Thursday, September 22, 2016

Today's Links

"The last 7 years of extreme monetary experimentation has created a mutant economy... where the only beneficiaries have been holders of financial assets. Investors have been loath to invest in real plant, infrastructure or jobs because the returns look so limited by artificially low rates. Instead they invest in financial assets because these returns are being inflated by monetary policy."Bill Blain, zero hedge

"We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been." AEP


1---Moron Yellen  talks up economy


Of course we are worried that bubbles will form in the economy, and we routinely monitor asset valuations, while nobody can know for sure what type of valuation represents a bubble,” said Yellen at the news conference after the meeting of the regulator.

However, the Fed decided against raising interest rates despite the concern, holding the rate between 0.25 percent and 0.5 percent. Three officials voted against the decision – the biggest dissent since December 2014.

“We’re generally pleased with the progress of the economy, and the decision not to raise rates today and to wait for some further evidence is largely based on the judgment that we’re not seeing evidence that the economy is overheating,” said Yellen

“Conditions in the labor market have strengthened and we expect that to continue, and while inflation remains low we expect it to rise to our two percent objective over time,” she said, stressing that the majority saw economic progress, but it was not a strong enough case to hike.


2--CNBC defends Wells Fargo


Have you ever read an article where 100% of the comments disagree with the author??

3--OECD Warns Fed, BOJ, ECB of Asset Bubbles, “Risks to Financial Stability,” Pinpoints US Stocks & Real Estate (Today's "must read")


The OECD estimates in its Interim Economic Outlook that for member nations as a whole, GDP-per-capita will grow only 1% in 2016, “which is half the average in the two decades preceding the crisis.”
Per-capita is what counts. It’s what people experience. It’s their slice of the economic pie. Population growth papers over a lot of ills for economists: for example, in the US, 14 million jobs were created since the Financial Crisis, which has been touted endlessly. But the US population grew by 15 million people. Now there are fewer jobs “per capita” than there were at the depth of the Financial Crisis. That’s why per-capita matters.
So 1% GDP growth per capita in 2016 is terrible. And it’s likely happening because of these scorched-earth monetary policies. The OECD blames:
  • “Weak investment”
  • “Slower growth of total factor productivity”
  • “Slowing of diffusion of innovations across firms”
  • “And slowing innovation at the technological frontier.”...
Yet its outlook, bad as it is, is “subject to significant risks.” The economy might further deteriorate, it says, because: “Financial instability risks are rising, including from exceptionally low interest rates and their effects on financial assets and real estate prices.”
Bubbles in stocks and real estate! The Fed, however, as always, is steadfastly blind to bubbles....

The report goes on:
Low interest rates underpin widespread and substantial increases in asset prices, both internationally and across asset classes, which increases the likelihood and vulnerability of a sharp correction in asset prices.
A reassessment in financial markets of interest rates could result in substantial re-pricing of assets and heighten financial volatility even if interest rates were to remain below long-term averages....

in Q3, S&P 500 companies are expected to report the sixth quarter in a row of year-over-year earnings declines, the first time this happened in FactSet’s data going back to 2008. With earnings this terrible, what has propped up stock prices, according to the OECD?
  • Falling long-term interest rates
  • Cost reduction measures
  • Share buybacks and dividend pay-outs, rather than as the result of additional productive investment.
  • The issue of “solvency” of pension funds and insurance companies: 


The Organization for Economic Co-operation and Development threw the Fed and the Bank of Japan – even as they had their meetings today – a curve ball.

We in the US woke up to a new central-bank term: “yield curve control.” This is what the BoJ promised its rapt audience of hedge fund managers. Another Kuroda surprise. His negative-interest-rate surprise in February was just aping the ECB. But now he has come up with something for which no one had even coined a word 


4--Most Small Businesses Are Barely Saving Any Money, New Study Shows


(The looting of America: small business living hand to mouth due to Fed policy) The companies in question may be small, but they represent an outsized share of the U.S. economy. According to the Small Business and Entrepreneurship Council, they account for roughly 50 percent of gross domestic product and more than 50 percent of new job creation — a metric that's closely watched by the Fed in determining whether the economy can withstand a constriction in financing conditions. Yet even though they're contributing a great deal to the economy there remains ignorance about their financial health, Farrell added. 


On average, the companies surveyed have just 27 days worth of cash reserves — or money to cover expenses if inflows suddenly stopped — according to the JPMorgan study, which analyzed 470 million transactions by 570,000 small business last year. Restaurants typically hold the smallest cash buffers, with just 16 days of reserves, while the real-estate sector boasts the biggest, at 47 days.


5--Rising poverty in the US


Among the troubling statistics in a new report released Tuesday was the rising concentration of poverty in city neighborhoods, and expanding number of census tracts where the poverty rate stood at 40 percent or higher.

The count of high-poverty census tracts has nearly doubled in the city, from 19 to 37 since 2000. Fully one-third of Rochester residents live in poverty, and nearly another third require some outside assistance to get by, according to estimates in the ACT Rochester and Rochester Area Community Foundation update to its 2013 report on the state of poverty and self-sufficiency across the Greater Rochester region

6--UN  fears third leg of the global financial crisis - with prospect of epic debt defaults


The third leg of the world's intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.
It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.
"Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out," said the annual report of the UN Conference on Trade and Development (UNCTAD

We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been.

(WOW--UN wants to transform the entire system!)

The UN's diagnosis is that "shareholder primacy" and the entire edifice of liberal market finance are among the key culprits, all made worse by stringent fiscal austerity that has starved the global economy of sufficient demand.
Its prescription is radical. The world must jettison neo-liberal ideology, and launch a "global new deal" with a blitz of investment on strategic sectors. It wants a return of the "developmental state", commanding a potent industrial policy, and backed by severe controls on capital flows....

(Holy shit!)

It also explains the conundrum of collapsing productivity. There is no need for the grim pessimism of Professor Robert Gordon, who thinks the great the spurt of human progress over the last 250 years is largely exhausted, supposedly because we have already made most of the great advances. Falling investment explains it well enough.
The UN's advice to the emerging nations is to retake control of their destiny and turn the tables on the financial elites. They should impose capital controls, preferential tax treatment for retained earnings, and force fund managers to hold assets for longer. They should allocate credit without apology, and learn a trick or two from the Korea's methods of "financial repression"....

But what UNCTAD shows is that globalisation has not in fact worked for these countries, bar a few exceptions. One starts to suspect that it works for nobody except the owners of capital and their close allies.


7--The Guardian view on the global economic outlook: dark clouds ahead



8--A totally different world order?  China Joins Russia in Syria: Shaping the New Anti-Terrorist Alliance

In a major policy shift, China has launched the pivot to the Middle East aimed at increasing its involvement in the region by providing military training and humanitarian aid in Syria

9---US pushes for “no fly” zone as Syrian conflict escalates


Kerry also demanded the imposition of a de facto “no fly” zone over areas controlled by US-backed Islamist “rebels,” including those affiliated with Al Qaeda, under the pretext of assuring delivery of humanitarian aid and reviving the ceasefire.

“I believe that to restore credibility to the process, we must move forward to try to immediately ground all aircraft flying in those key areas in order to deescalate the situation and give a chance for humanitarian assistance to flow unimpeded,” Kerry told the Security Council meeting.

The Syrian government declared the ceasefire ended on Monday after reporting 300 violations by the Western-backed Islamist “rebels” and in the wake of the US bombing of a Syrian army outpost near the Deir al-Zor airport in eastern Syria on Saturday that killed as many as 90 soldiers and wounded another 100.

US officials have claimed that the attack was a mistake, while Damascus has pointed out that it was immediately followed by an assault on the position by fighters of the Islamic State (also known as ISIS), charging that the air and ground actions were coordinated. Deir al-Zor occupies a strategic position on the highway leading from Syria to Iraq and onto Iran....

