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Via The Daily Bell,

Fresh proof the FBI’s Hillary email probe was a joke … Yet another surprise revelation suggests strongly that the FBI’s probe of Hillary Clinton’s e-mail mess was anything but a by-the-book investigation.&nbs Read more.....

Via The Daily Bell,

Fresh proof the FBI’s Hillary email probe was a joke … Yet another surprise revelation suggests strongly that the FBI’s probe of Hillary Clinton’s e-mail mess was anything but a by-the-book investigation.  House Oversight Committee Chairman Jason Chaffetz (R-Utah) said he learned only Friday that the Justice Department gave immunity deals to Clinton’s former chief of staff, Cheryl Mills, and two other aides. That brings to five the number of Clintonistas who got a pass in exchange for testimony and/or information.

-New York Post

The FBI’s erosion of reputation – taking place this very day and minute as a result of the Clinton email mess – could not have happened to a more deserving operation.

For 75 years, the FBI has terrorized the American public with increasing vigor and brutality. Much of the FBI “crimes” it focuses on – insider trading and the like – weren’t even thought to be criminal a few decades ago.

It is increasingly clear that the drug-dealing prosecuted by the FBI takes place at the highest levels of America’s political office. Enough has been reported (certainly in the alternative media) about Clinton/Bush/CIA cocaine or heroin dealings to generate what may be a believable profile of these operations.

When it comes to white collar banking crime, the American public is increasingly skeptical about the engine of the industry – central banks themselves.

Generally speaking, there are lingering and expanding  questions about whom is being prosecuted (for what) in finance, banking and drug crime.

When it comes to terrorism, there is significant skepticism, especially among the alternative media, as to whether incidents are being staged to give the FBI something dramatic to do.

And now come high-profile reports in major New York newspapers calling a  major FBI investigation a “joke.”

But it is not the investigation that is a “joke” but the FBI itself. Somehow people seem to have forgotten the “hair evidence” fiasco that came to light in 2013.

Here from the Guardian:

In July 2013, the FBI admitted that the foundations of what it called “hair comparison evidence” – a technique that its agents had used in hundreds of criminal cases nationwide and spread through the training of state-based detectives potentially through tens of thousands of other cases – were scientifically invalid. A preliminary review of the FBI’s follicular flaws found that:

 

-Microscopic hair analysis could not scientifically distinguish one individual to the exclusion of all others.

 

-Statistical weight could not be given to comparisons to suggest a likelihood that the hair derived from a specific source.

 

-Expert witnesses should not cite the number of hair analyses they had conducted in the lab to bolster the idea that they could definitively state that a hair belonged to a specific individual.

Tens of thousands may have been put in jail mistakenly based on hair evidence that some in the FBI knew to be false. Exactly how many lives were ruined is not clear as the FBI has surely never published a definitive account.

In fact, this is part of the problem. The FBI is generally not held to account in any single aspect of its operations.

In bluntest terms, the FBI performs a function similar to that of the 20th century KGB. It creates high-profile “criminal cases” to reinforce elite memes. For instance, banking elites are currently fixated on creating a “war on terror.” The FBI is charged with finding and arresting terrorists to buttress this narrative.

Almost all of the terrorists that the FBI has arrested in the recent past have significant questions attached to them. There are cases to be made probably for every one of them that the individual is either nor responsible for the incident or was incited and supported by the FBI in such a way as to bring the episode to fruition.

This is how Western democracies operate today. They are run primarily by banking interests that create narratives intended to drive certain economic and sociopolitical results. The primary enforcers of these narratives are intel agencies like the Mossad, CIA, MI5 and MI6 and of course the FBI.

The nexus of control probably resides in London’s City and thus in a sense one can argue that the West is already under one functional umbrella when it comes to control.

The trouble with this system is that it is secret. The FBI for instance, masqueraded as anti-criminal operation for a long time. Today it defines itself mostly as a state-security facility.

The problem the FBI is facing has little to do with self-definition and much to do with credibility. The FBI like other intel agencies  throughout modern history loses considerable credibility if it is seen as an organ of state bureaucracy rather than an independent and unbiased entity of national justice.

Unfortunately for the FBI, this era of Internet information continues to be unkind to its reputation. Whether it is illegitimate hair evidence, terrorist suspects that are FBI supported or – now – a major investigation into Hillary’s emails that seems to be compromised and corrupted at every turn, the FBI is reeling from endless public relations disasters.

Intel operations when they are seen as corrupt begin to resemble agencies of oppression. Once the authoritarian yoke cannot be justified, the public’s mood can harden significantly. The FBI is currently in a delicate position. Its recent past provides little that is admirable and much that is questionable or illegal – including its furtive expansion abroad.

This latest disaster, featuring Hillary, is effectively stripping away the one argument the FBI could make regarding its broader behavior: It was making everyone equally miserable.

Now, as the Hillary fiasco continues to bleed into the mainstream media (and there are many reasons it is doing so) FBI execs face the worst of all worlds. The difficulty is not one that can be fixed via blackmail or using the famous FBI files as leverage against “enemies.”

The problem is simpler and more profound than that. More than half of Americans adults believe Hillary ought to have been prosecuted for her recent email misdeeds, but the FBI claimed there was no case. Unfortunately, information now trickling out shows that the FBI was careless with immunity and did not do a thorough-enough job of investigating available evidence.

In other words, it purposefully botched the job. Even worse for the FBI is that Hillary’s case is a political one, which means it will receive extraordinary coverage- and the flaws in the “prosecution” will be painstakingly delineated.

What will begin to emerge is the profile of an agency protecting the most powerful of American citizens. The ramifications of this public perception are not tolerable to the FBI.

The FBI can get away with many things but not with being seen as less than evenhanded. Strip away the faux mask of judicial blindness and the reality of the FBI as a brutal enforcer of elite authoritarianism comes clear. That above all else is not tolerable. It spells the end of the FBI as a functional police force. Stripped of rhetorical justification, it has nothing but intimidation to fall back on. And that’s not enough, not ever.

