* * *
Perhaps the biggest news overnight, aside from Ireland adopting the most restrictive lockdown across Europe after announcing plans to return to its highest level of COVID-19 alert, is that the number of new cases diagnosed in India is finally starting to slow, even as PM Narendra Modi continues to reopen the country.
India logged the fewest new cases in 3 months, reporting just 46,790 cases in the last 24 hours. The numbers brought its countrywide total to 7,597,063. India is now within 750,000 cases of the US.
Circling back to Ireland, the government has ratcheted up the coronavirus alert level to 5, the highest level on a scale of five introduced in September. People are being asked to stay at home, while those who can work from home must do so. There will be a penalty for anyone traveling beyond 3 miles of their home, unless they're doing so for essential work, or an essential purpose.
People will be able to meet up outdoors with one other household away from their home for the likes of exercise, within the 3-mile limit. No social or family gatherings are allowed in homes or gardens, but visits on compassionate grounds and for the purposes of caring for a relative can continue.
Finally, in the US, the New York Post reported overnight that a Kansas nursing home saw every single one of its 62 residents test positive, while 10 died.
On the vaccine front, Moderna CEO Stephane Bancel said Tuesday that the company expects to file for emergency use approval with the FDA by the end of the year, a comment that sent the company's stock up by double-digits in premarket trade. Moderna has officially stepped up to become one of the front runners as mRNA vector vaccines overtake adenovirus vector vaccines in the race to be the first to receive FDA EUA.
A total of 72,968 people have been infected with the coronavirus in Kansas, while 872 deaths have been attributed to the illness.
Global cases hit 40,327,407 after Johns Hopkins counted 439,890 new cases in a single day, the second daily record in four days.
Meanwhile the worldwide death toll hit 1,117,252 after reporting another 4,981 deaths. Even has hospitalizations have risen around the world, COVID-19 deaths - at least on a global scale - have shown little adherence in to trend in cases and deaths.
Here's some more COVID-19-related news from overnight and Tuesday morning:
Pfizer and BioNTech SE announce the Japan start of combined Phase I and Phase II clinical trials of their mRNA vaccine candidate. The study will recruit 160 people 20 to 85 years old. The pharmaceuticals earlier agreed to supply Japan with 120 million doses of their now experimental coronavirus vaccine in the first half of 2021 (Source: Nikkei).
A Kuwaiti-flagged livestock ship docked off Australia's west coast is evacuated after at least half the 52 crew test positive for COVID-19, Reuters reports. The cluster is the fourth detected aboard a ship arriving at a Western Australia port over the past month, in a state that has otherwise been free of the virus for weeks (Source: Nikkei).
South Korea confirms 58 cases, marking the fifth straight day of fewer than 100 cases. Of the new infections, 41 were locally transmitted (Source: Nikkei).
Officials in Qingdao, where 12 cases have surfaced this month, say they have found sufficient evidence for the first time showing the virus can survive for long periods on the outer packaging of frozen food, then be transmitted. To prevent further infections, Qingdao will test every package of frozen goods, and handlers will be required to stay in designated areas and be tested every three to five days (Source: Nikkei).
Singapore Airlines will next month resume non-stop flights between the city state and New York to cater to cargo traffic as well as a growing number of transfer passengers travelling via the island (Source: FT).
Greater Manchester is seeking an extra £90m in financial aid in return for tighter coronavirus restrictions as a noon deadline for talks with the UK government approaches (Source: FT).
Argentina has become the fifth country to record more than 1m coronavirus infections after it added almost 13,000 cases on Monday. The South American country reported 12,982 new cases on Monday, taking its overall tally to 1,002,622. The US leads the global count of coronavirus cases with more than 8m, followed by India with 7.6m, Brazil with 5.3m and Russia’s 1.4m, according to data from Johns Hopkins University. Argentina also reported 451 new deaths, taking Covid-related fatalities to 26,716 or the ninth-highest in the world (Source: FT).
One of the most bizarre decouplings in capital markets following the March crash, was the directional divergence between real and breakeven rates, something we addressed two months ago in "What's Behind The Bizzare Break Between Breakevens And Crashing Real Rates." However, in recent weeks, this unprecedented divergence appears to have finally ended, because since the start of August, US 10y rates have increased from 51bp to 74bp on the back of inflation expectations moving higher alongside real yields (+10bp).
As Goldman's Alessio Rizzi puts it mildly, "a positive correlation between 10y breakevens and real yields has not been a feature of 2020", which after hitting 7 months before finally inflecting, has been one the longest periods with breakevens and real rates moving in opposite directions.
The previous longest such period of divergence was exiting GFC, when similarly to now, the Fed committed to keep financial conditions easy and anchored nominal rates while the economy was improving from depressed levels. In a risk-on environment - such as the one since March - this usually pushes inflation expectations higher, real rates lower and nominal yields remain roughly unchanged.
In fact, as we have discussed previously, lower real yields provided a strong support for valuations while growth expectations were improving at the same time. And, as Goldman echoes today, "longer-duration equities like Tech and Gold have been the key beneficiaries in this regime while the dollar usually suffers." For this reason, real rates correlation with the S&P 500 remained firmly in negative territory over the last 3 months.
Of course, the flipside to this is ominous: if lower real yields were supportive for asset prices, then rising real yields will likely lead to a decline in risk assets. Sure enough, as Goldman's Rizzi observes, "given the negative correlation between real rates and equity, many investors are wondering if a potential rise in interest rates driven by real rates could weigh on risky assets."
In response to such concerns, Goldman suggests that it is the speed of the move that will matter most. In the next chart, the Goldman strategist plotted S&P 500 monthly returns based on US rates moves since 1998, when the negative equity/bond correlation regime started. The chart shows that higher nominal yields have usually reflected better growth and positive equity performance. And while a 2-sigma increase in nominal yields (which would equate to +41 bp currently) has on average led to relatively flat S&P 500 returns and positive equity/bond correlation, Rizzi warns that "investors should be more focused on an equivalent increase in real rates." In fact, a swift move higher in real rates (roughly +31 bp now) usually weighs the most on equities.
Looking ahead, Goldman notes that positive news on the vaccine together with a Democratic sweep in the US election could further interrupt the negative correlation between breakeven and real rates, as both could move higher together further. In this scenario, Goldman sees the potential for "a large rotation into more reflationary and risk-on trades and equities might be able to digest higher rates if supported by positive growth sentiment." As such, even a jump in rates could end up being friendly environment for risky asset... as long as real rates don’t move too fast.
Which could be problematic, as the gamma positioning is already betting on a sharp - and potentially quite rapid - move higher. Why? Because as the last chart shows, the positive option skew on US bonds suggests markets are already discounting the potential for US rates to move higher.
The question is how fast will this move be once it begins, because if it leads to another sharp correction in risk assets, then the reflationary move itself will be unwound, taking us back to square one.
"Yeah, sure they are environmentally friendly.. says so on the plastic wrapper.”
The glorious march forward of the correct thinking European superstate takes another great leap forward this morning with the launch of the first socially targeted bonds under the most intelligently designed SURE programme. All credit to the diligent double-plus-good Eurocrats of Brussels for their foresight in launching this epoch defining issue!
The EU will issue its first 10 and 20-year SURE bonds this morning. Officially the €100 bln programme is to finance “the social needs of EU Member States following the coronavirus pandemic and its consequences.” The SURE Programme is part of a larger €750 bln Recovery bond binge cooked up between the EU and ECB to solve Europe’s growth issues in the wake of the virus. The SURE Programme will run till the Recovery Bonds kick in next year with over 200 bln issuance expected.
[ZH: As Bloomberg reports, social bonds are defined by funding for projects that help society, such as improving social welfare or serving disadvantaged populations. They are the “perfect financial response” to the shock that welfare systems experienced from the pandemic, according to a report by Maia Godemer, a research analyst for green and sustainable finance at BNEF.]
I shall avoid obvious cynicism… but… it’s difficult to keep a straight face at the way these bonds are being marketed as "social bonds" by the EU and its bankers to smokescreen what they really achieve.
Today’s bonds will be priced with a negative yield, but investors will lap them up because they are slightly less of a negative yield than Bunds, and they expect the EU bonds will tighten in price as the ECB drives European rate ever lower into the sub-zero zone to create the recovery and inflation that has thus far eluded them. (A policy that has achieved nothing the last 5 years.. but, hey, keep trying..)
“I was expecting a three-digit book but not quite this high,” said Jan von Gerich, chief strategist at Nordea Bank Abp.
“These bonds were clearly eagerly awaited, and these issues only strengthen the picture that there is a huge demand for bonds at the moment.”
More to the point, this afternoon investors will be able to sell the bonds in the secondary market back to the ECB, probably at a small profit because of oversubscription, via its QE infinity programmes. The 5 investment banks leading the sale – which curiously includes Barclays, a bank domiciled on Airstrip1the UK – will be delighted to be sharing about €20 mm in fees.
Meanwhile.. back in Frankfurt (the not-quite-the-centre of European finance the Germans imagine it to be) lone EU critic, Bundesbanker Jens Weidemann, is desperately saying any EU joint-borrowing should be one-off, and should not become a common budgetary tool. Sadly…. No one is listening Jens. He is a lone voice in the Frankfurt wilderness.. No one is listening.
Too late. Common issuance looks inevitable. Today’s bonds establish a clear pathway towards a single European Bond Issuance vehicle, allowing AAA/Aaa/AAA rated Europe to dominate global issuance and for Brussels to set the funding agenda.
ECB Head Christine Lagarde wants joint issuance to be part of her armoury. While Jens points out that much “closer political integration would be needed and for the EU to develop into a democratic state” before common bond issuance is even contemplated, the reality is its happened. This bond redefines and strengthens the role of Brussels’ unelected Eurocrats in terms of financial power. This bond completes the state-capture of European national financing by Brussels. There will still be Bunds, Bonos, BTPs and OATs… for a while… for a while..
Wiedemann and the Germans had this curious notion that when countries joined the Eurozone they meet the strict membership rules of the Euro by exercising sound fiscal responsibility, reforming their economies, and ensuring solid accountable finances. Silly Germans.
What this programme achieves is the centralisation of European finance despite the absence of any real democratic process or agreement on a European polity. Instead the ECB and Brussels will decide. They have captured the system. European states will no longer go to the market to raise Euros to bulwark unemployment or stem job losses – nope, now they apply to Brussel for handouts. No longer will they need to finance much needed projects via markets in their own name – Brussels now runs their budgets.
The new EU funding programmes fit perfectly with the rules of Euro membership – independent nations can’t run up large state deficits under the terms of the Euro, but client states beholden to Brussels just need to ask nicely.
Of course, you won’t find Brussels' capture of national finances clearly stated on the bond prospectus or sales pitch this morning. Nope. Instead we have a very complex and convoluted smokescreen as the EU focuses the attention of the market and the market press on these bonds being sold to the world as a Social Bond Programme.
It’s deflection and distraction. I read through the issue pitch and there are lots of reassuring objective phrases like “spirit of solidarity”, “preserving productive capacity” and “mitigating direct societal and economic impact”, which I am sure are very laudable goals, but of anyone can explain this one, I am all ears:
“The SURE instrument can be seen as an emergency operationalisation of the European Unemployment Reinsurance Scheme announced by the President of the European Commission in her Political Guidelines.”
Thank you Chairman Leyen for your political wisdom….
It goes on to assure potential investors the bonds meet ICMA Social Bond Principles – even appointing an external party to opine they are aligned with ICMA! The pitch conclusively says these are suitable as ESG investments. I know what you are thinking… Can these bonds get any better?
To ensure investors are satisfied the bond proceeds are being used for the designated social purposes there will be regular reports (imposed by article 13(2) of the SURE regulation relating to the implementation of the planned public expenditure..) I can’t wait to read these reports – it will be fascinating to hear how the EU traces, say, the €504 mm it’s just given to Bulgaria under the programme. I wonder if they will do it as effectively as they’ve traced the billions skimmed off grants and aid programmes by Italian gangsters under previous aid programmes?
And just in case you are confused by the jargon the EU helpfully explains:
“It is EU’s ambition to align future EU bonds with the forthcoming EU Taxonomy for environmentally sustainable activities. To avoid any confusion, the bonds under the present Framework will be named “EU SURE Social Bonds”: they are not prefiguring the social part of the future EU Taxonomy nor a possible action of the Commission in the area of the EU Green/Social Bond Standard.”
I simply can’t wait… for the EU to institute their next programme: Governance bonds! These will lend EU cash directly to European companies that do exactly what Brussels tells them to do.. (US readers: dripping Sarcasm alert.)
Now in case you are wondering – no, these bonds are not joint and severally guaranteed by European Community member states.. but they are guaranteed by €25 mm voluntarily contributed by member states.. Don’t ask how that works, but the EU is AAA rated.. so what’s the problem…? and the ECB will buy them.
Actually.. if you have any questions on the bond… they can all easily be answered: The ECB will buy them. What’s to worry? Buy the bonds. Pay the EU 26 basis points per annum for the privilege of owning them and what can possibly go wrong when the ECB will buy them.
I give up…
Meanwhile… back in the UK – I did a video y’day explaining why Rishi Sunak would be mad to listen to Tory MPs telling him to balance the budget. Last thing the UK needs is austerity and tax hikes – and since the UK controls its own money we can make as much money as we like… Please nip on to the Shard Website and give it a like…
Hours before Politico reported the existence of a letter signed by '50 former senior intelligence officials' who say the Hunter Biden laptop scandal "has all the classic earmarks of a Russian information operation" - providing "no new evidence," while they remain "deeply suspicious that the Russian government played a significant role in this case," Tucker Carlson obliterated their (literal) conspiracy theory.
According to the Fox News host, he's seen 'nonpublic information that proves it was Hunter's laptop,' adding "No one but Hunter could've known about or replicated this information."
"This is not a Russian hoax. We are not speculating."
TUCKER: "This afternoon, we received nonpublic information that proves it was Hunter's laptop. No one but Hunter could've known about or replicated this information. This is not a Russian hoax. We are not speculating." pic.twitter.com/cl2ktdmdVc— August Takala (@AugustTakala) October 17, 2020
Meanwhile, the Delaware computer repair shop owner who believes Hunter dropped off three MacBook Pros for data recovery has a signed work order bearing Hunter's signature. When compared to the signature on a document in his paternity suit, while one looks more formal than the other, they are a match.
Going back to the '50 former senior intelligence officials' and their latest Russia fixation, one has to wonder - do they think Putin was able to compromise Biden's former business associate, Bevan Cooney, who gave investigative journalist Peter Schweizer his gmail password - revealing that Hunter and his partners were engaged in an influence-peddling operation for rich Chinese who wanted access to the Obama administration?
Did Putin further hack Joe Biden in 2011 to make him take a meeting with a Chinese delegation with ties to the CCP - arranged by Hunter's group, two years they secured a massive investment of Chinese money?
The implications boggle the mind.
Here's the clarifying sentences from the '50 former senior intelligence officials' that exposes the utter farce of it all:
While the letter’s signatories presented no new evidence, they said their national security experience had made them “deeply suspicious that the Russian government played a significant role in this case” and cited several elements of the story that suggested the Kremlin’s hand at work.
“If we are right,” they added, “this is Russia trying to influence how Americans vote in this election, and we believe strongly that Americans need to be aware of this.”
It would appear these former intel officials are not aware of the current intel official views, confirmed by DNI Ratcliffe yesterday that:
"Hunter Biden’s laptop is not part of some Russian disinformation campaign.”
And then there's the fact that no one from the Biden campaign has yet to deny any of the 'facts' in the emails.
I’ve read a lot of stories about the process through which the Hunter Biden story has been handled inside newsrooms and not one yet that has said these critical words: “they are not true”— Saagar Enjeti (@esaagar) October 19, 2020
Perhaps the real question is; what does Chuck Schumer know about this?
Despite soaring, record high homebuilder sentiment, US housing starts and permits disappointedly dropped in August but analysts now expect another rebound in September.
The data was mixed with Starts up 1.9% MoM (worse than the expedcted 3.5% jump) but Permits popped 5.2% MoM (ebtter than the expected 3.0%)...
This is the highest level for Building Permits since Feb 2007...
Driven by a surge in single-family housing permits (up 24.3% YoY to their highest since March 2007)
Additionally, single-family starts jumped 22.3% YoY to 1.108mm - the highest since June 2007...
Finally, a reminder that while homebuilders are ebullient, homebuyers are not...
If we build it, will they come?
