiment toward the country was overwhelmingly negative. In fact, to much of the rest of the world, Sri Lanka’s civil war is what they know of the country… I’ve often been asked, “Oh, are they still at war?” after I mention that I lived there for a few years.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">———-Recommended Link———–</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><img src="" align="left" width="175" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; height: auto !important;" /><span style="box-sizing: border-box; font-weight: bold;">3,700% Returns… In the Footsteps of a Dead Man</span><br style="box-sizing: border-box;" />Most people think it’s corrupt, violent, and bleak… like the backdrop of a James Bond movie. Yet places like this have generated some of the most profitable moneymaking opportunities in the world—<span style="box-sizing: border-box; font-weight: bold;">like 1,000%… 5,000%… or more.</span>Would you have the guts to invest?<br style="box-sizing: border-box;" /><a href=";eid=MKT339602&amp;encryptedSnaid=&amp;snaid=&amp;step=start" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;"><span style="box-sizing: border-box; font-weight: bold;">FIND OUT HERE</span></a>.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">————————————————</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">In 2002, Sri Lanka’s economy began to slowly improve, and the country made some progress toward political harmony. The turnaround was strong enough to trigger a sharp rally in the Sri Lankan market. In November 2005, the election of President Mahinda Rajapaksa, coupled with a strong public mandate to end the civil war, further fueled the rally.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Then the global economic crisis hit, along with the final and most ferocious chapter in Sri Lanka’s civil war, and in early 2009 the country’s stock market fell sharply.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The Sri Lankan stock market didn’t re-rate until the Tamils were definitively defeated in May 2009. The northern and eastern regions of the country – previously off-limits to investment and economic development because of the war – were gradually re-integrated into the economy, bolstering growth.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Investors who bought Sri Lankan stocks amidst negative sentiment could have made gains of 2,000 percent – though with plenty of volatility along the way.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><img src="" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; height: auto !important;" /></p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;"><span style="box-sizing: border-box; font-weight: bold;">Sugar prices rocket 45 times higher</span></h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The sugar industry experienced multiple price shocks throughout the 20th century. That’s not unusual for commodities, which tend to go through cyclical “boom and bust” periods.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Sugar boomed from 1962 to 1964, after the U.S. suspended imports of sugar from the Caribbean island of Cuba. (Socialist Fidel Castro led the Cuban Revolution that ousted President Fulgencio Batista in 1959, and the U.S. imposed a multi-decade economic blockade on the country, as part of its failed effort to undercut Castro.)</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">In 1964, the price of sugar started to fall. By 1966, the price had collapsed to close to a penny per pound. Finally, sugar was so cheap that demand started to rise. Then, in 1969, the U.S Food and Drug Administration banned cyclamate, a common sugar substitute, after researchers discovered it was carcinogenic. This pushed demand for sugar even higher.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Over the next four years, consumption outpaced supply, and inventories dwindled. This triggered a dramatic increase in sugar prices. Sugar hit a high of $0.64 per pound in October 1974.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Investors who got in at the 1966 low could have made just upwards of 5,000 percent through late 1974.