Transparency on Wall Street: SEC Chair Raises Weak Defenses

On November 8, the Securities and Exchange Commission (SEC) Chairman, Jay Clayton, delivered a speech at the Practising Law Institute’s 49thAnnual Institute on Securities Regulation. His focus was transparency on Wall Street and he had this nugget of wisdom to share with the audience:
‘Looking back at enforcement actions, a common theme emerges – where opacity exists, bad behavior tends to follow. As Joseph Pulitzer said: ‘There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice which does not live by secrecy.’ The remainder of my remarks will concentrate on topics that have proven over time to be fertile ground for fraud on investors. The SEC may not yet have policy or rulemaking answers in these areas, but we are on the lookout for ways to fight the type of opacity that can create an environment conducive to misconduct.’
The SEC was created to police Wall Street under the Securities Exchange Act of 1934. The legislation came on the heels of the U. S. Senate holding three years of hearings that showed Wall Street to be a cesspool of opaque self dealing and collusion that had led to the 1929 stock market collapse and ensuing Great Depression. The SEC has now had 83 years to hone its investigative skills and techniques. And yet, it wore blinders in the runup to the epic Wall Street crash of 2007-2009, which was caused by the same type of corruption that was ferreted out by the U. S. Senate after the 1929 crash. Its blinders remain securely in place.

This post was published at Wall Street On Parade on December 4, 2017.

The EU (with Help from Germany) just Made Monsanto’s Day

One of Germany’s largest companies is trying to buy Monsanto, which changes everything.
A majority of EU governments voted on Monday to extend the European license for glyphosate, the active ingredient in Monsanto’s flagship product, Roundup, for another five years. One of the deciding votes was cast by the caretaker government of Germany, which came off the fence after abstaining in previous meetings.
The decision was made despite a petition signed by more than 1.3 million EU citizen-subjects calling for a European ban on the weedkiller.
The five-year extension is welcome news for Monsanto, which has found itself in the rather unusual position of being on the back foot in recent years, especially since the UN’s World Health Organization (WHO) declared that glyphosate is ‘probably carcinogenic’. The company is facing a rash of potentially costly law suits in the US from farmers, members of their families, and others who claim that Roundup is connected to non-Hodgkin’s lymphoma.

This post was published at Wolf Street by Don Quijones ‘ Nov 28, 2017.

AMERICA’S SECRET WEAPON IN THE OIL WAR

As Saudi Arabia spins from crisis to crisis, U. S. oil hasn’t missed a beat. It’s stronger and more resilient than ever – and it has nothing to do with OPEC oil production cuts.
In this war, U. S. oil wins, and the recent purge of billionaire princes in Saudi Arabia is icing on the cake.
But when Saudi Crown Prince Mohammad bin Salman arrested key members of the royal family on corruption charges two weeks ago all of them his rivals – oil shot up. West Texas Intermediate (WTI) spiked more than $2 a barrel, closing around $57 a barrel – a nearly two-year high.
OPEC cuts have done little to boost oil prices, and Royal Family arrests are welcome news for oil tycoons the world over, but it’s still not what’s kept the U. S. on the winning side in this war: Fracking bust the U. S. through the front line, and major advancements in enhanced oil recovery (EOR) are cementing the victory.

This post was published at The Daily Sheeple on NOVEMBER 27, 2017.

Hillary Calls Trump Administration a Dictatorship if She is Investigated

The Washington Post has no problem with a Special Prosecutor investigating Trump and any attempt to stop that would be a crime known as Obstruction of Justice. Yet, when it comes to Hillary, they do a backflip and have the audacity to write: ‘The Justice Department’s declaration that Attorney General Jeff Sessions is considering appointing a special counsel to investigate Hillary Clinton in response to demands by Republicans should alarm anyone who cares about the independence of the department.’ So if a Special Prosecutor is ‘justice’ going after Trump and suddenly an abuse of power to investigate Hillary, to even take such a position seems to be the pinnacle of journalistic corruption.


This post was published at Armstrong Economics on Nov 26, 2017.

