So stocks dropped a little in October. Ok they actually dropped a lot and all of a sudden the S&P 500 was miles away from the all those optimistic 3,000+ year end targets. And what happens when stocks drop hard? Bulls cry for the Fed to come to the rescue.
It was quite the scene.
Here’s the global market cap wiped off in just October:
$8 TRILLION. Poof. Gone. The largest drop since 2008.
So it is no wonder the Fed begging has begun. From the president on down:
“If the Fed backs off and starts talking a little more Dovish, I think we’re going to be right back to our 2,800 to 2,900 target range that we’ve had for the S&P 500.” Scott Wren, Wells Fargo.
“My main fear is that we could have a mini version of 2008 if the Fed doesn’t change course,” the “Mad Money” host said. “Our one hope? If Fed chief Jerome Powell actually starts listening to the stock market and wakes up to the damage that tariffs can do to the economy, then maybe he’ll shift gears, just like Greenspan did in ’98. Then we can bottom and even roar higher. But as long as Powell stays committed to the December hike and three more next year, … and the president stays committed to expanding his tariffs, then history says we’ve got more downside no matter what.”
“The market turmoil of the past month threatens to put the brakes on US economic growth, according to a closely watched measure of financial conditions. Conditions have tightened so sharply in recent weeks, investors are beginning to suggest that the Federal Reserve could limit the number of times it raises interest rates. The S&P 500 has tumbled over 8 per cent since the start of October — on course for its worst monthly performance since February 2009 — raising equity funding costs for companies and sending the Goldman Sachs’ financial conditions index to its highest level since April 2017. Measures of financial conditions typically factor in long-term bond yields, corporate borrowing rates, currency fluctuations and share prices, and assess how supportive or restrictive they are for the economy. Ian Lyngen, head of US rates strategy at BMO Capital Markets, said that investors were “getting nervous that the sell-off has tightened financial conditions enough that the Fed will struggle to achieve some of its policy goals, such as raising interest rates to their ideal target level.”
You get my drift: Basically everyone is now setting up the argument that it’s the Fed’s fault if markets can’t advance. Really? After 10 years of straight up years (courtesy easy central bank money) at the first sign of the 10 year yield at risk of breaking out above trend everyone wants the Fed to stop.
Please. What’s the argument here, the Fed is hiking too aggressively?
It’s just not true.
If anything the Fed has slow walked this rate hike cycle compared to previous rate hike cycles. Everyone wants the Fed to stop raising rates here?
Here? Give me a break. At a point where real rates remain negative, the effective Fed funds rate is barely above 2% and we just saw the slowest rate hike cycle in decades. Please.
If the debt construct is so sensitive that it can’t even handle a little attempt at normalization then this entire experiment has been a giant failure.
And maybe that’s what everyone is worried about.
Growth has been slowing down globally with negative rates and intervention still being on the daily market menu in many places.
Look at the data coming in:
South Korea:
Japan:
China:
Europe:
Slowing growth with rising inflation:
A winning combination if I ever saw one.
And the US? You tell me.
Capex spending growth? I don’t see it:
GDP already slowed from the Q2 4.2% sugar high to a lower 3.5%, a print heavily relying heavily on government expenditures and an increasing in inventory build:
Massive debt is the name of the game and we just saw how fear of rising rates contributed to markets selling off.
Debt serviceability matters and the US stands out:
And with tax cuts and increased military spending the US is going pedal to the metal on debt expansion:
And corporations are on the same page:
High yield default rates are still not showing signs of stress, but compared to the size of the underlying economy corporate debt has never been higher.
As rates are rising the very real cost of servicing this debt via interest payments is very evident:
It’s not a mystery. Decades of expanding debt, enabled by artificial low rates are now running into a wall of serviceability, particularly as the US government needs for more debt financing has accelerated courtesy tax cut.
This chart is going to $30 trillion+:
Best of luck:
So no wonder all of sudden participants are freaking out about the Fed continuing to raise rates. The Fed needs ammunition for the next recession, but, because they slow walked it all, they let markets run into its next bubble and now the hangover has begun.