Update (0825ET): The Google news has rattled the market, as investors contemplate the prospect of the DoJ, partnered with the state AGs, launching historic lawsuits against more Big Tech firms, thereby pulling the rug out from under the market.
The case against Google will be the first major DoJ antitrust lawsuit to take on big tech since the DoJ sued Microsoft in the late 1990s, a suit that began during the year that Google was founded in a garage in the Bay Area.
According to details of the suit leaked to WSJ - details that have been previously outlined during leaks about the investigation when that was still ongoing - Google is being accused of maintaining its status as 'gatekeeper to the internet' via an unlawful web of exclusionary and interlocking deals that effectively shut out competitors. These deals include all the money Google pays to phone manufacturers, carriers and makers of browsers like Apple's Safari to ensure that Google's search engine is pre-set as the default on millions of smartphones, even those produced by competitors like Apple. DoJ is also taking issue with Google's Android operating system, which preloads Google's search application in a way that it can't be deleted.
These revenue-sharing agreements have allowed Google to ensure that no search competitor can challenge its dominance. Google handles about 80% of all Internet searches executed in the US each year.
During an interview with Sen Ted Cruz on CNBC, the senator pointed out that the lawsuit comes just a week after Twitter and Facebook worked to shut down a series of New York Post stories alleging shady and corrupt behavior by Hunter Biden and members with his family revealing that the scope of their international influence-selling was larger than candidate Joe Biden has led the public to believe.
If Big Tech companies are going to use their monopoly power to try and silence political speech, then the government isn't going to hold back, Cruz said.
DOJ antitrust head Makin Delrahim sat for an interview with CNBC's David Faber yesterday. Though he has been recused from the Google case, he hinted about the upcoming charges. To be sure, it could be years before this case reaches a trial or settlement (which was the outcome during the Microsoft case).
* * *
The landmark antitrust case will focus on alleged Google-controlled monopolies in search and search advertising. These businesses are the cornerstone of Google owner Alphabet's profits. At least 11 state AGs are expected to join the suit.
Google shares are sliding on the news.
The DoJ has scheduled a press briefing for 0945ET. Though no subject has been announced, it's a safe bet that the Google lawsuit, which has been in the works since at least January, when DoJ reportedly started beefing up a team that was reportedly focused on bringing antitrust cases against Alphabet and a handful of other big tech names.
The case is expected to be filed in federal court in Washington DC, forcing Google out of its California "comfort zone".
A person who claims to be a program manager at Google Cloud has told investigative journalists with Project Veritas that the search engine is intentionally manipulating results in order to benefit the Democrats and to hinder President Trump’s campaign.
Ritesh Lakhkar, who identified himself as a technical program manager at Google’s Cloud service, made the comments in footage released Monday. The interview appears to have been filmed without Lakhkar’s knowledge.
The project manager accused Google of “playing god” with US politics, and of ‘skewing’ it’s algorithms to project negative news and talking points where Trump is concerned.
BREAKING: @Google Program Manager Confirms Election Interference In Favor of @JoeBiden— Project Veritas (@Project_Veritas) October 19, 2020
Google search “skewed by owners and drivers of the algorithm”
“Plain and simple trying to play god”#ExposeGoogle pic.twitter.com/swyV1W3ZKt
When asked if Google favours one party over another, Lakhkar commented that “The wind is blowing toward Democrats, because GOP equals Trump and Trump equals GOP. Everybody hates it, even though GOP may have good traits, no one wants to acknowledge them right now.”
“So the wind is blowing toward Democrats, so let’s skew the results toward Democrats,” he added.
“It’s skewed by the owners or the drivers of the algorithm,” Lakhkar explains, adding “Like, if I say ‘Hey Google, here’s another two billion dollars, feed this data set of whenever Joe Biden is searched, you’ll get these results.’”
Remember when Google had that meeting in 2016 after Trump won and vowed to never let it happen again?— Paul Joseph Watson (@PrisonPlanet) October 20, 2020
Have you tried finding anything on Google in the last 2 years that doesn't amplify Democrat talking points?
"Oh, but there's no bias...we're non partisan."
Yeah, OK. 😄
Lakhkar slammed Big Tech for “playing god and taking away freedom of speech on both sides.”
He emphasised that “Like, if it was fraud it doesn’t matter, but for Trump or Melania Trump, it matters… Trump says something, misinformation. You’re going to delete that because it’s illegal under whatever pretext. And if a Democratic leader says that, you’re going to leave it.”
Describing the working environment at Google, Lakhkar said “your opinion matters more than your work.”
“When Trump won the first time, people were crying in the corridors of Google. There were protests, there were marches. There were like, I guess, group therapy sessions for employees organized by HR,” he said.
The whistleblower continued, “I guess that’s one of the reasons I feel suffocated [at Google]. Because on one side you have this unprofessional attitude, and on the other side you have this ultra-leftist attitude. Your entire existence is questioned.”
Google has not responded to the allegations at time of writing.
If futures are higher, it's due to stimulus optimism; if futures are lower, then stimulus fears dominate etc, you know the drill by now... so by that logic with Eminis trading 0.7% higher this morning, optimism is apparently on the rise again after yesterday's rout, even as we approach today's deal ultimatum, or "do-or-die" moment as Bloomberg called it, for Nancy Pelosi and Steven Mnuchin to clinch a pre-election virus relief deal. Late on Monday, the two were said to narrow their differences after a 53-minute telephone conversation on Monday where they "continued to narrow their differences" about the coronavirus aid package, and will talk again today but still remain at odds over the scope of aid. In any case, the good news is that after today the farce may finally be over at least until after the election. Treasury yields rose and the dollar slipped, while oil and gold fluctuated. The Aussie slid after an RBA official suggested short-term rates may fall below zero.
Sure enough, as Reuters puts it, "stock index futures rose on Tuesday on expectations that Washington lawmakers would be able to settle their differences for an economic stimulus bill to pass before the Nov. 3 presidential elections." And as Reuters also adds "Uncertainty over the fiscal stimulus weighed on Wall Street's main indexes on Monday, with analysts expecting market turbulence to increase with only two weeks left until Election Day." So simple, a 99 cent algo could write this market narrative.
Elsewhere, Goldman is in focus after a Bloomberg report it reached a long-awaited settlement with the DOJ to pay more than $2 billion for the bank’s role in Malaysia’s 1MDB scandal, to avoid criminal charges. Procter & Gamble shares rose in the pre-market on the best organic sales growth since 2005. Netflix Inc added 0.9% in premarket trading as investors awaited the the streaming giant's membership additions in the third quarter. International Business Machines Corp tumbled - again - after cloud growth slowed and total revenue hit a new 21st century low: its shares were down 2.9% last after the company stayed away from issuing a current-quarter forecast, citing economic uncertainty related to the COVID-19 pandemic.
European stocks recovered from early losses on Friday, following a bearish Asian session where investors adjusted their risk exposure before the U.S. elections two weeks away. Record COVID-19 cases in Europe also weighed on sentiment. MSCI's European Index was up 0.4% while the STOXX 600 was up 0.2, after initially falling as fears about the economic impact of lockdown restrictions outweighed some strong earnings. UBS gained the Swiss banking giant's credit, FX and rates traders performed better than almost all of their rivals in New York as they took advantage of a virus-fueled trading bonanza. Total revenue rose 41%, beating JPMorgan and Citi but falling short of Goldman. UBS also beat on profit and said it lined up $1.5 billion for share buybacks.
New, tougher restrictions to limit the spread of coronavirus in Europe weighed on sentiment. Ireland announced some of Europe’s strictest constraints on Monday, telling people not to travel more than five kilometers from home. New restrictions were also approved in the Lombardy region of Italy. France reported a massive increase in the number of people hospitalised.
Earlier in the session, Asian stocks fell, led by the energy and finance sectors, after climbing in the last session. Markets in the region were mixed, with South Korea's Kospi and China's Shanghai Composite gaining, while Japan's Topix and Australia's S&P/ASX 200 slid. The Topix lost 0.7%, with SoftBank and Nintendo contributing the most to the move. The Shanghai Composite Index rose 0.5%, driven by Kweichow Moutai and Foshan Haitian.
With just two weeks until the U.S. presidential elections on Nov. 3, analysts said that investors were reining in their riskier bets. Meanwhile attention is on the outcome of today's stimulus negotiations.
"The likelihood of a deal taking place appears no more likely now than it was a week ago,” said Michael Hewson, chief market analyst at CMC Markets. The lack of action is particularly concerning in light of rising COVID-19 cases in the United States, he said. "While equity markets appear to be struggling in the short term, the lack of a fiscal stimulus deal in the next two weeks is probably neither here nor there. Most investors expect to see some sort of fiscal stimulus in the next six months, whoever gets in, with the only unknown being around the size and scale, and the timing. The problem for stock markets is that they want to see it now."
In FX, the dollar was again lower with the Bloomberg Dollar Index sliding as the greenback fell against most of its Group-of-10 peers; the euro advanced, topping 1.18 per dollar as European equities reversed an early decline. Australia’s dollar weakened after RBA Assistant Governor Kent said the Board is considering the case for further easing, there is some room to cut the Cash Rate further, one option is to purchase longer-dated bonds - bond purchases would be regular and aimed to bring down yield. Kent also said expansion of balance sheet is adding monetary stimulus, need policy support to be provided for some time given. Kent remarked that the Bank Bill Swap Rate (BBSW) could move into negative territory in the case of further RBA easing. He also reiterated that the central bank will not increase Cash Rate until actual inflation is sustainably in the target range. RBA has not done a formal policy framework review.
RBA Minutes noted the Board discussed the case for additional monetary easing to support jobs and the overall economy. As in previous meetings, members discussed the options of reducing the targets for the cash rate and the 3-year yield towards zero, without going negative, and buying government bonds further along the yield curve. While members noted that the Australian dollar exchange rate was broadly consistent with its fundamental determinants, a lower exchange rate would provide more stimulus to the Australian economy in the recovery phase.
New Zealand’s currency also declined on speculation the central bank may act to lower borrowing costs. In minutes of its October meeeting, Australia’s central bank said further policy easing is likely to “gain more traction” as restrictions are lifted across the economy and agreed the governor would flag the shift to targeting actual over forecast inflation. The pound swung between gains and losses after the U.K. rebuffed the European Union’s effort to restart deadlocked trade negotiations and as investors waited for evidence that the two sides are reconciling their differences.
In rates, Treasuries were lower again with the curve steeper in early U.S. trading as front-end yields remain anchored while long-end yields were cheaper by ~2bp, 10-year by 1.5bp at 0.784% after breaching Monday’s high. Risk appetite stirred during Asia session and European morning, lifting S&P 500 futures, as investors eyed potential for agreement in stimulus talks today. Euro zone government bond yields rose, with the benchmark 10-year German yield holding near recent seven-month lows at -0.623%.
Gold edged down while oil prices were little changed after three days of declines on fears that a resurgence of COVID-19 infections would stifle the recovery in fuel demand. Brent crude futures were trading down 2 cents, or 0.4%, at $42.44 a barrel recovering ground after falling as low as $42.19 earlier in the session.
Looking at the day ahead, we have earnings from Procter & Gamble, Netflix, Texas Instruments, Philip Morris International and Lockheed Martin. Central bank speakers include Fed Vice Chair Quarles, the Fed’s Bostic and Evans, the ECB’s Hernandez de Cos and the BoE’s Vlieghe. And data releases include US housing starts and building permits for September.
Top Overnight News from Bloomberg
A quick look at global markets courtesy of NewsSquawk:
Major Asia-Pac indices traded with losses across the board after Wall Street suffered a broad decline following reports which suggested a State-side stimulus deal is not sounding imminent based on comments from the House Speaker and Committee Chairs. US equity futures opened electronic trade in modest positive territory, but have since came off highs and traded sideways throughout the night, with ES, NQ and YM still holding onto some gains heading into the European open. Back to APAC, ASX 200 (-0.7%) was pressured by its mining sector, albeit the index saw some fleeting upside in light of further the dovish RBA rhetoric, this time from Assistant Governor Kent. Nikkei 225 (-0.5%) failed to benefit from the JPY dynamics as the index felt the weight of losses across its industrial sector. KOSPI (+0.5) initially conformed to the losses in the region, with Hyundai and its affiliate Kia posting losses between 3-4% after the former warned that Q3 profits will be hit by charges related to engine problems. Meanwhile, SK Hynix traded in the red after the chipmaker confirmed that it is to purchase Intel’s NAND memory business. Elsewhere, the humdrum tone reverberated into China, with Hang Seng (U/C) and Shanghai Comp. (+0.4%) modestly softer for much of the session despite another PBoC liquidity injection and a non-event LPR setting as anticipated; however, the bourse did pick up somewhat in the tail-end of APAC trade.
Top Asian News
European equities (Eurostoxx 50 +0.1%) trade mixed to flat in what has been a relatively indecisive session thus far with little in the way of incremental macro newsflow since yesterday’s close. Slightly outperformance has been observed in the CAC 40 (+0.3%) with Accor (+6.0%) top of the index after a broker upgrade from JP Morgan with the bank upbeat on the Co. “as it streamlines costs, simplifies its business, whilst its sound BS should support small/midscale M&A, allowing the company to emerge from the crisis stronger”. Sectors are mixed with not much in the way of breadth across the broader categories; oil & gas is the main outlier to the downside amid modest losses in the crude complex. Travel & leisure names have been granted some reprieve amid plans to open up international travel to the UK with Heathrow implemented a rapid COVID-19 testing operation for some destinations. As such, IAG (+6.3%), whose British Airways will be one of the first to offer testing, sit at the top of the Stoxx 600, gains are slightly less pronounced for some of the budget airlines such as easyJet (+4.0%) and Ryanair (+2.5%). Elsewhere, support has also been observed in the banking sector post-earnings from UBS (+2.2%) with the Co. far exceeding Q3 net income expectations in what was its “best Q3 earnings in a decade”. Additionally, the Co. announced it has set aside USD 1.5bln for potential share buybacks and currently has USD 1bln available to be paid out as a cash dividend in 2021. Reckitt Benckiser (+1.4%) are another gainer this morning after Q3 earnings were boosted by surging Dettol sales throughout the pandemic. To the downside, Tele2 (-1.5%) are the Stoxx 600 laggard post-earnings, albeit having pared back much of the initial downside, in a session that has featured several Scandi updates, including Stora Enso, Swedbank and Yara International.
Top European News
In FX, the race to the bottom is back on down under, and even though a 15 bp RBA rate cut looms larger than the next batch of RBNZ stimulus, the tables have turned to the detriment of the Kiwi. Indeed, Nzd/Usd has relinquished 0.6600+ status and breached the 100 DMA at 0.6586, as the Aud/Nzd cross rebounds from sub-1.0700 and Aud/Usd pivots 0.7050. To recap, minutes from the October policy meeting coupled with comments from RBA Deputy Governor Kent all but sealed an ease early next month, with the latter also noting that Bank Bill Swap rates may also fall below 0% if benchmark rates are reduced further, while RBNZ Governor Orr remarked that there is ample room to deliver more QE and an update on tools will be forthcoming in November.
In commodities, a relatively slow session for the commodity space thus far in terms of fundamental updates as the dust settles following yesterday’s JMMC meeting, which ended up making no recommendation to change policy prior to 2021; the next gathering is November 17th ahead of the full OPEC+ event at the month’s end. Perhaps most notably from the meeting, reports highlight there was no indication of Russia putting forward a compensation plan for their 430k/bbl of overproduction; as such, attention will turn to whether the likes of Saudi put pressure on Russia to unveil a plan and whether some of the other over-complying members follow Russia’s lead on this matter in the months ahead. Price action throughout the session has been choppy but relatively contained compared with the action seen yesterday; currently, benchmarks remain in proximity to the unchanged mark but closer to the top-end of the day’s range. Crude explicitly, the sessions highlight will be the private inventory report which may well display another crude drawdown given a significant magnitude of production remained shut-in last week given the after-effects of Hurricane Delta. As a reminder, last week’s report printed a draw of 5.4mln which was followed by the EIA reading of a 3.818mln draw. Moving to metals, spot gold has been uneventful and in proximity to flat levels for the majority of the session following similar price action in the later-half of APAC trade. However, most recently the precious metal has gleaned some strength from further downside in the DXY as sentiment stateside remains cautiously firm as the Democrats stimulus deadline approaches. Separately, BHP updated that their copper operations in South America are still being affected by COVID-19 related measures but nonetheless copper production came in at 413k/T vs. Exp. 394k/T for Q1.