For this reason we suspect FBI director James Comey – who has a prior relationship with the Clintons – will have to resign. The FBI is going to have to cast its recent actions as aberrations in order to survive.

Conclusion: Perhaps the easiest way to survive while retaining at least shreds of critical credibility is to blame the mess on a single individual who perverted the actions of an otherwise reputable facility. That doesn’t sound comforting for Comey but it may be the easiest way for the FBI to recover in the short term. In the long term, given the FBIs exposure to a variety of Internet truths, probably nothing can save it – in its current form anyway.

When a commodity trading guru like Dwight Anderson, founder of the iconic Ospraie Management, has something to say on the market outlook, people tend to listen, especially when he’s consigning the last great commodity bull run to the dustbin of history and buying gold and farmland for the next crisis.

Anderson is the former Tiger Cub, whose Ospraie Management at one time ran the world’s biggest commodity hedge fund, with close to $4 billion at the peak. In what’s billed as a MasterCla Read more.....

When a commodity trading guru like Dwight Anderson, founder of the iconic Ospraie Management, has something to say on the market outlook, people tend to listen, especially when he’s consigning the last great commodity bull run to the dustbin of history and buying gold and farmland for the next crisis.

Anderson is the former Tiger Cub, whose Ospraie Management at one time ran the world’s biggest commodity hedge fund, with close to $4 billion at the peak. In what’s billed as a MasterClass of commodity investing, Dwight granted Real Vision a rare ‘one-on-one’ interview. Hosted by macro heavyweight Dan Tapiero, the former Tiger, Duquesne and SAC industry veteran, the interview showcases the factors influencing markets across the commodities spectrum through the perspective of a commodity trading giant.

Below we present a highlight clip of some of Anderson's key insights, but we urge readers to see the full interview, not just for the astonishing market insights, but to hear Anderson lift the lid on his incredible backstory in the hedge fund business. Dwight relives his early days at Tiger, guided by Julian Robertson and explains why he partnered with Paul Tudor Jones, who would go on to seed Ospraie.

Here is a summary od Dwight Anderson's key talking points:

The China Driven Bull Market Can’t be Recreated

It is the sheer scale of the last commodity bull market that will probably again never be repeated, as Anderson said the massive tailwind from China from 2003 through 2009, combined with the overly stimulative backdrop created a cocktail of conditions that had never been seen before.

“And probably, from an aggregate of variables, we won't see again, in that the pace and scale of China's growth and how that could be so unfettered, there's no other economy, both of size and of flexibility, where I can see that being possible,” he said. “We've had bull markets over the centuries, and always have, but I'm talking the scale of where crude went from sub-10 at the end of last decade to 150.”

While India does have a large population and provides hope for the future, Anderson said it could never recreate the scale and pace that would drive the volume growth which China was able to, without huge changes to the way the government and corporations work together within the legal system. 

Buy Gold for Protection from Central Bank Policy Environment

Practically everyone these days has a view on gold at present and although Dwight is pretty torn on price expectations – he’s not short on the yellow metal, which is going to deliver some important advantages when the next crisis comes.

“Gold is a Tier 1. It's a level one asset for banks. So they can actually pay you in a negative interest rate environment to hold that, because they can turn around and monetize that. That's not true for platinum or silver. So when a negative central bank interest rate environment is, I think it's incredibly difficult for you to be short gold."

“I struggle with what the proper paradigm is for gold, and that we would not be short it in absolute basis here,” Anderson said. “And I believe that it will keep its purchasing power, but in real terms, is that a strong dollar environment? In that case, gold is 1,000 or 1,200 or whatever. Or is it the paper currencies have no value and its 2,000? I am not convinced of either one at the moment."

“I'd probably be more convinced that there is value in platinum group metals relative to gold. You take a look at a $260 discount of platinum versus gold, and that's something that, over the next four or five years, I don't think is sustainable. But I also don't think that's something that is correctable the next 18 months. Platinum is in surplus, and it lacks a lot of the monetary advantages that gold has. In Europe and Switzerland, the VAT for gold is zero. If you take physical delivery of platinum, you have to pay a VAT in the gains."

Buy the Farm to Avoid a Crisis

While we have previously discussed the plight of the US farming sector, with astounding increases in debt and the erosion of farmland values, Anderson sees more than just value here.

“I think farming, in terms of the productive side of the industry, is still an incredibly under-appreciated asset and business in that you've got land where every single year, on average, you're going to grow more. You maintain your water table, your soil, the nutrients there, and I get productivity growth every year. That is awesome. Every other one of the productive businesses, you produce less every year."

“It's hardest to get real pricing power in agriculture, because you actually are growing productivity per year, versus the decline rates in the others. But as an asset to own for currency protection, inflation protection, just a general income, yes, yield, farming is phenomenal."

“Now, I think there's going to be changes in the industry as farming size gets larger in the United States, and customers take advantage of our transportation network and the information systems and larger farmers to disintermediate some of the merchants. So the Cargills and ADMs of the world are going to have to close or reinvent some of their businesses as some of it goes more directly from farm to effective table, or at least the manufacturing plant. So there's elements of the infrastructure logistics curve that I worry about, but farming? No. And in the US, we're blessed with a lot of advantages for that.”

How Electric Cars Will End Up Supporting the Next Oil Bull Market

Among his big picture observations, Anderson’s appearance was packed with trading ideas, including a short term trading opportunity on natural gas and a contrarian view that the move to electric vehicles could actually support crude prices towards the end of this decade and into the next, with expectations of EV inroads to the auto industry would put the brakes on planned additional oil supply.

 “So that EV side is going to be something that is really going to affect demand growth in crude next decade, and I actually think it could have the odd effect of keeping crude oil prices higher for longer at the tail end of this decade into early next. Because the huge projects that have to be sanctioned that really change the supply and demand, the 100 to 500,000 barrels per day, are ultra deep, deep oil sands, Arctic, and they are many billions of dollars and many years' lead time. So by the end of this decade, when the oil executives are taking a look and they're going, holy cow, and they're starting to see electrical vehicles become more competitive outright economically, and start to gain share."