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><img src="" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; height: auto !important;" /></p> <h3 style="box-sizing: border-box; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; font-weight: 500; line-height: 1.1; color: #303030; margin-top: 20px; font-size: 24px;"><span style="box-sizing: border-box; font-weight: bold;">These types of markets…</span></h3> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Today, many markets are close to all-time highs. But there are plenty of assets that are in crisis… or – maybe even worse – are unloved and ignored, and as a result are trading at crisis-like levels. I’ll be looking for those types of markets, and companies, in our new service,&nbsp;<em style="box-sizing: border-box; line-height: 24px; padding-bottom: 8px;">International Capitalist</em>, and the life-changing price gains that can go with them…&nbsp;<a href=";eid=MKT339602&amp;encryptedSnaid=&amp;snaid=&amp;step=start" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">find out more here</a>.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Good investing,</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><img src="" width="200" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; height: auto !important;" /><br style="box-sizing: border-box;" /><span style="box-sizing: border-box; font-weight: bold;">Kim Iskyan</span><br style="box-sizing: border-box;" /><span style="box-sizing: border-box; font-weight: bold;">Publisher, Stansberry Churchouse Research</span></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><em style="box-sizing: border-box;">This was written by<span class="defanged7-defanged4-" style="box-sizing: border-box;">&nbsp;</span></em><a href=";utm_medium=syndication&amp;utm_campaign=daily" target="_blank" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;" rel="noopener noreferrer">Stansberry Churchouse Research</a><em style="box-sizing: border-box;">, an independent investment research company based in Singapore and Hong Kong that delivers investment insight on Asia and around the world. Click<span class="defanged7-defanged4-" style="box-sizing: border-box;">&nbsp;</span></em><a href=";utm_medium=syndication&amp;utm_campaign=daily" target="_blank" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;" rel="noopener noreferrer"><span style="box-sizing: border-box; font-weight: bold;"><em style="box-sizing: border-box;">here</em></span></a><span class="defanged7-defanged4-" style="box-sizing: border-box;"><em style="box-sizing: border-box;">&nbsp;</em></span><em style="box-sizing: border-box;">to sign up to receive the Asia Wealth Investment Daily in your inbox every day, for free.</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="1200" height="628" alt="" src="" /> </div> </div> </div> Bond Business Caribbean Economic bubbles Economy European Economic Community European Union European Union Financial crisis Financial market Foreign Interest France Hong Kong India KIM Liberation Tigers of Tamil Eelam Macroeconomics North Atlantic Treaty Organization Politics Portugal Rahm Emanuel Sri Lankan Civil War Stock market Systemic risk Tamil Tigers U.S. Food and Drug Administration Volatility War Tue, 19 Sep 2017 15:32:37 +0000 TDB 603779 at Hillary Clinton: Women Only Voted For Trump Because Their Husbands Told Them To <p><a href=""><em>Authored by Mac Slavo via,</em></a></p> <p><strong>Hillary Clinton&rsquo;s delusions continue. </strong></p> <p><a href=""><img height="291" src="" width="542" /></a></p> <p>It&rsquo;s been almost a year since the election, and <strong>now Hillary&rsquo;s blaming married women who voted for Donald Trump for her loss to the president back in November</strong>.</p> <p>Still unwilling to take any responsibility for her loss to Donald Trump, <strong>Hillary continues to play the blame game. </strong>&nbsp;So far, she&rsquo;s blamed everyone from <a href="" target="_blank">her most trusted advisor, Huma Abedin</a>, to the infamous&nbsp;<a href="" target="_blank">socialist and fellow democrat Bernie Sanders</a>, for the disastrous campaign and ridiculous ideas she championed&nbsp;last year. But she doesn&rsquo;t stop there anymore. Now it&rsquo;s the fault of married women who voted for Donald Trump.</p> <p>According to the <a href="" target="_blank"><em>Daily Wire</em></a>, <strong>the quintessential modern feminist Clinton says women were too scared to stand up to their husbands, boyfriends, and fathers, who told them to vote Republican, and since, clearly, women have no agency or ability to think for themselves, they listened.</strong></p> <p>Of course, that&rsquo;s according to Hillary. But she blamed socialist women as well.&nbsp;Clinton made<a href="" target="_blank"> the outrageous claims in an interview with <em>NPR</em></a><em>,</em> where she also blamed the so-called &ldquo;Bernie Bros&rdquo; for bullying Democratic women into avoiding the more moderate Clinton in favor of the socialist, Bernie Sanders.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;You yourself in the book acknowledge that a good number of young women didn&rsquo;t vote for you, which is presumably not a sexist choice. They just weren&rsquo;t inspired by your message,&rdquo; </strong></em>NPR&rsquo;s Rachel Martin said during an interview with Clinton, out to promote her litany of excuses&hellip;er&hellip;recently released book,&nbsp;<em>What Happened</em>.