Tuesday, August 30, 2016

Today's Links

Today's quote:  "Russia made it clear to Turkey that it will not tolerate any infringement of the agreement or any clash with the Syrian Army drawing clear redlines, and threatening that its Air Force will hit the Turkish forces and its proxies in case of any similar violation....Moscow told Damascus “Turkey is willing to cut the Kurds’ toenails, they who believed the US is carrying a magic wand and could offer them a state in Syria without any objection or reactions. The YPG have no previous experience with American forces that can abandon them when US interests with Turkey prevails, despite hundreds of Kurds being killed on the battlefield against ISIS”...." Elijah J. Magnier, Putin and Erdogan have agreed on a restricted road map in Syria: the Kurds and Nusra will be the main losers

1--Low-Volatility Stocks At Risk As Credit Cycle Ends, UBS Warns A Crash Is Coming

The age of excess liquidity and inexpensive debt is over, according to Winter, and that makes it harder for management to use credit to satiate investors' demands for corporate profits
UBS notes that "77% of stock crashes are driven by earnings announcements," and more companies are likely to disappoint the market in the future.

We are currently witnessing the end of the credit cycle. Credit spreads have been increasing, global earnings growth rates are in aggregate flat and market impact has been increasing...


In a world of heightened macro factor, systemic and economic policy risk, we should expect higher levels of equity market volatility.

2-- Why the Math Doesn’t Work for Today’s Market

Stock valuations rise and fall, but when an important factor driving market performance is mathematically unsustainable, it is worth a closer look.
That is especially true now when ultralow interest rates make it easy to rationalize stocks at almost any valuation. At minimum, depressed interest rates allow the market to stay higher for longer than under more normal circumstances.

One factor that could end this game is how much cash companies are giving back to investors. It is no secret that companies that pay healthy dividends or buy back stock, usually both, are the most popular kids in the class this year.

Aswath Damodaran, a professor at New York University’s Stern School of Business, sees this as the market’s biggest risk. Mr. Damodaran, who is considered an authority on valuation, says S&P 500 companies through the first two quarters of the year collectively returned 112% of their earnings through buybacks and dividends. That is the highest since 2008 and well above the 82% average over the past 15 years, he said in a blog post last week.

3--The Price of the Calm After the Storm   -- Policy makers have ensured that markets are calm, but distortions are rife

Central banks now own a staggering $25 trillion of financial assets, according to Bank of America Merrill Lynch. Bond yields and prices are at extraordinary levels. The Austrian government bond due 2062 is trading over 200% of face value; the 10-year U.S. Treasury hasn’t yielded 3% in more than 2½ years. Central-bank buying has squeezed corporate markets; European nonfinancial bonds yield just over 0.5%. Single-B-rated Rwanda’s U.S. dollar bonds yield just 6.3%, down from 8.2% early this year.....

Investors now have a near-Pavlovian reaction to bad news: they expect monetary policy to ride quickly to the rescue. But central bankers are increasingly talking of the limits to their powers; they cannot address structural problems. Even if central bankers succeed in restoring growth, the real test will be unwinding the policies that bought the time to get there. After more than seven years of increasingly unconventional measures, the exit is looking increasingly difficult.

4--The Federal Reserve’s Politicians---Interest groups now lobby the central bank as if it’s a legislature

(absolute economic power?) The Fed these days has more power than Congress. So thoroughly has the central bank taken over regulating finance since Dodd-Frank, so completely does it preoccupy financial markets, and so broadly has it intruded into fiscal policy and the allocation of capital that Fed officials Janet Yellen, Stanley Fischer and Bill Dudley are the most important economic decision makers in government. ...

(Why does policy only serve the few and the rich?) If the Fed is going to be a political body, why not hold a hearing for savers whose retirement plans have been upset by seven and a half years of near-zero interest rates? Or what about pension trustees who have seen their funding shortfalls soar due to low interest rates?...     

(The Fed picks the winners)  Fed policies to raise asset prices have favored affluent stock owners over middle-class savers who have bank accounts or lower-yielding investments. Handed more regulatory power by Dodd-Frank, the Fed is now a joint-venture partner with the biggest banks

(The Fed cannot reduce its giant liabilities for fear of a market crash)  A Fed that wanted to reduce its political footprint would wind down its $4.5 trillion balance sheet as its bond holdings mature. The Yellen Fed instead is reinvesting the principal from maturing bonds to maintain its sway over long-term bond rates.....