Jeff Bezos and All He Owns Must Be Destroyed

There is a basic premise behind reporting .vs. editorializing — one is allegedly unbiased, although we all have our personal prejudices while the other is labeled opinion (it’s found on the opinion page and is disclosed as such.)
Jeff Bezos bought the Washington Post, it is now clear, in order to effect a public lobbying strategy much larger than that which Hastings “organized” and led to a five times increase in his firm’s stock price revolving around net neutrality.
That latter event occurred after ISPs, properly recognizing that he was effectively driving semi trucks over the roads built for cars and refusing to pay higher fuel taxes and license plate fees for same, or, if you prefer, opening up a 2″ water connection to a 6″ main and demanding not to be charged by the gallon, resulting in you having no water pressure, started pushing back and demanding that Netflix cover the outsized costs being imposed on said ISPs to prevent service-quality collapses to everyone, including those who didn’t want his service.
In response Hastings got a bunch of left-aligned media to whip the public into a froth and Obama’s FCC obliged by handing him tens of billions of dollars of money literally forced out of non-subscriber’s wallets.
Amazon engages in cross-subsidization of its product sales (on which he makes no profit, particularly when fulfillment along with G&A are included) with other sales, particularly in AWS, where he does. This now includes government sales of AWS which means you’re being forced to subsidize Jeff Bezos’ destruction of retailers all across the United States at literal gunpoint, along with all the jobs that go when those retailers are forced out of business.

This post was published at Market-Ticker on 2017-11-24.

Matt Is Still Making Excuses (So Are You)

Matt Stoller and I, years ago, used to talk a fair bit on policy in the political realm. We have rather different views that could be reasonably-characterized by some “left:right”, but I think are more “socialist:libertarian”, when you get down to it.
But that’s all well and good, if you can confine your differences to policy and try to hash out how the government can function more-efficiently, which I think everyone can define as provides more benefit than it costs to a larger percentage of the population.
Of course we’ll differ on what defines “benefit” and “cost.”
The problem is that unlike my perspective on what happened, which hasn’t changed very much in quite a long time, Matt’s is basically the same perspective both the “right” and “left” hold. Here’s his perspective on where the Democrats went wrong:
It was January 1975, and the Watergate Babies had arrived in Washington looking for blood. The Watergate Babies – as the recently elected Democratic congressmen were known – were young, idealistic liberals who had been swept into office on a promise to clean up government, end the war in Vietnam, and rid the nation’s capital of the kind of corruption and dirty politics the Nixon White House had wrought. Richard Nixon himself had resigned just a few months earlier in August. But the Watergate Babies didn’t just campaign against Nixon; they took on the Democratic establishment, too. Newly elected Representative George Miller of California, then just 29 years old, announced, ‘We came here to take the Bastille.’
One of their first targets was an old man from Texarkana: a former cotton tenant farmer named Wright Patman who had served in Congress since 1929. He was also the chairman of the U. S. House Committee on Banking and Currency and had been for more than a decade. Antiwar liberal reformers realized that the key to power in Congress was through the committee system; being the chairman of a powerful committee meant having control over the flow of legislation. The problem was: Chairmen were selected based on their length of service. So liberal reformers already in office, buttressed by the Watergate Babies’ votes, demanded that the committee chairmen be picked by a full Democratic-caucus vote instead.

This post was published at Market-Ticker on 2017-11-24.

The Delirious Dozen of 2017

Yesterday we noted the massive market cap inflation and then stupendous collapse of the Delirious Dozen of 2000. The latter included Microsoft, Cisco, Dell, Intel, GE, Yahoo, AIG and Juniper Networks—plus four others which didn’t survive (Lucent, WorldCom, Global Crossing and Nortel).
Together they represented a classic blow-off top in the context of a central bank corrupted stock market. When the bubble neared its asymptote in early 2000, the $3.8 trillion of market cap represented by these 12 names was capturing most of the oxygen left in the casino. That is, the buying frenzy had narrowed to a smaller and smaller group of momo names.
That severe concentration pattern was starkly evident during the 40 months between Greenspan’s December 1996 “irrational exuberance” speech and April 2000 (when he told the Senate no bubble was detectable). In that interval, the group’s combined market cap soared from $600 billion to $3.8 trillion.
That represented, in turn, a virtually impossible 75% per annum growth rate for what were already mega-cap stocks. As it happened, in fact, $2.7 trillion or 71% of the group’s bubble peak market cap vanished during the next two years.

This post was published at David Stockmans Contra Corner on Wednesday, November 22nd, 2017.

The Mother Of All Irrational Exuberance

You could almost understand the irrational exuberance of 1999-2000. That’s because everything was seemingly coming up roses, meaning that cap rates arguably had rational room to rise.
But eventually the mania lost all touch with reality; it succumbed to an upwelling of madness that at length made even Alan Greenspan look like a complete fool, as we document below.
So doing, the great tech bubble and crash of 2000 marked a crucial turning point in modern financial history: It reflected the fact that the normal mechanisms of honest price discovery in the stock market had been disabled by heavy-handed central bankers and that the natural balancing and disciplining mechanisms of two-way markets had been destroyed.
Accordingly, the stock market had become a ward of the central bank and a casino-like gambling house, which could no longer self-correct. Now it would relentlessly rise on pure speculative momentum—- until it reached an asymptotic top, and would then collapse in a fiery crash on its own weight.