“And that that will affect the demand growth the middle of next decade. I think they might not sanction some of the large oil projects. The largest, the longest lead time, but also the biggest size and capacity, because of concerns over what pricing will be then. So I think the oddity, actually, is that, at the tail end of this decade to early next, the penetration rate of electrical vehicles I think could lead to higher crude prices, potentially, rather than lower, until that demand really catches up middle to late next decade.”

Tapiero tested the logic that if we won’t see another bull market on the scale of the last one, did that mean we can’t be in a bull market right now and asked if crude could ever get back to $150. Anderson fired back that there was a difference between a 15-fold move and a tripling.

“So can we go to 150? Sure. You give me the right accent in Saudi Arabia. No problem. If it's something that is driven by the economic cycle as opposed to a supply shock, the answer is, I don't see that happening in the next 15, 20 years, in that with what's going on for the productivity growth of crude, how you've expanded so many different geologic basins, and also some of the other things that have gone on to moderate demand growth, in that it would be a supply shock that could get there. It wouldn't be demand-driven like it was last time.”

For anyone dabbling in commodities and in particular energy, it’s well worth hearing Anderson’s views on the collapse in capex in the oil sector, suggesting that unless prices get back to at least the mid 60s, we won’t be seeing the production growth out of the US needed to help the world balance and meet demand growth.

“So in a world where you're looking at prices a year out are not even $50, and you've had capex of the major public companies fall by 65% over the last two and 1/2 years, there is a lag time where Shell, their Stones project is just coming on the Gulf of Mexico. That was approved four years ago, and that's one of the most recent approvals."

“So of the major approvals of formal investment decisions, from '07 to '13, we averaged over 40 a year. In 2014, we were under 15. Last year, we were under 10. And so those are the projects to come on in '18 to '19, and they're not going to come on. And so that gap of the supply growth through the crash of capex is something you're going to need decently higher prices. And adjust that whole-- it took forever for the supply decisions to come on over the last two and 1/2 years, and now it's going to take forever from a commodity trader's perspective for that supply to come back.”

Watch the full interview on Real Vision

Submitted by Jason Ditz via AntiWar.com,

Throughout Obama’s presidency, his vetoes have always survived Congressional challenges. That his first might be a bill about Saudi Arabia reflects waning Saudi influence in lobbying Congress to get their way, and what wou Read more.....

Submitted by Jason Ditz via AntiWar.com,

Throughout Obama’s presidency, his vetoes have always survived Congressional challenges. That his first might be a bill about Saudi Arabia reflects waning Saudi influence in lobbying Congress to get their way, and what would likely have once been a very safe veto is now at serious risk.

Obama’s Friday veto of the Justice Against Sponsors of Terrorism Act (JASTA) aims to block a bill that would allow family members of 9/11 victims to sue Saudi Arabia in American courts. The House and Senate both passed JASTA unanimously, and many in both parties are expressing confidence they have the votes for an override of the veto.

The House was widely expected to override easily, but Sen. Chuck Schumer (D – NY) insisted that the Senate too would “quickly” override Obama’s veto, insisting that the Saudis must be held accountable if the courts find they were culpable in 9/11.

President Obama has warned that the JASTA would set a dangerous legal precedent, warning that allowing individual lawsuits against the Saudi government could lead to other countries allowing their own citizens to sue the US government over its own misdeeds.

The Administration had originally hoped to keep the veto and override votes until after the November elections, hoping it would make newly reelected senators more willing to listen to Saudi lobbyists and less concerned about strong voter support for the bill. Saudi lobbying clearly isn’t what it once was, however, and those senators that switch sides on the override now risk serious repercussions in the election.

*  *  *

And just this afternoon, The Senate agrees to hold the vote on overriding President Obama’s veto of legislation that would let families of Sept. 11 victims sue Saudi Arabia on Wednesday.

• Senate Majority Leader Mitch McConnell gets unanimous consent agreement to have 2 hours of debate on bill, S. 2040; exact time of override vote Wed. to be determined.
• McConnell calls on Democrats to pass his proposed stopgap funding bill; says Democrats want an unrelated provision that provides funding to help Flint, Mich., fix lead water poisoning.
• Senate Democratic leader Harry Reid says Flint cannot be left out.
• The Senate has scheduled tomorrow (Tuesday) at 2:15pm to hold procedural vote on McConnell’s stopgap spending bill, an amendment to H.R. 5325

Ever wondered just what happens when the immovable object of safe-space-demanding social justice warriors collides with the irresistible force of free-speech-seeking American students? Wonder no longer...

On Thursday night protestors at Kansas University (KU) hijacked a Young Americans for Freedom (YAF) meeting, reportedly unleashing a virulent tirade against the conservative students, providing a glimpse into Read more.....

Ever wondered just what happens when the immovable object of safe-space-demanding social justice warriors collides with the irresistible force of free-speech-seeking American students? Wonder no longer...

On Thursday night protestors at Kansas University (KU) hijacked a Young Americans for Freedom (YAF) meeting, reportedly unleashing a virulent tirade against the conservative students, providing a glimpse into the crazy arguments of the far Left.

Their entire confrontation was captured on video...

Leftists can be seen screaming obscenities, berating the calm YAF students, shouting about privilege, safe spaces, and micro aggressions, and threatening to “tear this motherf***ing school up on a daily motherf****ing basis.”

 

“I don’t study in the library because I don’t feel comfortable with people always wondering what my gender identity is and how I express myself, and I don’t feel comfortable being in classrooms where I am supposed to speak as a transhuman and as a queer person as all queer people,” one student whined. “That shows you that there is a problem with this institution about there not being—that these students are not being taught that they are supposed to create safe spaces.”

 

Cox, who was also present for the conversation, declared emphatically that “safe spaces are a necessity” and making clear that she would brook no dissent on the matter.