</p> <p>&nbsp;</p> <p>&ldquo;I think it&rsquo;s a lot more complicated than that,&rdquo; Clinton answered. &ldquo;I did win the women&rsquo;s vote. I didn&rsquo;t win the vote of white women, but <strong>I got more white women votes than Barack Obama did</strong>,&rdquo; she said.</p> <p>&nbsp;</p> <p>&ldquo;Women will have no empathy for you because they will be under tremendous pressure - and <em><u><strong>I&rsquo;m talking principally about white women - they will be under tremendous pressure from fathers, and husbands, and boyfriends and male employers, not to vote for &lsquo;the girl,&rsquo;</strong></u></em>&rdquo; she said. &ndash;<a href="" target="_blank"><em>Daily Wire</em></a></p> </blockquote> <p>But Clinton also said that even though women liked and respected her (an observation American women might disagree with generally) they were too afraid to stand up to the &ldquo;oppressive Patriarchial hand&rdquo; that often &ldquo;forces&rdquo; them to hide their allegiance to womankind. Clinton also tried pretty hard to convince <a href="" target="_blank">NPR</a> that she is taking the blame for her loss, but no one is buying this snake oil anymore:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;I take ultimate responsibility for the loss,&rdquo; </strong>Clinton said.</p> <p>&nbsp;</p> <p>&ldquo;I was the candidate. I was the person whose name was on the ballot. And I&rsquo;ll never get over that.&rdquo;</p> </blockquote> <p>And even though she lost to <a href="" target="_blank">one of the most hated candidates </a>of all time, <a href="" target="_blank">Hillary Clinton is refusing to go away</a>.&nbsp;<em><strong>&ldquo;I&rsquo;m not going anywhere. I have the experience, I have the insight, I have the scars that I think give me not only the right but the responsibility to speak out,&rdquo;</strong></em> Clinton said.</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="542" height="291" alt="" src="" /> </div> </div> </div> Barack Obama Bernie Bro Bernie Sanders Bernie Sanders Bernie Sanders presidential campaign Donald Trump Hillary Clinton Misogyny Political positions of Hillary Clinton Politics Politics Politics of the United States Rodham family Social Issues United States Tue, 19 Sep 2017 15:11:10 +0000 Tyler Durden 603768 at Wikileaks Publishes "Spy Files Russia" Detailing Russia's Mass Surveillance System <p>Perhaps in an attempt to refute recurring allegations that it has traditionally focused on exposing only US state secrets, if not being an outright covert and subversive Moscow front, today Wikileaks <a href="">released a new cache of documents </a>which it claims detail surveillance apparatus used by the Russian state to spy on Internet and mobile users. It&rsquo;s the first time the organization has leaked material directly pertaining to the Russian state.</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="en">RELEASE: Spy Files <a href="">#Russia</a> <a href=""></a> <a href="">#SORM</a> <a href="">#FSB</a> <a href=""></a></p> <p>&mdash; WikiLeaks (@wikileaks) <a href="">September 19, 2017</a></p></blockquote> <script async src="//" charset="utf-8"></script><p>The full <a href="">datadump can be found here</a>.</p> <p>In its <a href="">summary </a>of the cache of mostly Russian-language documents, Wikileaks claims they show how a long-established Russian company which supplies software to telcos is also installing infrastructure - with the government&#39;s blessing - that enables Russian state agencies to tap into, search and spy on citizens&rsquo; digital activity, <strong>suggesting a similar state-funded mass surveillance program to the one utilized by the U.S.&rsquo;s NSA or by GCHQ in the U.K</strong>. (both of which were detailed in the 2013 Snowden disclosures).</p> <p><a href=""><img height="301" src="" width="500" /></a></p> <p>And speaking of, shortly following the publication, another famous whistleblower, one also exiled and currently residing in Russia, Edward Snowden tweeted &quot;<strong>Plot twist: @Wikileaks publishes details on Russia&#39;s increasingly oppressive internet surveillance industry.&quot;</strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Plot twist: <a href="">@Wikileaks</a> publishes details on Russia&#39;s increasingly oppressive internet surveillance industry. <a href=""></a> <a href=""></a></p> <p>&mdash; Edward Snowden (@Snowden) <a href="">September 19, 2017</a></p></blockquote> <script src="//"></script><p>To be sure, arguments have already broken out on Twitter suggesting that Wikileaks/Assange is trying to deflect from charges that it is a front for the Kremlin by finally dumping &quot;something&quot; on Russia. (<a href="">see this tweet comment thread as one example).