This post was published at David Stockmans Contra Corner on November 21st, 2017.

Hyperinflation in Zimbabwe – It’s back, but maybe not for long

When a nation adopts a foreign currency it will typically face significant hurdles when it tries to rid itself of that currency, or de-dollarize. But Zimbabwe’s autocratic ruler Robert Mugabe has appeared to have done the impossible. After dollarizing ten years ago, over the course of the last year or two he and his cronies have managed to throw off the U. S. dollar and re-introduce a Zimbabwean replacement.
We can see evidence of this new currency in Zimbabwe’s stock market. Below I’ve charted the country’s main equity index, the Zimbabwe Industrial Index, going back to 2011. What an incredible rise over the last year, right? Beware; these returns have nothing to do with real economic growth. Zimbabwean equities have switched from being claim on an a stream of cash flows denominated in U. S. dollars to a stream denominated in Zimbabwe’s new currency. Because investors expect inflation of the new currency to drive up future cash flows, they have responded by bidding stock prices up. In real terms (i.e. U. S. dollar terms), stock prices are probably flat – and may have even declined.

This post was published at GoldSeek on Monday, 20 November 2017.

Everything You Need to Know (and Ignore) About the November OPEC Meeting

The last November OPEC meeting sent oil prices rocketing 20% higher in less than a month, and this year’s Nov. 30 meeting will be just as important for the energy market…
OPEC’s current agreement – the one negotiated during last November’s meeting – caps the total oil production of OPEC and 11 other countries. The agreement limits oil production to 32.5 million barrels a day, a 1.8 million-barrel-per-day reduction from last year.
By capping oil production below 2016 output, the cartel is helping end the global oil glut that sent prices tumbling from $107.95 a barrel in June 2014 all the way down to $26.19 by February 2016. That was a 75% drop.
In fact, the compliance rate among OPEC members for the production cap reached a high of 120% in September. That means they cut even more oil than the agreement asked them to.

This post was published at Wall Street Examiner on November 17, 2017.

Here We Go Again—Swell Numbers Which Aren’t

According to the financial press we have had some swell economic numbers in the last two days—so it’s giddy-up-and-go time for the stock market again. Thursday’s industrial production number was allegedly gangbusters and today’s housing start figure for October was described as a “boom” by the incorrigible headline writers at MarketWatch:
The Commerce Department on Friday said October housing starts surged, rising 13.7% to a seasonally adjusted annual rate of 1.29 million.
Obviously, “surge” is a very different thing than “flat” or “punk”, but those latter terms are exactly what was reported by the Commerce Department this AM.
Last October, for example, single family housing starts posted at a 871,000 SAAR (seasonally adjusted annual rate) and for October 2017 they came in at 877,000. Recalling that this minute difference represents an annualized rate, what we are really talking about here is roughly a 500 start gain for the month of October on a Y/Y basis. And that’s for the entire US of A where the total housing stock consists of about 135 million units!

This post was published at David Stockmans Contra Corner on November 17th, 2017.

Next-Generation Crazy: The Fed Plans For The Coming Recession

Insanity, like criminality, usually starts small and expands with time. In the Fed’s case, the process began in the 1990s with a series of (in retrospect) relatively minor problems running from Mexico’s currency crisis thorough Russia’s bond default, the Asian Contagion financial crisis, the Long Term Capital Management collapse and finally the Y2K computer bug.
With the exception of Y2K – which turned out to be a total non-event – these mini-crises were threats primarily to the big banks that had unwisely lent money to entities that then flushed it away. But instead of recognizing that this kind of non-fatal failure is crucial to the proper functioning of a market economy, providing as it does a set of object lessons for everyone else on what not to do, the Fed chose to protect the big banks from the consequences of their mistakes. It cut interest rates dramatically and/or acquiesced in federal bailouts that converted well-deserved big-bank losses into major profits.
The banks concluded from this that any level of risk is okay because they’ll keep the proceeds without having to worry about the associated risks.
At this point – let’s say late 1999 – the Fed is corrupt rather than crazy. But the world created by its corruption was about to push it into full-on delusion.
The amount of credit flowing into the system in the late 1990s converted the tech stock bull market of 1996 into the dot-com bubble of 1999, which burst spectacularly in 2000, causing a deep, chaotic recession.