And instead of aggressively raising (as they have in the past cycles) when they had the chance they are now set up to be the fall guy. Serves them right.
They kept kicking the can, always cautious, always uncertain, always tinkering. Well now things have gotten shaky and major trends are at risk and they have preciously less ammunition compared to previous slowdowns.
Key trend line confluence between markets and the 10 year yield.
If the Fed caves and slows down its rate hike cycle bulls can find comfort in a dovish Fed again.
If the Fed sticks to its guns for once and trend lines break everybody can blame the Fed. I can hear them already now: “Wasn’t our fault for running investors off the cliff again. It’s the Fed’s fault”.
Right.
Or maybe the truth is a lot more sinister and that is that the Fed’s playing a losing hand. With each boom and bust cycle they are forced to lower rates ever lower and can raise them only to ever lower highs, a cycle that will ultimately result in failure.
Why? Because while the Fed responds to recessions with easy money (lowering rates) while our political system is unable to solve structural problems and hence the answer has been ever more debt and the Fed enabled this spiral with cheap money:
And so when markets eventually break their trends the Fed will be forced to lower rates again.
Fed chair Powell is not in enviable position here.
If he doesn’t raise rates in December the Fed’s independence will be questioned having been perceived to have succumbed to political pressure and perhaps admitting that the market construct can’t handle higher rates. In that case the reaction may be ultimately opposite of what everyone expects. While the Fed caving may bring about a year end rally it could also badly damage confidence going into 2019.
If Powell does raise rates and markets freak and break their 2009 trends the ensuing market calamity may force the Fed to cut rates again in 2019.
The Fed crying has already begun. Let’s see how it ends. Don’t be surprised to see more tears. A lot more tears.
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That’s a headline no press outlet wants to see about one of their reporters, but exactly what MSNBC got, when disabled veteran James Berrie garnered national attention for his Facebook post calling out MSNBC’s Mariana Atencio and her crew for blocking, and refusing to move from, the handicapped parking spot outside of his polling place.
“Different kind of voter suppression,” said Houston resident and Air Force veteran Berrie, who has multiple sclerosis.
“Went to vote, and found this waiting for us,” he wrote. “The only van accessible spot and they’re filming in it. We asked them to move, pointed out how it was wrong, then went to vote, because it takes time to load up. But came out and still there. Not even packing up, still getting ready for their shot.”
“This is suppression. If I couldn’t park I couldn’t vote. Their van had no handicap placards,” he added. “This happens all the time. Handicap spots are not loading zones for gear and equipment. Figure something else out. Especially at a public event where people are going to need the spots. This is not ok, and the station needs to be made aware. All of them.”
Houston CBS affiliate KHOU reported on the Facebook posting, and as The Hill notes, Berrie told the outlet that the MSNBC crew kept telling him they would move but were still there after he’d already finally found a way to go and vote.
Eventually, the CBS story lead to an apology from NBC reporter Mariana Atencio.
We made the wrong call today by using a disabled parking spot for our live shot in TX. There’s no excuse. I apologize to the two people who were on their way to vote as it’s one of the most important parts of our democracy; we’d never want to jeopardize anyone’s ability to do so
After his Facebook post went viral, Berrie added an edit: “Thank you all for your support. This has gotten bigger than I thought, but that is a good thing. People are talking about this, having the conversation. Please keep going. If you see something, say something.”
An Ohio Muslim man has been accused of plotting to spark a bloody civil war by provoking standoffs between American militia leaders and federal authorities, reports Joseph Farah’s G2 Bulletin.
“We pull something off like filling militia leaders computers and phones with child sexual abuse then tip the fbi,” said the suspect, according to a court filing uncovered by the Investigation Project on Terrorism.
“When the militias see their leaders are being arrested left and right, they’ll panic,” he continued. “Then we start off assassinations … soon militias will have standoffs with the feds which will turn bloody.”