US Event Calendar
DB's Jim Reid concludes the overnight wrap
US equity markets lost significant ground yesterday amidst ongoing stimulus discussions as investors awaited a raft of earnings releases which heat up from today. Over the weekend speaker Pelosi set the end of today as the deadline to make progress ahead of the election. So today could be interesting.
In terms of the latest, Treasury Secretary Mnuchin and Speaker Pelosi spoke late in the session yesterday, but the Speaker told fellow Democratic lawmakers afterwards that significant areas of disagreement continue to get in the way of a deal. The two sides remain talking ahead of today’s deadline. While the Republican-led Senate has been reluctant to pass a stimulus bill above the $500 billion level that Majority leader McConnell has supported, President Trump has indicated that he is willing to go up to the $2.2 trillion range that Democrats have demanded. Mr Trump said yesterday that if an agreement with Democrats is reached, he would “lean” on Republican Senators to “come along.”
Regardless, the confirmation that the two sides remain significantly apart saw the S&P 500 fall over 1.1% in the last 90 minutes of trading, though the index had been dripping lower throughout the day as risk sentiment soured after a healthy start. By the end of the session, the S&P 500 had lost -1.63%, while the VIX index rose +1.8pts in its 6thconsecutive move higher.
Overnight, S&P 500 futures (+0.34%) are trading back up a little on headlines that the House Speaker Pelosi and Treasury Secretary Mnuchin have “continued to narrow their differences” on a coronavirus relief package. So expect the dance to continue today.
The large losses yesterday saw every industry in the S&P lower on the day, with the Tech (-1.87%) and Energy (-2.10%) sectors leading the declines. In spite of the heavy tech losses, especially among the recent mega cap winners, the NASDAQ (-1.65%) fell largely in line with the S&P. The Dow Jones (-1.44%) also moved lower, while in Europe, the STOXX 600 lost just -0.18% – having closed prior to the US stimulus headlines roiling markets.
Asian markets are trading lower tracking Wall Street’s move from yesterday. The Nikkei (-0.55%), Hang Seng (-0.09%), Shanghai Comp (-0.13%), Kospi (-0.21%) and Asx (-0.63%) are all down.
On the coronavirus, there were further concerning developments from the US and Europe, as the number of confirmed global cases passed the 40m mark yesterday, and governments around the world moved to re-impose restrictions once again. Here in the UK, a further 18,830 cases were reported yesterday as Wales announced a 2-week ‘firebreak’ that would start on Friday evening. In practice, this means that people will be told to stay at home, apart from certain exceptions, with pubs, restaurants and non-essential shops all closing. Prime Minister Johnson has come under pressure to pursue a similar move in England, with opposition Labour leader Keir Starmer having already called for one to be imposed. Elsewhere in Europe, case numbers also remained at elevated levels as you’ll see in the table below. Monday reporting is always a little challenging to interpret though due to the weekend impact.
In terms of further restrictions, Ireland is moving closer towards a full lockdown as of Wednesday night. The new restrictions will close all retail, restaurants and pubs, while schools will remain open. Elsewhere Austria changed the limit on gatherings to 6 people indoors and 12 people outdoors, while Slovenia announced that a 9pm-6am curfew would come into force from today. So far most countries seem relatively keen to keep schools open as much as possible which is a huge economic swing factor given that it governs what parents can do.
Over in the US, weekly cases are set to rise above 400k per week for the first time since early August, with the majority of the outbreaks in regions that either had yet to experience significant caseloads or had relatively moderate first waves. Overnight, the US CDC has issued a “strong recommendation” for mask-wearing by both passengers and operators on planes, trains, buses and taxis. On a related note, Our chart of the day yesterday (link here) actually looked at the average age of deaths across a number of countries from Covid-19, and the US stood out in having a much lower average age of death than the other developed countries at 75.8 (vs. 80-82) in most of the others. Separately, one note of optimism from the US was that the Transport Security Administration said that they had over 1 million passengers go through a security checkpoint on Sunday for the first time since March, while the weekly volume from Oct 12-18 was also the highest since the start of the pandemic.
On the vaccine front, Moderna said overnight that the US government could authorise emergency use of its Covid-19 vaccine in December if it gets positive interim results in November from a large clinical trial. A reminder that even the UK is working to mobilise for a possible vaccine rollout by December. So a month to watch.
Over in fixed income, sovereign bonds lost ground for the most part yesterday, with yields on 10yr Treasuries up +2.3bps, as the 2s10s curve also steeped +1.9bps. Meanwhile in southern Europe, yields on 10yr Italian BTPs came off their all-time closing low on Friday, as they moved up +7.5bps, whilst Spanish (+4.1bps) and Greek (+4.1bps) bonds similarly lost ground. Bunds and gilts were the exception to this pattern however with 10yr bund yields down another -0.6bps to a fresh 7-month low of -0.63%, while those on gilts fell -1.3bps.
Onto Brexit, and in spite of Prime Minister Johnson’s Friday statement that the UK should get ready to leave the transition period without a trade agreement in place, the two sides’ chief negotiators spoke once again yesterday. In a tweet afterwards, the EU’s Michel Barnier said that “I confirmed that the EU remains available to intensify talks in London this week, on all subjects, and based on legal texts. We now wait for the UK’s reaction." Sterling strengthened by +0.26% against the US dollar yesterday, though this seemed to be more of a dollar-negative story as the dollar index lost -0.27%. Overnight, Bloomberg has reported that the UK is rebuffing the EU’s effort to restart their deadlocked trade negotiations, holding out for more concessions from the bloc before it is prepared to restart talks. The same report though quoted three unidentified EU officials as saying that they expect the negotiations to resume in London by the end of the week. A bit like the US fiscal stimulus, this is now a political dance. We hope no one stumbles!
Staying on politics, there weren’t a great deal of updates on the US election yesterday as the polls continued to show a solid lead for Joe Biden. His chances of victory in FiveThirtyEight’s model now stand at a campaign high of 88%, while the Democrats’ odds of controlling the Senate are at 74%. This week’s debate on Thursday will be the main highlight, but the unprecedented quantity of early voting in this election means that the ability to change the trajectory of the race is diminishing with each passing day. Overnight, the Commission on Presidential Debates has said that President Donald Trump and Democratic nominee Joe Biden will have their microphones turned off during parts of the final presidential debate while adding that each candidate will have an uninterrupted two minutes to speak at the beginning of each of the six 15-minute segments of the debate. Their mics will be turned on again for “a period of open discussion” in the segment’s remaining time. The change comes after the chaotic first debate in which both the candidates talked over the moderator and each other. The list of topic in this Thursday’s debate include Covid-19, American families, race in America, climate change, national security and leadership.
There also wasn’t much in the way of data yesterday, though the NAHB’s housing market index in the US for October rose to another record high of 85 (vs. 83 expected).
Goldman Sachs is reportedly on the cusp of settling one of the biggest criminal cases involving a Wall Street bank since the financial crisis: According to a Bloomberg News report published late Monday evening, the Vampire Squid has reached a tentative agreement with the DoJ to pay more than $2 billion in penalties - a figure that BBG noted is "broadly in line with analysts expectations" - and - here's the key bit - allows the bank to avoid all criminal penalties.
That last bit is especially important, because, as we've chronicled over the past few years, many of the bank's top executives appeared to have been personally involved with the deal, which was initially brought in by Tim Leissner, formerly the bank's top man in Southeast Asia, before he was suspended over the deal, before agreeing to cooperate with the Feds against his former employer (where he reportedly told authorities about the endemic "culture of corruption" at play within the bank).
Though we can't be certain, we suspect that the timing of former Goldman chief Lloyd Blankfein's departure was influenced by the unfurling scandal; he suddenly left the bank right around the time that Leissner flipped. Word on the street was that Goldman would be made to admit guilt as part of the deal. Indeed, a leak about an 'imminent' deal published nearly 1 year ago claimed that the bank had reluctantly agreed to the plea. Apparently, the bank's legal team was able to avert this, amid whispers that connections between Goldman's representatives and the current leaders of the DoJ might create conflicts of interest (a negotiating tactic that the bank appears to have leveraged to its advantage; note the deal is reportedly coming just weeks before a close American presidential election).
The deal comes just months after Goldman agreed to pay $3.9 billion in "reparations" to the government of Malaysia for its role in raising the $6.5 billion that seeded the 1MDB sovereign wealth fund, which was supposed to be used to finance public projects, but was instead drained by cronies of former Malaysian Prime Minister Najib Razak, who has been convicted in Malaysia for his role in the region's largest-ever financial fraud.
That settlement included $2.5 billion in cash payments from Goldman to the Malaysian government.
But the fraud's true ringleader was a mysterious financier named Jho Low, who allegedly orchestrated the siphoning off of money from the fund, which was disbursed to bank accounts controlled by Razak, and others controlled by Low and presumably other cronies. Low went on to spend the money on a seemingly endless stream of luxury goods - jewels, fine art, yachts - Low even used some of the money to finance the film "the Wolf of Wall Street", and to make illegal campaign contributions to the campaign of former President Barack Obama (this, after Razak was once criticized for his "golf diplomacy" with the former president while his country struggled with historic floods).
The DoJ has seized billions of dollars of these ill-gotten gains, and even returned some of the stolen money to Malaysia.
Goldman has struck deals with prosecutors in at least three countries over its role in 1MDB: in Singapore, the bank could face serious criminal penalties if it is caught violating its settlement agreement. All told, the bank will pay $5 billion in cash penalties tied to 1MDB, an amount that's roughly in line with expectations.
Goldman pays $2 Bn in 1MBD corruption probe, avoids criminal conviction.— zerohedge (@zerohedge) October 20, 2020
That's how the legal system really works
In return, the bank and its top executives will simply walk away, while Leissner (who pleaded guilty two years ago per his plea deal) and another banker who was arrested in connection with the investigation are left to face the music.
On Monday the UK Ministry of Defence confirmed a hugely embarrassing incident involving a security and operations lapse aboard the British nuclear submarine HMS Vigilant while it temporarily was docked during a mission at a US naval base, specifically Naval Submarine Base Kings Bay in Georgia.
The officer in charge of overseeing the vessel's nuclear warheads arrived to his shift "staggering drunk" while strangely carrying a bag of barbecue chicken.
The scene immediately sparked concern that the officer, later identified as Lt. Commander Len Louw "was not in a fit state to be in charge of nuclear weapons” as there was something "seriously wrong" according to UK media reports.
The alarmed crew then reported the incident up the chain of command and the drunk officer has relieved of his shift immediately, and an investigation ensued. He was reportedly sent back to the UK.
The BBC noted that as the weapons engineering officer on the submarine he was "responsible for all weapons and sensors on board." The sub is armed with Trident ballistic missiles and is thus subject to stringent safety and security measures.
The submarine has been source of controversy especially since the start of the pandemic, given what have been described as multiple safety breaches and failure to adhere to safety protocols.
Royal Navy nuclear submarine officer sent home from US after arriving to take charge of missiles while 'drunk'https://t.co/Jx5LJqU0nZ— BBC News (UK) (@BBCNews) October 19, 2020
And more astounding, according to the Daily Mail, is that:
The Royal Navy officer had been preparing to start a shift during which they would offload the 16 nuclear missiles - which each weigh 60 tons and have the combined power to kill almost the entire population of the UK.
He reportedly clocked in for his shift after a full night of drinking aboard one of only four submarines that make up the UK's nuclear deterrent.
The submarine is based out of Faslane, Scotland, and UK tabloids have sarcastically dubbed the vessel the 'HMS Sex and Cocaine' due to recent scandals involving the crew partying hard while at port.
You may have seen some reporting this morning on an incident on a submarine. While we don’t comment on the detail, there are numerous safety checks and processes to protect the safety and use of weapons aboard all submarines.— Ministry of Defence Press Office (@DefenceHQPress) October 19, 2020
A week ago the nuclear sub was in the news due to a reported COVID-19 outbreak after crew members were caught breaking port call rules to go to strip clubs and bars.
In a rare communication the UK Ministry of Defence Press Office appeared to confirm that indeed a 'safety' related incident had occurred on the nuclear submarine.
The statement said "there are numerous safety checks and processes to protect the safety and use of weapons aboard all submarines" in relation to an incident that's subject of wide "reporting this morning" but without giving further detail.
No doubt American military authorities at Kings Bay naval base will also have serious questions, considering they've just witnessed a significant operations lapse aboard a foreign allied 'top secret' nuclear submarine docked in US waters.
The main central banks have been discussing the idea of implementing a digital currency. The rationale behind it escapes many citizens. Most transactions in the main global currencies are conducted digitally and one could say that the largest and most traded currencies, the US Dollar, Euro, Yen, British Pound, Swiss Franc, and the Yuan are already functioning as mostly digital money. So, what are central banks saying when they talk about a new and different digital currency? It is basically another step in the effort to gradually get rid of physical currencies, with an idea of strengthening control of the payments and make it simpler to trace the use of a particular means of payment. It is also aimed at competing with global cryptocurrencies. Most will state that the reasons behind the idea of a central bank digital currency are efficiency and improving the transmission mechanism of monetary policy.
Let us go point by point. When central banks say they want to improve the transmission mechanism of monetary policy, many of their messages are based on a wrong diagnosis: That there is an excess of savings that needs to be restrained. Central banks implement negative rates to try to push savers to take more risk, spend and invest more as if the reason why they do not spend or invest as much as central banks would want is the interest rate and not the challenged that households and businesses face in an uncertain economic environment. Citizens do not save because they are stupid or ignorant, but the opposite, because they understand that the economic environment is difficult and the attractive opportunities to invest are few. This does not mean that businesses and citizens are not spending and investing, they are, a lot. But central banks and governments place completely misguided and wrong blame on savings.
A solid economy is based on saving and prudent investment, not on debt and malinvestment. Therefore, it is wrong to continuously lower rates and attack savings. The economy does not improve by making it more fragile and indebted, rather the opposite.
The other point is the so-called efficiency. Central banks basically seem to want spending and control of monetary transactions at any cost. Issuing a central bank digital currency is not more efficient. It is another means of financial repression. If negative rates don’t work as a way of forcing economic agents to spend even more, they seem to think, then negative rates and dissolving the currency via an even higher increase in the supply of money with a digital currency should do.
The problem is that it does not work either. A central bank digital currency will increase the perception of risk and will not make economic agents spend or invest more because the problems of debt, overcapacity, and malinvestment will not be limited with a digital currency, they will be exacerbated.
Central banks cannot force economic agents to spend and invest, and even less so if their policies are consistently aimed at incentivizing debt and perpetuate imbalances.
The support of a currency is not strengthened via a constant artificial increase in money supply and legal or financial repression. Central banks will not make their digital currencies a success if citizens fear -as they do- that the policymakers will constantly strive to dilute the purchasing power of the currency, which means less purchasing power of economic agents’ salaries and savings.
The process of any asset becoming a widely used currency is the most democratic there is. It cannot be decided by governments and cannot be imposed. If governments and central banks push financial repression and devaluation of their currency, citizens will move to other means of payment that become real money. Cryptocurrencies have not developed because of people´s idiocy or ill-means, but because of the lack of trust in fiat currencies and the constant desire of central banks and governments of destroying the currency to disguise structural problems.
That is why a central bank digital currency is an oxymoron, a contradiction in terms. The reason why citizens demanded cryptocurrencies is precisely because they were not controlled by central banks that constantly aim to increase the money supply and generate depreciation of money, inflation.
Central banks should defend the purchasing power of savings and salaries, not aim to erode them. If they decide to use new tools to dilute wealth, confidence in the domestic currency will evaporate. The fact that it has not happened yet does not mean that it is not going to occur sooner rather than later. When central banks finally realize that they have gone too far with their policy it will be too late.
On Friday, a French schoolteacher named Samuel Paty was brutally decapitated by an 18-year-old assailiant outside his workplace, a brutal murder that has been confirmed as a terror attack, possibly inspired by a fatwa issued by a French cleric.
French authorities have determined all this, and more, as French President Emmanuel Macron launches an unprecedented crackdown on terror networks in the country with a focus on "political" organizations that officials fear function as fronts, or gateways, for terror recruits plotting acts of violence. Over the weekend, police arrested 11 people, including 4 relatives of the attacker, 18-year-old Abdoullakh Abouyezidovitch Anzorov, who is a migrant from Chechnya living in France.