Russian military officials, meanwhile, reported Wednesday that a US Predator drone, capable of firing multiple air-to-surface missiles, was seen flying over the aid convoy at the time of the attack. Earlier, the Russian Defense Ministry released an aerial video showing that the aid convoy had been accompanied by a “rebel” truck towing a large-caliber mortar launcher, which subsequently disappeared from view.

In his statement to the Security Council, Lavrov also insisted that there could be no more “unilateral” cessations of hostilities in Syria. Russia has charged that the US-backed Islamists never accepted the ceasefire and continued to carry out attacks on government positions after it went into effect on September 12.

Speaking before the same Security Council meeting, Syria’s ambassador to the UN Bashar al-Jaafari vowed that his country “will not become another Libya or Iraq,” and stated that his government was prepared “to reach a political solution that is decided by the Syrians”...

The Syrian ceasefire has been the subject of bitter divisions within the Obama administration, with the Pentagon and top uniformed commanders in the Middle East calling into question whether the military would even obey orders to implement the deal.
Those most heavily involved in the US-orchestrated war for regime change in Syria, particularly elements within the CIA, have opposed the agreement because it calls upon Washington to oversee the separation of the so-called “moderate opposition” that it has paid and armed from Al Qaeda-linked forces like the Al Nusra front that are formally designated as “terrorists.” In the week following the ceasefire’s initiation, there was no sign of these “moderates” distancing themselves from the Al Qaeda elements. Such a separation is opposed by Washington’s “rebels” because Nusra represents the most significant armed group fighting the Syrian government....

Even more importantly for the Pentagon, the ceasefire’s call for the establishment of a joint operations center with Russia to share intelligence and targeting information would cut across the US military’s escalating preparations for war with Russia itself. The bombing of the Syrian army position on Saturday, followed by the attack on the aid convoy on Monday, served to squelch this proposal.
Amid the diplomatic sparring between the US and Russia at the United Nations, there were multiple signs that the conflict in Syria is on the brink of a dangerous escalation, carrying with it the threat of a wider and even world war....

Before leaving for the UN General Assembly meeting in New York City, Erdogan told reporters that the Turkish intervention had “cleared” an area of 900 square kilometers (about 350 square miles) of “terrorists,” by which he meant both ISIS and the Kurdish YPG. He added, “We may extend this area to 5,000 square kilometers as part of a safe zone.” Such an intervention would require the deployment inside Syria of thousands of Turkish troops.

10--Battle for Deir Ezzor takes a turn for the worse as ISIS captures Jabal Thardeh


The Islamic State of Iraq and Al-Sham (ISIS) launched a major offensive in southwest Deir Ezzor on Wednesday, targeting the strategic Thardeh Mountains at the western rim of the provincial capital...

Much of the Islamic State's success is a result of the U.S.' airstrikes that fractured the Syrian Arab Army's defenses at Jabal Thardeh



11--Assad accuses US of intentionally bombing Syrian troops in Deir Ezzor


It was not an accident by one airplane; it was four airplanes which kept attacking the position of the Syrian troops for nearly one hour or maybe a little bit more than one hour”.
On September 17, at least 62 Syrian soldiers were killed by US-led coalition airstrikes on Army posts in Jabal al-Thadreh; a strategic mount that overlooks the Deir Ezzor military airbase.

The attack on Syrian troops came as they were defending the area against a full-scale offensive launched by ISIS.
The IS troops attacked at the very same time as the American strike. How could they know that America was going to attack that position in order to gather their militants right away and attack it one hour after the strike. It was definitely intentional and not unintentional,” Assad added.
The Pentagon acknowledged the attack and said its fighter jets accidently hit Syrian government troops and that the airstrikes were meant to strike ISIS jihadists.

12--Russia is Tired of the Bullshit: Lavrov: No More Unilateral Pauses in Syria

Russia’s Foreign Minister, Sergey Lavrov, has said during the United Nations Security Council meeting on Syria that there will be no more unilateral ‘ceasefire’ pauses in Syria. According to Lavrov it can’t even be discussed because all pauses have been used by militants, incluinng Jabhat al-Nusra, to regroup and get reinforcements


points to it being the militants of the terrorist organizations who exploded and set on fire the trucks of the convoy," he added.

It should be also noted, al Malas added, that the attack coincided with the militant assault on the positions of the Syrian army near Aleppo. "Therefore it was more likely a provocation aimed at capturing the media's attention in order to accuse Damascus and Moscow of the attack," he stated....

The attack [on the convoy] is a provocation aimed to disrupt the peaceful settlement of the Syrian conflict and any possible negotiations on the matter," the political analyst added.

Tuesday, September 20, 2016

Today's Links

Bill Van Auken: "rather than being an accident, the attack was carried out with the deliberate aim of scuttling the agreement, either by the military acting on its own, or following a change in policy reached by the Obama administration, under intense pressure from the US military and intelligence apparatus." WSWS





1--“We had a lot of Drama in the Markets this Week,” Thanks to the Bank of Japan


(Monetary intervention is now openly failing. Important---Extra easing is actually tightening rates. The attempt to push rates lower is raising rates)


Japan has invented QE and zero-interest-rate policies. It conducted umpteen iterations of them over the past two decades. Throughout, it has demonstrated and documented with ample evidence that QE and ZIRP do not stimulate demand in the economy, though they can have all sorts of other effects. Now once again, Japan is out on front.

This week, something interesting happened, even by the standards of the NIRP-absurdity currently in vogue. The 10-year yield of Japanese Government Bonds (JGBs) rose sharply. It had been negative ever since the BOJ announced its negative interest rate policy in February and had dropped as low as -0.30% by late July.

But on July 28, the BOJ, to show it’s easing further, expanded its QE program by announcing yet another stock market pump-up scheme: it would nearly double its annual purchases of equity ETFs from about ¥3.3 trillion to ¥6 trillion ($60 billion).

At that point, 10-year JGBs began to lose ground and yields began to rise to where they nearly kissed 0% last Monday and Wednesday. On Friday, the 10-year yield edged down to -0.03% (there’s still a decimal difference between where it had been at the end of July, -0.30%, and today, -0.03%). So something is up

2---Fed to keep its balance sheet huge forever The distortions in the financial markets will remain permanently

The intense focus on when — and if — the Fed might raise rates again has overshadowed the second step in the central bank’s exit strategy: shrinking its $4.5 trillion balance sheet. Under the published plan, the Fed would reduce its holdings of long-term Treasurys and mortgage-backed securities by not replacing them when they mature.
The process is not supposed to begin until well after rate hikes are underway, and the Fed has explicitly stated it does not intend to sell any of its assets. ....

At the Fed’s exclusive annual conference in Jackson Hole, Wyo., which draws some of the world’s most influential policymakers, several prominent economists argued that the Fed should maintain a large balance sheet indefinitely. The idea has the backing of Bernanke, who recently questioned Yellen’s continuing support for the exit strategy outlined two years ago.

3--Why the Bank of Japan may overshadow the Federal Reserve on Super Wednesday

The BOJ has a propensity to surprise, although most of the time, the surprises are negative," Lam said.
The market certainly took a negative view of the BOJ's late January surprise move to introduce a negative interest rate policy, when the central bank cut the rate it pays on certain deposits to negative 0.1 percent.

That counterintuitively sent the yen sharply higher, frustrating policymakers who had hoped a weaker currency would help the BOJ reach its long-delayed 2 percent inflation target by increasing the cost of imports and spurring more consumption.

4--Russia's UN Ambassador Argues Bombing of Syrian Army Killing 80 Was Intentional

5--US-Led Bombing of Syrian Army 'Looks More Like a Warning Than a Mistake'

"There are many questions regarding this operation since the US has satellites and radars," he said. "Americans say that it was a mistake; Russians call it a provocation. The truth could lie somewhere in the middle."...