This post was published at DollarCollapse on NOVEMBER 17, 2017.

The Big Money Grab Is ‘On’ As Middle America Collapses

The stock market rejoices the House passage of the tax ‘reform’ Bill as the Dow shot up 187 points and the S&P 500 spiked up 21. The Nasdaq soared 1.3%, retracing its 3-day decline in one day. The tax bill is nothing more than a massive redirect of money flow from the Treasury Department to Corporate America and billionaires. The middle class will not receive any tax relief from the Bill but it will shoulder the burden of the several trillion dollars extra in Treasury debt that will be required to finance the tax cuts for the wealthy. The tax ‘reform’ will have, at best, no effect on GDP. It will likely be detrimental to real economic output.
The Big Money Grab is ‘on’ at the highest levels of of Wall St., DC, Corporate America, the Judiciary and State/local Govt. These people are grabbing from a dying carcass as fast and greedily as possible. The elitists are operating free from any fear of the Rule of Law. That particular nuisance does not apply to ‘them’ – only to ‘us.’ They don’t even try to hide their grand scale theft anymore because the protocol in place to prevent them from doing this is now on their side. This is the section in Atlas Shrugged leading up to the big implosion.
‘When you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.’ – Atlas Shrugged

This post was published at Investment Research Dynamics on November 16, 2017.

Three Strikes And You’re Out!

As we keep insisting, monetary central planning systematically falsifies asset prices and corrupts the flow of financial information. That’s why bubbles seemingly inflate endlessly and egregiously, and also why financial crashes and economic corrections appear to come out of the blue without warning.
Back in the winter of 1999-2000, for example, we were allegedly in the midst of a “new age economy”. The revolution in technology then underway, it was claimed, meant all historic valuation benchmarks–like PE multiples, cash flow and book values—– were irrelevant to stock prices.
Likewise, in the fall of 2007 there was nary a cloud in the economic skies. That’s because the Great Moderation superintended by the geniuses at the Fed had purportedly engendered a “goldilocks” economy destined to expand indefinitely.
Within months of the dotcom epiphanies, however, the highflying NASDAQ 100 crashed—eventually hitting bottom 83% below its new age apogee; and 15 months after the S&P 500 reached its goldilocks peak of 1570 in October 2007 it staggered around in smoldering ruins at 670—down 57% from its housing bubble high.

This post was published at David Stockmans Contra Corner on November 15th, 2017.

Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash

As we noted shortly after the Crown Prince’s purge of potential rivals within Saudi Arabia’s sprawling ruling family, while the dozens of arrests were made under the pretext of an “anti-corruption crackdown”, Mohammed bin Salman’s ulterior motive was something else entirely: Replenishing the Kingdom’s depleted foreign reserves, which have been hammered for the past three years by low oil prices, with some estimating that the current purge could potentially bring in up to $800 billion in proceeds.
Furthermore, the geopolitical turmoil unleashed by the unprecedented crackdown helped push oil prices higher, creating an ancillary benefit for both the kingdom’s rulers and the upcoming IPO of Aramco.
***
And, in the latest confirmation that the crackdown was all about cash, the Financial Times reports today that the Saudi government has offered the new occupants of the Riyadh Ritz-Carlton a way out…. and it’s going to cost them: In some cases, as much as 70% of their net worth.

This post was published at Zero Hedge on Nov 16, 2017.

At Last – Clinton Foundation Gets Investigated

What goes around, comes around. The Washington Post has reported that the Department of Justice has instructed the US Attorney’s Office to investigate the controversial sale of a uranium group to Russia during the presidency of Barack Obama and the role of the Clinton Foundation. The Obama administration approved the deal in 2010 giving Moscow control of a much of the American uranium sources. It turns out that the FBI had gathered significant evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering to get the deal in the USA. According to a letter released on Monday, Justice Secretary Jeff Sessions instructed the prosecutors to consider, inter alia, the appointment of a special investigator and an extension of the investigation.

This post was published at Armstrong Economics on Nov 15, 2017.

GE’s Comeuppance—Poster Boy For Financial Engineering Run Amok

GE is taking a pounding this morning for cutting its dividend by 50%, and we’d say it’s about time for both.
That is, its unaffordable and unsustainable disgorgement of cash into the stock market should have been drastically curtailed long ago. Likewise, even a quasi-honest stock market would have severely punished the gong show of dumbkopf M&A, financial engineering and crony capitalist sleaze that occurred under former CEO Jeff Immelt’s 17 year reign.
So consider GE yet another poster boy for the Fed’s destruction of honest price discovery on Wall Street, and its conversion into a gambling casino that rewards blatant value destruction in the C-suites. The GE saga, in fact, exemplifies the reason that growth, good jobs and rising incomes are dying in Flyover America.
Thus, on the eve of the financial crisis in December 2007, GE’s LTM net income posted at $22.1 billion. During the decade since then it has been all downhill—-with the September 2017 LTM figure coming in at just $7.5 billion.