Anzorov used the large knife to decapitate the teacher, who was targeted after students complained about him showing cartoons from Charlie Hebdo allegedly depicting the Prophet Mohammad, an act considered blasphemy in the religion of Islam.
As we explained over the weekend, police are also looking into what role, if any, social media played in the attack, as a parent of one of Paty's students is suspected of "doxxing" the teacher in a Facebook post urging Muslim parents to demand that Paty be fired from the school in the Parisian suburb of Conflans-Sainte-Honorine. After complaining to the headmaster, the parent posted three videos calling on parents to take action.
The attack has galvanized French politicians from across the political spectrum to demand that the government do more, while centrists and those on the right have attacked progressive sensitivities that they fear impede the ability to hold terrorists accountable. At one point, Macro sounded like former American president George W Bush, promising that "fear" would soon "change sides" as French police seek to disrupt terror cells in the country.
"Islamists should not be able to sleep easy in our country," Mr Macron said after an emergency inner cabinet meeting at the Elysée Palace on Sunday with Jean Castex, the prime minister, and Jean-François Ricard, the anti-terrorism prosecutor. "Fear is going to change sides."
France's Interior Minister said he would push for a ban on any Islamic "organizations" that support the establishment of "Sharia Law" in France.
Gérald Darmanin, interior minister, said on Monday he would propose a ban on several organisations deemed "separatist" for seeking to bypass the secular institutions of the French republic, including the Collective against Islamophobia in France (CCIF), and a humanitarian aid group called BarakaCity.
"You can see how political Islam combines with radical Islam and so eventually leads to terrorism," Mr Darmanin said on Europe 1 radio.
“We must fight political Islam with the same determination as we fight terrorism.” He said 51 organisations would be inspected by the state this week. Mr Macron, who had already announced tighter controls on Islamist radicals in a speech at the start of the month, is now under pressure from politicians from left to right to take an even harder line against militants.
Even the cryptocommunist Jean-Luc Mélenchon didn't hold back.
Even Jean-Luc Mélenchon, the head of the extreme-left La France Insoumise (France Unbowed) party, who has himself been criticised by the right as "Islamo-leftist," condemned “Islamist terrorism” and suggested targeting the Chechen immigrant community.
Police appear to be nearing a determination of a motive in the attack: they suspect that a French extremist cleric named Abdelhakim Sefrioui issued a "fatwa" against Paty after visiting the school with the father of a pupil who was referenced above. Both of these men are among the 11 who have been arrested so far in the case.
When Michelangelo Merisi (also known as Caravaggio) left continental Italy for Malta in 1607 to escape the ramifications of a lethal sword fight, little did he know what a profound impact he would leave on the little Mediterranean island. For Michelangelo himself the impact was questionable at best - apart from painting some of his most profound works there (such as the Beheading of Saint John the Baptist), he became a Maltese Knight only to be banished from Malta a year later for being a “foul and rotten member”. In brief, Caravaggio’s one-year sojourn has only perpetuated all the problems the artist had been suffering from. Yet for the island nation of Malta, Caravaggio has become a showcase to spearhead all its remarkable achievements.
No wonder one of the Mediterranean’s most ambitious oil-drilling projects assumed Caravaggio’s name.
Caravaggio is a heretofore undrilled prospect offshore Malta, lying in water depths of 350 metres within Area 07. According to preliminary assessments based on seismic surveys the main target for Caravaggio is a Lower Eocene carbonate reef and a secondary reef below that, the aggregate reserves of which might be 1 Bboe. The operator of Area 07, Heritage Oil, was awarded the rights to it in December 2007 along with Area 02 and was supposed to conduct at least 1000km seismic surveying (the blocks cover 8778km2 and 9190km2 respectively) and drill one exploration well. The latter objective could not be met, however now Heritage has some solid 5000km of seismic surveying data, reportedly attesting to the presence of several prospects to be drilled.
The reason why Caravaggio was still not drilled is fairly straightforward – absent any demarcation within the Malta-Italy-Libya maritime triangle, it simply cannot be if the area’s operator is to stick to the international norms of maritime law. The lack of political settlement also seems to be the underlying reason why Heritage Oil is reportedly looking to farm out some of its Area 02 and 07 stakes. Cognizant of the international ramifications, the Maltese government seems to be unwilling to issue the required exploration well permit, meaning that even if tomorrow brought about a swift resolution of the maritime border dispute (the GNA Foreign Minister Mohamed Taha Siala has visited Malta with the issue on his agenda), the project would still need to go through the full approval procedure.
Seemingly the easiest element of the problem would be to find common ground with Italy, a nation historically knit to Malta by ties of friendship. This has already been suggested by the Maltese government, among others in 2012 yet seemingly triggered no noteworthy reaction from the Italian side. Thus, the stale state of the Central Mediterranean is in stark contrast to the Eastern Mediterranean where large gas discoveries offshore Egypt, Israel and Cyprus have started off a large-scale kerfuffle over delimitation rights. The task is somewhat aggravated by the fact that both Malta and Italy depend on tourism for a sizeable share of their income and have been working to nudge offshore exploration farther offshore (according to a 2012 Italian E&P decree all drilling within the 12-nautical mile territorial sea is banned).
Yet even if Italy and Malta were to settle all past grievances and delimit their maritime zones, this would not be enough for Caravaggio drilling to happen – the prospect is located in the immediate vicinity of the assumed Maltese-Libyan maritime border, hence might be claimed by both sides. Malta and Libya (back in the Jamahiriya days of Colonel Gaddafi) took the maritime dispute to the International Court of Justice in 1984-1985, not asking for a suggested line of demarcation but rather to decide on what principles could the two sides base the potential prospective agreement. The ICJ did in fact provide a suggested delimitation line, smiting Libya’s demands that the Maltese exclusive economic zone be curbed by the geological limits of its rift zone, i.e. the discontinuity of the troughs to the south of Malta. For reasons beyond obvious, the 1985 ICJ decision was never followed upon.
Although the Caravaggio prospect is located to the east of Libya’s two currently producing offshore fields, Bouri and Al Jurf, Libya’s offshore Pelagian Basin might provide the most suitable reference frame for Malta’s offshore potential. According to a recent USGS assessment, the Pelagian Basin has a total undiscovered resource tally of some 2 Bbbls crude and 37.55 TCf of natural gas, confirming a past assumption that gas occurrence in the offshore area would be higher than onshore – set against the total undiscovered resources of the Sirte-Pelagian Basin, offshore crude makes up a mere 12% of the aggregate, whilst offshore natural gas amounts to more than a third.
Considering that Malta produces no oil and gas at all, a future gas discovery would be very convenient for the small island nation. Currently, Malta is utilizing predominantly natural gas to generate electricity (70% of its energy consumption), its basis being a 10-year LNG supply contract with SOCAR. According to Maltese media reports, for the 5 years the purchase price was fixed at $11.50 per MMbtu, making Malta one of the most profitable Mediterranean LNG outlets ever. Producing some gas of its own could alleviate Malta’s necessity to buy overpriced imports. Malta never had an oil refinery and has historically depended on Italy to provide its products and its name reverberated quite frequently in stories relating to oil smuggling activities out of Libya.
As if European banks did not have enough on their plates, with diving profitability in a prolonged period of zero or negative interest rates, along with rising NPLs, the virus pandemic has accelerated the plunge into the abyss, which as of recent, has resulted in a collapse in finance job vacancies and industrywide job cuts.
Bloomberg, citing a new report via recruitment firm Morgan McKinley, said job vacancies in London's finance industry were more than halved in the third quarter compared with 2019. The report said coronavirus, Brexit, and bank profits discouraged many of the top banks situated in the financial district to hire in the third quarter - as many also reduced their workforce.
Morgan McKinley showed only 3,800 finance position openings were offered in the three months through September, a sharp drop of 4,500 openings from 8,300 compared with the quarter last year, representing a 54% decline.
Hakan Enver, managing director at Morgan McKinley U.K., said, "businesses and job seekers were struggling with the impact of the pandemic and worried about what a second wave will mean."
"But we also can't forget about Brexit. There are concerns for the long-term recovery and the free flow of capital and equivalence for U.K. financial services that need to be clarified," Enver said.
The plunge in London third-quarter finance position openings comes as big banks such as Citi, Wells Fargo, HSBC, and Deutsche Bank reduce their workforce to the tune of 64,000 this year. The number of job cuts could be on pace to surpass 78,000 bank jobs lost last year and could soon hone in on the 94,100 cuts seen in 2015.
The coronavirus pandemic has halved the FTSE U.K. bank equity since the start of the pandemic.
Andrea Enria, chair of the ECB's supervisory board, recently told the German business daily Handelsblatt that a second wave of the virus pandemic could spark another surge of bad loans.
Rating agency S&P has remained vocal about the European bank debacle, warning corporate default rates would more than double over the next nine months to 8.5% from 3.8%.
Europe's financial system is hanging on by a thread. Another round of the pandemic could doom the continent's banking industry; nevertheless, bankers at Barclays, Deutsche Bank, and SocGen will be unhappy this year as their bonuses are set to slump because of the virus-induced downturn.
Paris, October 16. A history teacher who had shown his students cartoons of the Islamic Prophet Muhammad and had spoken with them about freedom of speech was beheaded in Conflans-Sainte-Honorine, a small town in the suburbs of Paris. The murderer, who tried to attack the police attempting to arrest him, was shot and killed while shouting "Allahu Akbar". According to the public prosecutor, he was a family member of one of the students. The facts are still unfolding....
A few weeks before that, on September 25, Zaheer Hassan Mehmood, a 25-year-old Pakistani man, attacked and seriously injured two people with a cleaver. When he tried to escape, he was arrested by police. He had entered France illegally in 2018, had appeared before a judge to ask for asylum and to benefit from the status of an "isolated minor". The information he gave the judge was false: he had said he was 18 years old. The judge accepted his request and refused any method of determining his real age. Since then, Mehmood has been financially supported by the French government. It gave him housing, training and a monthly allowance.
Just before the attack, Mehmood posted a video on a social network in which he tried to justify his act. He wanted, he said, to kill people working for the satirical magazine Charlie Hebdo because it had republished the cartoons that had triggered the murderous attack on the magazine in January 2015. He wanted, he said, to avenge the offense done to the Prophet Muhammad. He stated his allegiance to Ilyas Qadri, founder of Dawat-e-Islami, a Sufi movement that claims to condemn violence, even though its members have nevertheless murdered people they accused of blasphemy.
In September, Mehmood had gone to the magazine's old address. The people he injured were not working for Charlie Hebdo, which had long since moved, but for a documentary production company. They are now disfigured for the rest of their lives.
The attack sadly shows that criticizing Islam is still an extremely dangerous activity. Anyone even suspected of doing it can be injured or killed, anytime, anywhere. It also shows that one can decide to attack or become a murderer even if one does not belong to an organization defined as jihadist, or shown no signs of radicalization. The attack once again confirms the existence of what Daniel Pipes has called "sudden jihad syndrome".
The attack shows that, in addition, France, like other Western countries, is abysmally lax in guiding those who are arriving on its soil and asking for its help. A man can lie about his age and identity without their being detected and without tighter controls. The attack shows that declaring oneself an "isolated minor" in France can be sufficient not to be observed at all and still receive full assistance from the government. The attack also suggests a disappointing grade for gratitude.
Logic would require that a defense of freedom of expression be immediately and unanimously affirmed; that the government call for vigilance in the face of extremist danger, which seems to be persistent, and that more stringent controls on those who apply for asylum be set up. None of those improvements has taken place.
On September 23, two days before Mehmood's attack, an article purporting to defend freedom of speech was published in France by 90 newspapers. The article said that "women and men of our country have been murdered by fanatics, because of their opinions... we must join forces," it added, "to drive away fear and make our indestructible love of freedom triumph". The article seemed deliberately vague. It did not mention who the murderers were or what might have motivated them.
The day after the attack, several commentators counseled that in France, the love of freedom was not indestructible. They prescribed self-censorship and ventured -- unfortunately "blaming the victim" -- that those who had decided to republish the cartoons were the ones responsible for the attack. "When you repost cartoons", Anne Giudicelli, a journalist, said on television, "you play into the hands of these organizations. By not saying certain things, you reduce the risks."
"When you shock a person", TV host Cyril Hanouna ventured, "you have to stop. Charlie Hebdo drawings pour oil on the fire".
The persistence of Islamic danger was not mentioned, except by the journalist Éric Zemmour. Ironically, on the day of the attack, Zemmour was sentenced to a heavy fine (10,000 euros, nearly $12,000) for remarks on Islam in September 2019. He had said at the time that "Muslim foreign enclaves" exist in France. They do. At least 750 of them. He also noted that attacks in the name of Islam have not disappeared and seem likely to increase. The French justice system decided to regard these words as "incitement to hatred".
After the cleaver attack, no one requested tightening controls on asylum seekers, except, again, Zemmour. He said that "the uncontrolled presence of unaccompanied minors on the French territory is a very serious problem" and that "we must no longer welcome unaccompanied minors in France as long as drastic controls are not put in place". He recalled that many self-proclaimed unaccompanied minors lie about their age, commit crimes, and turn out to be "thieves and assassins".
His words immediately caused a massive scandal. Even though he did not say a single word about race or religion, dozens of complaints were lodged against him by "anti-racist associations", and the French Ministry of Justice robotically opened another investigation against him for "incitement to racial hatred" and "Islamophobic prejudice". He will most likely again be condemned by the courts.
Facts, however, prove Zemmour is right. The National Observatory of Delinquency and Penal Responses (ONDRP), an organization that analyzes crime in France, recently published reports noting that 60% of assaults, murders and violent robberies committed in France in 2019 were indeed committed by "unaccompanied minors". ONDPR published still another study, disclosing that, on average, 120 knife attacks per day occur in France and that those attacks are committed by "unaccompanied minors" or "refugees" coming from the Muslim world.
In addition, France's Directorate-General for Internal Security (DGSI) reported a few weeks ago, that, since January 2015, 59 Islamist attacks have been thwarted in France. Those, of course, not thwarted include the attack against Charlie Hebdo; the murders the same day in a kosher supermarket; a mass murder in the Bataclan Theater; the murder of Arnaud Beltrame, who took a bullet to shield others; the murders of Fr. Jacques Hamel; of schoolchildren and others in Toulouse, of elderly Jews in Paris, and of at least 84 people watching fireworks in Nice. These attacks were all committed by French Muslims or Muslims legally present in France.
French laws currently make it possible to prosecute just about anything regarded as "incitement to discrimination, hatred or violence against a person or a group of people because of their origin or their belonging to an ethnic group, a nation, a race or a religion." An openly Marxist organization of judges, the Judiciary Union (Syndicat de la magistrature), has steadily gained influence and uses applicable laws to suppress any criticism of either Islam or immigration. They work together with organizations such as SOS Racism, founded in 1984 by members to the left of the Socialist Party; the Movement against Racism and for Friendship between Peoples (MRAP), created in 1949 by members of the French Communist Party (the MRAP was initially called Movement Against Racism, anti-Semitism and for Peace, and removed "anti-Semitism and for Peace" from its name in 1989, when it devoted itself almost entirely to the fight "Islamophobic racism"); the Collective Against Islamophobia in France (CCIF), created in 2003 by members of the Union of Islamic Organizations of France (UOIF), the French branch of the Muslim Brotherhood, and Coordination Against Racism and Islamophobia (CRI), created in 2009.
Any criticism of Islam in France can lead to legal action. The French mainstream media, threatened with prosecution by their own government, have evidently decided no longer to invite on air anyone likely to make comments that could lead to convictions or complaints. Zemmour might still appear on television, but the increasingly heavy fines imposed on him are aimed at silencing him and potentially punishing stations that invite him.
No French political leader dares to say what he says, not even Marine Le Pen. She has been condemned several times by the French judicial system, and, as in the former Soviet Union, ordered to undergo a psychiatric evaluation for having shown the public what ISIS was doing to "disbelievers". She has evidently now decided to be "careful".
The French authorities continue to ignore most of the violent attacks committed in the name of Islam. When they occurred -- against a Jewish school in Toulouse in 2012, or against Charlie Hebdo and a kosher supermarket 2015, or at the Bataclan Theater in 2015, or by the truck-ramming in Nice in 2016 -- the country's leaders promised "firmness" but delivered nothing.