The suspect is Naser Almadaoji, 19, a naturalized U.S. citizen from Iraq. IPT reported he was arrested at John Glenn International Airport in Columbus, Ohio. He was attempting to travel to Astana, Kazakhstan, “hoping then to be smuggled into Afghanistan to be trained by the ISIS affiliate.”
He was charged with attempting to provide material support to the ISIS branch in Afghanistan and Pakistan, known as Wilayat Khorasan, the report said.
The details from an FBI affidavit said he was questioned by Customs and Border Protection last winter following a trip to Egypt and Jordan.
“It isn’t clear what triggered it, but the FBI had a confidential source posing as an ISIS supporter contact Almadaoji in August via a messaging app,” IPT said.
Almadaoji later told the informant he wanted to trigger a civil conflict between the U.S. government and anti-government militias.
“I imagined a scenario of the collapse of the US as a nation,” he said. “… They have alot [sic] of weak spots 2 really weak spots that would ignite the deadliest civil war on earth if the right spots are poked.”
Almadaoji also envisioned a repeat of the Oklahoma City bombing in 1995 in which a vehicle was exploded next to a federal building, killing 168 people.
On Saturday’s broadcast of MSNBC’s “AM Joy,” House Minority Leader Nancy Pelosi (D-CA) stated Democrats are “not going to rest” until gun safety legislation is passed. Pelosi said Democrats will push legislation to lower prescription drug prices and their agenda includes building infrastructure and decreasing the influence of big money in politics. She added, “We also will do what we have asked the Republicans to do…bipartisan, commonsense background checks, we’re not going to rest until we get gun safety legislation passed, protect our DREAMers.” Pelosi also said the Democrats’ agenda includes passing the Equality Act and legislation on the Voting Rights Act. Follow Ian Hanchett on Twitter @IanHanchett
MADRID (AP) - Spanish police say they have busted a crime ring that cloned credit cards and was headed by a man who had previously been found guilty of helping finance the September 11th attacks in 2001.
Baton Rouge Police have arrested a 13-year-old boy in the fatal shooting of a 6-year-old boy Friday afternoon on Madison Avenue, said Baton Rouge Police spokesman Sgt. Don Coppola Jr.
Mexican drug cartels continue to be the greatest criminal drug threat to the U.S., federal authorities stated in one of their latest reports. Federal agencies reported that drug cartels in Mexico continue to be the wholesale sources of drugs for street gangs that in turn push narcotics at the local level.
Everyone not named Franklin D. Roosevelt hates Daylight Saving Time. The constant back and forth is confusing, especially for those who have an early Sunday morning commitment. The Standard Time Act of 1918 gave the federal government power to oversee national time zones. That power was extended with the passage of the Uniform Time Act of 1966, which allows the Department of Transportation (DOT) to set Daylight Saving Time for the entire country. Why DOT? Because "time standards are important for many modes of transportation," or something like that. Despite decades of observance, however, more and more Americans are rebelling against the pointless concept.
Arizona, Hawaii, and territories like American Samoa and Puerto Rico have broken free of oppressive time changes. If a state wishes to follow suit, including those who choose to keep their state in the Daylight Saving Time zone year-round, it must seek approval from DOT.
In March, Florida signed off on the appropriately named Sunshine Protection Act. But thanks to the federal government, residents must wait on Congress to change federal law in their favor. They, too, will begrudgingly observe the time change this year.
Californians hoping to ditch the practice are planning to vote yes on Proposition 7, yet must similarly wait for congressional approval. Massachusetts is also considering a change to its laws, with more states following suit. The federal government still reserves the ability to deny a state's request.
As more states begin to rebel against changing their clocks twice a year, an important question remains: Why do we still do this inane practice?
The century-old justifications related to farming, war, and light bulb conservation no longer apply in the modern world. We do this simply because we've always done it, except, of course, we haven't always done it. In the case of Massachusetts, actual harm results from the practice. As you wind your clock back this weekend, and then find yourself gassed earlier than you should be come Monday afternoon, blame Washington, D.C.