</a> Making matters more complicated, it&rsquo;s not possible at this point to verify the value or veracity of the latest Wikileaks document release.</p> <p>The documents published today by Wikileaks (there are just 34 &ldquo;base documents&rdquo; in this leak) relate to a St. Petersburg-based company, called Peter-Service, which it claims is a contractor for Russian state surveillance. According to <a href="">Tech Crunch,</a> the company was set up in 1992 to provide billing solutions before going on to become a major supplier of software to the mobile telecoms industry.</p> <p>Wikileaks <a href="">writes</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The technologies developed and deployed by PETER-SERVICE today go far beyond the classical billing process and extend into the realms of surveillance and control. Although compliance to the strict surveillance laws is mandatory in Russia, rather than being forced to comply PETER-SERVICE appears to be quite actively pursuing partnership and commercial opportunities with the state intelligence apparatus.</p> <p>&nbsp;</p> <p>As a matter of fact PETER-SERVICE is uniquely placed as a surveillance partner due to the remarkable visibility their products provide into the data of Russian subscribers of mobile operators, which expose to PETER-SERVICE valuable metadata, including phone and message records, device identifiers (IMEI, MAC addresses), network identifiers (IP addresses), cell tower information and much more. This enriched and aggregated metadata is of course of interest to Russian authorities, whose access became a core component of the system architecture.</p> </blockquote> <p>One of Wikileaks&rsquo; media partners for the release, the Italian newspaper <a href="">La Repubblica </a>reports that the documents cover &ldquo;an extended timespan from 2007 to June 2015&rdquo;, and describes the contents as &ldquo;extremely technical&rdquo;. It also caveats that <strong>the documents do not mention Russia&rsquo;s spy agency, the FSB, </strong>but rather &ldquo;speak only of state agencies&rdquo;, a formula it asserts &ldquo;certainly includes law enforcement, who use metadata for legal interception&rdquo;. It also says the documents do &ldquo;<strong>not clarify what other state apparatus accesses those data through the solution of the St. Petersburg company</strong>&rdquo;.</p> <p>Wikileaks says that under Russia law operators must maintain a Data Retention System (DRS), which can store data for up to three years. La Repubblica reports that Peter-Service&rsquo;s DRS stores telephone traffic data and &ldquo;allows Russian state agencies to query the database of all stored data in search of information&rdquo; &mdash; which it specifies can include calls made by a certain telephone company&rsquo;s customer; payment systems used; the cell phone number to which a user is calling.</p> <p>&ldquo;The manuals published by WikiLeaks contain the images of interfaces that allow you to search within these huge data fields, so access is simple and intuitive,&rdquo; it adds.</p> <p>Some technical details:</p> <ul> <li>According to Wikileaks, Peter-Service&rsquo;s DRS solution can handle&nbsp;<a href="" rel="noopener" target="_blank">500,000,000 connections per day</a>&nbsp;in one cluster. While the claimed average search time for subscriber related-records from a single day is ten seconds. &ldquo;State intelligence authorities use the&nbsp;<a href="" rel="noopener" target="_blank"><em>Protocol 538</em>&nbsp;adapter built into the DRS</a>&nbsp;to&nbsp;<a href="" rel="noopener" target="_blank">access stored information</a>,&rdquo; it adds.</li> <li>Peter-Service has also apparently developed a tool called TDM (Traffic Data Mart) &mdash; which allows the database to be queried to determine &ldquo;where users&rsquo; data traffic is stored in order to understand visited sites, forums, social media&rdquo;, as well as how much time is spent on a certain site and the electronic device used to access it.</li> <li>Wikileaks describes TDM as &ldquo;a system that records and monitors IP traffic for all mobile devices registered with the operator&rdquo;,&nbsp;&nbsp;and says it maintains a&nbsp;<a href="" rel="noopener" target="_blank">list of categorized domain names</a>&nbsp;&mdash; &ldquo;which cover all areas of interest for the state. These categories include blacklisted sites, criminal sites, blogs, webmail, weapons, botnet, narcotics, betting, aggression, racism, terrorism and many more&rdquo;.