"Perhaps there is a rivalry between the Pentagon, which was against the deal brokered by Russia and the US, and the State Department that could have possibly made concessions [to Moscow]. Quite possibly the US feels that Russia is calling the shots in Syria and this has to be stopped," he suggested, referring to possible reasons behind the attack


“There’s been a lot of unhelpful rhetoric over the last couple days,” said Marine Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff. “It hasn’t yet … derailed the process we're involved in with the Russians to seek a verifiable cessation of hostilities.”...

The Pentagon acknowledged that it halted an airstrike by coalition planes Saturday after Russia said the planes hit Syrian government forces, killing 62....

Under the ceasefire agreement, the United States and Russia would begin exploring military cooperation in Syria if violence is reduced and aid convoys are able to get to Aleppo and other besieged areas within a week after the cease-fire began. Monday marked the end of the first week for the truce.

7--Markets too dependent on central banks, BIS warns

8--New York Times peddles alibi for US bombing in Syria (today's "must read")

How does the Times know that Saturday’s bombing of the strategic Syrian army position, overlooking the Deir Ezzor Airport near the Syrian-Iraqi border, was “accidental,” “mistaken” and “errant?” It provides no evidence to support this conclusion, citing neither any investigation nor any new facts gleaned from its own reporting.

The air strike was an accident, a mistake and an error because the US government says it was. End of story. That is good enough for the three reporters with bylines on the article. They see no need to include any qualifiers, such as “US officials claimed that the bombing was accidental,” much less seek out any contrary opinions from those who firmly believe it was not.

Nor does the supposed newspaper of record raise the slightest doubt about how the US managed to confuse a military base, which the Syrian army has occupied for years, with an encampment of the Islamic State (ISIS); or, for that matter, why the Pentagon’s sophisticated military satellites and surveillance drones failed to provide accurate images of the intended target.

That ISIS forces were able to use the bombing as air support for their own assault upon, and overrunning of, the Syrian military base is also accepted as merely another “accident.”...

The Times article itself suggests a far more plausible explanation for Saturday’s bloody events. It notes that the ceasefire deal “faced many skeptics in Washington,” adding that “Chief among them was Defense Secretary Ashton B. Carter,” who “feared that the accord would reveal too much to the Russians about American targeting intelligence...”

The article, however, does not indicate the intensity and depth of the Pentagon’s hostility to the ceasefire. It was not just a matter of Carter’s “skepticism.” Top US uniformed commanders openly called into question whether they would abide by an agreement that had been adopted by the president of the United States.
Lt. General Jeffrey Harrigian, commander of the US Air Forces Central Command, told the media in respect to the agreement: “I’m not saying yes or no. It would be premature to say that we’re going to jump right into it.”

Army Gen. Joseph Votel, commander of the US Central Command, expressed similar views, declaring, “We have to see how this goes first of all ... see what direction it goes ... whether it actually pans out or not, I don’t know.”

Also unreported in the Times article is the fact that on Friday, on the eve of the US bombing, Obama convened a meeting of his security cabinet, including both Kerry and Carter, to discuss the crisis gripping his administration over the Syria ceasefire.
Given these facts, the Times’ parroting of the official US line that the air strike in Deir Ezzor was “accidental” has the unmistakable characteristics of an alibi and a coverup.

....rather than being an accident, the attack was carried out with the deliberate aim of scuttling the agreement, either by the military acting on its own, or following a change in policy reached by the Obama administration, under intense pressure from the US military and intelligence apparatus....

predominant layers within the military brass oppose any collaboration with the Russian military because they fear it could compromise US preparations for direct military confrontation with Russia itself, the world’s number two nuclear power.
Moreover, the bombing fits a definite agenda, clearly articulated by top figures in the ruling establishment. Just last month, former acting CIA director Michael Morell advocated bombing Syria to “scare Assad” and “make the Russians pay a price,” by which he meant killing them. Morell is a prominent supporter of Democrat Hillary Clinton’s presidential candidacy.

On a similar note, Human Rights Watch director Kenneth Roth, a proponent of the “human rights” pretexts used by US imperialism to justify its interventions in the Middle East, tweeted his approval of the US bombing raid: “As US kills 80 Syrian soldiers, is it sending Assad a signal for his deadly intransigence?”...

Washington correspondent David E. Sanger. In addition to his 30-year career writing for the Times, Sanger has found time to teach as an adjunct lecturer in public policy at Harvard’s Kennedy School of Government, an academy for top political and military officials. The faculty has also included figures now playing a key role in executing US policy in Syria, such as Ashton Carter and Washington’s ambassador to the UN, Samantha Power. Sanger is also a member of both the Council on Foreign Relations and the Aspen Strategy Group, think tanks that bring together senior government, military and intelligence officials, along with corporate executives, to discuss US imperialist strategy.

The second byline is that of national security correspondent Mark Mazzetti. In 2011, Mazzetti gained some notoriety by secretly “leaking” a piece on the Osama bin Laden assassination by New York Times columnist Maureen Dowd to the CIA, prior to its publication, along with a note reading, “this didn’t come from me… and please delete after you read. See, nothing to worry about!”
In other words, these are figures completely integrated into the state and trusted defenders of its interests. The conception, dating back to the 18th century bourgeois revolutions, that the press represents a “Fourth Estate,” functioning as a watchdog, with a critical and adversarial attitude toward the government and its officials, is a dead letter within these circles.

Among those presiding over this operation and its steady march to the right is the recently installed editor of the Times editorial page, James Bennet. His connections to the ruling establishment and the top echelons of the Democratic Party include a father who was a former head of USAID, a front for the CIA, and a brother who is the senior senator from Colorado.

Under the direction of such figures, the Times has become the premier conduit for US state disinformation and propaganda, and a key ideological instrument in the preparations for world war

9--U.S. Department of State spokesman Mark Toner said Lavrov and U.S. Secretary of State John Kerry will hold a bilateral meeting this week on the sidelines of the general debate of the United Nations General Assembly








Monday, September 19, 2016

Today's links

1--Foreigners turn away from Treasurys just when needed most: Analyst


The biggest buyers of U.S. Treasurys have turned fickle on U.S. debt, just when they may be needed most.
Peter Boockvar, chief market analyst at The Lindsey Group, points out that for a fourth month in a row, foreigners were net sellers of U.S. notes and bonds, dumping $13.1 billion in July for a year-to-date total of $156 billion.

That compares to net selling of $20 billion for all of 2015, but foreigners made massive purchases of about $1 trillion in total for the four years prior to that.
"This level of selling is unprecedented," he said. And it comes just as U.S. interest rates may have seen their cycle lows and bond yields look set to rise...

Now that QE could be about to slow down or even reverse, the U.S. market could become more vulnerable to this lack of foreign buying, Boockvar said.
A key factor that could turn the tide for sovereign debt yields is the Bank of Japan, which meets Tuesday and Wednesday, and may decide to stop buying longer-duration bonds, according to reports...

If the foreigners remain on the sidelines, Treasury yields could move up faster regardless of Fed policy. There is also the potential for fresh fiscal spending programs next year, when a new president is in the White House and is eager to boost economic growth. To fund those programs, the U.S. would need to issue more debt which could also send yields higher.
"Bottom line, a major crutch for the U.S. Treasury market over the past decade of foreign central bank reserve accumulation has gone away for now," Boockvar said. China is an outright seller of Treasurys, because it is seeing capital outflows and its economy is slowing.
"Foreign flows were a big part of Treasury bond buying. Take that away and central banks take away the stimulus that was affecting long-term interest rates. Deficits are expected to head higher. This is a process that takes time to see these things play out," he said

2--Fun With Fake Statistics: The 5% "Increase" In Median Household Income Is Pure Illusion

3--How a ‘twist’ by the Bank of Japan could upstage the Fed

There are several reasons why McCarthy and other central bank watchers are focused on the Bank of Japan.
The BOJ remains the most aggressive major central bank when it comes to quantitative easing—its program of bond and other asset purchases as well as negative interest rates that are designed to reflate Japan’s stubbornly moribund economy.
But there’s an increasing sense that aggressive QE by the Bank of Japan and other major central banks, including the European Central Bank, are producing, at best, diminishing returns. ...