(anticipating a slump, the Fed pledges more of the same)  the Fed now considers QE bond buying to be a routine part of its “toolkit” to keep unemployment low. Come the next recession, her implication is that the Fed won’t stop merely at buying Treasurys or mortgage securities. It will follow the European Central Bank in buying a board swath of corporate bonds. This will plunge the Fed even deeper into favoring some parts of the economy over others. ...

(where are the results?)  Sooner or later the public and its representatives are going to demand that the Fed show economic benefits from its vast de facto political powers.

5--Erdogan Calls Putin as Russia Seethes at Turkey’s Syrian Incursion

6--Leaked Memos Show George Soros Plotted to Oust Putin, Destabilize Russia

7--Joe Biden's junket to Turkey: It's all about the gas

Thereafter, Joe Biden travelled to Sweden, where he appealed to EU states to cancel the construction of the second line of the Nord Stream. Sweden was the key country for Biden to convince because of its unique right to cancel the project – Sweden has access to the Baltic Sea, where the largest part of the gas pipe is located. The US Vice President claimed that Nord Stream 2 was a fundamentally bad deal. Biden also mentioned that Europe’s dependence on Russian gas destabilises Ukraine. “Europe needs to diversify the gas sources,” he said...

But why does Biden care so much about European energy contracts and gas pipes in the Old World?
The reason is that Biden has a personal interest in the Ukrainian gas transit industry. Soon after the Euro-Maidan events in 2014, his son, Hunter Biden, became a member of the board of directors of Burisma Holdings, the largest gas company in Ukraine. This corporation – whose real owners are unknown, while its formal ones are registered in Cyprus – began to trample all Ukrainian gas assets, even during Yanukovich’s reign. The new regime, however, made Burisma Holdings a monopoly in the industry.

Burisma plans to mine not only natural gas, but to also deal with shale gas. In addition to this, the company intends to build a network of sea terminals and pipelines to receive liquefied natural gas (LNG).

In Stockholm, Biden offered to deliver LNG directly from the US to Europe. Several European countries already have an opportunity to receive this type of gas; however, the terminals have quite a poor connection with the gas transportation system based on the Russian pipelines. The idea of connecting the terminals with the existing pipeline, therefore, is fairly logical, unless the idea is buried, of course.

At the present, due to the low level of oil prices, both shale and liquefied gas are not very popular in Europe. However, the prices will not be low forever. Besides this, shale gas technologies keep forging ahead, which will make the Ukrainian gas business profitable in the future, unless it is overrun by Nord Stream 2. This is why Biden called the second pipeline “a destabilising factor.”

In today’s Ukraine, not a single serious decision is made without two people – the Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, and the US Vice President, Joe Biden. The coup in Ukraine was guided by the neo-conservative forces led by Nuland – this was discovered during a journalistic investigation in 2014. Since Joe Biden was a co-sponsor of the Euro-Maidan project, he claimed a share in the Ukrainian gas business.

The “democratisation” process in Ukraine was also forced by the National Democratic Institute (NDI), of which Biden Junior is a member of the board of directors. The NDI is an affiliate of the US Democratic Party. The main aim of this institute is to “help build democracy” in different countries around the world. The chairperson of the NDI board of directors is Madeleine Albright. Whether or not Albright took part in the “Ukraine: Gas and Democracy” project, remains unknown. However, the interesting fact is that the board of directors of Burisma Holdings includes Devon Archer, who is Hunter Biden’s partner in US-based investment trust company, Rosemont Seneca Partners. Archer is also John Kerry’s friend and he runs a property fund founded by Kerry’s wife, Teresa Heinz Kerry.

Therefore, so-called “friends of the Ukrainian democracy” have been inspired not only by their political views, but also by certain business interests. It was thus not Europe that Biden was protecting from Russian gas aggression during his visit in Sweden; he was protecting his investments.

