One year ago, when looking at the 20 most popular stories of 2016, we admitted that perhaps as a result of one too many shocking outcomes, it was difficult to find a coherent theme of the key events that shook the world, and which you, our readers, found most interesting and notable.
- 2016 was a year of shocks, twists, turns and unexpected outcomes - first the surprise Brexit vote and then Trump's just as shocking presidential victory, both of which forced many to re-evaluate what "expert", "pundit" and certainly "opinion poll" means; it also unleashed the concept of "fake news" used by the establishment to justify why it was so wrong about everything, yet which would boomerang and lead to an even greater collapse in mainstream media credibility.
- 2016 was year in which class warfare in the US approached unprecedented levels with antagonism between races, genders, ethnicities, ideologies, age groups and incomes all approaching peak levels, and spilling over, literally, on the street as the US public was inundated with daily reports of mass shootings, of trigger-happy policemen, of petulant students demanding conformity, of a president demanding the population hand over even more constitutional rights, of a nation torn in the most volatile presidential race yet.
- it was a year of two diametrically different markets: the first half was marked by rising, and in many cases, brutal intraday volatility as global stocks entered a near bear market, offset by a sharp reversal when following the infamous "Shanghai Accord" volatility suddenly faded away, and the S&P500 set off on an unprecedented surge, rising in 21 of the subsequent 22 months, in the process recording a perfect year: 14 consecutive months of positive total returns to close the year, something never before seen in equity markets.
- it was a year in which the S&P closed far higher than many had speculated, and defied the doomsayers who predicted a crash after Donald Trump won the presidential election despite the ongoing pile up of various imbalances, thanks largely to an unprecedented credit injection by China which has single-handedly been the world's biggest source of new debt creation since the financial crisis, as well as the now widely accepted support of central banks around the globe whose only mandate is to prop up asset prices or else risk another crash, a collapse in the pension system of an increasingly aging developed world, resulting in violent social upheaval
- it was a year in which the geopolitical situation outside of the U.S. continued to deteriorate, although as a result of non-US intervention in Syria, we also watched the beginning of the end of ISIS which lost several key decisive battles, that would prove critical in the coming year for the terrorist organization, even as the historic refugee crisis and immigrant wave that was unleashed as a result of Syrian proxy war would alter the ethnic and demographic face of Europe for years to come, while also unleashing a wave of terrorist events as governments across the globe sought to exploit the crisis for their own selfish reasons.
- In summary, 2016 was a year of confused flux and of dramatic change: change which was largely amorphous and chaotic but which we said would crystallize over 2017, "in unpredictable and, sadly, violent ways."
It did indeed, because while many of the trends observed in 2016 were taken to their logical extremes in 2017, it is difficult to say that 2017 provided much needed closure to many of the themes and narratives that emerged in the previous year and earlier, most of which played out in the political arena, where for the first time in decades, the non-establishment president of the world's biggest superpower, a manifestation of the "protest vote" that had built up over the past decade, shook to the core everything that the world had taken for granted, setting the stage for a dramatic revulsion from widely accepted norms and principles, .
As we had warned for years, the vast if silent majority, feeling snubbed and neglected by the political oligarchy and the world's central bankers, decided to take the power back which they did within the confines of the democratic process, sending the establishment reeling, by rejecting years of legacy narratives by replacing decades of a failed, and flawed, political regime in the US with something... different.
And yet, looking back over the past 12 months, it remains to be seen if these changes will be successful and bear fruit, or if they will be a change for the worse. To be sure, the defeated forces of established powers refused to go gentle into that good night and created an unprecedented McCarthyism 2.0 narrative that desperately hoped to make Trump's victory appear as the outcome of collusion with Russia... of which incidentally 14 months after the election there has still been no tangible evidence.
It is also true that while many had placed high hopes that Trump would prove to be an agent of substantial change, the president quickly doused such expectations as he rushed to surround himself with Wall Street "experts" and corporate oligarchs who promptly hijacked the post-Obama transition process resulting in... more of the same. As such it is hardly a surprise that the biggest - and really only - legislative achievement by the Trump administration, was a tax cut that benefits corporations and the wealthy first and foremost, even as it adds trillions more to the already record US debt.