A lawyer for a U.S. Treasury Department employee charged with leaking to a journalist confidential documents on former Trump campaign chairman Paul Manafort and others, said on Friday that his client was motivated by public service.
Over the past 11 months, the processors running our computers, and in some cases phones, have succumbed to a host of attacks. Bearing names such as Meltdown and Spectre, BranchScope, TLBleed, and Foreshadow, the exploits threaten to siphon some of our most sensitive secrets—say passwords or cryptographic keys—out of the silicon microarchitecture in ways that can’t be detected or stopped by traditional security defenses. On Friday, researchers disclosed yet another leak that has already been shown to exist on a wide range of Intel chips and may also affect other makers, too.
PortSmash, as the new attack is being called, exploits a largely overlooked side-channel in Intel’s hyperthreading technology. A proprietary implementation of simultaneous multithreading, hyperthreading reduces the amount of time needed to carry out parallel computing tasks, in which large numbers of calculations or executions are carried out simultaneously. The performance boost is the result of two logical processor cores sharing the hardware of a single physical processor. The added logical cores make it easier to divide large tasks into smaller ones that can be completed more quickly.
Port contention as a side channel
In a paper scheduled for release soon, researchers document how they were able to exploit the newly discovered leak to recover an elliptic curve private key from a server running an OpenSSL-powered TLS server. The attack, which was carried out on servers running Intel Skylake and Kaby Lake chips and Ubuntu, worked by sending one logical core a steady stream of instructions and carefully measuring the time it took for them to get executed.
The Saudi Air Force has unleashed a massive attack across the Sana’a Governorate over the last 48 hours, reports Middle East-based Al Masdar Newsciting Yemeni sources on the ground. This appears to be the Saudi response to the U.S. call for a ceasefire "in the next 30 days"announced by Secretary of Defense Jim Mattis and Secretary of State Mike Pompeo a mere two days ago.
According to the reports from Sana'a, the Saudi Air Force heavily bombarded the capital city and its surroundings, hitting a number of sites that allegedly have a Houthi presence. The string of airstrikes also hit civilian neighborhoods, including the area around Sana'a International Airport — all resulting in an unknown number of casualties. Given the timing it appears the Saudis are ready to unleash as many bombs as possible ahead of a potential US negotiated ceasefire suggested by Pompeo and Mattis; or alternately it could be the Saudis are now quickly escalating the war further to ensure a ceasefire cannot be obtained.
This comes as the Trump administration has released early details of a UN-brokered peace plan aimed at ending the war in Yemen, beginning with a ceasefire within a month along with talks to be held in Sweden.
Past airstrikes on Yemen's capital of Sana'a via Reuters
Perhaps predictably, The Washington Post blames the rebels for not coming to the negotiating table, something which the Saudi coalition has certainly also refused to do over the past three years of war:
Friday’s assault comes two days after the United States called for a cease-fire and negotiations within 30 days to end the war. The fresh offensive could be designed to pressure the Houthis to come to the negotiating table, which the rebels have so far avoided.
Yemeni journalist Mohammed al-Qadhi described the significant uptick in fighing in a tweet Friday morning: “Fierce battles between forces backed by Saudi-led coalition and the Houthis have been going on for hours in the southern and eastern outlets of the Red Sea port city of Hodiedah, with huge blasts being heard and airstrikes,” he wrote.
This comes after both Mattis and Pompeo early this week for the first time called for a ceasefire to a war that the U.S. has had direct participation in as a key leader of the Saudi coalition, along with the UAE.
Thirty days from now we want to see everybody around a peace table based on a ceasefire, based on a pullback from the border and then based on ceasing dropping of bombs that will permit the (UN) special envoy, Martin Griffiths — he's very good, he knows what he's doing — to get them together in Sweden and end this war.
Pompeo followed by issuing a similar statement, saying, "The United States calls on all parties to support UN Special Envoy Martin Griffiths in finding a peaceful solution to the conflict in Yemen."