Negative rates have failed to weaken the Japanese yen USDJPY, -0.07% EURJPY, -0.07% as might be expected. A weaker currency, which makes Japanese exports more competitive on the global market, is seen as an important pathway for transmitting monetary stimulus to the economy. In the year to date, the yen is up nearly 18% versus the dollar and 15% versus the euro....

Speculation has mounted that the Bank of Japan could undertake an “inverse twist,” shifting its bond purchases away from the longer end of the yield curve. That would be a mirror image of a Federal Reserve maneuver dubbed “Operation Twist” that the central bank used in 1961 and 2011 to flatten the yield curve by buying long-term debt and selling short term debt. Bond yields move inversely to prices....

The BoJ is potentially the more important market-moving event despite a history of under-delivering on expectations,” wrote McCarthy at Jefferies. “Were the BOJ to break with history and deliver on backing away from QE to foster a steeper curve, the bear steepener will resume in the Treasury market.”

4---THE DEATH OF THE BAKKEN FIELD HAS BEGUN: Means Big Trouble For The U.S.

5--China facing full-blown banking crisis, world's top financial watchdog warns

6--Syria declares end of ceasefire, US seeks clarification from Russia

"It was assumed that the ceasefire will present a real chance to end the bloodshed, but terrorist groups did not adhere to any of the points of the agreement on a ceasefire, the number of violations on their part has exceeded 300," reads the statement published by SANA news.
According to the statement, the Syrian Army has "shown the highest level of endurance in confronting the abuses by terrorist groups

7--Rift Appears Between US DoS and Pentagon Over Syrian Deal With Russia

The agreement that Secretary of State John Kerry announced with Russia to reduce the killing in Syria has widened an increasingly public divide between Mr. Kerry and Defense Secretary Ashton B. Carter, who has deep reservations about the plan for American and Russian forces to jointly target terrorist groups," The New York Times reported on September 13....

In his interview on the John Batchelor Show Stephen F. Cohen, professor emeritus of Russian studies at New York University and Princeton University, highlighted that that a covert struggle is going on between the "party of war," represented by Ashton Carter and the Hillary Clinton camp, and the "party of peace" led by John Kerry and his followers.

Commenting on the July attempts by Kerry to strike a deal with Moscow on Syria, Cohen suggested that "the party of war" and most notably Carter, could have thrown a wrench in the US-Russian negotiations.


(The Pentagon's fingerprints are everywhere) The U.S. is trying to distribute the blame for its air support of ISIS against the Syrian Arab Army in Deir Ezzor.
The facts, not put into doubt by any U.S. statement, via the Russian military report after Saturday's incident:
"Today at 17:00-17:50 Moscow time, international anti-Daesh coalition (two F-16 and two A-10 jets) carried out four strikes on Syrian government forces' units encirled by Daesh near Deir ez-Zor airport. The coalition's aircraft entered Syrian airspace from the side of the Iraqi border," Maj. Gen. Igor Konashenkov said.
...
As a result of the attack, 62 Syrian soldiers were killed and some 100 others were injured, according to information received from the Syrian command in Deir ez-Zor, he said.

9--62 dead, 100 wounded as US bombs Syrian army near Deir ez-Zor

Everything suggests that the attack, coming in the initial days of a US-Russian ceasefire in Syria openly criticized last week by the US army brass, was deliberately committed by forces inside the US government hostile to the ceasefire....

An anonymous Centcom official told the New York Times that US surveillance aircraft tracked the Syrian army units “for several days” before US fighters attacked them. “The attack went on for about 20 minutes, with the planes destroying the vehicles and gunning down dozens of people in the open desert, the official said. Shortly after this, an urgent call came into the American military command center in Qatar… The call was from a Russian official who said that the American planes were bombing Syrian troops and that the strike should be immediately called off.”

Nevertheless, the US jets continued to bomb the Syrian base for several minutes before ending the attack, according to the Centcom official’s account.

The attack at Deir ez-Zor shows that Washington and its allies are not seeking a cease-fire and de-escalation, let alone peace. They are pursuing the same strategy adopted by the NATO powers in Syria ever since 2011: pursuing regime change by backing Islamist militias like IS or the Al Qaeda-linked Al Nusra Front against Syrian President Bashar al-Assad’s regime. The latest attack has shown that, even after IS mounted repeated terror attacks in Europe and the United States, a definite collaboration still exists between US and IS forces to escalate the war. ...

After the emergency meeting of the UN Security Council called by Moscow, Russian Ambassador to the UN Vitaly Churkin charged that the US attack was a deliberate attempt to derail the joint US-Russian-brokered ceasefire, pointing to the “highly suspicious” timing of the attack.

“It was quite significant and not accidental that it happened just two days before the Russian-American arrangements were supposed to come into full force,” he said. “The beginning of work of the Joint Implementation Group was supposed to be September 19. So if the US wanted to conduct an effective strike on Al Nusra or ISIS, in Deir ez-Zor or anywhere else, they could wait two more days and coordinate with our military and be sure that they are striking the right people… Instead they chose to conduct this reckless operation.”

“One has to conclude that the airstrike has been conducted in order to derail the operation of the Joint Implementation Group and actually prevent it from being set in motion,” Churkin added.



Saturday, September 17, 2016

Today's links

Michael Hudson:  "Quantitative easing and the refusal of central banks to fund governments is a new kind of class war. It’s not the old kind of class war, which was between employers and their workforce over what wages will be. It’s by the financial sector trying to take over the economy, and especially to take over the public sector, to take over the public domain, to take over public utilities and whatever assets a government has. If governments cannot borrow from central banks, they have to begin selling off property."


Quote Hurriyet: "Russia has not openly criticized the Turkish offensive but it has indirectly urged Turkey not to go further south toward Aleppo, where Syrian regime and opposition forces have long been fighting. In addition, Russia also questions how long the Turkish army will stay in Syria and whether its presence will create a de facto safe zone." Hands off Aleppo



1--Why everyone needs to pay attention to the bond market


The Bank of Japan will no longer buy long-dated securities in its QE program.

"I think there's a rethinking going on about the benefits and costs of bringing long-term rates as low as they did," said Robert Sinche, chief global strategist at Amherst Pierpont Securities. Some of the concerns have been that central banks crowded out other buyers of long-term debt, and that has particularly hurt pensions, insurance companies and other financial institutions, who need to hold long-dated securities. ...


"In many respects, the European Central Bank and the Bank of Japan have a greater influence over our market than the Fed does. You're seeing somewhat of a pause in European Central Bank and Bank of Japan policy and that's impacting the global bond market," said Jack Ablin, CIO of BMO Private Bank. "If you get any kind of pullback. ... The European Central Bank program ends in March 2017. If there's any indication that's not going to be extended, that will impact the stock market."


(QE forever?) This is not the beginning of a taper tantrum yet, because they're still buying bonds, but if they were ever going to stop buying bonds it's going to reprice


2--Harvard Crushes The "Obama Recovery" Farce With 9 Simple Charts (excellent)


Harvard University points out that, despite claims of an "Obama Recovery," in fact, the U.S. economy has continued to deteriorate in the aftermath of the "great recession."  Among other things, Harvard attributes the economic deterioration to a "lack of economic strategy, especially at the federal level" and a "political system was once the envy of many nations" but has now "become our greatest liability."...


America’s economic performance peaked in the late 1990s, and erosion in crucial economic indicators such as the rate of economic growth, productivity growth, job growth, and investment began well before the Great Recession.