Still, the simple reality is that as we entered 2017, people had enough and wanted change. This, in the words of the established media, was called "populism", and the transformation process which allowed it to take place was maligned under the umbrella definition of "fake news." More on that later.
And yet, while political upheaval was the defining feature of 2017, in a bizarre transformation never before seen, in the financial realm markets exhibited an eerie, unprecedented calm as the year progressed, ignoring and even savoring jarring headlines, even ignoring a standoff between the nuclear powers of the US and North Korea, which ultimately led to a record low volatility, best captured by this Citi chart which showed that never before in history were there so many sub 10 VIX days as there were in 2017.
To be sure, there was a reason for this historic drop in volatility, and it once again had to do with central banks, which injected a record $2.5 trillion in liquidity despite 2017 being the first year since the financial crisis which demonstrated a coordinated global economic recovery. The problem, as so many banks hinted across the year, is that it is unclear if the world economy rebounded as a result of this liquidity, which is now being withdrawn. Indeed, as a record $1 trillion in global liquidity is pulled from the system by central banks which now realize they have created a massive asset bubble, the outcome could - according to numerous skeptics - be dire.
Of course, 2017 is the year when in addition to monetary stimulus, fiscal policies started to matter again, and none more so than Trump's tax cut, which is expected to boost the economy just as inflation is gradually rebounding; should it lead to overheating it could force the Fed to hike rates even more than expected, resulting in a sharp tightening in financial conditions and ultimately a stock market drop, if not crash.
Needless to say, it would be ironic if Trump's greatest legislative achievement in 2017 is also the catalyst for the next American recession.
In this context, one of the biggest questions facing 2018 is whether this transition from monetary to fiscal policy will actually take place, and how smooth this a handover will be. For now optimism and hope prevail: global markets closed 2017 at an all time high with volatility just barely off record lows.
2017 also demonstrated how dominant the political narrative has become when it comes to finance and capital markets. For all those lamenting that relentless coverage of politics in a financial blog (which sadly also includes every tweet from Donald Trump), why finance appears to have taken a secondary role, and why the political "narrative" has taken a dominant role for financial analysts, the past year showed vividly why that is the case. After all, it was the S&P's daily "pricing-in" for over one year of Trump's fiscal and tax reform, that allowed the S&P to levitate as much as it did, and the Dow Jones to rise by 25%.
And speaking of market performance in the past year, it is also ironic that despite numerous experts predicting a correction in stocks, this never happened despite - or rather thanks to - the Trump presidency, which was also not lost on Trump himself. After declaring the S&P500 a "massive bubble", Trump has pivoted to the point where he takes daily credit for the market's record highs, something he just did on the last day of 2017.
Eventually, the time will come for Trump to pay the piper, but for now it is smooth sailing ahead for the tweeting president, who one year into his presidency has yet to see a 5% market correction. Incidentally, and speaking of twitter, as a reminder in our 2016 year end recap, we said that "2017 will be the year when domestic and foreign policy takes place on Twitter"; we were correct.
Stepping away from Trump's market boasts, the reasons for the market relentless move higher are by now clear to all: central banks have openly warned that any selling following watershed political events, or any selling period, is no longer acceptable (who can possibly forget the ECB pledging to bailout the market in case of a Brexit). Sure enough, markets took the hint, and after taking 65 days to recover all losses from the August 2015 China devaluation, it took the S&P only 5 days to recover the post-Brexit losses, it took only 16 hours to regain the sharp, limit-down drop after the Trump election, and stunningly, just 9 hours to recover the entire loss from the Italian referendum outcome which, too, was a vote against establishment politics.
This trend culminated with a stunning admission from none other than Bank of America which this month warned that not only have central banks broken the market, which now responds with furious dip buying to even the most modest of corrections, but that "In Every Market Shock Central Banks Have Stepped In To Protect Markets." The result: a habituation that nothing wrong can ever again happen, period.
The problem with this habituation that "no news can ever again be bad news" is that it is no longer clear what the market may or may not have priced in, absent hope and expectations of central bank intervention to arrest any future selling episodes; central bank intervention which in 2017 hit all time highs and numerically amounted to over $15 trillion in cumulative liquidity injections. However, with a major shift now taking place away from monetary and toward fiscal policy, the "assumption of hope" will be tested in 2018. Perhaps violently.