This post was published at David Stockmans Contra Corner on Monday, November 13th, 2017.

Fall of the House of Saud, Finally

*** COLLAPSE OF THE KINGDOM ***
The Saudi Kingdom will fall, a longstanding Jackass forecast, an inevitable event
The Saudi Kingdom will fall alongside the ruined collapsing Petro-Dollar
The Saudi foundation has been the primary element to entire Petro-Dollar system
This Saudi situation is loaded with intrigue, corruption, cunning, collusion, criminality
The Saudi region will erupt in chaos ruin decay and gross destabilization
The entire Saudi situation is a grand mixture of deep corruption and wreckage
The Saudi Royals will scatter and escape with stolen wealth, an absolute guarantee
*** BLATANT TREACHERY ***
The old guard like Prince al-Waleed are Citigroup investors and Wall Street friends
US will knock off princes to continue the USD, and to prevent deviation toward the East
Iran will knock off princes to stop the Yemen War, and to halt ISIS
Iran has a new vested interest, to avoid the spread of war to Lebanon
The US will deploy its usual terrorism, via Langley and ISIS tool
Iran will use the Yemeni violent anger for a rapacious invasion by the Saudi thugs

This post was published at GoldSeek on 12 November 2017.

The Saudi-Iran Brewing War

The turmoil in the Middle East has been instigated in part by fiscal mismanagement. When the money was rolling in with high oil prices, it was assumed, as always, that whatever trend is in motion will remain in motion. Consequently, the government expanded their spending assuming money would continue to flow in. When oil broke, the fiscal mismanagement has been exposed for all to see if they care to look.
Falling oil prices have decimated revenues and trade in the region. Security worries about terrorism, particularly in the US, have led to cuts in airline routes. Then there has also been a long-running diplomatic and trade impasse between Saudi Arabia and its allies on the one hand, and Qatar on the other. Now the good-old-days of easy money and rapid growth has led to concerns about over-capacity, waste, and corruption that nobody cared about when money flowed like oil.
We are witnessing the beginning of a Middle East War between the Suni and Shite where the latter opposes kings and the state should be ruled by religious leaders. Iran and its Lebanese ally, the militant Shia group Hezbollah, claim the Saudis detained Mr. Saad El-Din Rafik Al-Hariri is a Lebanese-Saudi politician who has been the Prime Minister of Lebanon since December 2016. They allege that Saudi Arabia forced his resignation. Rex Tillerson said he had received assurances that Mr. Hariri was free to leave anytime.

This post was published at Armstrong Economics on Nov 12, 2017.

Power Brokers: Saudi Crown Prince Clears a Path to the Throne

Just two weeks ago, the Future Investment Initiative summit in Riyadh took place to international acclaim. Now, investor interest has turned to intense uncertainty, as Crown Prince Mohammed bin Salman spearheads an anti-corruption crackdown, and power shifts unfold in the Gulf. But despite the short-term risks, Alex Damianou argues that the long-term impact should be positive.
The 4th of November was an historic day in Saudi Arabia. King Salman and his son, Crown Prince Mohammed bin Salman (MbS), demonstrated their continued, almost Machiavellian determination to execute social and economic reforms under Vision 2030. Their goals – to usher in a new area of transformation, consolidate power, and re-assert themselves on the regional battleground towards Iran.
A Strategic Move
The day began with the seemingly Saudi-influenced resignation of Lebanese Prime Minister Saad Hariri in Riyadh, citing Iranian influence and fears of an attempt on his own life. This was followed by a royal decree issued by King Salman, establishing the National Anti-Corruption Committee. Chaired by Crown Prince Salman, the committee has a mandate to identify offenses, persons, crimes, and entities involved in public corruption. The extensive powers of the committee include the ability to issue arrest warrants, restrict travel and freeze accounts. As the King put it in a televised address, ‘Laws will be applied firmly on everyone who touched public money and didn’t protect it or embezzled it, or abuse their power and influence’.
In another example of the autocratic liberalization we have come to see over the past year from the King and Crown Prince, the crackdown strategically targeted power players in business and government. This included 11 princes, dozens of businessmen and senior officials, and former and sitting ministers. Notable among them are:

This post was published at FinancialSense on 11/09/2017.