8--Turkish-led Forces & Kurdish SDF Reached Ceasefire Agreement – Reports

Seaparately, reports have appeared that the Turkish army and the SDF’s Jarablus Military Council have set up a ceasefire deal in northern Syria with the US-led coalition mediation.
According to unconfirmed reports:

  • The SDF will have to withdraw to east of Euphrates river
  • The Turkish army will be allowed 15km advance from Jarablus towards Azaz (not more)
  • Turksih-backed militants are not noted in the agreement (In other words, Turkish-backed militants will be able to cross the Sajur river and andvance towards Manbij if they have a will)

The Turkey-backed Free Syrian Army (F)SA has declarred a new operation aganist the ISIS terrorist group in the west of Jarablus.
If reports are confirmed, it will appear that the Turkish Armed Forces will not advance further to the north from Sajur river and will focus on capturing from ISIS more areas along the Turkish-Syrian border

9--Syrian War Report – August 30, 2016: US-backed ‘Rebels’ and ISIS Unite Efforts in Hama

On August 29, an ISIS-linked militant group called “Jund al Aqsa” and US-backed moderates from the so-called “Free Syrian Army” launched a joint advance on the Syrian army and the National Defense (NDF) in the northern part of Syria’s province of Hama......

(The Russians are coming)

Meanwhile, unconfirmed reports appeared in pro-government and pro-militant sources that a convoy consisting of some 120 Russian military advisers have arrived Aleppo city from Latakia. If this is confirmed, Moscow will likely use this contingent for humanitarian operation in the area.

10--Kremlin: Putin to meet Turkey's Erdoğan, UK's May, Saudi's bin Salman in China

11--Syrian Army makes huge strides in southern Aleppo

12--Turkish, Kurdish forces in Syria agree to ‘stop shooting at each other’

13--Putin and Erdogan have agreed on a restricted road map in Syria: the Kurds and Nusra will be the main losers

Ankara committed itself to hunting down “ISIS” along the Syrian border with Turkey, and to preventing the Kurds from establishing themselves along the borders. Russia has accepted a Turkish incursion into Syrian territory due to the Kurds’ declared hostility to the government in Damascus when YPG forces attacked and expelled the Syrian army from al-Hasakah city to the suburbs, with US backing, – a clear intention to initiate the partition of Syria. Russia stands against a Kurdish state ruled by the US in the new Kremlin Mediterranean base, Syria. The Kurds had been enjoying the support of Damascus for the five years of war, and believe that the rebellion was not in vain, rather part of a plan to divide Syria.

Russia understands that the US is reluctant to exert influence over its allies in the Middle East to instruct their proxies in Syria to stay away from the (ex) Nusra group (Al-Qaida in Sham, newly rebranded as Jabhat Fateh al-Sham). Turkey expressed its willingness to collaborate and instruct many rebel groups under its direct influence, to reject unification, avoid the merger proposed by Nusra, and keep its distance from the Jihadists, mainly in the northern city of Aleppo. Those groups receive their logistic, finance, military equipment, medical treatment, medicine, hospitalisation, free access to the country and intelligence information from their sponsors in the Middle East: all via Turkey...

Moreover, Turkey showed its ability to change its long declared policy toward  Damascus: Prime Minister, Binali Yildirim declared, “Syrian President Bashar al-Assad could be a partner in this transitional phase”. The tactical disagreement over Assad’s future as the head of his country remains a suspended unsolved issue that Russia considers it is the right of the Syrian people to decide.

Turkey agreed to avoid any contact or clash with the Syrian army, mainly around Aleppo, in support of the Syrian rebels and jihadists. This is leaving (ex) Nusra almost alone with minor groups around Aleppo, Ramouseh and the academies, offering a perfect target to the Russian Air Force, and the US, if willing to act in partnership, since jihadists are left alone on that front.

Turkey succeeded in benefitting from Washington’s blessing to engage its forces in Syria after five years of objection and rejection of a most wished no-fly-zone. Erdogan was carrying a sharp knife, blackmailing a US concerned that the Turkish president may fall into the arms of Russia, which would represent a threat to the NATO alliance. Erdogan was due to be pleased by the US to divert attention from the role he is unwittingly claiming that the US played and was not far from orchestrating the failed coup last July....

Russia made it clear to Turkey that it will not tolerate any infringement of the agreement or any clash with the Syrian Army drawing clear redlines, and threatening that its Air Force will hit the Turkish forces and its proxies in case of any similar violation.