Another assumption that will be tested in the coming year is whether "China no longer matters" for US markets, something which was certainly not the case last year. Back in 2015, US futures would swoon the moment the PBOC announced even a modest drop in the Yuan. On the other hand, in the second half of 2016 and much of 2017, US equities could care less what Beijing did, how high NPLs among Chinese banks rose, how pervasive corporate defaults in China became, or what the future held for China, and its $40 trillion in financial assets. We have a nagging suspicion that whether or not the US manages to avoid a recession in 2018, and the business cycle is now so long in the tooth, the current expansion is now the second longest in US history, any global shock will ultimately come out of Beijing.
However, should the most powerful trend of 2017 (and prior years) persist and it most likely will, far fewer hedge funds will be there to trade this "assumption" - the one overarching trend in recent years has been a record outflow away from active managers, who saw the biggest outflows in assets under management since the financial crisis, as investors grew so disenchanted with the "2 and 20 model", they pulled their money out of the underperforming asset class and dumped it into ETFs and other, cheaper alternatives.
Still, while many themes, both in the political and financial realm, did get some closure, dramatic changes in 2017 persisted, and will continue to manifest themselves in dramatic, often violent and unexpected ways - from the unprecedented obsession with everything Trump does, says and tweets, to terrorism in Europe, to "populist" upheavals around the developed world, to unprecedented capital flight out of China. Perhaps these non-stop changes is the reason why 2017 was an absolute record year for Zero Hedge, which recently crossed 4 billion cumulative page views since inception, just over three years after hitting our first 1 billion pageview milestone.
As always, we thank all of our readers for making this website - which has never seen one dollar of outside funding (and despite amusing recurring allegations, has certainly never seen a ruble from the KGB either), and has never spent one dollar on marketing - a small (or not so small) part of your daily routine. Which also brings us to another amusing topic: that of fake news, and something we - and others who do not comply with the established narrative - have been accused of. While we find the narrative of fake news laughable, after all every single article in this website is backed by facts and links to outside sources, we find it a dangerous development, and very slippery slope, that the entire developed world - is pushing for what is, when stripped of fancy jargon, internet censorship under the guise of protecting the average person from "dangerous, fake information."
To preserve its counter-establishment aura, it goes without saying that the current administration should overturn this blatant attack on the First Amendment, and let people decide for themselves what is and isn't fake news. If anything, it is the conventional, mainstream media, most of which is owned by a handful of corporations with extensive ties to the government, that demonstrated on many occasions in 2017 that it is the primary creator and distributor of "fake news", something in which the president took particular delight.
In addition to the other themes noted above, we expect the crackdown on free speech to accelerate in the coming year, especially as the following list of Top 20 articles for 2017 reveals, many of the most popular articles in the past year were precisely those which the conventional media would not touch out of fear of repercussions, which in turn allowed the alternative media to find a key entry point, and take significant market share from the established outlets by covering topics which the public relations arm of established media outlets refused to do, in the process earnings itself the derogatory "fake news" condemnation.
We are grateful that our readers - who hit a new record high in 2017 - have realized it is incumbent upon them to decide what is, and isn't "fake news."
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Before we get into the details of what has now become an annual tradition for the last day of the year, those who wish to jog down memory lane, can refresh our most popular articles for every year during our no longer that brief, 7-year existence, starting with 2009 and continuing with 2010, 2011, 2012, 2013, 2014, 2015 and 2016.
So without further ado, here are the articles that you, our readers, found to be the most engaging, interesting and popular based on the number of hits, during the past year.
- In 20th place, with over 466,000 views, was a recent discussion of what we believe is the most troubling development affecting America, one where free speech is increasingly becoming a victim of government propaganda and corporate doublespeak, something we reported in "New York Assemblyman Unveils Bill To Suppress Non-Government-Approved Free Speech", a bill under which newspapers, scholarly works, and online books would have to be censored whenever a judge and jury found that the speech was “no longer material to current public debate or discourse” (except when it was “related to convicted felonies” or “legal matters relating to violence” in which the subject played a “central and substantial” role). For now such attempts at open censorship continue to take place largely in the shadow although with every successful attempt, the desire to quash the 1st Amendment become increasingly more bold.