 

“It's not a question. It's not for you to say. It's not for anyone else to say. Safe spaces are necessary because the institution that we’re at is not a safe space in its entirety,” she claimed. “We have to carve out places and fight for places that we feel safe because not only will we get harassed, we’ll be murdered, we’ll be all this stuff and discriminated against because we have to do that. It’s not because we want to.”

 

At one point when KU YAF Chairman Gabe Lepinski referred to the protesters as “you guys,” one leftist completely exploded, screaming, “Do not call us guys! That is a micro aggression!”

 

At another point, one of the protestors broke down when asked about safe spaces, pounding fists on the table and shouting, “I am not retreating! I’m making myself safe and comfortable… If I want this space, I can have this space! It’s my right to have this space!”

 

 

The leftists also repeatedly referred to the YAF students as “white supremacists,” scolding them by commenting, “You still reap the privilege of the genocide of Native Americans and slavery.”

 

The protestors screamed about “white fragility,” their preferred gender pronouns, and not calling illegal immigrants “illegal.”

 

The incident occurred after students attacked KU YAF Chairman Gabe Lepinski for posting the phrase, “Facts don’t care about your feelings,” in a group promoting leftist campus protests for transgender rights on social media.

 

The protestors left the meeting enraged, screaming obscenities as they walked down the hallway.

 

 

Here is the full meeting... we strongly suggest you put down all sharp objects...

But the final 3 minutes is where it gets really heated as snowflake mentality confronts safe-spaces...

* * *

As we have repeatedly noted, no matter where you go in life, someone will be there to offend you.

Maybe it’s a joke you overheard on vacation, a spat at the office, or a difference of opinion with someone in line at the grocery store. Inevitably, someone will offend you and your values. If you cannot handle that without losing control of your emotions and reverting back to your “safe space” away from the harmful words of others, then you’re best to just stay put at home. Remember, though: if people in the outside world scare you, people on the internet will downright terrify you. It’s probably best to just accept these harsh realities of life and go out into the world prepared to confront them wherever they may be waiting.

The highly-anticipated first presidential debate of 2016 is finally upon us.  The event is expected to draw a record TV audience of 100mm likely making it the most-watched presidential debate of all time.  The candidates are expected to come out swinging as Politico points out that debates are typically won or lost in the first 30 minutes:

Read more.....

The highly-anticipated first presidential debate of 2016 is finally upon us.  The event is expected to draw a record TV audience of 100mm likely making it the most-watched presidential debate of all time.  The candidates are expected to come out swinging as Politico points out that debates are typically won or lost in the first 30 minutes:

That’s when Al Gore first sighed, Mitt Romney knocked President Obama on his heels, and Marco Rubio, earlier this year, glitched in repeating the same talking point — over and over and over. It’s when Gore tried, unsuccessfully, to invade George W. Bush’s space, Richard Nixon was first caught wiping away sweat with a handkerchief (during the moderators’ introductions!) and Gerald Ford in 1976 made the ill-advised declaration that, “There is no Soviet domination of Eastern Europe.”

With that, here are all the things that you need to know but are likely too lazy or simply not interested enough to track down on your own. 

THE DETAILS

Start Time:  9PM EST

 

TV Coverage:  Debate will be aired on all the major broadcast and cable news networks

 

Event Location:  Hofstra University in Hempstead, N.Y.

 

Moderator:  Lester Holt of NBC

 

THE RULES

Topics:  Debate will cover 3 topics including: “Securing America,” “America’s Direction” and “Achieving Prosperity"

 

Length:  Debate set to run 90-minutes straight with no commercial breaks (So if a coughing fit breaks out we'll get to enjoy every second of it.)

 

Other:  Debate moderator Lester Holt does not have the authority to cut away from the stage during the epic 90-minute showdown and Microphone audio for either of the candidates is not to be manipulated.

 

THE SCANDALS

Gennifer Flowers:  The first scandal of the debate erupted over the weekend as the candidates traded tweets over who they would invite to watch the debate live in New York.  Hillary first announced plans to invite Mark Cuban, who has been critical of Trump, to which Trump responded with a threat to invite former Bill Clinton mistress Gennifer Flowers (see our post here).

Podium-gate:  The next point of contention proves that "size does matter", at least to Hillary Clinton.  Last week, Hillary's team demanded a step stool for their candidate so that the 5'4" Hillary wouldn't look small and frail beside the larger 6'2" Trump.  While the debate commission denied the step stool they did allow a "custom-made" podium which was presumably scaled down by exactly 14% to match Hillary's relative stature...this is the status of American politics folks.  Here's a look at the podiums to be used tonight:

 

Moderator "Fact Checking":  Of course, one of the biggest points of contention is whether the moderator, Lester Holt, will "fact check" candidates during the debate.  The Trump campaign has already stated that it does not believe Holt's purpose as moderator is to police each candidate citing issues that arose in a 2012 debate in which CNN's Candy Crowley "fact checked" Mitt Romney on the fly even though her "facts" were entirely wrong...oops.  Per the Daily Mail, the Clinton campaign, on the other hand, is already crying foul with manager Robbie Mook saying that "it's unfair to ask that Hillary Clinton both play traffic cop with Trump, make sure that his lies are corrected, and also to present her vision for what she wants to do for the American people."

Ear Mics:  The next scandal arose out of the last Commander in Chief forum hosted by Matt Lauer in which Hillary was accused of wearing an ear piece so as to receive guidance from advisers during the discussion.  According to the World Tribune, the issue prompted one Maryland voter to write a letter to the Federal Elections Commissioner, Matthew Petersen, seeking assurances that ear pieces would not be allowed though no such assurances were provided.  That said, Carlos Greer, of the Commission on Presidential Debates, sent out a message to news organizations on Sept. 9 banning devices that would allow presidential debate moderators get directions from their news teams.

 

THE WALL STREET VIEW

Meanwhile, per Bloomberg, here's what some wall street analysts think of the event that Goldman Sachs Group Chief U.S. Equity Strategist David Kostin dubbed "the biggest match-up since the Mayweather/Pacquiao bout."