 

Workforce participation, the proportion of Americans in the productive workforce, peaked in 1997. With fewer working-age men and women in the workforce, per-capita income for the U.S. is reduced.

 

Median real household income has declined since 1999, with incomes stagnating across virtually all income levels. Despite a welcome jump in 2015, median household income remains below the peak attained in 1999, 17 years ago. Moreover, stagnating income and limited job prospects have disproportionately affected lower-income and lower-skilled Americans, leading inequality to rise....


Meanwhile, Harvard points out that "pessimism about the trajectory of U.S. competitiveness deepened in 2016" for the first time in 5 years. 

Pessimism about the trajectory of U.S. competitiveness deepened in 2016, for the first time since we started surveying alumni in 2011. Fifty percent of the business leaders surveyed expect U.S. competitiveness to decline in the coming three years, while 30% foresee improvement and 20% no change....


First, the labor force participation rate has continued to decline after the "great recession" and currently stands at the lowest level since 1982 


3--Foreign Central Banks Sell A Record $343 Billion In US Treasuries In The Last Year (Uh, oh)


4--Down for the count: U.S. Economy Grew Less-Than-Forecast 1.2% in Second Quarter


5--Corporate debt keeps piling up


  1. The 1% most cash-rich of all US companies control over 50% of all US corporate cash.
  2. US corporate debt has risen by $2.8 trillion over the last five years, while corporate cash has only risen by $600 billion.
  3. If you back out the top 1% referre~ to in (1) above, the cash holdings of the remaining 99% fell 6% in 2015 to stand at just $900 billion by the end of December vs. $6.6 trillion of debt.

Based on those numbers, I think it is fair to say that, with the exception of a few extremely cash-rich companies, corporate America is increasingly indebted and not at all as cash-rich as widely perceived. 

(Credit crunch approaching?)

6--From the horses mouth: Fed governor says QE doesn't work


There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed—inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation," Williamson wrote.

"For example, in spite of massive central bank asset purchases in the U.S., the Fed is currently falling short of its 2 percent inflation target," he added. "Further, Switzerland and Japan, which have balance sheets that are much larger than that of the U.S., relative to GDP, have been experiencing very low inflation or deflation

In the third stage of QE, the Fed sought to establish specific targets for when it would raise rates, such as 6.5 percent unemployment rate and a 2.5 percent inflation target. However, as unemployment fell and inflation lagged, the Fed began moving the goalposts, to the point where the headline unemployment rate is now 5.3 percent and the central bank has yet to move on interest rates.
http://www.cnbc.com/2015/08/18/st-louis-fed-official-no-evidence-qe-boosted-economy.html

7--QE increases stock prices but not credit expansion


In fact such a pattern is consistent with the so-called portfolio rebalancing channel of QE.  The key to this channel is the assumption that the OFC will not want to hold banks deposits because of their low yield, but instead will want to “rebalance” their portfolio by using the deposit to purchase higher yielding assets such as equities or corporate bonds.  The repetition of this process, and the associated movement of deposits and reserves through the banking system, boosts asset prices.  But the churn in deposits that it creates may mitigate any possible bank lending channel.


In this blog post we find no evidence to suggest that QE boosted bank lending in the UK through a bank lending channel, possibly because the high churn in deposits meant they were not viewed as a stable funding source by banks.  In the process, we dispel the myth that money created by QE lay idly on banks’ balance sheets.  Instead deposits and reserves moved more rapidly around the banking system, consistent with the portfolio rebalancing channel of QE...
https://bankunderground.co.uk/2015/07/17/did-quantitative-easing-boost-bank-lending/

8--Michael Hudson on QE


The Fed was pretty open in what quantitative easing is supposed to do since 2008. It’s supposed to lower the interest rates, which raises bond prices and inflates the stock market. Since 2008 they’ve had the largest monetary inflation history – $4 trillion of quantitative easing by the Fed. But it’s gone via the banks into the stock and bond market.

What has this done for the economy as a whole? For starters, it’s obviously helped stock and bond holders get richer. And who are they? They’re the 1 percent and the 10 percent.

People are wringing their hands and saying, why isn’t the economy getting richer? Why is it that since 2008, economic inequality and the distribution of wealth have worsened instead of gotten closer together? Well, it’s largely because of quantitative easing. It’s because quantitative easing has increased the value of the stocks and the bonds that are held mainly by the 1 percent or the 10 percent hold. This hasn’t helped the economy because the Fed is really concerned with its constituency, which are the banks...


Draghi was vice chairman of Goldman Sachs during 2002 to 2005. His view is that of Wall Street. It’s not a vantage point helping labor or helping economies grow. So it’s not surprising that the trillion euros of new money that the eurozone’s central bank is creating hasn’t gone to help Greece, for instance, survive. It hasn’t gone to help Greece, Spain, Italy, or Portugal get out of depression by fueling government spending. It’s simply been given away to the banks to buy bonds and stocks, including buying American stocks and bonds.
Behind this policy is the trickle-down theory that if you can make the financial sector richer, if you can make the one percent and the 10 percent richer, it’s all going to trickle down...

quantitative easing and the refusal of central banks to fund governments (except to pay bondholders and bail out commercial banks) is a new kind of class war. It’s not the old kind of class war, which was between employers and their workforce over what wages will be. It’s by the financial sector trying to take over the economy, and especially to take over the public sector, to take over the public domain, to take over public utilities and whatever assets a government has. If governments cannot borrow from central banks, they have to begin selling off property


9--Andrew Huszar: Confessions of a Quantitative Easer-- We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street.


I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time

10--Yellen on Helicopter Money: Fed chair says "Yes" to printing but promises to be careful


The Federal Reserve ‘might legitimately consider’ using Public Money Creation in ‘extreme circumstances’, when there is ‘very weak growth’ or ‘deflation’, Fed Chairwoman Janet Yellen said earlier this week at a press conference.
Yellen did not elaborate on what type of Public Money Creation the Fed would consider using. However, it is relatively safe to assume that it would most likely resemble some form of money-financed Helicopter Drops as advocated by Yellen’s predecessor – Ben Bernanke. In Bernanke’s proposal, the Fed would use newly created money to finance a tax-cut or direct cash transfer to households, such as a one-off citizen’s dividend.

Public Money Creation, using central bank money to directly finance spending in the real economy, has been taboo for over fifty years. In accepting that the central bank of the world’s biggest economy might have to create money to stimulate the real economy, Yellen is implicitly suggesting that central banks might need to update their toolkits.

Below is a short transcript of Chairwoman Yellen’s remarks in response to Greg Robb:
“In normal times I think it is very important that there be a separation between monetary and fiscal policy, and it is a primary reason for independence of the central bank. We’ve seen all too many examples of countries that end up with high or even hyperinflation because of those in charge of fiscal policy direct their central bank to help them finance it by printing money and maintaining price stability and low and stable inflation is very much aided by having central bank independence.

Now that said, in unusual times where the concern is with very weak growth or possibly deflation — rather rare circumstances — first of all, fiscal policy can be a very important tool. And it is natural that if it can be employed that just as monetary policy is doing a lot to try to stimulate growth that fiscal policy should play a role. And normally you would hope in an economy with those severe downside risks, monetary and fiscal policy would not be working at cross-purposes, but together.

Now whether or not in such extreme circumstances there might be a case for close coordination where the central bank playing a role in financing fiscal policy. This is something that academics are debating. And it is something that one might legitimately consider. I would see this as a very abnormal, extreme situation where — I warn you it’s an all-out attempt — and even then it’s a matter that academics are debating — but only in an unusual situation.”