A week after the September 25 attack, French President Emmanuel Macron again delivered a speech that pledged "firmness". He denounced "Islamic separatism" and the "Islamic indoctrination" practiced by radical preachers. He said he would fight terrorism and "liberate French Islam from foreign influences" and that in French schools and universities, he would "strengthen the teaching of Islamic civilization" and "teaching the Arabic language". He said nothing that he has not said before. Seven months ago, on February 18, he gave almost the identical speech in Alsace.
Ibrahim Mounir, spokesman for the Muslim Brotherhood in Europe, nevertheless accused Macron of "hurting the feelings of more than two billion Muslims" and of "acting deliberately to incite Muslims to renounce their religion". He added: "The beliefs of the Muslim Brotherhood have always been able to overcome the mistakes of regimes using illegal and inhuman abuses to distort our religion". Manon Aubry, MEP from the leftist party Rebellious France, commented that "Macron obsessively wants to stigmatize Muslims".
Marine Le Pen, head of the National Rally Party, said that "Macron omitted certain subjects, probably deliberately: he said nothing on terrorism, and nothing on immigration". She added that "massive immigration is the breeding ground of communitarianism [empowering groups rather than individuals], which itself is the breeding ground of Islamist fundamentalism".
The journalist Celine Pina noted that Macron did not speak about the status of asylum seekers. "Once again," she wrote, "Macron refuses really to tackle the causes of the problems that the French suffer. The government fights terrorism by pretending not to see the link between the propaganda of political Islam and the proliferation of violent acts".
Columnist Ivan Rioufol wrote that "the measures Macron is advocating do not respond at all to the urgency of the threat."
Jean Messiha, a senior civil servant of Coptic Christian origin and member of the National Rally party, noted that "Islam does not seek to separate but to conquer". He added that "speaking of an Islam of France dissociated from Islam itself does not make any sense". As Turkish President Recep Tayyip Erdogan correctly noted, "There is no extremist Islam or moderate Islam; Islam is Islam and that's it".
Messiha also suggested that "strengthening the teaching of Islamic civilization is not a priority at a moment when so many young French people no longer know what French civilization is", and that "strengthening the teaching of Arabic will simply help to nourish 'cultural replacement'".
France is now the European country with the largest Muslim population (around six million, or nearly 10% of the total population); each year, moreover, thousand more people from the Muslim world arrive in France. Most of the Muslims living in France today reside in Muslim neighborhoods from which most non-Muslims have fled.
A 2016 study showed that 29% of Muslims living in France believe that Islamic law is superior to French law, and that they must first and foremost obey the laws of Islam. A recent study shows that four years later, the situation has only worsened. Now, 40% of Muslims living in France believe that Islamic law is superior to French law. Eighteen percent of French Muslims also apparently think that the deadly attack on Charlie Hebdo in 2015 was justified. Among Muslims between the ages of 18- 25, that number rises to 26%.
Studies show that if migratory flows continue at the current pace, France could become a Muslim-majority country within 30 to 40 years. Other European countries are moving in the same direction; their leaders are behaving no more courageously than French leaders are. Censorship against anti-Islamic statements is increasing rapidly across the continent.
Abdelaziz Chaambi, director of the group Coordination Against Racism and Islamophobia, recently said that "the data shows that France will be Muslim in a few decades... Islam is the second religion, the second community in France, and those who do not like Muslims have to leave France".
At the end of the speech that earned Zemmour his September 25 court sentence, he told the French, "You are right to be afraid".
A trial is now underway in Paris for those who attacked Charlie Hebdo and the kosher supermarket in 2015. The trial, however, is largely meaningless. All the terrorists are dead. The defendants are simply people who provided weapons or shelter to the terrorists. It is easy for them to say they did not know whom they were hosting or for what the weapons were intended. They have even said that they do not know anything about jihad.
Commenting on a news report that stated, "The trial has sparked protests across France, with thousands of demonstrators rallying against Charlie Hebdo and the French government," the American attorney and commentator, John Hinderaker, wrote: "When thousands demonstrate against the prosecution of alleged murderers, you know you have a problem."
On October 9, Macron announced that he had secured the release of a woman held hostage by a jihadist group in Mali. The release was obtained in exchange for a ransom of $12 million and the freeing of 200 jihadists ready to return to combat against the French military. The hostage, Sophie Petronin, a 75-year-old aid worker, said she converted to Islam, that her name is now Myriam, and that she wants to quickly go back to Mali to live among jihadists. She said she understands why the jihadists fight the French army. France is officially at war with the jihadists in Mali. Macron, it seems, has an oddball, idiosyncratic way of waging war.
This is not the first time that France has paid a ransom -- a practice many countries emphatically reject because it only invites more hostage-taking. Between 2008-2014, to free hostages, France has paid $58 million, more than any other country. Where does one sign up?
“Treason doth never prosper; what is the reason? Why, if it prosper, none dare call it treason.”
– Sir John Harrington.
As Shakespeare would state in his play Hamlet, “Something is rotten in the state of Denmark,” like a fish that rots from head to tail, so do corrupt government systems rot from top to bottom.
This is a reference to the ruling system of Denmark and not just the foul murder that King Claudius has committed against his brother, Hamlet’s father. This is showcased in the play by reference to the economy of Denmark being in a state of shambles and that the Danish people are ready to revolt since they are on the verge of starving. King Claudius has only been king for a couple of months, and thus this state of affairs, though he inflames, did not originate with him.
Thus, during our time of great upheaval we should ask ourselves; what constitutes the persisting “ruling system,” of the United States, and where do the injustices in its state of affairs truly originate from?
The tragedy of Hamlet does not just lie in the action (or lack of action) of one man, but rather, it is contained in the choices and actions of all its main characters. Each character fails to see the longer term consequences of their own actions, which leads not only to their ruin but towards the ultimate collapse of Denmark. The characters are so caught up in their antagonism against one another that they fail to foresee that their very own destruction is intertwined with the other.
This is a reflection of a failing system.
A system that, though it believes itself to be fighting tooth and nail for its very survival, is only digging a deeper grave. A system that is incapable of generating any real solutions to the problems it faces.
The only way out of this is to address that very fact. The most important issue that will decide the fate of the country is what sort of changes are going to occur in the political and intelligence apparatus, such that a continuation of this tyrannical treason is finally stopped in its tracks and unable to sow further discord and chaos.
When the matter of truth is depicted as a possible threat to those that govern a country, you no longer have a democratic state. True, not everything can be disclosed to the public in real time, but we are sitting on a mountain of classified intelligence material that goes back more than 60 years.
How much time needs to elapse before the American people have the right to know the truth behind what their government agencies have been doing within their own country and abroad in the name of the “free” world?
From this recognition, the whole matter of declassifying material around the Russigate scandal in real time, and not highly redacted 50 years from now, is essential to addressing this festering putrefaction that has been bubbling over since the heinous assassination of President Kennedy on Nov. 22nd, 1963 and to which we are still waiting for full disclosure of classified papers 57 years later.
If the American people really want to finally see who is standing behind that curtain in Oz, now is the time.
These intelligence bureaus need to be reviewed for what kind of method and standard they are upholding in collecting their “intelligence,” that has supposedly justified the Mueller investigation and the never-ending Flynn investigation which have provided zero conclusive evidence to back up their allegations and which have massively infringed on the elected government’s ability to make the changes that they had committed to the American people.
Just like the Iraq and Libya war that was based off of cooked British intelligence (refer here and here), Russiagate appears to have also had its impetus from our friends over at MI6 as well. It is no surprise that Sir Richard Dearlove, who was then MI6 chief (1999-2004) and who oversaw and stood by the fraudulent intelligence on Iraq stating they bought uranium from Niger to build a nuclear weapon, is the very same Sir Richard Dearlove who promoted the Christopher Steele dossier as something “credible” to American intelligence.
In other words, the same man who is largely responsible for encouraging the illegal invasion of Iraq, which set off the never-ending wars on “terror,” that was justified with cooked British intelligence is also responsible for encouraging the Russian spook witch-hunt that has been occurring within the U.S. for the last four years…over more cooked British intelligence, and the FBI and CIA are knowingly complicit in this.
Neither the American people, nor the world as a whole, can afford to suffer any more of the so-called “mistaken” intelligence bumblings. It is time that these intelligence bureaus are held accountable for at best criminal negligence, at worst, treason against their own country.
The Family Jewels report, which was an investigation conducted by the CIA to investigate itself, was spurred by the Watergate Scandal and the CIA’s unconstitutional role in the whole affair. This investigation by the CIA reviewed its own conduct from the 1950s to mid-1970s.
The Family Jewels report was only partially declassified in June 25, 2007 (30 years later). Along with the release of the redacted report included a six-page summary with the following introduction:
“The Central Intelligence Agency violated its charter for 25 years until revelations of illegal wiretapping, domestic surveillance, assassination plots, and human experimentation led to official investigations and reforms in the 1970s.” [emphasis added]
Despite this acknowledged violation of its charter for 25 years, which is pretty much since its inception, the details of this information were kept classified for 30 years from not just the public but major governmental bodies and it was left to the agency itself to judge how best to “reform” its ways.
On Dec. 22, 1974, The New York Times published an article by Seymour Hersh exposing illegal operations conducted by the CIA, dubbed the “family jewels”. This included, covert action programs involving assassination attempts on foreign leaders and covert attempts to subvert foreign governments, which were reported for the first time. In addition, the article discussed efforts by intelligence agencies to collect information on the political activities of U.S. citizens.
Largely as a reaction to Hersh’s findings, the creation of the Church Committee was approved on January 27, 1975, by a vote of 82 to 4 in the Senate.
The Church Committee also published an interim report titled “Alleged Assassination Plots Involving Foreign Leaders”, which investigated alleged attempts to assassinate foreign leaders, including Patrice Lumumba of Zaire, Rafael Trujillo of the Dominican Republic, Ngo Dinh Diem of Vietnam, Gen. René Schneider of Chile and Fidel Castro of Cuba. President Ford attempted to withhold the report from the public, but failed and reluctantly issued Executive Order 11905 after pressure from the public and the Church Committee.
Executive Order 11905 is a United States Presidential Executive Order signed on February 18, 1976, by a very reluctant President Ford in an attempt to reform the United States Intelligence Community, improve oversight on foreign intelligence activities, and ban political assassination.
The attempt is now regarded as a failure and was largely undone by President Reagan who issued Executive Order 12333, which extended the powers and responsibilities of U.S. intelligence agencies and directed leaders of the U.S. federal agencies to co-operate fully with the CIA, which was the original arrangement that CIA have full authority over clandestine operations (for more information on this refer to my papers here and here).
In addition, the Church Committee produced seven case studies on covert operations, but only the one on Chile was released, titled “Covert Action in Chile: 1963–1973“. The rest were kept secret at the CIA’s request.
Among the most shocking revelation of the Church Committee was the discovery of Operation SHAMROCK, in which the major telecommunications companies shared their traffic with the NSA from 1945 to the early 1970s. The information gathered in this operation fed directly into the NSA Watch List. It was found out during the committee investigations that Senator Frank Church, who was overseeing the committee, was among the prominent names under surveillance on this NSA Watch List.
In 1975, the Church Committee decided to unilaterally declassify the particulars of this operation, against the objections of President Ford’s administration (refer here and here for more information).
The Church Committee’s reports constitute the most extensive review of intelligence activities ever made available to the public. Much of the contents were classified, but over 50,000 pages were declassified under the President John F. Kennedy Assassination Records Collection Act of 1992.
President Kennedy was assassinated in Dallas, Texas on Nov. 22nd, 1963. Two days before his assassination a hate-Kennedy handbill (see picture) was circulated in Dallas accusing the president of treasonous activities including being a communist sympathizer.
On March 1st, 1967 New Orleans District Attorney Jim Garrison arrested and charged Clay Shaw with conspiring to assassinate President Kennedy, with the help of David Ferrie and others. After a little over a one month long trial, Shaw was found not guilty on March 1st, 1969.
David Ferrie, a controller of Lee Harvey Oswald, was going to be a key witness and would have provided the ”smoking gun” evidence linking himself to Clay Shaw, was likely murdered on Feb. 22nd, 1967, less than a week after news of Garrison’s investigation broke in the media.
According to Garrison’s team findings, there was reason to believe that the CIA was involved in the orchestrations of President Kennedy’s assassination but access to classified material (which was nearly everything concerning the case) was necessary to continue such an investigation.
Though Garrison’s team lacked direct evidence, they were able to collect an immense amount of circumstantial evidence, which should have given the justification for access to classified material for further investigation. Instead the case was thrown out of court prematurely and is now treated as if it were a circus. [Refer to Garrison’s book for further details and Oliver Stone’s excellently researched movie JFK]
To date, it is the only trial to be brought forward concerning the assassination of President Kennedy.
The Assassination Records Review Board (ARRB) was created in 1994 by the Congress enacted President John F. Kennedy Assassination Records Collection Act of 1992, which mandated that all assassination-related material be housed in a single collection within the National Archives and Records Administration. In July 1998, a staff report released by the ARRB emphasized shortcomings in the original autopsy.
The ARRB wrote, “One of the many tragedies of the assassination of President Kennedy has been the incompleteness of the autopsy record and the suspicion caused by the shroud of secrecy that has surrounded the records that do exist.” [emphasis added]
The staff report for the Assassinations Records Review Board contended that brain photographs in the Kennedy records are not of Kennedy’s brain and show much less damage than Kennedy sustained.
The Washington Post reported:
“Asked about the lunchroom episode [where he was overheard stating his notes of the autopsy went missing] in a May 1996 deposition, Finck said he did not remember it. He was also vague about how many notes he took during the autopsy but confirmed that “after the autopsy I also wrote notes” and that he turned over whatever notes he had to the chief autopsy physician, James J. Humes.
It has long been known that Humes destroyed some original autopsy papers in a fireplace at his home on Nov. 24, 1963. He told the Warren Commission that what he burned was an original draft of his autopsy report. Under persistent questioning at a February 1996 deposition by the Review Board, Humes said he destroyed the draft and his “original notes.”
…Shown official autopsy photographs of Kennedy from the National Archives, [Saundra K.] Spencer [who worked in “the White House lab”] said they were not the ones she helped process and were printed on different paper. She said “there was no blood or opening cavities” and the wounds were much smaller in the pictures… [than what she had] worked on…
John T. Stringer, who said he was the only one to take photos during the autopsy itself, said some of those were missing as well. He said that pictures he took of Kennedy’s brain at a “supplementary autopsy” were different from the official set that was shown to him.” [emphasis added]
This not only shows that evidence tampering did indeed occur, as even the Warren Commission acknowledges, but this puts into question the reliability of the entire assassination record of John F. Kennedy and to what degree evidence tampering and forgery have occurred in these records.
We would also do well to remember the numerous crimes that the FBI and CIA have been guilty of committing upon the American people such as during the period of McCarthyism. That the FBI’s COINTELPRO has been implicated in covert operations against members of the civil rights movement, including Martin Luther King Jr. during the 1960s. That FBI director J. Edgar Hoover made no secret of his hostility towards Dr. King and his ludicrous belief that King was influenced by communists, despite having no evidence to that effect.
King was assassinated on April 4th, 1968 and the civil rights movement took a major blow.
In November 1975, as the Church Committee was completing its investigation, the Department of Justice formed a Task Force to examine the FBI’s program of harassment directed at Dr. King, including the FBI’s security investigations of him, his assassination and the FBI conducted criminal investigation that followed. One aspect of the Task force study was to determine “whether any action taken in relation to Dr. King by the FBI before the assassination had, or might have had, an effect, direct or indirect, on that event.”
In its report, the Task Force criticized the FBI not for the opening, but for the protracted continuation of, its security investigation of Dr. King:
“We think the security investigation which included both physical and technical surveillance, should have been terminated … in 1963. That it was intensified and augmented by a COINTELPRO type campaign against Dr. King was unwarranted; the COINTELPRO type campaign, moreover, was ultra vires and very probably … felonious.”
In 1999, King Family v. Jowers civil suit in Memphis, Tennessee occurred, the full transcript of the trial can be found here. The jury found that Lloyd Jowers and unnamed others, including those in high ranking positions within government agencies, participated in a conspiracy to assassinate Dr. King.
During the four week trial, it was pointed out that the rifle allegedly used to assassinate King did not have a scope that was sighted, which meant you could not have hit the broad side of a barn with that rifle, thus it could not have been the murder weapon.
This was only remarked on over 30 years after King was murdered and showed the level of incompetence, or more likely, evidence tampering that was committed from previous investigations conducted by the FBI.