Russia has advised Syria to avoid any official objection and condemnation deposited at the United Nations Security Council related to the presence of Turkish troops on its soil. Turkey is protecting its national interest, preventing the partition of Syria, a possible domestic Kurdish uprising and a Rojava state on its border, and eliminating a future permanent foothold of US forces in Syria.
Moscow told Damascus “Turkey is willing to cut the Kurds’ toenails, they who believed the US is carrying a magic wand and could offer them a state in Syria without any objection or reactions. The YPG have no previous experience with American forces that can abandon them when US interests with Turkey prevails, despite hundreds of Kurds being killed on the battlefield against ISIS”.

14--Joe Biden came, saw, but failed to conquer Turkey

15--  Guess who's coming to dinner:  Hillary's regime change meetings with George Soros?

Days in the life of Hillary Clinton   
On June 2, 2010, Hillary Clinton's calendar as secretary of state shows that she held a half-hour meeting with billionaire investor George Soros and officials from his Open Society Institute, which makes grants to various causes around the world. (The group is now known as the Open Society Foundations.)
In the room for the meeting was Obama White House special assistant Michael McFaul, who would go on to become the U.S. ambassador to Russia. Also included, according to the calendar entry, were two officials from the Open Society Institute: Michael Hall, who is now the group's regional director for the Caucasus and Central Asia, and Jeff Goldstein, who is now the group's senior policy advisor for Eurasia, according to the organization's website.

16-- Happy Sounds at Hillary State Department; CHA-CHING

Billionaires dropped by a lot

Particularly billionaire Mort Zuckerman, who owns the New York Daily News and shows up in Clinton's calendar several times, including the 35 minutes he spent with Clinton in her office on Thursday, Oct. 7, 2010. On Monday, Oct. 26, 2009, Bill and Melinda Gates came by for a 50-minute session. Billionaire and former Citigroup chairman Sanford Weill got a half hour appointment on June 2, 2010, along with his chief of staff, Mike Conway.
Warren and Susie Buffett dropped by on Tuesday Oct. 5, 2010, for lunch in the secretary's outer office for an hour beginning at 12:55 p.m. Unlike many of Clinton's other meetings, this one includes a listing for the topic of conversation: "Buffett Foundation...

Behind the scenes at the NYSE

The schedule gives a detailed account of Clinton's visit to the New York Stock Exchange on Sept. 21, 2009 — a time when Wall Street was still reeling from the 2008 financial crisis. Clinton's turn ringing the opening bell that day was visible to the media and the world, but her other meetings were not. The calendar shows Clinton met at 8:20 a.m. with Jeffrey Eubank, the NYSE's senior vice president of global affairs and government relations, a former Bush administration official whose Wall Street job included managing relationships with governments and heads of state around the world.
Clinton also met with then-NYSE CEO Duncan Niederauer in his office for a five minute "courtesy call" and held an off-the-record breakfast discussion with CEOs including Stephen Schwarzman of the Blackstone Group, James Tisch of Loews Corp., Indra Nooyi of PepsiCo and Howard Schultz of Starbucks.

17 --How big alcohol is about to get rich on weed

18 --It Takes a Ruling-Class Village to Staff the White House

"The people who own the country, ought to govern it." John Jay

According to William K. Black, who has held top federal regulatory positions, what we are seeing in this group “is complete domination by what used to be the Democratic Leadership Council. … Very, very right-wing foreign policy. What they call a muscular foreign policy … a euphemism for invading places. Very, very tough on crime … [and pro-] mass incarceration. And the economic side, all in favour of austerity. All in favour of privatization. Tried to do a deal with Newt Gingrich to privatize Social Security. And of course, were all in favour of things like NAFTA.”
It’s no small matter. “The transition team,” Black notes, “is the one that is both deciding what are we actually going to make our policy priorities in the magic—again a cliché—first 100 days? But more than that, who will the top people be?”....