11--Top 1 percent own more than half of world’s wealth


A new report issued by the Swiss bank Credit Suisse finds that global wealth inequality continues to worsen and has reached a new milestone, with the top 1 percent owning more of the world’s assets than the bottom 99 percent combined.
Of the estimated $250 trillion in global assets, the top 1 percent owned almost exactly 50 percent, while the bottom 50 percent of humanity owned collectively less than 1 percent. The richest 10 percent owned 87.7 percent of the world’s wealth, leaving 12.3 percent for the bottom 90 percent of the population.
http://www.wsws.org/en/articles/2015/10/14/weal-o14.html

12---QE is 'good for the rich' but 'bad for the poor'


13--Putin to Erdogan: Hans off Aleppo


Russia has not openly criticized the Turkish offensive but it has indirectly urged Turkey not to go further south toward Aleppo, where Syrian regime and opposition forces have long been fighting. In addition, Russia also questions how long the Turkish army will stay in Syria and whether its presence will create a de facto safe zone

14--Turkey’s Plan to Expand Its Periphery


On March 29, Prime Minister Ahmet Davutoglu caused quite a stir during a visit to Jordan where he stated, “Turkey’s security zone starts from Latakia and passes through Aleppo, Mosul and Sulaimani (Sulaymaniya).” This confirmed that Turkey intends to expand its regional geopolitical and geo-economic projected into northern Syria.

15--Syrian Buffer Zone – Turkey-Qatar Pipelin, Christina Lin


Abstract Erdogan’s demand for a US-Turkey buffer zone in Syria is likely to prevent Kurdish autonomy and not fight ISIS, and enable the building of the Turkey-Qatar natural gas pipeline proposed back in 2009.  With the proposed pipeline traveling through the Aleppo region—the same area for the buffer zone—the Turkey-Saudi-Qatar backed Army of Conquest would be able to establish a sunni salafist statelet in Syria and enable Ankara, Riyad and Doha to share in the future wealth of the pipeline
https://www.files.ethz.ch/isn/192741/367_Lin.pdf

Writing in Armed Forces Journal4, Major Rob Taylor joined numerous other pundits in observing that the Syrian civil war is actually a pipeline war over control of energy supply, with Saudi Arabia, Qatar and Turkey needing to remove Assad “so they can control Syria and run their own pipeline through Turkey.” “Saudi Arabia and Qatar, as well as al Qaeda and other groups, are maneuvering to depose Assad and capitalize on their hoped-for Sunni conquest in Damascus. By doing this, they hope to gain a share of control over the ‘new’ Syrian government, and a share in the pipeline wealth.” Even if it includes Turkey surreptitiously supporting ISIS5 against Assad. ISIS also benefits from the aggressive Turkish onslaught against PKK—the most effective boots on the ground fighting ISIS.  United by their mutual hatred of the Kurds, Turkey also sat back and watched ISIS pound the YPG in Kobani last year. If Kurds had connected along Turkey's border and formed an autonomous region, plans for the Qatar-Turkey pipeline via Saudi Arabia would be completely destroyed.  It is not surprising that Turkish officials drew a line from Aleppo to Kobani as a buffer zone and the US agreed to their demands.


16--US special forces flee “moderate” rebels in Syria; US failed "ceasefire" leads to  comedy of errors


“We’re going to slaughter you,” the so-called “moderate rebels,” shouted. “Down with America. Get out you pigs.”
An individual who appeared to be leading the demonstration shouted, “The collaborators of America are dogs and pigs. They wage a crusader war against Syria and Islam.” Another man shouted, “Christians and Americans have no place among us.” (These are our allies????)

Until recently, the YPG has served as the backbone of the Syrian Democratic Forces (SDF), the principal US proxy ground forces in the war against ISIS, and had been armed, trained and supported by US special forces “advisers.” The attempt to deploy American special operations troops with the Turkish-backed militias raised the real prospect of US soldiers confronting each other on opposite sides of the battlefield.

The US alliance with the Kurdish forces was undoubtedly a factor in the anger of the so-called FSA fighters depicted in the video. These Sunni sectarian militias, however, are not only hostile to the Kurds, but also share the essential ideology of Al Qaeda.
The confrontation, which was largely blacked out by the US media, exposes the real character of the so-called “moderate opposition” backed by Washington and its regional allies—principally Turkey, Saudi Arabia and Qatar—as well as the intractable contradictions created by the criminal and reckless policy pursued by Washington over the past five years in its systematic destruction of Syria.
The episode also provided embarrassing—from the Obama administration’s standpoint—confirmation of the charge levied by Russia that Washington is either unable or unwilling to pressure the Islamist militias that the CIA has armed and paid to abide by the terms of a ceasefire agreement reached last week between US Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov.

“Despite the fact that the ceasefire regime in Syria envisaged by the Russian-US agreement has lasted for four days now, the issue of the general ability of the ‘moderate opposition’ to observe it remains open,” Russian Defense Ministry representative Maj. Gen. Igor Konashenkov said on Friday. “All attempts by our American partners to demonstrate to the world at least some manageability of their opposition activists in Syria have now failed,” the general added.

Vladimir Savchenko, the chief of Russia’s center for reconciliation of the warring parties in Syria, reported Friday that over the previous 24 hours there had been 39 separate instances of the so-called rebels shelling government positions and civilian areas. He said that the attacks indicated that the US-backed armed opposition was “once again using the ceasefire regime to restore its combat capabilities and regroup its forces.”

Russian officials have expressed particular frustration over Washington’s failure to provide information on the exact locations and the numbers involved of the so-called “moderate rebels,” which under the ceasefire agreement are supposed to separate themselves from the Al Qaeda-linked al-Nusra Front, which recently renamed itself Jabhat Fatah al-Sham....

The reality is that the Al Qaeda forces are the dominant armed militias attacking the Syrian government of President Bashir al-Assad, and the existence of a “moderate,” much less secular, opposition is a propaganda invention of the US and its allies. The CIA-supported militias are largely integrated with the Al Nusra forces and could not survive independently of them.

...The al-Nusra forces that predominate in the area, moreover, have held public demonstrations vowing to block any UN aid in protest against the ceasefire agreement.
The Obama administration has also resisted Russian proposals that the terms of the ceasefire deal be made public and be presented to the United Nations Security Council for its endorsement.
Underlying this reticence are deep divisions within the US state itself over the agreement with Russia. Pentagon officials, including the top uniformed commanders in the Middle East, have publicly expressed reservations over the agreement, indicating that they are not committed to implementing it, despite its having been approved by the US president.

Obama met Friday with Kerry, Defense Secretary Ashton Carter, who reportedly opposed the ceasefire, and other top security officials.
Underlying the political divisions within the US government and statements by top generals bordering on insubordination are not only differences over the crisis-ridden US strategy in Syria. More fundamentally, the US military brass is focused increasingly on a direct military confrontation with Russia, the world’s number two nuclear power, and sees the ceasefire as cutting across the preparations for such a catastrophic conflict.

17--Putin: Terrorists use Syria ceasefire to try & regroup


18--Russia's Military, Diplomatic Involvement Paved Way for Syrian Ceasefire


"The United States didn't reply to any of our appeals containing information on ceasefire violations by US-controlled armed groups… This indicates that the United States does not control the situation in Syria and is not ready to take steps to force US-controlled militants to implement ceasefire," the chief of the Russian Reconciliation Center in Syria, Lt. Gen. Vladimir Savchenko warned Saturday.

"Despite numerous violations of the ceasefire regime and absence of progress in dividing moderate opposition from Jabhat al-Nusra [al-Nusra] by the American party, the Russian party is ready to prolong the ceasefire regime for an additional 72 hours," the Russian Defense Ministry's statement stressed

19--US & US-controlled forces haven't fulfilled any Syria ceasefire deal obligations - Russian Army

Thursday, September 15, 2016

Today's links

Today's quote: "Through last Thursday, the S&P 500 went 43 consecutive trading days without swinging more than 1%, and registered its lowest level of volatility since the 1960s." WSJ (The calm before the storm)


AEP: "It is striking that markets do not believe that the Fed will hit its 2pc inflation target for the next 30 years, based on the pricing of the "TIPS" breakeven curve. Michael Darda from MKM Partners says it would be "utterly absurd" for the Fed to give in to the chorus of calls for a rate rise in such circumstances."