- In 19th place, with over 470,000 views, was a topic that is near and dear to an aging subset of Americans, a discussion on whether "Collapsing pensions are "about to bring hell to America." In a world in which pension returns requirements are increasingly out of alignment with what is achievable when interest rates are unable to rise to historical levels, it is unclear how pension schemes, which by definition are ponzi scheme, will ever be able to satisfy all the claims of America's aging population. The worst case scenario, of course, is that like every other ponzi scheme, the final unwind will reveal that more than one generation of Americans has no retirement benefits to fall back on, the consequences of which would be dire for social stability.
- In 18th place was an article detailing the increasing robotization of menial and unskilled jobs. In "McDonalds Is Replacing 2,500 Human Cashiers With Digital Kiosks: Here Is Its Math", which was read 482,000 times, we explained why the minimum wage movement has backfired when it comes to employers such as McDonalds, a topic which was also discussed in our 18th most popular article of the year, detailing the "Minimum Wage Massacre: Wendy's Unleashes 1,000 Robots To Counter Higher Labor Costs." Read 528,450 times, the articles dealt with a subject which we are confident will become an increasingly more sensitive and popular theme in 2018 and beyond as increasingly more humans lost their jobs to much more efficient and effective robots.
- Read nearly 550,000 times, and in 17th place, was a story that dealt with the blowback against the mainstream media which Trump has repeatedly called "fake news" and in this case he was absolutely correct: it was the result of an "Epic Mistake" by ABC in its reporting of the Mueller's Russian collusion investigation, which completely botched Mike Flynn's reported intentions, prompting it to effectively Retract its Bombshell Flynn Story. Indeed, in its eagerness to "out" Trump as nothing short of a KGB agent, many if not most of the mainstream media networks made one blunder after another, resulting in social distrust and the fracturing of the "fake news" narrative.
- In 16th place was a vivid reminder that the legacy of Merkel's "open door" policy will haunt Europe for a long time, when some 630,000 people read our report that "Meanwhile, Rioting Breaks Out In Sweden." What made the article especially poignant is that it came just days after Trump suggest that Europe's refugee problem is nowhere near contained, which in turn drew derision from the "establishment." And, as so often has happened in the past year, Trump was promptly proven right.
- In 15th place, read more than 633,000 times, was a story detailing Trump's first successful derailing of established norms, when his involvement in the latest Paris Accord talks led to a "Merkel Furious With Trump After "Unprecedented" G-7 Failure To Reach Consensus On Climate Change." Meanwhile, for all the outrage at Trump for pulling out of the Paris Accords, where the US was one of the biggest sources of funding, there has been little criticism of the biggest carbon emissions offender, China, a nation which has been quite eager to step into global superpower shoes, if only for purely optical reasons.
- It wasn't just Europe that was challenged by legacy refugee concerns in 2017: in a glaring attempt of "virtue signaling", progressive icon Starbucks coffee announced it would hire 10,000 refugees not long after president Trump announced his intention to crack down on illegal immigrants and refugees coming to the US. However, it didn't work out quite as expected, and in what would soon become a theme for other such "progressive" causes, the Starbucks "brand perception" took a massive hit after the announcement as a majority of America disagreed with the CEO's decision to demonstrate his "resistance" to Trump policies, leading to a sharp drop in sales. This was the topic of our 14th most popular post of 2017, read just over 694,000 times.
- Speaking of "fake news", it wasn't just ABC: while its viewership jumped this year, 2017 was also a very bad year for CNN's credibility, which gradually emerged as the frontrunner of the media resistance against Trump, with much of its reporting provided by "anonymous" source. Alas, those anonymous sources got numerous narrative pieces wrong, not least of which were explicit details about what former FBI director James Comey said or did, in this particular case a CNN report that "FBI Director James Comey is reportedly set to testify he never told President Donald Trump that he was not under investigation." As it turned out Comes would testify to precisely the opposite, resulting in one of numerous occasions on which "CNN's Anonymous Sources Got This One Wrong", an article which was our 13th most read article of the year, with some 770,000 page views.
- A tragic, and very significant, event for America's growing social split took place in August, when a right-wing extremist plowed into a crowd of progressive protesters, and killed a young woman during the infamous Charlottesville protests. Taking place during the peak of the otherwise sleepy summer season, our reporting on this tragic incident became the 12th most popular article of 2017, read 771,054 times. This was combined with the 658,556 times a follow up article was read by our readership, namely "Why Was This 'Crowd Hire' Company Recruiting $25 An Hour 'Political Activists' In Charlotte Last Week?" Incidentally, the question brought up by the follow up piece has still not been answered.
