On the eve of a planned trip to Moscow by National Security Advisor John Bolton to discuss election hacking, the Department of Justice unsealed an indictment Friday afternoon charging a Russian national for her alleged involvement with another "troll farm" that US prosecutors say attempted to tamper with the midterm election.
Source: DoJ
According to the Washington Post, the charges - the first alleging meddling in the midterms - have been brought against Elena Khusyaynova, 44, who was accused of conspiracy to defraud the United States.
Khusyaynova is believed to manage the finances of "Project Lakhta," a "foreign influence operation" that prosecutors say was intended to "to sow discord in the US political system" by pushing "arguments and misinformation" about "immigration, the Confederate flag, gun control, and the NFL national anthem protests."
Source: DoJ
The charges follow warnings by President Trump, Vice President Mike Pence and the Director of National Intelligence that Russia and China have sought to interfere in the midterms. Trump has claimed that this interference has been directed against Republican candidates as part of China's retaliation for his disruptive trade war.
"This effort was not only designed to spread distrust towards candidates for U.S. political office and the U.S. political system in general, but also to defraud the United States by impeding the lawful functions of government agencies in administering relevant federal requirements."
Source: DoJ
In a statement, he DNI clarified that the US has "no evidence" that this "Project Lakhta" tried to infiltrate the US's voting infrastructure in a way that could actually sway vote totals.
In a statement, the Director of National Intelligence said officials “do not have any evidence of a compromise or disruption of infrastructure that would enable adversaries to prevent voting, change vote counts or disrupt our ability to tally votes in the midterm elections.”
But the statement noted, "We are concerned about ongoing campaigns by Russia, China and other foreign actors, including Iran, to undermine confidence in democratic institutions and influence public sentiment and government policies. These activities also may seek to influence voter perceptions and decision making in the 2018 and 2020 U.S. elections."
The announcement, which was joined by the Justice Department, FBI and Department of Homeland Security, comes on the eve of a trip National Security Advisor John Bolton is making to Moscow, where he is expected to raise the issue with his counterparts.
The indictment claims the operation was financed by oligarch Yeveniy Prigozhin and two companies he controls. Prigozhin - better known as "Putin's Chef" - was targeted by sanctions in March. Prigozhin also allegedly controlled the Internet Research Agency, the troll farm that was the object of a Mueller indictment earlier this year.
Court papers said Khusyaynova’s operation was funded by Russian oligarch Yeveniy Prigozhin and two companies he controls, Concord Management and Consulting LLC and Concord Catering.
A criminal complaint filed against the woman charges that she managed the finances of Project Lakhta, including detailed expenses for activities in the U.S. such as paying for activists, advertisements on social media, registering domain names, the purchase of proxy servers, and promoting news postings on social media.
Finally, and perhaps most terrifying, is the fact that the operation's budget was a mere $35 million - it is now apparently a lot cheaper to manipulate the American mind than Hillary's billion-dollar spend tried to (or perhaps, just perhaps, this is a mickey-mouse operation merely using trolling to gather traffic and not some mysterious effort to disrupt America's democracy).
Given the timing, this appears to be yet another attempt by deep state operatives to force the Trump Administration to take a more aggressive tack with Russia. While we imagine the charges will cast a shadow over Bolton's trip and his meeting with Russian Foreign Minister Sergei Lavrov, the big question now is whether charges will be forthcoming against China.
Adding to unfit parents, "sexy at any size" fat-acceptance movements and the abundance of hormone-laden fast food in every corner of the world, there's a new culprit in town for teenage obesity; internet memes.
According to five UK professors, memes which glorify fatness or make self-deprecating jokes about unhealthy eating habits can program impressionable young teens with the notion that it's ok to just give up when it comes to their health.