The case of JFK and MLK are among the highest profile assassination cases in American history, and it has been shown in both cases that evidence tampering has indeed occurred, despite being in the center of the public eye. What are we then to expect as the standard of investigation for all the other cases of malfeasance? What expectation can we have that justice is ever upheld?
With a history of such blatant misconduct, it is clear that the present demand to declassify the Russiagate papers now, and not 50 years later, needs to occur if we are to address the level of criminality that is going on behind the scenes and which will determine the fate of the country.
Today we see the continuation of the over seven decades’ long ruse, the targeting of individuals as Russian agents without any basis, in order to remove them from the political arena. The present effort to declassify the Russiagate papers and exonerate Michael Flynn, so that he may freely speak of the intelligence he knows, is not a threat to national security, it is a threat to those who have committed treason against their country.
On Oct. 6th, 2020, President Trump ordered the declassification of the Russia Probe documents along with the classified documents on the findings concerning the Hillary Clinton emails. The release of these documents threatens to expose the entrapment of the Trump campaign by the Clinton campaign with help of the U.S. intelligence agencies.
The Director of National Intelligence John Ratcliffe released some of these documents recently, including former CIA Director John Brennan’s handwritten notes for a meeting with former President Obama, the notes revealing that Hillary Clinton approved a plan to “vilify Donald Trump by stirring up scandal claiming interference by the Russian security service.”
Trey Gowdy, who was Chair of the House Oversight Committee from June 13th, 2017 – Jan. 3rd, 2019, has stated in an interview on Oct. 7th, 2020 that he has never seen these documents. Devin Nunes, who was Chair of the House Intelligence Committee from Jan. 3rd, 2015 – Jan. 3rd, 2019, has also said in a recent interview that he has never seen these documents.
And yet, both the FBI and CIA were aware and had access to these documents and sat on them for four years, withholding their release from several government-led investigations that were looking into the Russiagate scandal and who were requesting relevant material that was in the possession of both intelligence bureaus. Do these intelligence bureaus sound like they are working for the “national security” of the American people?
The truth must finally be brought to light, or the country will rot from its head to tail.
Upon Sunday's historic expiration of the 13-year long UN weapons embargo on Iran, the AFP and others noted that the Islamic Republic has ruled out a weapons "buying spree" at a moment Russia and China have indicated they're quite open to selling advanced systems to Tehran.
The Foreign Ministry said of the "momentous day" on Sunday that “as of today, the Islamic Republic of Iran may procure any necessary arms and equipment from any source without any legal restrictions and solely based on its defensive needs.”
However, Iran's Ministry of Defense has indicated it is ready and willing to sell weapons to "countries despised by the US" - as one state media headline reads. As Al Jazeera has emphasized, "The end of the embargo means Iran will legally be able to buy and sell conventional arms, including missiles, helicopters and tanks."
Citing the country's defense minister, the Iranian media report says:
Iran’s defense minister says the country is going to support the countries that seek to defend their existence now that the UN Security Council’s restrictions on Tehran’s arms trade are lifted.
Brigadier General Amir Hatami said Iran will sell arms to the countries despised by the Americans if they ask for it.
He explained in a Sunday night televised interview that “Many countries have already talked to us; we have held negotiations with some countries, and the grounds are totally prepared for exchanges [of weapons], both for selling [arms to other countries] and for supplying certain needs [buying weapons].”
“Of course our sales will be much more extensive than our purchases,” he said.
While finding itself isolated among international powers and unable to deal even with potential 'friendly' countries under the pressure of US sanctions reimposed since 2018, Iran has been unable to make major deals, though has closely supported its ally Syria throughout the proxy war in that country.
Iran has also been long accused of supplying ballistic missiles to Yemen's Houthi rebels as well, resulting in occasional major attacks on Saudi Arabian military and oil facility sites.
Iran has developed a large domestic arms industry in the face of international sanctions and embargoes that have barred it from importing many weapons. https://t.co/oCj3mei6P1— Algemeiner (@Algemeiner) October 18, 2020
But it's clear there's been some significant advances in the Islamic Republic's domestic production capabilities. Gen. Hatami touted this, saying “Even our enemies admit that Iran today is a significant missile power in the world… It is also a renowned world power in the aerial field.” He highlighted Iranian-build drones and missile defense systems.
“Our Khordad-3 defense system managed to target an expensive American stealth drone which had intruded the Iranian airspace,” the defense minister underscored.
One likely country "despised by the US" - in the top commander's words - that Iran is likely to sell to is Venezuela.
Over the past two years Washington has actively plotted to topple Nicolas Maduro with the help of local military dissidents, but to no avail. From there, Iran stepped up its support to Caracas, especially by shipping tankers full of gasoline of late.
Hunter Biden profited from his father’s political connections long before he struck questionable deals in countries where Joe Biden was undertaking diplomatic missions as vice president. In fact, virtually all the jobs listed on his resume going back to his first position out of college, which paid a six-figure salary, came courtesy of the former six-term senator’s donors, lobbyists and allies, a RealClearInvestigations examination has found.
Hunter Biden: Through a lawyer, he maintained he and his father dutifully avoided “conflicts of interest.” Democratic National Convention/YouTube
One document reviewed by RCI reveals that a Biden associate admitted “finding employment” for Hunter Biden specifically as a special favor to his father, then a Senate leader running for president. He secured a $1.2 million gig on Wall Street for his young son, even though it was understood he had no experience in high finance. Many of his generous patrons, in turn, ended up with legislation and policies favorable to their businesses or investments, an RCI review of lobbying records and legislative actions taken by the elder Biden confirms.
That the 50-year-old Hunter has been trading on his Democratic father’s political influence his entire adult life raises legal questions about possible influence-peddling, government watchdogs and former federal investigators say. In addition, the more than two-decades-long pattern of nepotism casts fresh doubt on Joe Biden’s recent statements that he “never discussed" business with his son, and that his activities posed "no conflicts of interest."
No fewer than three committees in the Republican-controlled Senate have opened probes into potential Biden family conflicts. Investigators are also poring over Treasury Department records that have flagged suspicious activities involving Hunter's banking transactions and business deals that may be connected to his father’s political influence.
U.S. ethics rules require all government officials to avoid even the appearance of a conflict of interest in taking official actions. The Bidens have denied any wrongdoing.
While most of the attention on Hunter has focused on his dealings in Ukraine and China when his father was in the White House, he also cashed in on cushy jobs and sweetheart deals throughout his dad’s long Senate career, records reveal.
"Hunter Biden's Ukraine-China connections are just one element of the Biden corruption story,” said Tom Fitton, president of the Washington-based watchdog group Judicial Watch, who contends Biden used both the Office of the Vice President and the Senate to advance his son’s personal interests.
In each case, Hunter Biden appeared under-qualified for the positions he obtained. All the while, he was a chronic abuser of alcohol and drugs, including crack cocaine, and has cycled in and out of no fewer than six drug-rehab treatment programs, according to published reports. He's also been the subject of at least two drug-related investigations by police, one in 1988 and another in 2016, according to federal records and reports. A third drug investigation resulted in his discharge from the U.S. Navy Reserve in 2014.
This comprehensive account of Hunter Biden’s “unique career trajectory,” as one former family friend gently put it, was pieced together through interviews with more than a dozen people, several of whom insisted on anonymity to describe private conversations, and after an in-depth examination of public records, including Securities and Exchange Commission filings, court papers, campaign filings, federal lobbying disclosures, and congressional documents.
Hunter Biden's resume begins 24 years ago. Here is a rundown of the plum positions he has managed to land since 1996, thanks to his politically connected father and his boosters:
Fresh out of college, credit-card giant MBNA put him on its payroll as "senior vice president" earning more than $100,000 a year, plus an undisclosed signing bonus. Delaware-based MBNA at the time was Biden’s largest donor and lobbying the Delaware senator for bankruptcy reforms that would make it harder for consumers to declare bankruptcy and write off credit-card debt.
When Tom Brokaw asked Biden in 2008 about whether his son's job was a conflict of interest, he snapped "Absolutely not." It was an answer he'd repeat many times in the future. NBC News/YouTube
Besides a job for Hunter, bank executives and employees gave generously to Joe Biden’s campaigns – $214,000 total, federal records show – and one top executive even bought Biden’s Wilmington, Del., home for more than $200,000 above the market value, real estate records show. The exec paid top dollar – $1.2 million – for the old house even though it lacked central air conditioning. MBNA also flew Biden and his wife to events and covered their travel costs, disclosure forms show.
Sen. Biden eventually came through for MBNA by sponsoring and whipping votes in the Senate to pass the Bankruptcy Abuse Prevention Act.
When NBC News anchor Tom Brokaw asked Biden during the 2008 presidential campaign whether it was wrong “for someone like you in the middle of all this to have your son collecting money from this big credit-card company while you were on the (Senate) floor protecting its interests,” Biden gave an answer he would repeat many times in the future: “Absolutely not,” he snapped, arguing it was completely appropriate and that Hunter deserved the position and generous salary because he graduated from Yale.
Hunter also capitalized on the family name in 1998 when he joined President Clinton’s agency. In spite of having no experience in the dot-com industry, he was appointed "executive director of e-commerce policy coordination,” pulling down another six-figure salary plus bonuses.
He landed the job after his father’s longtime campaign manager and lawyer William Oldaker called then-Commerce Secretary William Daley, who'd also worked on Biden’s campaigns, and put in a good word for his son, according to public records.
After Republican President George W. Bush took over the Commerce Department, Hunter left the government and joined Oldaker to open a lobbying shop in Washington, just blocks from Congress, where he gained access to exclusive business and political deals.
Robert Skomorucha: Hunter had “a very strong last name that really paid off in terms of our lobbying efforts.” LinkedIn
Federal disclosure forms show Hunter Biden and his firm billed millions of dollars while lobbying on behalf of a host of hospitals and private colleges and universities, among other clients. In a 2006 disclosure statement submitted to the Senate, Hunter said his clients were “seeking federal appropriations dollars.”
Hunter won the contract to represent St. Joseph’s University from an old Biden family friend who worked in government relations at the university and proposed he solicit earmarks for one of its programs in Philadelphia. The friend, Robert Skomorucha, remarked in a press interview that Hunter had “a very strong last name that really paid off in terms of our lobbying efforts.”
These clients, like MBNA, also favored bankruptcy reforms to make it harder for patients and students to discharge debt in bankruptcy filings. At the same time Hunter was operating as a Beltway lobbyist, he was receiving "consulting payments" from his old employer MBNA, which was still courting his father over the bankruptcy reforms.
In 2007, Hunter also dined with a private prison lobbyist who had business before a Senate Judiciary subcommittee Joe Biden chaired, according to published reports. Senate rules bar members or their staff from having contact with family members who are lobbyists seeking to influence legislation.
William Oldaker: Did not just make Hunter a rich lobbyist, but secured him a $1 million loan that went sour. ldaker & Willison
Hunter’s lawyer-lobbyist firm was embroiled in a conflict-of-interest controversy in 2006 when it was criticized for representing a lobbyist under investigation by the House ethics committee. The lobbyist was still taking payments from his old K street firm while working as a top aide on the House Appropriations Committee. Hunter at the time was lobbying that same committee for earmarks for his clients.
William Oldaker did not just make Hunter a rich lobbyist. Oldaker also secured a $1 million loan for him through a bank he co-founded, WashingtonFirst, that Hunter sought for an investment scheme, which later went sour.
Joe Biden deposited hundreds of thousands of dollars in campaign and political action committee donations at WashingtonFirst, while funneling hundreds of thousands in campaign and PAC expenditures to Oldaker, Biden & Belair. Joe Biden's payments to Hunter’s lobbying firm, including more than $143,000 in 2007 alone, were listed as “legal services” in Federal Election Commission filings.
Oldaker did not respond to a request for comment left at his office.
National Group: Hunter won earmarks for the University of Delaware and other Biden constituents. thenationalgroup.net
While serving as a partner at Oldaker, Biden & Belair, Hunter also registered as a lobbyist for National Group, a lobbying-only subsidiary which shared offices with OB&B and specialized in targeted spending items inserted into legislation known as “earmarks.”
Hunter represented his father’s alma mater, the University of Delaware, and other Biden constituents and submitted requests to Biden’s office for earmarks benefiting these clients in appropriations bills.
In 2005, when Joe Biden was thinking about making another run at the White House, after a 1987 bid that ended in plagiarism charges, his lobbyist son was looking for a new line of work too.
In early 2006, Wall Street executive and Biden family friend Anthony Lotito said, Biden’s younger brother, Jim, phoned him on behalf of the senator. He said Biden wanted his youngest son – whom he still called “Honey” – to get out of the lobbying business to avoid allegations of conflicts of interest that might dog Biden’s presidential bid.
“Biden was concerned with the impact that Hunter’s lobbying activities might have on his expected campaign [and asked his brother to] seek Lotito’s assistance in finding employment for Hunter in a non-lobbying capacity,” according to a January 2007 complaint that Lotito filed in New York state court against Hunter over alleged breach of contract in a related venture. (Jim and Hunter Biden denied such a phone call took place as described.)
Lotito told the court he agreed to help Hunter as a favor to the senator, who had served on the powerful banking committee. He figured “the financial community might be a good starting place in which to seek out employment on Hunter’s behalf,” the court documents state. But he quickly found that Wall Street had “no interest" in hiring Biden.
So the Bidens hatched a scheme to buy a hedge fund, “whereby Hunter would then assume a senior executive position with the company.” And Lotito helped broker the deal. Despite having no Wall Street experience, Biden was appointed interim CEO and president of the Paradigm investment fund and given a $1.2 million salary, according to SEC filings. Lotito joined the enterprise as a partner, and agreed to shepherd Hunter, still in his mid-thirties, through his new role in high-finance.
“Given Hunter Biden’s inexperience in the securities industry,” the complaint states, it was agreed that Lotito would maintain an office at the new holding company’s New York headquarters “in order to assist Biden in discharging his duties as president.”
After the venture failed, Lotito sued the Bidens for fraud. The Bidens countersued and the two parties settled in 2008.
During this same period, Hunter was appointed vice chairman of the taxpayer-subsidized rail line, thanks to the sponsorship of powerful Democratic Sen. Harry Reid, a political ally of his father.
Joe Biden: The "senator from Amtrak" had a son from Amtrak too. Michael Perez/AP for Siemens
In a 2006 statement submitted to the Senate during his confirmation, Hunter asserted that he was qualified for the Amtrak board because “as a frequent commuter and Amtrak customer for over 30 years, I have literally logged thousands of miles on Amtrak.”
Amtrak has been a major supporter of Joe Biden, donating to both his Senate and presidential campaigns and even naming a train station after him in Wilmington. In return, Biden has supported taxpayer subsidies for the government railroad throughout his political career.
In his testimony, Hunter denied his Amtrak appointment pushed conflict-of-interest boundaries.
Hunter co-founded the investment firm five months after his father moved into the White House and incorporated it in his father’s home state of Delaware, which has strict corporate secrecy rules.
At the time, Obama had tapped Vice President Biden to oversee the recovery from the financial crisis. Three weeks after Rosemont was incorporated, Hunter and his partners set up a subsidiary called Rosemont TALF and got $24 million in loans from the federal program known as the Term Asset-Backed Securities Loan Facility. TALF was designed to help bail out banks and auto lenders hit by the crisis.
Within months, Rosemont had secured a total of $130 million from the program. Some of the government cash was then funneled into an investment fund incorporated in the Cayman Islands, SEC records show. Such offshore accounts are commonly used to evade taxes.
The move raised ethical flags with government watchdogs who suspected the bailout cash was used to benefit a well-connected insider.
Other records reveal that another subsidiary created years later – Rosemont Realty – touted to its investors that board adviser Hunter was politically connected. It highlighted in a company prospectus that he was the “son of Vice President Biden.”
On his resume, Hunter also lists himself as “founder" of yet another investment firm. But Eudora’s articles of incorporation show it was actually set up by a major Biden donor, Jeffrey Cooper, who put Hunter on his board after his father became vice president.
A self-described “friend of the Biden family,” Cooper also happened to run one of the largest asbestos-litigation firms in the country — SimmonsCooper LLC — and had courted Biden to make it easier to file asbestos lawsuits by defeating tort reforms. As a leader on the Senate Judiciary Committee, Biden had blocked reform of asbestos litigation every time bills reached the Senate floor.
Cooper’s law firm, which directly lobbied the Delaware senator's office to kill such bills, donated more than $200,000 to Biden’s campaigns over the years, as well as his Unite Our States PAC, FEC records show. In fact, SimmonsCooper was one of Biden’s biggest donors during his failed 2007-2008 run for president, pumping $53,000 into his campaign.