- In 11th place, with 774,544 reads, was an article that perfectly capped the unprecedented year for cryptocurrencies in general and bitcoin in particular, which exploded in popularity, and value, and surged from just under $1,000 at the start of the year to $20,000 by mid-December, before retracing some of its gains. Whether this is a global protest against the current broken monetary system, or just a get rich quick scheme, as of just a few weeks ago, it became Official "Bitcoin Surpasses "Tulip Mania", Is Now The Biggest Bubble In World History." To be sure, one of the biggest questions for 2018 will be how much higher can and will Bitcoin and its peers rise, or if the bubble will finally pop, resulting in a dramatic crash among the crypto space. While we don't know the answer, one thing is clear: there are vocal supporters of both sides of the this particular narrative.
- In 10th place, with over 826,000 page views, was an article detailing another troubling trend in the US, namely that "Congress Quietly Passed A Bill Allowing Warrantless Searches of Homes - Only 1% Opposed It. " A direct attack on US civil liberties, this was not the first time Congress quietly passed a bill that would take away some of the most basic rights from law-abiding citizens in the U.S., and it won’t be the last. One of the most important things to remember about this legislation is that it was ignored by the media, and while it may only affect the Washington D.C. metro area now, it could be laying the blueprint for future legislation across the country.
- In 9th place with 850,000 page views, and a vivid reminder of the turbulent geopolitical situation unleashed by President Trump's unorthodox foreign diplomacy, was our report that for the first time in years, the "US Deploys Two More Aircraft Carriers Toward Korean Peninsula." The result would eventually be an extremely rare naval drill that involved three US aircraft carriers, a show of force meant to frighten the North Korean regime of Kim Jong Un into submission, which however has yet to achieve its intention as the heated war of words between the two world leaders continues apace as we enter 2018.
- Not surprisingly, in 8th place with over 922,000 page views was a different view on the same geopolitical drama, when we reported that "China Has Deployed 150,000 Troops To North Korea Border. " One of the main reasons why North Korea has so far avoided war with the US is China's direct buffering of tensions on both sides. However, reminders that Beijing itself may drop its stated neutrality and seek to benefit from what appears to be an imminent military confrontation between the US and North Korea remain among top of mind of not only our readership, but the entire world.
- For our 7th most popular article of 2017, with over 925,000 reads we go back to the US, where we reported in July that former CIA director John Brennan said that if the White House tries to fire special counsel Robert Mueller, government officials should refuse to follow the president orders, as they would be - in his view - “inconsistent” with the duties of the executive branch. In other words, a former CIA director directly called for a coup should Trump seek to fire the special prosecutor whose probe recent revelations suggest is indeed a politically-motivated witch hunt, something Trump himself has stated on numerous occasions.
- 2017 was also the year when the remaining 3,000 documents in the JFK assassination archive were finally declassified thanks to a Trump executive decision. What the files revealed was "The One Paragraph You Need To Read From The JFK Assassination Files That May Change Everything", which was also our 6th most popular article with over 931,000 page views. For those who missed it this is what the document said: "...the "Surgeon General's Report" on the assassination stated that the first bullet entered the President's throat below the adams apple, clearly showing that two persons were involved with the first shot being fired from the bridge across the park way in front of the car.... To further substantiate this, POTITO said there was a bullet hole in the wind shield of the President's car..." Needless to say, it wouldn't be the first time the US government has hid and covered up the truth of what really happened in one of the world's most historic events.
- In 5th spot, with over 1.1 million reads, was a discussion of what appeared to be a bizarre concurrent electric power grid failure as a series of power outages in Los Angeles, San Francisco, and New York City left commuters stranded and traffic backed up, which in turn prompted many to fear that a foreign cyber attack or worse, an EMP had been launched against the US. This was reported in "Total Chaos" - Cyber Attack Feared As Multiple Cities Hit With Simultaneous Power Grid Failures", and while the US has yet to officially be the victim of a coordinated foreign cyber attack aiming what many claim is America's weakest link, its infrastructure, it's likely only a matter of time.