Athanasios Vamvakidis, head of G10 FX strategy at Bank of America Merrill Lynch:

"Having been in the driver’s seat for most of the year, central banks can now take a break and wait for the U.S. elections. We have been arguing that markets are underpricing the risks involved. As the polls now suggest a much narrower gap between the two candidates, we feel even stronger about our concerns...We see several clear fault lines where the outcome of the U.S. elections will likely matter for EM FX, namely: U.S. fiscal policy, trade policy and associated concerns over rising protectionism, U.S. corporate tax policy and repatriation of overseas earnings and finally geopolitics."

Andres Jaime Martinez, FX and rates strategist at Barclays Capital Inc.:

"The single most important event in the U.S. will be the first presidential debate between Hillary Clinton and Donald Trump which is set to take place from 9pm to 10:30pm ET. It takes particular relevance as the share of undecided voters is somewhat higher compared to four years ago. Since the presidential race has been tightening, it seems that swing states will have increasing relevance as well as undecided voters in shaping the outcome.

 

As the race between Hillary Clinton and Donald Trump has tightened and we approach November 8, we expect a tighter correlation between the financial asset prices and the subjective assessment of the outcome of the elections. The higher percentage of undecided voters (around 20 percent) compared to four years ago (12 percent) increases the relevance of the debates as they could shift the odds in either direction. High yield and high beta assets should perform well except for those tightly linked to the outcome of the U.S. election as volatility has receded from its temporary spike."

David Kostin, chief U.S. equity strategist at Goldman Sachs Group Inc.:

"The first U.S. Presidential debate will take place on Monday, September 26 and viewership may approach Super Bowl proportions with an audience of perhaps 100 million...Regardless of victor, the most likely policy outcome of the election is increased fiscal spending. We recommend clients vote with their wallets and focus on the likely beneficiaries.

 

Health Care appears to be the sector most at risk from the election. Sec. Clinton’s criticism of drug pricing and Mr. Trump’s opposition to the Affordable Care Act have drawn investor focus to the sector as the election approaches. Health care providers are among the few industries that have demonstrated a statistical relationship with election odds in recent months."

Martin Enlund, chief currency strategist at Nordea Markets:

"Most market participants are however greatly concerned that the U.S. could see a Republican in the White House. It is generally perceived that a Donald Trump presidency would be consistent with greater global economic-political uncertainty (troublesome for investment activity and manufacturing growth), and that Trump poses a risk to world trade, and so on.

 

As a consequence, similar to the wide-spread Brexit fears this summer, it might make sense for various accounts to not sell EUR/SEK if they fear that a Trump presidency could impact upon the global economy negatively."

And, of course, the debate comes as the national polls reflect a very tight race...

 

As we've said before, grab your popcorn, this is going to be fun...

Close

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

As we inch closer and closer to Nove Read more.....

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

As we inch closer and closer to November 8th, one thing has become increasingly clear to me. This election will be viewed by voters as a referendum on the status quo itself. While it’ll definitely be a referendum on Obama specifically, it’s much bigger than that. It’ll be about whether the American people want to continue along the path we’ve been on for decades, or if they’re willing to try something entirely different.

Indeed, Hillary Clinton clearly highlighted the choice herself earlier today with the following tweet:

Not a single living president has endorsed Donald Trump. https://t.co/nGXxXTo3NI

— Hillary Clinton (@HillaryClinton) September 26, 2016

The message from the above tweet says it all. She’s not running merely as a continuation of Obama’s last eight years, she’s running as a continuation of the last 40. A period during which median wages in real terms have barely budged, while income inequality has exploded. A period during which financialization has hollowed out America’s economy, while a handful of people reaped enormous wealth via labor arbitrage as they shipped manufacturing overseas. A period during which we have seen pointless war after pointless war, all in the pursuit of an enemy largely created by America’s imperial foreign policy in the first place. In other words, it hasn’t been a very good forty years for the average American. Nevertheless, it took a very long time for the public to figure it out, just like the boiling frog doesn’t get that it’s cooked until too late.

Since so many Americans hold the above truths to be self-evident, why in the world would Hillary attach herself to the status quo? The reason is actually quite simple. Hillary Clinton, her sycophants, her celebrity supporters, her billionaire donors and her high-level operatives simply have zero engagement with the average American voter. Not only do they have no interaction with them, we now know what they think of them — they are a “basket of deplorables.” Putting the situation into historical terms, I tweeted the following observation earlier today:

Democrats are acting just like the French aristocracy before they lost their heads.

— Michael Krieger (@LibertyBlitz) September 26, 2016

At this point, many of you will frustratingly be saying to yourselves, “but Donald Trump is the status quo.” I would respond to this critique in two ways. First, Trump certainly is the status quo from many perspectives, but from other perspectives he isn’t. For example, he won the Republican nomination without having served as a Governor or member of Congress. Even Ronald Reagan, who so many dismissed as a Hollywood actor, for eight years served as Governor of California, America’s largest state. Trump has done none of that. He hasn’t “played the game,” which is one of the things many voters like about his candidacy. This lack of respect for “how things are done,” is a big part of why so many D.C. insiders resent him and his political success. Beyond that, there’s no debating that he has totally upended traditional GOP policy positions on issues as varied as these fake “free trade” deals and imperial foreign policy.

While all that is true, I’d argue it isn’t even his positions that have truly solidified him into the anti-status quo candidate. The status quo itself has done that for him. As I explained in last week’s piece, The Status Quo vs. Donald Trump:

Taking a step back, it’s become clear to me that many members from the corrupt status quo of both useless political parties are making a huge calculated error by coming together so publicly against Trump. By rallying so aggressively and passionately around Hillary Clinton, the worst of the worst from America’s oligarchy have succeeded in the impossible. They have made a billionaire reality tv star look like a counter culture iconoclast.

 

When Trump first ran for President, I looked on incredulously as he attempted to portray himself as an anti-status quo stalwart. As someone raised in New York City, I literally grew up with this man’s face plastered all over the papers. In my particular corner of the planet, he was more ubiquitous in the media than the President. Yet as we stand here in September 2016, less than two months away from this momentous national election, the man has remarkably morphed into an anti-status quo symbol in real life. How did this happen?