The Policy Planning Group Filter
The revolving door between top corporate/financial and government positions and the promise of heightened remuneration in the “private” sector (after one does Big Business’ bidding while “serving” in the “public” one) is a very big and often underestimated part of this overall system of class rule. Also unduly neglected is the role that elite neoliberal and corporate-financial-networked policy planning bodies play in staffing, socializing, solidifying and doctrinally schooling top U.S. executive branch personnel. The key institutions here are the CFR, The Trilateral Commission, the Bilderberg Group, the Rand Corp., The Aspen Institute, the Atlantic Council, the Brookings Institution, the Center for Strategic and International Studies, the Peterson Institute for International Economics, the Hoover Institution, the Carnegie Corporation of New York/Carnegie Endowment for International Peace, The Rockefeller Foundation, the Foreign Policy Association, the Committee for Economic Development and The Bretton Woods Committee.

These core policy organizations (with the CFR in the lead) share three basic properties: a strong commitment to the domestic and global “Open Door” expansion (non-territorial but not without considerable reliance on the U.S. and U.S.-sponsored military force) of American transnational “free market” capitalism (corporate, state and financial); principal funding by transnationally oriented Fortune 500 corporations and financial institutions; the ubiquitous presence of their top personnel both in the elite “private” (corporate, financial and legal) sector and in White House GSM positions.
Of Obama’s 30 GSMs, van Apeldoorn and de Graaff find, fully 25 (83 percent) held prior top affiliations with one or more of these planning groups, totaling 162 such affiliations. The elite policy groups’ presence was slightly higher in the Clinton White House (26/209) and similar in the Bush presidency (22/211). ....

“Lady Klynton Kissinger Sachs”

Will things be any different in the likely Clinton 45 White House? One would have to be very naive to think so. It’s not for nothing that Hillary Clinton is known on Wall Street as “Lady Klynton Kissinger Sachs.” The consistently war-hawkish Clinton is the quintessential power-elite and ruling-class insider.  She was minted and socialized at such ruling-class institutions as Oxford, Yale Law, Rose Law, the Wal-Mart board of directors, the Democratic Leadership Council (dedicated to pushing the Democratic Party further to the corporate-friendly right during the 1980s and 1990s), the White House (eight years as a highly policy-empowered first lady), the globalist Clinton Foundation, the CFR and the U.S. State Department. She and her husband “operate in … a world awash in money and connections … [a] very privileged place,” as The New York Times’ Carolyn Ryan recently said. She is the candidate of campaign finance and of (exorbitant) speaking-fee choice for Goldman Sachs, Citigroup, the CFR, the Chicago Mercantile Exchange, Robert Rubin and the rest of the nation’s transnationally oriented corporate and financial aristocracy—including a remarkable number of pinstripe Republicans who do not trust the “unhinged” Trump. As New York Times columnist Maureen Dowd cleverly reflects:
All these woebegone Republicans whining that they can’t rally behind their flawed candidate is crazy. The G.O.P. angst, the gnashing and wailing and searching for last-minute substitutes and exit strategies, is getting old. They already have a 1-percenter who will be totally fine in the Oval Office, someone they can trust to help Wall Street, boost the U.S. Chamber of Commerce, cuddle with hedge funds, secure the trade deals beloved by corporate America, seek guidance from Henry Kissinger and hawk it up. … The Republicans have their candidate: It’s Hillary.
Personnel Is Policy
But it’s not just about Hillary Clinton. It takes a ruling-class village to make policy for the few in the name of the many. Clinton’s vice presidential pick, Tim Kaine, is a financial-sector darling who backed fast-tracking the arch-global corporatist, Wall Street-backed Trans-Pacific Partnership (TPP). Her campaign manager, John Podesta, is a legendary ruling-class inside-outsider. A former chief of staff for President Bill Clinton, Podesta has headed a major Washington, D.C., lobbying firm whose clients have included BP, Citigroup, Wal-Mart and Lockheed Martin. He founded the Center for American Progress (CAP), which has become a virtual policy arm of the neoliberal Obama White House and—as The New York Times reported after Obama appointed him as a special adviser in December of 2013—“taken millions of dollars in corporate donations and has its own team of lobbyists who have pushed an agenda that sometimes echoes the interests of those corporate supporters.” The CAP poses as a “progressive,” even “left-leaning” alternative to right-wing think tanks like the Heritage Foundation, but it really embodies a kind of reconstructed “Third Way neoliberalism” that is deeply captive to global corporate and financial interests. Podesta is also president of the Clinton-Kaine Transition Project.

20--Syria: Their War, Not Ours


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