- In 4th spot, with over 1.25 million reads, was our real-time blog of the bizarre events that took place at the start of November which we described "In Shocking Purge, Saudi King Arrests Billionaire Prince Bin Talal, Dozens Of Others In Cabinet Crackdown", and which saw the young Saudi Crown Prince, MbS, arrest many of his wealthiest royal peers and Saudi oligarchs in an operation that was supposedly meant to be an anti-corruption drive, but was nothing more than a shakedown seeking money from Saudi's wealthiest. While Mohammad bin Salman appears to have cemented power in the Kingdom for now, rumors that anger against the future king is growing suggest that Saudi Arabia could very well be a distinct middle east hotspot in the coming year.
- In 3rd spot, read over 1.5 million times, was Wikileaks' revelation of the CIA's global hacking program, something we chronicled in "Wikileaks Unveils 'Vault 7': "The Largest Ever Publication Of Confidential CIA Documents", and which just as importantly confirmed that there is yet another "Snowden-type" embedded deep within the apparatus of the US Deep State. While the CIA spying on other was not exactly news, the threat that these weaponized exploits had fallen into the wrong hands as many speculated, is arguably one of the reasons why the US intelligence community has been so eager to focus the public's attention on Russian "hacking", when in reality the real story is the CIA's own carelessness with its technologies which appear to have fallen into the wrong, and certainly not Russian, hands in recent years.
- In 2nd spot, read over 1.6 million times by the panicked public, was a faulty headline picked up first by the Chinese press and then Bloomberg in early April, and which "Almost Set Off Military Action With Erroneous North Korea Headline." Ironically, just a few months later, report that North Korea would fire ICBMs have become a monthly occurrence, once which barely leads to any selling in risk assets as the world has learned to tune out any events out of the North Korean boy who keeps on crying wolf. The risk is that one day, Kim Jong Un will indeed launch an ICBM aimed at the US, and nobody will care...
- Finally, in top spot, with 1.8 million reads, was an article that discussed the biggest mass shooting event in US history, specifically touching on the "16 Unanswered Questions About The Las Vegas Shooting That Mainstream Media Doesn't Want To Talk About." Surprisingly, 3 months after this tragic mass killing, virtually nobody in the public has any idea what prompted this unprecedented shooting spree, and what can be done to avoid such events in the future.
With all that behind us, what is in store for 2018?
We don't know: as frequent and not so frequent readers are aware, we do not pretend to be able to predict the future and we don't try despite endless allegations that we constantly predict the collapse of everything: we leave the predicting to the "smartest people in the room" who year after year have been consistently wrong about everything, and never more so than in the last two years, which destroyed the reputation of the conventional media and the professional "polling" and "strategist" class for ever. We merely observe, try to find what is unexpected, entertaining, amusing, surprising or grotesque in an increasingly bizarre, sad, and oftentime crazy world, and then write about it.
We do know, however, that after $15 trillion in liquidity has been conjured out of thin air by the world's central banks, and the tens of trillions of credit money created (and misallocated) by China - a country which was the world's growth dynamo for the past three decades and which is now rapidly slowing down - the entire world is floating on an ocean of excess money, which for one more year has succeeded in masking just how ugly the truth beneath the calm surface is. Now, with the Fed hiking and actively shrinking its balance sheet and the ECB and BOJ set to join in the not too distant future, and as the global growth dynamics shifts from monetary to fiscal policy, as the liquidity tide starts to come out, those swimming naked will finally be exposed, especially if as we expect, the handoff from monetary to fiscal policy is far more volatile than what the market currently prices in.
The question we have: how far will the tide be allowed to recede before central banks step in again?
We are confident, however, this in the end it will be the very final backstoppers of the status quo regime, the central banking emperors of the New Normal, who will eventually be revealed as fully naked. When that happens and what happens after is anyone's guess. But, as we have promised - and delivered - every year for the past nine, we will be there to document every aspect of it.
Finally, and as always, we wish all our readers the best of luck in 2018, with much success in trading and every other avenue of life. We bid farewell to 2017 with our traditional and unwavering year-end promise: Zero Hedge will be there each and every day - on most occasions doing so with a cynical smile - helping readers expose, unravel and comprehend the fallacy, fiction, fraud and farce that the system is reduced to (ab)using each and every day just to keep the grand tragicomedy going for at least one more year.