 

The incredible irony of the situation is that in its failed attempts to make him unacceptable, mainstream Republicans have made him palatable. Trump couldn’t convincingly turn himself into “outsider” on his own. He needed help, and he has received it in droves from the GOP establishment. Meanwhile, the most pathetic part of it all is the fact that these so-called “conservative thought leaders” and politicians still don’t understand how absolutely despised they are by the general public. They think their “stand against Trump” hurts him, when in reality it just makes him grow stronger and gives him the street cred he never had before.

The above post went on to explain how neocon Republicans and Wall Street rallying around Hillary just gives Donald the ammunition he needs to make this election a choice between him and the status quo. Upon waking up today, I noticed the hits just keep on coming.

For example, Bloomberg published a piece this morning titled, Hillary Clinton Is Outraising Trump 20-to-1 Among Billionaires. Here are a few excerpts:

Hillary gets the vote from America’s richest citizens. Or at least she’s getting their cash.

 

Former Secretary of State and Democratic presidential candidate Hillary Clinton has collected $21.1 million for her campaign and its supporting political action committees from 17 U.S. donors on the Bloomberg Billionaires Index. Republican Donald Trump has received $1.02 million from 12 members of the group.

 

The survey looks at FEC disclosures through Sept. 20 and includes donations made to the candidates, joint fundraising committees and super-PACs since the start of 2015. The data exclude money given to national parties, PACs not specifically aligned with the candidates, and money given to other down-ticket candidates and causes. The FEC information doesn’t include donations made to the campaigns after the end of August. Some groups file disclosures quarterly, so information is included only through the end of June.

 

The analysis also excludes billionaire donors who are not on the Bloomberg index, which ranks the world’s 400 richest people. Thomas Barrack, Jay Pritzker and Haim Saban have given millions of dollars to the campaigns. Many of the billionaires included in the analysis could also be giving to nonprofit groups that have no obligation to disclose who funds them. Renaissance Technologies co-founder Robert Mercer has set up a pro-Trump group and seeded it with $2 million, while this month Joseph Ricketts revealed plans to support Trump primarily through similar vehicles. 

There’s our old friend, Israeli-American citizen Haim Saban. I’ve covered him and some of his views before. See:  “You Want to Be Free and Dead?” – Billionaire Hillary Clinton Donor Says to Sacrifice Civil Liberties for “Safety”

What does all of this tell you? It tells you that it doesn’t really matter whether or not Trump himself is part of the “elite.” What we know for sure is that the status quo is uniformly and publicly rallying against him. A status quo that has totally failed the American public, and a status quo whom the people despise more and more each day.

So I ask you this: If the 2016 election becomes a referendum on the status quo, who’s gonna win that argument?

As a very observant Charlie McElligott of RBC points out, lost in a sleepy Friday morning session, there was a sneaky trade in November Fed Funds Futs (FFX), where somebody bot 9962 Calls in what was essentially a ‘Trump Hedge’ lotto-ticket that pays in the event that the FOMC were to LOWER the Fed Funds rate…thus, quite notable. 

Read more.....

As a very observant Charlie McElligott of RBC points out, lost in a sleepy Friday morning session, there was a sneaky trade in November Fed Funds Futs (FFX), where somebody bot 9962 Calls in what was essentially a ‘Trump Hedge’ lotto-ticket that pays in the event that the FOMC were to LOWER the Fed Funds rate…thus, quite notable. 

More polling data out over the weekend shows Trump and HRC in a “dead heat” (per left-leaning WaPo), with Trump taking a lead on Clinton in the key state of Colorado, while closing his gap in Pennsylvania to just 1ppt as well. 

Below we present the rest of Charlie's thought on what Trump's recent surge means for markets which, as we noted earlier, aside for the Mexican Peso, have largely failed to price in the "risk" of a Trump presidency.

* * *

I am still amazed at how few clients are talking about tonight as a potential “accelerant” w.r.t. the recent “Trump strengthening trend.”  The DC folks we speak with continue to see this much closer than some of the probability projections are currently showing.  How can it be so close, despite HRC’s structural (funding & “professional and veteran” campaign managers) and demographic advantage?  Because per some data sets, Trump is making up for this by being considered stronger head-to-head with Clinton on the perceived ‘top 3 issues’ for this electorate: the economy, terrorism and immigration.  

My RBC Macro teammate Mahmood Noorani has recently input the publically available historical data on “Trump victory odds” into the Quant-Insight macro factor PCA model.  The data shows that up to this point in time, Trump’s recently increasing odds have had little impact on equities or FX (as per ‘now,’ it’s not reflected as a “price driver” in either asset—seemingly ex-MXN).  This goes back to my anecdotal point above: despite the polls reflecting better Trump odds, stocks are not pricing in much of anything, and are considering this still to be a “left tail” event.  That said, the model is showing a larger current impact in US rates / Treasuries.  Per Mahmood’s first blush, the “…longer you go out the curve, the bigger the effect.  Trump victory = yields higher, curve steeper.”  This likely reflects the expectation for massive fiscal policy expansion with his infrastructure plan.  To a much lesser extent, the model also shows us that the recent “Trump effect” has been a “slight positive for the US Dollar” as well, and one I would assume in an outright Trump victory would only further strengthen from the ironic “flight to quality / liquidity” trade.

Per the experiences of this past month, the global cross-asset volatility spike was entirely driven by the long-end selloff in major sovereign bonds around the globe (as triggered post the BoJ / Sakurai commentary on steepening the yield curve).  If a Trump victory were to indeed drive yields higher and the curve steeper, it would likely then too drive equity vol higher as well—as the crowded ‘duration trade’ could get slippery on the unwind, especially after the multi-day collapse in vols in both rates and equities (post Fed / BoJ) has enabled leveraged strategies to add-back sizeable length to the trades (risk parity effect) which would seemingly the be exposed. 