For example:
The authors suggest that fat-centric memes are dangerous becuase memes in general invoke a sense of happiness:
"It is worrying that Internet meme content - which, by definition, has come to represent the Internet-fuelled propagation of items such as videos, jokes, rumours and websites (Shifman 2014) – produces a predominate sense of happiness regardless of the underlying tone or image used (see the appendix for examples of health-related Internet memes). If this is the broader case then we run the risk of normalising and accepting ridiculing and stereotyping of “non-normative”, “fat”, “unhealthy”, “irresponsible”, “at fault” individuals because of cultural ignorance."
In other words, because most people get a kick out of memes, the ones which make suggest that it's ok to be fat run the risk of normalizing poor habits. The study specifically cites two dangerous memes:
A picture of an overweight child with the caption "Free food? Count me in!" was sent along with the letter as an example of a meme the researchers found dangerous.
The academics were also concerned by a meme that created a human-like body from pictures of pizzas and hamburgers, with frankfurters used for limbs and a smiley-faced potato for a face.
The body was captioned "me" and placed alongside images of three well-defined bodies for comparison.
"The vast majority of sharers display little, if any, emotion when sharing these memes," the academics commented. -CNN
The authors note that obesity costs the UK's socialized National Health Service £4 billion (USD $5.2 billion) per year - second only to smoking at £5 billion, but ahead of alcohol (£3.5 billion) and physical inactivity (£1.1 billion).
They also suggest that memes should be filtered in order to prevent wrong-think:
Internet memes are generally viewed as entertaining but they also represent a body of cultural practice that does not account for the specific needs and rights of teenagers (Livingstone, Carr, & Byrne, 2016). If Internet memes carry political, corporate or other agendas without priorities tailored to the needs of 13-16-year-olds then they have the potential to do harm on a large scale (Wartella et al., 2015). We need to know the types of health information/knowledge that teenagers are exposed to because social media is an increasingly central aspect of their daily lives and social interactions.
And while teenage obesity is undoubtedly caused by multiple factors, including not being fat, just big boned - the kids of today wouldn't do well just two short generations ago.
1960s:
Today:
Read the paper below:
A new poll conducted by Military Times and Syracuse University has found that nearly half of all active duty American troops believe the next major war is just around the corner.
The poll results show about 46% of respondents think the U.S. will be drawn into a new war at some point in the next year, which is a significant 5% leap above the same category in the Military Times poll taken last year.
Analysts who looked at the numbers believe military personnel fear global instability and the heightened rhetoric of the Trump administration especially related to world powers like Russia and China.
According to published results by Military Times:
When asked about specific countries, troops said Russia and China were among their top concerns. The poll showed a big increase in the number of troops who identify those two countries as significant or major threats: About 71 percent of troops said Russia was a significant threat, up 18 points from last year’s survey. And 69 percent of troops said China poses a significant threat, up 24 points from last year.
Some top Pentagon officials have voiced similar views. Last year, Marine Corps Commandant Gen. Robert Neller told Marines that he thought there was a “big-ass fight” on the horizon.
The Commandant reportedly told Marines stationed in Norway, "I hope I’m wrong, but there’s a war coming.”
Results of the Military Times poll conducted between Sept. 20 and Oct. 2:
The overwhelming majority that identified Russia and China as the biggest threats to American security are perhaps the most shocking numbers - at 71 and 69 percent respectively, and are likely due to the preponderance of news stories concerning each country's military readiness and war games over the past year.
Other concerns that topped the list for active military personnel includes cyber-terrorism, as 89 percent of those surveyed saw it as a significant threat. One-third said the U.S. is under prepared to face this type of threat.
Interestingly, the threat of terror organizations that have defined much of the past nearly two decades of the post-9/11 "war on terror" — namely Al Qaeda and ISIS — were seen as less of a threat, with about 57 percent saying it was domestic terrorism that now constitutes the most pressing threat above foreign groups.
But perhaps the biggest shocker — and what could be the biggest affirmation on Trump's Korea policy yet — the poll for the first time saw North Korea recede into the background as a significant threat.