The firm also put up $1 million in investment capital to help his son buy out the Paradigm hedge fund as part of the arrangement brokered by another Biden family friend, Lotito, to find non-lobbying work for Hunter.. Thanks in large part to Biden’s effort to kill bills reining in asbestos trial lawyers, SimmonsCooper has hauled in more than $1 billion for alleged asbestos victims.
Attempts to reach Cooper for comment were unsuccessful.
When Joe Biden became Vice President, Hunter landed a high-paying, no-show job at the New York-based law firm, a Democrat shop long tied to the Clintons. Another major Biden donor, the firm gave him the title “of counsel.”
Boies Schiller Flexner: Got Fraud charges against Hunter Biden dismissed, then brought him aboard. Boies Schiller Flexner
Boies Schiller brought Hunter aboard in 2009 after the Bidens hired the firm to defend Hunter against charges he defrauded partners in the Paradigm investment venture. Boies Schiller managed to get the case dismissed.
In 2014, a corrupt Ukrainian oligarch, who was under investigation and looking to repair his reputation to attract Western investors, started sending large payments to Boies to support Hunter for unspecified work. It’s unclear what Hunter did for the oligarch, who ran the gas giant Burisma, but $283,000 showed up at the same time his father was tapped by Obama to play a central role in overseeing U.S. energy policy in Ukraine.
Boies Schiller has pumped more than $50,000 into Biden's campaigns, Federal Election Commission records show.
After Obama named Biden his point man on China policy, Rosemont Seneca set up a joint venture worth $1 billion with the Bank of China called BHR – and Hunter was named vice-chairman and director of the new concern.
BHR Partners: Hunter arranged for one of his Chinese partners to shake hands with his father, the vice president. Beijing approved a business license shortly afterward. BHR Partners
Following in the shadow of his father’s political trajectory, Hunter’s new venture won the first-of-its-kind investment deal with the Chinese government at the same time Biden was jetting to Beijing to meet with top communist leaders. Secret Service records reveal Hunter flew to China on Air Force Two with his father while brokering the December 2013 deal. He arranged for one of his Chinese partners to shake hands with the vice president. BHR was registered 12 days later. Beijing OK’d a business license shortly afterward.
“No one else had such an arrangement in China,” said Peter Schweizer, president of the Government Accountability Institute.
Hunter resigned from the board of the Beijing-backed equity firm earlier this year as his father faced growing criticism on the campaign trail over what critics called a glaring conflict of interest. He did not, however, divest his 10% equity stake in the Chinese fund, which is estimated to be worth tens of millions of dollars.
Schweizer, whose books include “Profiles in Corruption: Abuse of Power by America’s Progressive Elites,” said Biden went “soft” on the Chinese communists so his son could “cash in” on China business deals. Biden insists he did not discuss the venture with his son before, during or after his official visit to Beijing. But others see obvious hypocrisy at play in the Biden family's self-dealing in notoriously corrupt China.
"Biden was one of the most vocal champions of anti-corruption efforts in the Obama administration. So when this same Biden takes his son with him to China aboard Air Force Two, and within days Hunter joins the board of an investment advisory firm with stakes in China, it does not matter what father and son discussed,” said Sarah Chayes, author of "Thieves of State: Why Corruption Threatens National Security.” "Joe Biden has enabled this brand of practice.”
Hunter was selected for a direct commission as a public affairs officer in a Virginia reserve unit.
He clearly received special treatment in securing the part-time post. Officers had to issue him two waivers – one for his age and one for a previous drug offense.
His vice president father swore him in at the White House in a small, private ceremony.
Barely a year later, authorities booted Hunter from the Navy for cocaine use after he tested positive from a urine test. The reason for his discharge was withheld from the press for several months.
The Ukrainian gas giant added Hunter to its board soon after Obama named his father his point man on Ukraine policy, focusing on energy. The company paid his son as much as $83,000 a month, even though he had no energy experience to bring to the table and was required to attend just one board meeting a year.
Golf buddies: White House visitor logs show that Joe Biden met with Hunter’s business partner Devon Archer, far left, on April 16, 2014. Burisma put Archer on its board shortly thereafter, followed by Hunter, far right, the next month. Fox News
At the time, the vice president was steering U.S. aid to Kiev to help develop its gas fields, which stood to benefit Burisma as the holder of permits to develop natural gas in three of Ukraine’s most lucrative fields. Biden promised Ukrainian officials the US would pump more than $1 billion into their energy industry and economy during a visit to Kiev in late April 2014. He urged leaders to increase the country’s gas supply and to rely on Americans to help them. Less than three weeks later, Burisma appointed his son to the board, after already retaining him for undisclosed services through Boies Schiller.
Burisma was run by an oligarch, Mykola Zlochevsky, who was under investigation at the time and seeking Western protection from prosecution. In a move observers suspect was intended to send a message to prosecutors, the company sent out a news release in May 2014 claiming, falsely, that Hunter would be in charge of its “legal unit.” Burisma also trumpeted the fact that Hunter was “the son of the current U.S. Vice President Joseph Biden."
Biden’s office was aware Burisma was under investigation. The administration had tried to partner with the gas company through U.S. aid programs, but the outreach project was blocked over corruption concerns lodged by career diplomats.
Viktor Shokin, ex-Ukraine prosecutor: “The truth is that I was forced out because I was leading a wide-ranging corruption probe into Burisma, and Joe Biden’s son was a member of the board,” he said in a recent sworn affidavit prepared for a European court. AP Photo/Sergei Chuzavkov, File
In early 2016, Biden threatened to withhold $1 billion in U.S. loan guarantees if Ukraine did not dismiss the country’s top prosecutor, Viktor Shokin, who was investigating Burisma. “If the prosecutor is not fired,” Biden recalled telling Ukraine’s leader, “you’re not getting the money."
Biden’s muscling worked: Shokin was sacked in March 2016.
The former vice president says he was carrying out official U.S. policy that sought to remove an ineffective prosecutor. But Shokin had raided the home of Burisma’s owner and seized his property.
In addition, Shokin said that as part of his probe he was making plans to interview Hunter about millions of dollars in fees he and his partners had received from Burisma. He insists he was fired because he refused to close the investigation.
“The truth is that I was forced out because I was leading a wide-ranging corruption probe into Burisma, and Joe Biden’s son was a member of the board,” Shokin said in a recent sworn affidavit prepared for a European court. “I assume Burisma had the support of Joe Biden because his son was on the board.” He added that the vice president himself had “significant interests” in Burisma.
The prosecutor who replaced Shokin shut down the Burisma probe within 10 months. Burisma’s founder was also taken off a U.S. government visa ban list.
Biden claims he only learned of his son joining the Burisma board from the news media. But there is evidence Biden had been consulted in advance. White House visitor logs show that Biden met with Hunter’s business partner Devon Archer on April 16, 2014. Burisma put Archer on its board shortly thereafter, followed by Hunter the next month. (Both Archer and Hunter maintain Burisma never came up during the private visit in Biden’s office, which lasted late into the night.)
The day after Joe Biden’s meeting with Hunter’s partner in the White House, Burisma executive Vadym Pozharskyi reportedly emailed Hunter to thank him for inviting him to Washington and “giving an opportunity to meet your father and spent[sic] some time together.” The Biden campaign asserts it cannot find a meeting with Pozharskyi on the former vice president’s “schedule,” though it did not deny such a meeting could have taken place. The Ukrainian official mentioned going out for coffee with Hunter on April 17, 2014, which indicated he was physically in D.C. at the time. RCI has not confirmed the authenticity of the April 17 email document, first disclosed by the New York Post after obtaining it from a hard drive allegedly copied from a laptop of Hunter Biden left at a computer repair shop in Wilmington, Del. Pozharskyi did not respond to emails seeking comment.
Hunter stepped down from Burisma's board in April 2019, a month before his father announced his White House bid and after critics made an issue of the conflicts his sinecure posed. He has since kept a very low profile. Unlike Trump’s children, Biden’s son is not out on the trail campaigning for him.
“Hunter Biden had no experience in the field, but he did have a notable connection to the vice president, who publicly has bragged about making clear to the Ukrainians that he alone controlled U.S. aid to the country,” noted Jonathan Turley, a public-interest law professor at George Washington University.
Retired FBI official I.C. Smith, who led public corruption investigations in Washington and Little Rock, Ark., said both father and son should have known joining Burisma was a bad idea, adding that it gives at least the appearance he was leveraging his name for payoffs from shady clients abroad.
I.C. Smith, ex-FBI official: "I would think, given Hunter's past, the father would have asked more questions.” icsmith.com
"Clearly he's led a troubled life and would be the sort of person susceptible to becoming engaged in this sort of rather sordid deal,” Smith said of Hunter.
"When he said his father asked if the deal was on the up and up and was assured it was, I would think, given Hunter's past, the father would have asked more questions,” he added.
Hunter acknowledged in an ABC News interview last year that he lacked experience in both energy and Ukraine, but maintained that Burisma was impressed by other things on his resume.
“Ironically, Hunter highlighted his work at MBNA and his work on the board of Amtrak as evidence of his qualifications for the Burisma gig,” said Fitton of Judicial Watch. "But both the MBNA and Amtrak jobs, under any sensible analysis, were obvious favors for Joe Biden."
Fitton argued that Biden’s claim he never discussed his son’s jobs and business deals rings hollow against the lengthy record of something-for-nothing nepotism.
“That’s campaign spin,” he said. “Hunter has already admitted to having at least one conversation on the Ukraine issue with Vice President Biden.”
Biden defenders argue that many relatives of politicians are often involved in government and politics. Ivanka Trump and Don Trump Jr., for instance, have cozy relationships with, or financial stakes in, companies that may benefit from those decisions. They also point out that, while they may look bad, there's nothing illegal about such arrangements.
Fitton isn’t so sure. He said Judicial Watch is demanding Obama administration documents related to Hunter’s Ukraine and China deals, as well as other business arrangements potentially monetizing Biden’s political power.
“We can’t be sure if the arrangements were legal,” he said. “If any payments or jobs were neither ordinary nor customary, there may be legal issues.”
It’s a federal crime to provide a government benefit or favorable change in policy in exchange for something of personal value. At a minimum, argued former federal prosecutor Andrew McCarthy, Biden “had a conflict of interest with the position his son had” on the Burisma board, noting that at the time, Biden was pushing energy policies that favored the gas giant.
The Biden School, part of the University of Delaware, which is keeping a lid on Biden records. Biden School of Public Policy and Administration
Not all of Hunter Biden’s critics are coming from the right, either.
“It’s hard to avoid the conclusion that Hunter’s foreign employers and partners were seeking to leverage Hunter’s relationship with Joe, either by seeking improper influence or to project access to him,” said Robert Weissman, president of Public Citizen, a liberal watchdog group based in Washington.
The Biden Institute: Maggie Haberman, New York Times White House correspondent, was a featured speaker in 2018, according to its website. The University of Delaware holds more than 1,850 boxes of Biden records under seal. Biden Institute/University of Delaware
While Joe Biden insists “there’s been no indication of any conflict of interest from Ukraine or anywhere else," Senate investigators are seeking a number of related emails and memos generated during the Obama administration, as well as his 36-year Senate career. That period, spanning from 1973 to 2009, coincides with a large chunk of his son’s resume.
However, Biden has sealed the bulk of the records at the University of Delaware Library, which refuses to release any of his papers until after the election. It maintains more than 1,850 boxes of Biden records, including his speeches, voting records, position papers and notes from confidential interviews he’s conducted with foreign leaders, among other documents. The papers the university is keeping a lid on could shed light on Biden’s thinking behind foreign policies and controversial bills he sponsored.
A spokeswoman said the library will not release any of Biden’s papers to the public until they are “properly processed and archived.” Until then, “access is only available with Vice President Biden’s express consent,” she said, while declining to answer whether the university would comply if the Senate subpoenaed documents as part of its investigation of the Bidens.
The university houses the Biden Institute, which is part of the Joseph R. Biden, Jr. School of Public Policy and Administration.
Through a lawyer, Hunter maintained he and his father dutifully avoided “conflicts of interest” — or even “the appearance of such conflicts." In every business pursuit, he asserted, they acted “appropriately and in good faith.”
However, in a moment of candor during a recent ABC News interview, Hunter confessed: "I don't think that there's a lot of things that would have happened in my life if my last name wasn't Biden,” before adding, "There's literally nothing my father in some way hasn't had influence over.”
Still, the elder Biden argues it’s the Trump family who has the nepotism problem. In a recent CBS “60 Minutes” interview, he slammed the president for letting his daughter and son-in-law "sit in on Cabinet meetings."
"It's just simply improper because you should make it clear to the American public that everything you're doing is for them,” he intoned. "For them.”
A Chinese PLA soldier has been apprehended by the Indian Army in the western Himalayan border region of Ladakh on Monday, where both sides have been locked in a fierce border dispute which over the summer broke into hand-to-hand clashes that left at least 20 Indian troops killed.
While the Chinese side has kept quiet about it, Indian military officials say the lone Chinese soldier appears to have strayed across the contested border line where thousands on each side have been based amid a military build-up. Indian media is so far widely reporting the soldier is expected to be returned based on official statements.
"The People’s Liberation Army (PLA) soldier was captured in the Demchok area of eastern Ladakh and would be returned after the completion of formalities," the Indian Army said according to Al Jazeera.
“The PLA soldier has been provided medical assistance including oxygen, food and warm clothes to protect him from the vagaries of extreme altitude and harsh climatic conditions,” the statement said.
It's unclear how quickly the soldier is expected to be returned to the Chinese side, but it's a very rare occurrence, also coming at a moment of continued high tensions.
China and India have been engaged in military-to-military talks to attempt to return the region to a peaceful status quo amid the border dispute, which reaches back decades.
Each side has accused the other of violating prior agreements, but for now that talks appear to have kept the peace even as a military build-up on each side has continued.
However, as of September both sides were witnessed sending additional troops and supplies to the harsh high-altitude region, strongly suggesting the standoff will continue for the long haul.
When winter hits, all roads leading to the area are blocked, so it appears the rival militaries are digging in for the long harsh winter.
The FBI-generated indictment of six men on charges of terrorism for planning to kidnap Michigan Governor Gretchen Whitmer has all the earmarks of what has become that corrupt agency’s standard operating procedure.
Their lawyers are sure to claim they were victims of entrapment. If the case comes to trial, I doubt a jury will convict them.
During the eight years I spent supervising the intelligence agencies for the Senate Intelligence Committee, I watched as what had been a clerisy of strait-laced guardians of truth and justice was becoming a bunch of lazy bureaucrats eager to serve the ruling class’ prejudices.
No longer doing the hard and dangerous work of investigating deeply connected criminals and subversives such as the Mafia and well-financed, politically supported subversives, the FBI limited its vision to politically correct “profiles,” and started chasing small fry. Easy targets, defended by no one. What’s not to like?
After 9/11, the FBI spent few years going after very petty Islamists while covering its collective eyes to the work of major sources of trouble, such as the Muslim Brotherhood, the Palestinian Authority, and Saudi Arabia—each beloved by parts of the ruling class. But before and after this period, these profiles more often than not pointed to the ruling class’ favorite enemy: fellow Americans “excessively concerned with their liberties.”
The FBI’s method? Place agents among the target group, stoke their sentiments, and lead them to say or do something that could be characterized as a crime, then arrest them and claim credit for foiling a plot. In intelligence lingo, that is provocation. In legal terms, it’s entrapment. By whatever name, this is the work of cheap, dirty cops.
In the 1950s, the joke was that any meeting of a Communist Party cell in the New York area was likely to consist of two-thirds infiltrators, half from the FBI and the other half from the New York Police Department. But these FBI infiltrators, like those of the Vietnam era in the 1960s and early ’70s, and like those who penetrated organized crime were merely watching. Doing an honest job. They were not provoking or entrapping, not creating something that would never have been there except for their presence.
Fast forward to our time. The contrast between how the FBI behaves with regard to persons connected to the ruling class and those who are not speaks for itself. The 918 Americans who died in mass suicide in Jonestown Guyana in November 1978 were victims of a cult that had been closely associated with the California Democratic Party. Relatives of the people who were being drawn in had complained to the FBI. But the FBI had refused to keep an eye on the movement, and later officially argued that doing so would have infringed on its political and religious liberties.