</li> <li>&ldquo;Based on the collected information the system allows the creation of reports for&nbsp;<a href="" rel="noopener" target="_blank">subscriber devices</a>&nbsp;(identified by IMEI/TAC, brand, model) for a specified time range: Top categories by volume, top sites by volume, top sites by time spent, protocol usage (browsing, mail, telephony, bittorrent) and traffic/time distribution,&rdquo; it adds.</li> </ul> <p>Wikileaks points to a 2013 Peter-Service&nbsp;<a href="" rel="noopener" target="_blank">slideshow presentation</a>&nbsp;(it says this also appears to be publicly available on the company&rsquo;s website), which it claims is targeted not at telco customers but at state entities such as Russia&rsquo;s FSB and Interior Ministry (despite this document apparently being in the public domain) &mdash; in which the company focuses on a new product, called&nbsp;<em>DPI*GRID</em>; which it says is a hardware device for Deep Packet Inspection that takes the form of &ldquo;black boxes&rdquo; apparently able to handle 10Gb/s traffic per unit.</p> <p><img alt="" src="" style="width: 500px; height: 240px;" /></p> <p>Wikileaks adds that &ldquo;the national providers are aggregating Internet traffic in their infrastructure and are redirecting/duplicating the full stream to&nbsp;<em>DPI*GRID</em>&nbsp;units. The units inspect and analyse traffic (the presentation does not describe that process in much detail); the resulting metadata and extracted information are collected in a database for further investigation. A similar, yet smaller solution called MDH/DRS is available for regional providers who send aggregated IP traffic via a 10Gb/s connection to MDH for processing.&rdquo;</p> <p>Wikileaks also makes a point of noting that the presentation was written <strong>&ldquo;just a few months after Edward Snowden disclosed the NSA mass surveillance program and its cooperation with private U.S. IT-corporations such as Google and Facebook</strong>&rdquo;.</p> <p>&ldquo;Drawing specifically on the <a href="" rel="noopener" target="_blank">NSA Prism program</a>, the presentation offers law enforcement, intelligence and other interested parties, to join an alliance in order to establish equivalent data-mining operations in Russia,&rdquo; it adds &mdash; sticking its boot firmly back into U.S. government mass surveillance programs.</p> <p><em>The full release can be <a href="">found here.</a></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="751" height="373" alt="" src="" /> </div> </div> </div> cellular telephone Crime prevention Data Mart Edward Snowden Espionage FSB Global surveillance disclosures Google Government Interior Ministry Julian Assange Mass surveillance mobile devices National security National Security Agency News leaks Newspaper Politics PrISM SPY Technology Twitter Twitter US government WikiLeaks Tue, 19 Sep 2017 14:48:38 +0000 Tyler Durden 603773 at Trump Warns World At UN: "No Choice But To Destroy Rocket Man's North Korea" <p>While President Trump fell just short of "fire and fury," his first address to The United Nations was <strong>very clear in its perspective on North Korea (Iran and Syria).</strong></p> <p><a href=""><img src="" width="600" height="414" /></a></p> <p><strong><em>"It’s time for North Korea to realize that de-nuclearization is its only acceptable future."</em></strong></p> <p>Trump warned that<em><strong> if the US must defend itself or its allies, “we will have no choice but to totally destroy North Korea,"</strong></em> adding that <em><strong>"Rocket Man is on a suicide mission for himself and his regime."</strong></em></p> <blockquote class="twitter-video"><p dir="ltr" lang="en">Trump on Kim Jong Un: "Rocket Man is on a suicide mission for himself and for his regime" <a href="">#UNGA</a> <a href=""></a></p> <p>— POLITICO (@politico) <a href="">September 19, 2017</a></p></blockquote> <script src="//"></script><p>Trump added that:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p> "<strong>U.S. is ready, willing and able" to take military action</strong>, but "hopefully that won’t be necessary."</p> </blockquote> <p> Trump says it’s outrageous that nations would support North Korea and that rogue nation’s pursuit of missiles threatens the whole world...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The "righteous many" must confront the "wicked few."</strong></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="1085" height="748" alt="" src="" /> </div> </div> </div> American people of German descent Business Donald Trump Iran KIM North Korea North Korea Politics Politics Politics of the United States The Apprentice Twitter Twitter United Nations United States War WWE Hall of Fame Tue, 19 Sep 2017 14:34:04 +0000 Tyler Durden 603772 at