The Military Times reports:
The biggest decrease shown in this year’s poll was North Korea, which was seen as a significant threat by more than 72 percent of troops one year ago, but in this year’s poll only 46 percent described the country that way.
In the last year, U.S. posture toward North Korea has also seen a dramatic shift. Trump moved from mocking North Korean leader Kim Jong Un on social media last fall — calling him “Little Rocket Man” — to publicly proclaiming his respect for the controversial dictator, following a peace summit between the two in June.
Here's a breakdown of what the troops worry about the most in terms of most significant threat to American defense, via Military Times:
The report added this interesting commentary on North Korea: "One of the Military Times poll respondents, an Army recruiter with more than 18 years of service, said Trump’s handling of the standoff over North Korea’s nuclear weapons looked risky at times, but overall the soldier approves of how Trump is going 'toe-to-toe' in negotiations."
“It was kind of scary, but he had the guts to go over there and stand up for what a lot of Americans are believing in,” the respondent told the Military Times.
However, a number of those interviewed believe President Trump is making the world more unstable, and this could lead the U.S. into major war. One soldier polled said she wouldn't reenlist as, “I feel it has never been this bad and with this many adversaries, because of the way he [Trump] chooses to do business.” She noted the possibility of a “constant conflict” occurring soon, which would involve "endless deployments and fighting".
“With the way we’re growing our force, I tell my soldiers the reason we are growing the force is because we need you, and we’re going to fight,” she said.
Yet the fact remains that since 9/11 the United States is already in the midst of a "forever war" as two decades of Afghan conflict approaches with no end in sight, increased numbers of American troops are quietly back in Iraq as advisers, and there's over 2,000 personnel stationed in eastern Syria.
Enlarge / Windows 10 during a product launch event in Tokyo in July 2015. (credit: Kiyoshi Ota/Bloomberg via Getty Images)
It's fair to say that the Windows 10 October 2018 Update has not been Microsoft's most successful update. Reports of data loss quickly emerged, forcing Microsoft to suspend distribution of the update. It has since been fixed and is currently undergoing renewed testing pending a re-release.
This isn't the first Windows feature update that's had problems—we've seen things like significant hardware incompatibilities in previous updates—but it's certainly the worst. While most of us know the theory of having backups, the reality is that lots of data, especially on home PCs, has no real backup, and deleting that data is thus disastrous.
Microsoft's ambition with Windows 10 was to radically shake up how it develops Windows 10. The company wanted to better respond to customer and market needs, and to put improved new features into customers' hands sooner. Core to this was the notion that Windows 10 is the "last" version of Windows—all new development work will be an update to Windows 10, delivered through feature updates several times a year. This new development model was branded "Windows as a Service." And after some initial fumbling, Microsoft settled on a cadence of two feature updates a year; one in April, one in October.
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At the start of the month, we highlighted that the "incredibly shrinking junk bond spread" had just passed a historic landmark, when the Bloomberg Barclays U.S. Corporate High Yield index broke below the lowest spread since before the financial crisis, dipping to 309bps, the tightest level since late 2007.
The key reason for this relentless demand for "junk paper" has been the accelerating shrinkage in high-yield supply, as last month was the slowest September for junk bond issuance since 2011, while the high yield market as a whole has been contracting as investors have shifted their focus to leverage loans where - together with CLOs - demand has exploded recently, and the size of the loan market has soared even as the junk bond market has continued to shrink.
Meanwhile, with rates continuing to rise, investor demand has shifted ever more aggressively to floating-rate debt, i.e., leveraged loans, which provide buyers with interest rate protection as the cash interest is indexed to Libor or Prime which rises alongside the Fed Funds rate (earlier today, 3M USD Libor hit the highest since 2008) at the expense of traditional junk bonds where due to the fixed coupon, price is inversely affected by rising yields.