Clearly there is a qualitative market expectation that a strong Trump showing will drive VIX higher / equities lower—but that’s all it is for now, as it’s certainly not quantitatively pricing much of anything in; tonight’s debate could “make or break this.”

It was inevitable. With much of the debate over the past year focusing on Social Justice Warriors, "safe spaces", and - most notably - "trigger warnings," moments ago the first such caution emerged when Hofstra University- the venue of tonight's historic debate - posted a “trigger warning” sign to warn students about the potentially disturbing content that may be discussed during Monday night’s presidential debate.

According to CBS New York Read more.....

It was inevitable. With much of the debate over the past year focusing on Social Justice Warriors, "safe spaces", and - most notably - "trigger warnings," moments ago the first such caution emerged when Hofstra University- the venue of tonight's historic debate - posted a “trigger warning” sign to warn students about the potentially disturbing content that may be discussed during Monday night’s presidential debate.

According to CBS New York reporter Tony Aiello, a sign inside of the student center at Hofstra reads, “Trigger warning: The event conducted just beyond this sign may contain triggering and/or sensitive material. Sexual violence, sexual assault, and abuse are some topics mentioned within this event. If you feel triggered, please know there are resources to help you.”

As MrcTV adds, the sign provides students with contact information for student counseling services, the Title IX coordinator, student advocacy and prevention, and the national sexual assault hotline

It has already been an abysmal day for Germany's biggest lender: overnight Deutsche Bank plunged to fresh all time lows on speculation whether the German government would or wouldn't provide state aid to the bank (if needed), forcing the bank to state it does not need the funds at the same time as the government urged markets that "you can't compare" Deutsche Bank and that "other" bank, Read more.....

It has already been an abysmal day for Germany's biggest lender: overnight Deutsche Bank plunged to fresh all time lows on speculation whether the German government would or wouldn't provide state aid to the bank (if needed), forcing the bank to state it does not need the funds at the same time as the government urged markets that "you can't compare" Deutsche Bank and that "other" bank, Lehman Brothers, although looking at the chart, one may beg to differ.

However, while DB stock closed at session lows, over 7% lower on the day, with its market cap of $16 billion now rapidly approaching the $14 billion litigation settlement demanded by the DOJ, the bad news did not stop there.

In a report issued an hour ago by Citigroup titled "Capital, Litigation & AT1 Coupon Risks", bank analyst Andrew Coombs says that Deutsche reported an end-June CET1 ratio of 11.2% pro-forma for the HXB stake sale, but still only targets c11% by end-2016 as further litigation charges are assumed, with management expecting to resolve four of the five major outstanding litigation cases this year. To this Citi says that it "struggles" to see how Deutsche Bank can reach the fully-loaded SREP requirement of 12.25% in the medium-term.

Furthermore Coombs notes that "the leverage ratio, at 3.4%, looks even worse relative to the 4.5% company target by 2018 and an IPO of Postbank looks increasingly challenging to execute upon."

Worse, he calculates that while he only models €2.9bn in litigation charges over 2H16-2017 - far less than the $14 billion settlement figure proposed by the DOJ - and includes a successful disposal of a 70% stake in Postbank at end-2017 for 0.4x book he still only reaches a CET 1 ratio of 11.6% by end-2018, meaning the bank would have a Tier 1 capital €3bn shortfall to the company target of 12.5%, and a leverage ratio of 3.9%, resulting in an €8bn shortfall to the target of 4.5%.

He then observes that while "management should be reluctant to raise capital with the bank trading on only 0.3x P/TB", the only viable alternative is to further cut balance sheet, which would be even more detrimental to earnings. As a result, he says that "a rights issue looks inevitable, in our view."

The most direct implication from this is that the bank's AT1 coupon is now once again at risk: "Deutsche has confirmed the HXB stake sale and HGB 340 e/g reserves would lift Available Distributable Item (ADI) reserve capacity to €4.3bn versus c€0.4bn of annual AT1 coupon payments. Deutsche can potentially create another €1-2bn from releasing some of its Dividend Blocked Amounts."

This would explain the ongoing deterioration in the bank's "loss buffer" contingent convertible bonds.

Ironically, the longer DB waits to address the market's concerns, not to mention its untenable balance sheet, the worse it will get. Citi's conclusion is that the bank now faces two "negative feedback loops."

We highlight two feedback loops: one short-term and one long-term. Widening credit spreads can exacerbate market fears, result in negative press coverage and damage counterparty confidence. The February tender offer for senior debt, coupled with a solid funding and liquidity position, has helped to address this loop. However a longer-term feedback loop still exists. Deutsche needs to raise capital in our view. It may choose to wait until litigation issues have been resolved, but the further the share price falls, the more dilutive a capital raise becomes (and vice versa).

Naturally, all of the above assumes a slow-burn scenario for DB stock. What happens if what happens next is a more aggressive liquidation of exposure? Well, in that case we would have something that the Telegraph's Matthew Lynn would dub a "German banking crisis."

Our image of German banks, and the German economy, as completely rock solid is so strong that it takes a lot to persuade us they might be in trouble.

Maybe so, but a "German banking crisis" would certainly delight the Italians, who have been on the receiving end of Germany's stern lecturing about "sticking to the rules," not to mention Schauble's insistence not to engage in state-funded bailouts in this day and age of mandatory bail-ins, and explains why Merkel's party has been so careful not to admit that a bailout may ultimately be the endgame.

Then again, Merkel's stated position opens up a can of worms. As Lynn correctly notes, "if the German government does not stand behind the bank, then inevitably all its counter-parties – the other banks and institutions it deals with – are going to start feeling very nervous about trading with it. As we know from 2008, once confidence starts to evaporate, a bank is in big, big trouble. In fact, if Deutsche does go down, it is looking increasingly likely that it will take Merkel with it – and quite possibly the euro as well."

Even without counterparty risk rearing its ugly head, the market appears to already be pricing it in.