DOD chief Ash Carter's seven Days in May?  "The present divisions are far more ominous, however, pitting active duty US military commanders against the policy of the administration, implicitly posing a challenge to the constitutional principle of civilian control of the military." Bill Van Auken WSWS



1--Consumer is now bigger worry for economy, Fed rate hike odds fall (Bad economic news, stocks go up)


A disappointing drop in retail sales raises more concern about the health of the consumer and reaffirms a widespread view that the Fed will not raise rates next week. ...


Industrial production was also reported at a greater than expected decline of 0.4 percent, versus an expected 0.2 percent. That reaffirms weakness seen in other manufacturing data. ISM manufacturing for August actually showed a contraction in manufacturing activity...


The disappointing sales report follows a weaker-than-expected August jobs report, where just 151,000 jobs were created — 30,000 less than expected. The August report on ISM nonmanufacturing activity also showed a startling slowdown in growth in the services sector.


2--Keeping an eye on FX: The Smartest Market in the World Isn’t Buying the Bounce


One of the most critical ideas you need to understand as an investor is that while the media focuses on stocks, they are the usually the last asset class to “get” major changes to the financial system.

This is simply due to liquidity and size of markets.

1.     Globally, the stock market is about $69 trillion in size, trading about $191 billion in shares per day.
2.     The bond markets are well north of $140 trillion, and trade about $700 billion in volume per day,
3.     The currency markets are unmeasured as every currency trade is ultimately a pairs trade (meaning to buy one currency you have to sell another). However, we do know that the currency markets trade $5.3 trillion in volume per day.

the currency markets trade over 26 times more volume than the global stock market every single day. As such they are the most liquid, sensitive markets in the world.So major changes in the markets first hit in the currency markets. And the key item to watch is the $USD

The US Dollar is coiling tighter and tighter into a triangle pattern. If we get a breakout to the upside, the next target is 97.
Historically, spikes to this level have resulted in a stock market meltdown soon after

3--Business Inventories, Sales Disappoint; Leave Ratio Deep In Recession

4--Retail Sales Growth Tumbles To 6 Month Lows, Stuck In Recession Territory

5--On This Day Eight Years Ago Lehman Filed For Chapter 11: There Have Been 672 Rate Cuts Since

We estimate that since the collapse of Lehman, Central Banks around the world have cut interest rates 672 times. A phenomenal statistic and that's before we even get to unconventional measures.

As a bit of fun it’s interesting to have a look at where markets are now based on last night’s close versus this time 8 years ago. Starting first and foremost with the Treasury market, 10y yields are at 1.698% this morning which compares to 8 years ago when they were at 3.389%...

At the other end of the risk spectrum, the S&P 500 at 2,126

6--US confidence in media hits fresh low: Gallup : Democrats dumber about media than Republicans

Americans' trust in the media has sunk to a new low, and a bitter presidential race may be to blame, a Gallup survey showed Wednesday.
The poll asking whether the media report the news "fully, accurately and fairly" found just 32 percent of Americans have a great deal or fair amount of trust, the lowest level in Gallup polling history and eight percentage points below last year.

Gallup began asking the question in 1972, and has polled Americans on a yearly basis since 1997.
Trust and confidence in the media hit its highest point in 1976, at 72 percent following the investigative journalism coverage of the Vietnam and the Watergate scandal, according to the research group. But confidence has been below 50 percent since 2007.

"While it is clear Americans' trust in the media has been eroding over time, the election campaign may be the reason that it has fallen so sharply this year," Gallup said in its report.

"With many Republican leaders and conservative pundits saying (Democratic presidential nominee) Hillary Clinton has received overly positive media attention, while (Republican nominee) Donald Trump has been receiving unfair or negative attention, this may be the prime reason their relatively low trust in the media has evaporated even more."...

Just 14 percent of Republicans said they trust the media, down sharply from 32 percent a year ago and the lowest level of confidence among Republicans in 20 years, according to Gallup.

Among Democrats, 51 percent expressed confidence in the media, down from 55 percent a year ago, while the number of independents trusting news organizations fell to 30 percent from 33 percent.
Trust was also low among younger adults: just 26 percent of those between the ages of 18 and 49 said they felt confidence in the media compared with 38 percent of those 50 and older.


The CBOE Volatility Index VIX, -7.33% often used as a measure of fear in the market, rose 18% on Tuesday at 17.85—its highest level since June 28 and implying that investors are starting to dial up bets that stocks could suffer further near-term swings turbulent...(important)


The growth rate of nominal GDP in the US has fallen to 2.4pc, the lowest level outside recession since the Second World War.....

It has been sliding relentlessly for almost two years, a warning signal that underlying deflationary forces may be tightening their grip on the US economy.
Given this extraordinary backdrop, the violent spike in US and global bonds yields over the last four trading days is extremely odd. It is rare for AAA-rated safe-haven debt to fall out of favour at the same time as stock markets, and few explanations on offer make sense.

We can all agree that oxygen is thinning as we enter the final phase of the economic cycle after 86 months of expansion. The MSCI world index of global equities has risen to a forward price-to-earnings ratio of 17, significantly higher than on the cusp of the Lehman crisis.
"We think that too much complacency has crept in," says Mislav Matejka, equity strategist for JP Morgan....

Yields on 10-year Treasuries - the benchmark borrowing cost for international finance - have jumped 19 basis points to 1.72pc since the middle of last week. The amount of global government debt trading at rates below zero has suddenly fallen from $10 trillion to $8.3 trillion, with parallel effects for corporate bonds.

Fed governor Lael Brainard clearly agrees. Far from capitulating to the hawks - as many expected - her speech on Monday night warned that business investment has been falling for the last three quarters, and now the housing market is softening too.

She said the real "neutral" rate of interest has fallen to zero, and that there is no margin for error. It would be very hard to extract the US economy from Japanese-style trap if the Fed ever allowed it to happen.  "This asymmetry in risk management in today's "new normal" counsels prudence in the removal of policy accommodation," she said....

Japan's Governor Haruhiko Kuroda has had his wings clipped by critics in the ruling party of Shinzo Abe, alarmed that the BoJ is swallowing up the financial system. They forced him to carry out a "comprehensive review" of his policies.  "Japan has reached an inflexion point. The BoJ is clearly cornered," said Stephen Jen from Eurizon SLJ Partners.

The bank already owns 12pc of Fast Retailing and 13pc of the technology group Advantest, and these holdings are heading for 20pc next year as a mathematical effect on current policy. Japan's market economy is being nationalised.
The BoJ will soon hold 50pc of all Japanese government bonds. It is monetising the entire budget deficit. Mr Jen says the central bank is nearing the fateful point where it will have no exit strategy if inflation ever does recover, a worry shared by officials at the International Monetary Fund....

We are entering dangerous waters. Markets are losing faith in the central bank "put", but governments are not yet willing to step into the breach with fiscal stimulus to keep the global show on the road. This is how accidents happen.

9---Take me instead: Wikileaks’ Assange asks Obama to pardon Manning

10--41% of Americans believe Clinton’s health is bad – poll

11--Russian-Iranian bank may ditch the US dollar

12--More lies from Washington:  Russia says US failing to deliver on Syria deal, wants details declassified

Russia says the US is not keeping its end of the bargain on the Syrian ceasefire and has continued its calls for Washington to make public all documents relating to the deal. The Russian military says Damascus is the only party observing the agreement.
   
“On the third day of the ceasefire only the Syrian Army is observing it. Meanwhile, the US-led ‘moderate rebels’ are intensifying the shelling of residential areas,” Russian Defense Ministry spokesman Igor Konashenkov said on Thursday.