Which brings us to another landmark inflection point: according to Bloomberg calculations, in the past week the total notional of outstanding USD leveraged loans has just hit $1.27 trillion for the first time, overtaking the high-yield bond market which dipped to $1.26 trillion, and cementing the status of loans as the go-to financing source for junk bond companies. Additionally, October is on course for the highest loan issuance since June, while junk bond sales are the slowest since 2009.
While understandable - investors don't want to be penalized for rising rates in the current tightening environment - the relentless growth in the loan market has prompted numerous and widespread warnings, from banks such as Bank of America and JPMorgan, to prominent investing luminaries such as Howard Marks and Scott Minerd, all the way to the Fed, which in its latest FOMC Minutes on Wednesday, warned that it is watching for "possible risks to financial stability" from the leveraged loan industry, which unlike traditional junk bonds, belongs largely to the domain of non-bank lenders and as a result is generally unsupervised by regulators.
In his September memo to clients, Oaktree's Howard Marks captured the key tension in the junk vs loan markets, noting that "growth has been in levered loans, not high-yield bonds," and adding that “the risk level has risen in loans while remaining stable in high yield bonds."
Another rising concern has been the rapid deterioration in investor protections in the form of a growing prevalence of covenant-lite loans, which now make up the majority of the market and which have effectively stripped secured protections from the loan market: "overall, loan documentation is weaker and there’s further evidence that new borrowers coming to the market for the first time are coming with much weaker credit than in the past,” said Morningstar Credit Ratings analyst John Nagyker, cited by Bloomberg. "These features can enable or worsen the next crisis."
Commenting on this pervasive covenant stripping, in an extensive note published by Bank of America last week, credit strategist Oleg Melentev said that "strong competition in the new CLO/loan asset management space in the last few years led to deterioration in key investor protections, such as restricted payments, asset sales, EBITDA add-backs, and incremental debt capacity."
As a result, the bank predicted that during the next credit cycle, credit losses could balloon far more than historical precedent would suggest, as much as 2x the expected annual yield income in high yield and leveraged loans, and 1.3x in private debt.
Investors could also experience temporary mark-to-market losses of up to 5x of their annual income. To put this downside risk into perspective, it would take a 325bps increase in yield to wipe out 2 years of yield income in HY, given the 4yr duration of this asset class. In other words, a 150bps increase in Treasury yields coupled with a 150bps widening in spreads is less damaging than a cyclical turn.
However with investors clearly oblivious to any of these risks, last month even the Bank for International Settlements chimed in, warning about the danger from leveraged loans in its September quarterly outlook, and noting that a boom in leveraged loans often presages a bust in the wider economy. The loan market - which is "particularly procyclical" had risen faster than high-yield bonds in the run-up to the GFC and during the subsequent period of extraordinary monetary accommodation the BIS reminded its readers, a clear reference to the current period.
Even so, demand continues unabated, and in an amusing anecdote , Bloomberg writes how JPMorgan Asset Management CIO Bob Michele recently passed on some prospective high-yield bonds this year, "only to discover that the borrower later circumvents the bond market entirely and sells loans. You find they surface later with a lower yield in the loan market, where they’re swept up by floating-rate buyers and CLOs," said Michele.
“There’s potentially an over-extension of cheap borrowing,” said Michele "That’s always what seems to get the system in trouble.”
To be sure, much of the demand comes from Wall Street’s CLO machine, which will gobble up any leveraged loan product, often without regard for underlying fundmanetals, hoping that its broad exposure will insulate it from wholesale losses. According to Bloomberg, collateralized loan obligations raised $90 billion in the first half in the U.S., compared with $53 billion over the same period last year.
In another example of the ravenous demand for loans, as part of the largest post-crisis leveraged buyout, Blackstone last month boosted the size of term loans in its $13.5 billion debt package to pay for its stake in Thomson Reuters’s financial-and-risk operations.