The damage can be seen in its share price. Last October, the shares were at 27 euros. Back in 2007, they were over 100 euros, and even in the spring of 2009, when banks were crashing all across the world, they were still trading at close on 17 euros. For most of this year they have been sliding fast. On Monday, they crashed again, down another 6pc. Its bonds have slumped as well, while the cost of credit default swaps – essentially a way of hedging against a collapse – have jumped. It all has a very 2008 feel to it.

Indeed, but what is Merkel to do: admit that all the posturing about a stable banking system was just a lie, and the demands for Italy to get its house in order were sheer hypocrisy... or do what Allianz admitted that ultimately Deutsche Bank will have to be bailed out?

As Lynn points out, "there is something to be said for a hard-line position. It is hard to be sure the massive bank bail-outs of 2008 were such a great idea. Perhaps we would be better off now if a few had been allowed to fail. That said, Merkel is surely playing with fire. In the markets, investors, along with other financial institutions, have rightly or wrongly come to assume that major banks are, as the saying has it, ‘too big to fail’. You didn’t really have to worry about how solid they were, because if the crunch came the state would always ride to the rescue."

In Germany, that appears not to be the case – certainly for Deutsche, and possibly for its next biggest player, Commerzbank, which is hardly looking much healthier. Would you want to trade a few billion with Deutsche right now, and would you feel sure you’d get paid next month? Nope, thought not. The risk is that confidence evaporates – and as we know, once that is gone a bank is not long for this world.

To be sure, the politics of a Deutsche rescue would be terrible. Germany, with is Chancellor taking the lead, has set itself up as the guardian of financial responsibility within the euro-zone. Two years ago, it casually let the Greek bank system go to the wall, allowing the cash machines to be closed down as a way of whipping the rebellious Syriza government back into line. This year, there has been an unfolding Italian crisis, as bad debts mount, and yet Germany has insisted on enforcing euro-zone rules that say depositors have to shoulder some of the losses when a bank is in trouble.

And this is why Merkel is cornered: "for Germany to then turn around and say, actually we are bailing out our own bank, while letting everyone else’s fail, looks, to put it mildly, just a little inconsistent. Heck, a few people might even start to wonder if there was one rule for Germany, and another one for the rest. In truth, it would become impossible to maintain a hard-line in Italy, and probably in Greece as well."

"And yet" Lynn adds, "if Deutsche Bank went down, and the German Government didn’t step in with a rescue, that would be a huge blow to Europe’s largest economy – and the global financial system. No one really knows where the losses would end up, or what the knock-on impact would be. It would almost certainly land a fatal blow to the Italian banking system, and the French and Spanish banks would be next. Even worse, the euro-zone economy, with France and Italy already back at zero growth, and still struggling with the impact of Brexit, is hardly in any shape to withstand a shock of that magnitude."

What we do know is that if some €42 trillion in derivatives - some three times more than the GDP of the European Union - were to suddenly lose their counterparty, the systemic damage would be unprecedented.

And just like that, Germany finds itself in the same position the Fed and US Government were in September 2008: let the bank fail and deal with the devastating consequences, or inject a few more billion and keep the bank alive for a few more quarters. Indeed, "the politics of a rescue are terrible, but the economics of a collapse are even worse. By ruling out a rescue, she may well have solved the immediate political problem. Yet when the crisis gets worse, as it may do at any moment, it is impossible to believe she will stick to that line. A bailout of some sort will be cobbled together – even if the damage to Merkel’s already fraying reputation for competence will be catastrophic."

Lynn's conclusion is spot on:

Merkel is playing a very dangerous game with Deutsche – and one that could easily go badly wrong. If her refusal to sanction a bail-out is responsible for a Deutsche collapse that could easily end her Chancellorship. But if she rescues it, the euro might start to unravel. It is hardly surprising that the markets are watching the relentless decline in its share price with mounting horror.

In retrospect, the irony is delightful: for so many years the markets erroneously focusing only on the periphery as the source of potential banking contagion, when the biggest ticking time bomb in Europe's banking sector was smack in the middle of what was considered the safest and most stable country, until now.... or as we put it in 2014: "The Elephant In The Room: Deutsche Bank's $75 Trillion In Derivatives Is 20 Times Greater Than German GDP"

In a stunning allegation, one which would lead to dramatic gepolitical implications, the speaker of the People's Council of Syria said on Monday that the Syrian intelligence possesses an audio recording of conversation between Islamic State terrorists and the US military taken just prior to the Washington-led coalition's airstrikes on the government troops near Deir ez-Zor on September 17 which l Read more.....

In a stunning allegation, one which would lead to dramatic gepolitical implications, the speaker of the People's Council of Syria said on Monday that the Syrian intelligence possesses an audio recording of conversation between Islamic State terrorists and the US military taken just prior to the Washington-led coalition's airstrikes on the government troops near Deir ez-Zor on September 17 which left over 60 Syrian troops dead.

As reported last weekend, coalition warplanes hit Syrian government troops near the eastern city of Deir ez-Zor on September 17, leaving 62 military personnel killed and a hundred wounded. The Pentagon said initially that the airstrike was a mistake and targeted ISIS militants.  Britain, Australia and Denmark confirmed their air forces' participation in the deadly airstrikes.

"The Syrian Army intercepted a conversation between the Americans and Daesh before the air raid on Deir ez-Zor", Hadiya Khalaf Abbas said as quoted by the Al Mayadeen broadcaster.

Hadiya Khalaf Abbas, the head of the Syrian parliament, added during her visit to Iran that after the coalition's airstrikes on the government troops US military directed terrorists' attack on the Syrian army.

The attack on government positions, followed by an attack on a UN humanitarian convoy which the US has accused Russia of organizing, with Russia in turn putting the blame on US-supported rebels, has led to the collapse of the September 9 Syrian ceasefire. Russia's Foreign Minister Sergei Lavrov said last Friday it was necessary to separate Daesh terrorists from "moderate" opposition forces in order to salvage the truce.

Cited by Sputnik, the politician noted that the details would be made public later. If indeed the audio is confirmed, it would put to rest years of speculation that the US military has been directly coordinating with the Islamic State.