The US defence secretary, James Mattis, told an audience in Washington that Saudi Arabia and its Emirati allies were ready for a deal and that the talks between the Saudi-led coalition and the Houthi rebels were being arranged by the United Nations special envoy, Martin Griffiths.
When asked on Tuesday at a Pentagon press conference whether the Saudi murder of journalist Jamal Khashoggi had anything to do with the new, unprecedented U.S. call for a ceasefire in Yemen, Secretary of Defense Mattis answered, “I’d separate it out from the Yemen situation. We will get to the bottom of it.” And yet it comes just as Washington and Riyadh's relationship is under strain as international media scrutiny grows in the aftermath of the journalist's October 2nd gruesome killing.
More pressure has also been put on Washington and Riyadh as the appalling extent of the humanitarian crisis in Yemen becomes clearer — or we should say that after Khashoggi's killing the mainstream media actually decided to start looking into the clear war crimes committed there.
Meanwhile the Washington Post reports further the United Nations this month declared that as many as 14 million Yemenis — nearly half the population — are on the brink of famine. And another 3 million find themselves internally displaced while the bombs continue to fall.
Financial industry lobbyists say they will focus their efforts on moderate Democrats and regulatory agencies if Democrats take control of the House of Representatives after next week's congressional elections.
(Pluralist) A mom’s attempt to promote ?feminist values by telling a stranger and her son to leave a public space drew the ire of a mommy-blogger last week.
Writing to Washington Post advice columnist Carolyn Hax in April, the mother in question described a playgroup, made up exclusively of moms and daughters, that she and her daughter attended at a public park.
“Recently a mom of a boy brought her son to the playground at the same time we were there,” the socially conscious parent recounted. “I asked her (nicely, I thought) if she would mind leaving because we had wanted it to be a girls-only time. She refused and seemed angry at me.”
A left-wing activist who sent an anonymous letter to Sen. Kamala Harris, D-Calif., accusing Brett Kavanaugh of raping her now admits she engaged in a “ploy” against the then-Supreme Court nominee.
Kavanaugh was questioned by the committee after an anonymous letter signed ‘Jane Doe’ alleged he and a friend raped an Oceanside, California, woman in a car.
Grassley said said that when “individuals intentionally mislead the Committee, they divert Committee resources during time-sensitive investigations and materially impede our work. Such acts are not only unfair; they are potentially illegal.”
“It is illegal to make materially false, fictitious, or fraudulent statements to Congressional investigators. It is illegal to obstruct Committee investigations,” Grassley said.
The chairman already has referred lawyer Michael Avenatti and his client Julie Swetnick to the Justice Department for making false statements and obstructing of a congressional investigation.
Avenatti also was referred for promoting to the committee another woman who accused Kavanaugh accuser of gang rape.
Grassely said that on Oct. 3, committee staff received an email from a Munro-Leighton with a subject line claiming: “I am Jane Doe from Oceanside CA — Kavanaugh raped
me.”
Munro-Leighton wrote that she was “sharing with you the story of the night that Brett Kavanaugh and his friend sexually assaulted and raped me in his car” and referred to “the letter that I sent to Sen. Kamala Harris on Sept. 19 with details of this vicious assault.”
She continued: “I know that [‘]Jane Doe[’] will get no media attention, but I am deathly afraid of revealing any information about myself or my family.”
She then included a typed version of the Jane Doe letter.
Grassley said committee investigators began investigating the allegations and through open sources determined that she is a left-wing activist; is decades older than Kavanaugh; and lives in neither the Washington, D.C. area nor California, but in Kentucky.
Everyone not named Franklin D. Roosevelt hates Daylight Saving Time. The constant back and forth is confusing, especially for those who have an early Sunday morning commitment. The Standard Time Act of 1918 gave the federal government power to oversee national time zones. That power was extended with the passage of the Uniform Time Act of 1966, which allows the Department of Transportation (DOT) to set Daylight Saving Time for the entire country. Why DOT? Because "time standards are important for many modes of transportation," or something like that. Despite decades of observance, however, more and more Americans are rebelling against the pointless concept.