Of course, there is no such thing as a free lunch, and as monetary policy tightens and the business cycle ages, companies that have relied heavily on floating-rate loans will face bigger debt burdens, triggering defaults, the BIS - and virtually everyone else - warns. In fact, according to the BIS, default rates are already on the rise: according to BIS calculations, the default rate of U.S. institutional leveraged loans rose to 2.5% in June 2018 from about 2% in mid-2017.
One thing that is guaranteed: that number will only keep rising until the next recession, or until it causes the next recession.
We conclude with some parting words from Guggenheim's Scott Minerd who, when asked during a recent interview with Goldman Sachs what aspect of capital markets he is most worried about, and whether he is worried by the growth of non-bank lending, he had a simple answer: leveraged loans.
Fifteen years ago, around 80% of all syndicated loans remained on bank balance sheets through a “pro-rata” tranche that was a revolving credit line or an amortizing term loan; now, 70-80% of syndicated bank loans are outside of the banking system, meaning that the pro-rata tranche is much smaller in comparison to the institutional loan tranche that is distributed among non-bank lenders. We’ve also seen estimates that the private debt market has grown to around $400bn to $700bn in size—larger than the size of the bank loan market in 2007. That has made it harder to trace credit risk and maintain credit standards. Meanwhile, innovations like bank loan ETFs have moved credit risk into the hands of retail investors. That’s something we didn’t have to worry about in the last major crisis in corporate credit, in 2001/02.
His conclusion: "We’re in uncharted territory."
He is right, of course, but to most investors that simply means that during the next downturn the Fed will again have to bail everyone out. It will be up to Jerome Powell to prove them wrong... assuming Trump hasn't fired him by then.
The Black Death could make comeback as the climate warms, asserts Oxford professor of global history and director of the Oxford Centre for Byzantine Research, Peter Frankopan. How? He suggests that melting permafrost in the Arctic could release long buried and frozen microbes to once again ravage the Earth's people.
According to Fox News, Frankopan warned, "If we go over that degree change, it's not about the Maldives being harder to visit on holiday or migration of people—it's about what happens when permafrost unfreezes and the release of biological agents that have been buried for millennia."
In support of his assertions, Frankopen pointed to the 2016 case in Siberia in which contact with a thawed reindeer carcass frozen 75 years earlier is thought to have sparked an anthrax outbreak that sickened several people and killed a 12-year-old boy.
Chief amongst the potential diseases brandished by Frankopen is the plague, which he asserted was spread in the Middle Ages largely due to a rise in global temperatures.
"For example, in the 1340s, a 1.5-degree movement of heating of the earth's atmosphere—probably because of solar flares or volcanic activity—changes the cycle of Yersinia pestis bacterium," he explained. "That one and a half degree difference allowed a small microbe to develop into the Black Death."
According to Frankopan, such a possibility should be taken more seriously than a rise in sea levels or droughts, not least because the Black Death wiped out between 75 and 200 million people in Europe in the 14th Century. "These are the things we should be hugely worried about," he said.
So how worried should you be about climate change induced pandemics of the Black Death? Certainly not hugely.
Recall that folks in the Middle Ages did not have access to antibiotics or vaccines. We do. For example, a recent report in Emerging Infectious Diseases notes that five cases of culture-confirmed human plague in Uganda were treated successfully with the oral antibiotic ciprofloxacin, including one case of pneumonic plague. In addition, researchers are well on the way toward developing effective new vaccines against Yersinia pestis. Last year, the U.S. Food and Drug Administration granted orphan drug status to one such plague vaccine.
As I have earlier explained:
It is true that at the margin higher average temperatures may help some diseases and their vectors to spread a bit, but with regard to controlling infectious diseases we've got much bigger problems than that. The fact is we already know how to control diseases no matter what the climate is—better vector control and the development of effective vaccines. Focusing on anything else is just another exaggerated environmentalist scare story.
By not taking modern science and medicine into account, Professor Frankopen and other similar alarmists are engaged in plain old scaremongering.