The ministry said in a press briefing that government forces that "new conflict flashpoints are appearing" and that civilians had been shot at 45 times over the past 24 hours, without firing back.

The military added that the US failed to deliver on its promise to separate truce-observing moderates and truce-violating terrorists and is now “apparently trying to use a smoke-screen to cover up the violations of their part of the deal.”
The ministry called on the Pentagon to hand over up-to-date and detailed information about the location of the various factions in the conflict.

"Demarcating the areas belonging to Islamic State, Al Nusra Front, and moderate opposition forces is a priority," said senior Russian General Staff official Viktor Poznikhir in Moscow.
"So far, all we have received from the Pentagon is a list of units under their protection. It does not specify the locations, the number of fighters, or the field commanders of those battalions."...

“We know well how often documents get leaked to the media, and not by Russia but by our American colleagues,” Russian Foreign Ministry spokesperson Maria Zakharova said on Thursday. “Moscow suggests publishing [the documents] to avoid any erroneous interpretations, prevent an impact of such leaks on any party involved in the conflict or manipulation attempts by parties not familiar with details of the deal

13--You could spot that one a mile-off: 

"Europe's intervention in Libya, mostly by France and Britain and supported by the US, was certainly a very controversial operation. It was presented as a humanitarian necessity aimed at preventing bloodshed. Now we see that the death of Colonel Gaddafi led to the complete destabilization of Libya and the entire Sahara region," Dhuicq told Sputnik. ...

after Gaddafi was ousted, Libya descended into violence, with rival governments and the rise of hundreds of militias, including a local affiliate of Daesh.

An early 2016 NY Times article revealed that Hillary Clinton was instrumental in pushing the Obama administration to endorse the NATO bombing campaign, according to former US Secretary of Defense Robert Gates.


"As of the third day (of the truce), only the Syrian army is observing the regime of silence. At the same time, the [so-called] 'moderate opposition' led by the US is increasing the amount of attacks on residential districts," he added.
The Russian official also noted that Washington’s first and foremost task was to separate the so-called moderate opposition from terrorists.


15--US to 'Do Its Utmost' to Hinder Set-Up of Independent European Army; The urge to colonize continues

16--Pentagon openly challenges US-Russia ceasefire deal in Syria; Seven days in May?

The present divisions are far more ominous, however, pitting active duty US military commanders against the policy of the administration, implicitly posing a challenge to the constitutional principle of civilian control of the military.....


The US secretary of state “thinks” the Pentagon is prepared to abide by an agreement approved by the US president, while stressing that he is not asking the military brass to “abrogate their standards.” Kerry’s remarks express the real relations within the US state apparatus, the overriding influence of the vast military and intelligence apparatus and its ability to exercise what amounts to veto power over the country’s elected civilian officials.


If Kerry and the military are at loggerheads, it is bound up with the conflicting priorities in the prosecution of US imperialist policy on a global scale. The support of Kerry and others for the ceasefire is driven not by any humanitarian concern over bloodshed in Syria, but by their desire to use collaboration with Russia as a means of salvaging at least some of the proxy forces that they have backed, which are on the verge of a complete rout by Russian-backed government forces. They hope that they can employ a combination of diplomacy and military threats to pressure Moscow into acquiescing to some form of the regime change that Washington has pursued through its bloody intervention in Syria over the past five years....

(The pentagon refuses to agree to a deal that was made by the civilian leadership) Asked in a press teleconference if the military would abide by the terms of the agreement and share information with the Russians after the completion of the seven-day ceasefire, Lt. Gen. Jeffrey Harrigian, the commander of the US Air Forces Central Command, which is directing the bombing campaign in Iraq and Syria, responded: “I think...it would be premature to say we're going to jump right into it. And I'm not saying yes or no.” The military’s decision, he indicated, is “going to depend on what the plan ends up being.”...

“Well, the president of the United States is ready and I think the military therefore will be ready,” he said. “Nobody’s asking people to abrogate our standards, but it is important for us to keep our part of the bargain.”

The US secretary of state “thinks” the Pentagon is prepared to abide by an agreement approved by the US president, while stressing that he is not asking the military brass to “abrogate their standards.” Kerry’s remarks express the real relations within the US state apparatus, the overriding influence of the vast military and intelligence apparatus and its ability to exercise what amounts to veto power over the country’s elected civilian officials....

the decisive layers within the US military command are focused increasingly on the preparation for direct military conflict with Russia. Concrete reservations have been raised about sharing targeting information against ISIS and the Nusra Front—aside from their being the main fighters for US-backed regime change—that it could provide Russia with intelligence on US military protocols that it could used to defend itself against air strikes on or within its own borders.
Under conditions in which the US is building up its forces from Eastern Europe and the former Baltic States to the Black Sea in an increasingly aggressive encirclement of Russia, this has become a major concern.

The anti-Russian hysteria that has been generated by the US corporate media—led by the New York Times—over an alleged Kremlin hand in the hacking of the Democratic Party and allegations that Donald Trump is “dupe” of Putin is entirely bound up with these war preparations.

The emergence of divisions between the military and the Obama administration over the Syria agreement with Moscow constitute an urgent warning that the danger of far bloodier wars and even a nuclear conflagration are steadily growing.

17--The 2008 crisis and the lessons of history

Facts and figures confirm the analysis made by the World Socialist Web Site at the time that the financial crisis was not a conjunctural economic event but a breakdown in the very foundations of the global capitalist economy.
The immediate form was a financial meltdown. But as is almost invariably the case, its appearance-form was the outer expression of deeper processes, rooted in the very foundations of the capitalist economy itself....

One of the most significant features of any crisis is what emerges out of it. And here the outcome is clear. In every country the working class faces an unending assault on its living standards and social conditions to pay for the bankruptcy of the profit system.
The financial system has not been repaired, parasitism and speculation have become even more pronounced, the same criminal practices that helped spark the 2008 meltdown are continuing and the policies of the financial elites are creating the conditions for another disaster.

18--Further considerations on the household income report: Poverty and inequality in America

In 2015, the poorest 20 percent (quintile) of the US population received only 3.1 percent of total income. The richest 20 percent raked in 51.1 percent....
A similar permanence is displayed in the share of national income going to the top 5 percent, those genuinely wealthy: 21.0 percent in 1995, 22.2 percent in 2005, virtually the 22.1 percent in 2015.
Despite the propaganda distortions of Obama, the Democrats and the media, what the Census report actually documents is the social reality of American capitalism in its death agony: mass poverty, stagnant incomes, increased low-wage exploitation, and the unbridgeable gulf between a tiny minority of the rich and super-rich and the working population.

The statistical data is not fabricated, but it has been packaged in the light most favorable to the Democrats in the final two months of a hotly contested presidential election.
The 5.2 percent increase in household income from 2014 to 2015, celebrated in media headlines around the country, was the first annual increase in median household income since 2007, before the Wall Street Crash. However, median household income remained 1.6 percent below the 2007 figure, and 2.4 percent below the all-time high, reached in 1999....

median household income may rise significantly through an increase in working hours rather than an increase in hourly pay. Given that real wages have remained stagnant or risen only slightly in recent years, that appears to be what happened in 2015. Low-paid workers worked more hours, and most new jobs taken by previously unemployed workers were in the low-pay service sectors, like healthcare, restaurants and bars, nursing homes, retail outlets, etc.....

These omissions suggest that the report’s findings on declining poverty should be taken with a large grain of salt. What is happening to that section of the population too poor, too sick, too old or too desperate to be covered by the survey of households? Nearly all of these people are of low income, and the vast majority would be added to the total number of people living in poverty, bringing that figure closer to 50 million Americans.

That said, the poverty figures actually reported by the Census are themselves quite grim.
The Current Population Survey found: “During the 4-year period from 2009 to 2012, 34.5 percent of the population had at least one spell of poverty lasting 2 or more months.” The number is staggering: about 110 million people