And yet when the Tea Party movement arose to protest collusion between the Republican and Democratic parties against popular sentiment on a host of political issues, the FBI rushed to infiltrate it.
Having addressed countless meetings of Tea Parties in Northern California from 2010 to 2012, I experienced this infiltration directly. The audiences were respectful, and asked informative questions. When, occasionally, I got a question that seemed to push me to say something inflammatory, I made it a point to find and speak to the individual who had asked it. Invariably, the person fit a profile with which I had become familiar from my years overseeing the FBI: a man in his late 30s, who had recently moved into the community and worked for a big company, often remotely, and whose echoing of the sentiments surrounding him sounded studied. I would then advise him on how to write his report to headquarters. Generally, the man would walk away.
In the Michigan case, it seems the FBI had started by monitoring the men’s social media traffic and, on the basis of “excess concern for liberty” (prithee, what is that?) had obtained warrants for wiretaps and had inserted one or more infiltrators. But up to this time, no crime could be alleged—only what the FBI and its local affiliate considered a bad attitude.
What exactly was the infiltrator’s role in moving the men from mere talk to incipient, allegedly criminal action? That is going to be the essence of the trial. The FBI will produce recordings made by the infiltrator. When was the device turned on, and when off? To what extent do those intermissions and/or additions made to the recording contribute to the impression that this was a real plot hatched autonomously?
The accused will have the government’s and media’s full weights used against them, as would you or I.
The jury will have to decide whether the FBI was protecting society from sociopaths or whether it is itself sociopathic.
DC lobbyists are licking their chops at the prospect of a Biden win in November, as a flood of new regulations means they'll have their work cut out for them.
"There is a huge amount of planning going on in our client base for what this could look like," according to Holland & Knight LLP lobbyist, Rich Gold. "It’s highly likely the first six months of 2021 are some of the biggest legislative months I will have in my career in terms of things moving."
Gold represents the American Chemistry Council, education technology provider Zovio, Inc., agriculture giant Corteva and several local governments.
According to Bloomberg, K Street lobbyists began planning for major changes when polling began to show former Vice President Biden leading President Trump, as well as the possibility that Democrats would regain control of the Senate.
"Not since 2008, when President George W. Bush was leaving the White House, have lobbyists planned for the possibility of so sweeping a change in Washington’s corridors of power," writes Bloomberg's Jennifer Dlouhy and Ben Brody.
The presidential race remains tight in key states and the firms remain vigilant for another Trump victory like the one that caught many by surprise in 2016. But they are hedging their bets and increasingly planning around Biden’s polling lead.
One firm is developing dossiers on potential appointees, selling them to clients under the maxim “people are policy.” Another has created flow charts outlining possible committee leadership changes on Capitol Hill. And at least one group has established a war room to brainstorm strategies for countering policy proposals. -Bloomberg
One oil lobbyist told Bloomberg on condition of anonymity that the election would be a "rack-and-stack" exercise when it comes to the multitude of actions the Biden administration could undertake, while a Democratic sweep of the Senate has caused many lobbyists to begin cultivating relationships with moderate Democrats, including Jon Tester of Montana, Kyrsten Sinema of Zrizona, and Joe Machin of West Virginia.
According to lobbyists interviewed by Bloomberg News, a Biden administration would likely take immediate action on a new COVID-19 relief bill to help stimulate the US economy, along with their healthcare agenda and an increase in the corporate tax rate.
The stimulus bill alone would generate a whirlwind of activity for corporate interests - such as drugmakers who want to fend off the Trump administration's efforts to limit drug prices, while the renewable energy industry will be looking for ways to get in on the COVID-19 package to foster clean energy programs.
"It’s so difficult to play out some of these scenarios here, and as a committed Democrat, I think we’re all still suffering from a little post-traumatic stress from 2016," said former Al Gore aide and current partner at Mehlman Castagnetti Rosen & Thomas, David Thomas. "Everything comes with qualifiers."
The energy industry, meanwhile, will be girding their loins in anticipation that a Biden administration would undo much of the deregulation enacted by the Trump administration.
Companies are trying to figure out "what do Biden's first 100 days look like," and "how do they impact us and how do we begin planning for that, according to longtime energy consultant, Stephen Brown.
"You can’t just be against everything; it’s what you can be for and how can you be for it," he added. "That creates a huge internal discussion, not just by company by company but also trade association by trade association."
Tony Podesta's ex-wife, Heather Podesta - a Democratic lobbyist and CEO of lobbying firm Invariant - says that "Sophisticated corporations are in a constant state of re-evaluating their consulting teams, understanding that they’ve got to be nimble and have the best possible folks advising them and representing them in Washington." Podesta represents Apple, Yelp, PelsiCo and the Business Roundtable.
"Right now, everybody is in a state of speed dating," she added.
No Washington-designed “maximum pressure” has been able to derail a crucial milestone this Sunday: the end of the UN arms embargo on Iran, in accordance with UN Security Council 2231, which has endorsed the 2015 JCPOA deal.
The JCPOA – or Iran nuclear deal – was unilaterally ditched by the Trump administration. But that, notoriously, did not prevent it from engaging in a massive campaign since April to convince the proverbial “allies” to extend the arms embargo and simultaneously trigger a snapback mechanism, thus re-imposing all UN sanctions on Tehran.
Foad Izadi, professor of International Studies at Tehran University, summed it all up:
“The US wanted to overthrow the government in Iran but failed obviously, they wanted to get more concessions out of Iran, but they have not been successful and they actually lost concessions. So the policy of maximum pressure campaign has failed.”
Under the current US electoral shadow play, no one can tell what happens next. Trump 2 most certainly would turbo-charge “maximum pressure”, while Biden-Harris would go for re-incorporating Washington to the JCPOA. In both options, Persian Gulf oil monarchies are bound to increase the proverbial hysteria about “Iranian aggression”.
The end of the arms embargo does not imply a renewed arms race in Southwest Asia. The real story is how the Russia-China strategic partnership will be collaborating with their key geostrategic ally. It’s never enough to remember that this Eurasian integration trio is regarded as the top “existential threat” to Washington.
Tehran patiently waited for October 18. Now it’s free to import a full range of advanced weaponry, especially from Moscow and Beijing.
Moscow has hinted that as long as Tehran keeps buying Su-30s, Russia is ready to build a production line of these fighter jets for Iran. Tehran is very much interested in producing its own advanced fighters.
Iran’s own weapons industry is relatively advanced. According to Brigadier General Amir Hatami, Iran is among a select group of nations able to manufacture over 90% of its military equipment – including tanks, armored personnel carriers, radars, boats, submarines, drones, fighter jets and, crucially, land and seaborne cruise missiles with a respective range of 1000 km and 1400 km.
Professor Mohammad Marandi from the Faculty of Policy Studies at the University of Tehran confirms, “Iran’s military industry is the most advanced in the region and most of its needs are provided by the Ministry of Defense.”
So yes, Tehran will certainly buy military jets, “but Iranian made drones are the best in the region and they’re improving”, Marandi adds. “There is no urgency, and we don’t know what Iran has up its sleeves. What we see in public is not everything.”
A classic case of the public face of something that can’t be seen was just offered by the meeting last Sunday in Yunnan province in China, between excellent pals Mohammad Javad Zarif, Iran’s Foreign Minister, and his Chinese counterpart Wang Yi.
That’s of course part of their own strategic partnership – to be sealed by the now notorious $400 billion, 25-year, trade, investment and energy deal.
Both China and Iran happen to be encircled by rings of the US Empire of Bases and have been targets of varying, relentless brands of Hybrid War. Needless to add, Zarif and Wang Yi reaffirmed the partnership evolves in direct contrast with US unilateralism. And they must have discussed weapons trade, but there were no leaks.
Crucially, Wang Yi wants to set up a new dialogue forum “with equal participation of all stakeholders” to deal with important security issues in West Asia. The top precondition for joining the forum is to support the JCPOA, which was always staunchly defended by the Russia-China strategic partnership.
There won’t be an October Surprise targeting Iran. But then there’s the crucial interregnum between the US presidential election and the inauguration. All bets remain off.
It looks like the exodus out of the city, first catalyzed by the pandemic and then helped along by Bill De Blasio's commitment to allow criminals to overtake the city, is continuing at a blistering pace.
Home sales in Greenwich had their strongest quarter in "more than a decade" as people looked to escape the city. Single family home purchases were up 70% in Q3 to 311 sales, the most in a 3 month period in records that date back to 2010, per Bloomberg.
According to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate, the median price of the sales was up 18% to $2.13 million.
Discounts in Greenwich have averaged just 4.4%, the smallest in a decade - and properties are staying on the market for 25% less time than they were a year ago.
The suburb had been coming off of a long stretch where home prices were faltering and sales were slowing. But the large estates that had fallen out of favor are now once again in demand. Buyers are once again placing premiums on luxuries like swimming pools and "enough land for socially distant gatherings", Bloomberg notes.
Brokerage manager David Haffenreffer said: “With bigger homes, you’ve got the opportunity to have extended family with you, but also more amenities on-site. You can spread out and live that quarantine life in a more-liberated way.”
The section of town called "Back Country", which features large properties on large lots, saw the biggest leap in prices.
Scott Durkin, president of Douglas Elliman said: “We couldn’t give Back Country away, it was too far away from downtown.” Now, he says the area has become the "most requested".
And the trend shows no sign of slowing. As of September, there were 172 homes under contract, an almost 100% increase from the year prior. Haffenreffer concluded: “This could last a while. I don’t see what it is that could turn this on its head.”
White House chief of staff Mark Meadows on Monday suggested that the Trump administration would bring a lawsuit against the social media companies that have recently restricted and blocked news reports about Democratic presidential nominee Joe Biden and his son Hunter.
In an interview on “Fox & Friends,” Meadows said that the online platforms try to censor conservatives and suggested that if the story about Joe and Hunter Biden was about President Donald Trump and his family, tech companies would have not blocked the story.
“They have two standards: one for one campaign, one for the other. But I do believe that additional lawsuits will be filed perhaps as early as today to go after that,” Meadows said.
“Listen, it’s not just the campaigns,” he added. “They’re now starting to censor, actually, reporters. That’s a dangerous place for them to go when they’re the arbiter of what they deem to be the truth.”
The Chief of Staff’s comments come in the wake of a report by the New York Post alleging to have obtained emails from a laptop belonging to Hunter Biden. Many Democrats have claimed the story is an effort to discredit Joe Biden and an attempt by Russia to help elect Trump. So far, neither of the Bidens have denied the authenticity of the emails.
The threat of a lawsuit was also prompted by the actions Twitter took to lock Trump’s reelection campaign account last Thursday for trying to share the New York Post story.
Meadows said he has not received any intelligence suggesting that the Russians were involved in the emails being extracted from Hunter Biden’s laptop as Rep. Adam Schiff (D-Calif.) has alleged.
“All of this narrative that is out there that would suggest that it’s not real, that’s the disinformation. You know, Adam Schiff came on and said, ‘Oh, this is Russia, Russia, Russia,’ and again, I can tell you this is Adam Schiff once again trying to spin a story that’s not accurate.” Meadows said,
“I talked to director Ratcliffe over the weekend and I said, ‘Listen, if this is a Russian disinformation campaign, we need to make sure the American people know that.’ His response to me is that he had no knowledge of that.”
Schiff, who is the chairman of the House intelligence committee, has repeatedly asserted, without evidence, that the Trump 2016 campaign colluded with Russia and now is claiming that Trump is working with Russia to hurt Biden’s campaign.
“We know that this whole smear on Joe Biden comes from the Kremlin,” the California Democrat said on CNN last week, claiming that “the Kremlin has an obvious interest in denigrating Joe Biden,” and that “they want Donald Trump to win.”
When Schiff was asked about specific intelligence about the Kremlin’s involvement with disinformation about Biden, the Representative was unable to provide any evidence, saying that the Director of National Intelligence, John Ratcliffe was not “forthcoming” with intelligence.
“And frankly, we haven’t got much from the intelligence community very recently, which concerns me,” added Schiff.
Meanwhile, Ratcliffe told Fox News on Monday that there is no intelligence to suggest the Hunter Biden email scandal is led by Russia.
“It’s funny that some of the people who complain the most about intelligence being politicized are the ones politicizing the intelligence,” Ratcliffe said. “Unfortunately, in this case it is Adam Schiff, who said the intelligence community believes the Hunter Biden laptop and emails on it are part of a Russian disinformation campaign.”
He continued, “Let me be clear: the intelligence community doesn’t believe that, because there is no intelligence that supports that. And we have shared no [such] intelligence with Chairman Schiff or any other member of Congress.”
One month ago, when we first reported that SoftBank was the "Nasdaq Whale" responsible for the gamma meltup across some of the largest tech names which quickly led to marketwide levitation across the entire stock market - as the Japanese conglomerate was furiously buying call spreads in a generally illiquid market and forcing dealers who were short gamma to delta hedge at ever higher prices creating a upward price feedback loop - we observed that according to Bloomberg's previous reporting, SoftBank had been targeting investments of approximately $10 billion in public stocks as part of a new asset management arm, far exceeding the initial holdings that founder Masayoshi Son outlined to shareholders in the company's latest earnings call, and a break from the company's strategy of investing in private names.
Then, two weeks ago, the Nasdaq Whale made a repeat appearance, when we reported that SoftBank was back for round two: as SpotGamma wrote, highlighting the strong rally in many tech names "there are notes out detailing large options positions building in tech. Looking at FB as an example you can see how call activity has picked up over the last two weeks" and "this chasm between call & put gamma is starting to look similar to that of early August."
This was confirmed that same day by CNBC's David Faber who said that on Oct 1, SoftBank had bought $200M worth of calls in NFLX, AMZN, FB and GOOGL.
But if SoftBank had built up a $10 billion stake in public tech stocks by mid-August, how big was its position now that it appeared to be doubling down? Well, there's your hint right there: according to a new Bloomberg report, SoftBank has doubled its equity positions to more than $20 billion despite what was initially a skeptical response from shareholders, one which prompted the bank to announce it would not act as a Robinhood-esque hedge fund chasing momentum stocks, and would consider tempering its trading plans in early September after reports that SoftBank’s spending spree was stirring froth in tech stocks.
Yet despite the news costing SoftBank about $9 billion in market value at the time, with the stock rebounding Masa Son has re-reconsidered and is now literally doubling down. Ironically, all this is happened just days after SoftBank's Rajeev Misra disputed reports SoftBank had pumped up tech stocks through its options trading, saying no single investor has that kind of influence on the markets.
"Nobody buying $10 billion of Nasdaq over a few weeks is going to move the Nasdaq,” Misra said in an interview with Bloomberg at the Milken Institute’s virtual conference. “We’re not even a dolphin, forget being a whale.”
That's some dolphin. In its public filings, SoftBank disclosed holdings of "only" $3.9 billion in stocks such high beta tech names as Amazon, Alphabet NVidia and Netflix...
... however, it has since bought a lot more stocks. Curiously, according to Bloomberg, while focusing on major tech stocks, SoftBank has also been expanding to smaller companies. Last week, it invested $215 million in Norway-based Kahoot, which makes education software.
So what is SoftBank's thinking this time behind its "renewed commitment" to the public equities trading arm? According to Bloomberg sources, the strategy - which consists of buying out-of-the-money call options funded by selling calls at even higher prices - is "built around expectations of a volatile third-quarter earnings season." That, however, makes no sense because SoftBank's strategy is fundamentally a bullish bet, and anything but a vol hedge. In fact, as August demonstrated, if done in size and if it triggers another gamma melt-up, such call spread buying itself can become the catalyst the pushes stocks higher. And that's precisely the strategy adopted by Masa Son and implemented by former Deutsche Bank trader Akshay Naheta, first identified here and whom we called the "gamma whale."
And now that this information is public amid renewed chatter of yet another gamma squeeze, will SoftBank fade away as it did in early September when it was first identified? Hardly: if anything Masa Son will triple down. After all, for the Japanese billionaire, the only thing that matters is SoftBank's stock price, and that just happened to hit a 20 year high on monday, the highest since the March 2000 dot com boom.
In fact, looking at the chart above, it is very likely that Masa Son will aggressively continue to expand this strategy until softbank's stock price regains it all time bubble highs.
A man flying in from Dubai was caught trying to enter the Indian city of Kerala with nearly 1 kilogram (roughly 2.2 pounds) in gold bullion hidden inside his rectum. The man arrived at Kerala's Kannur airport on a GoAir flight from Dubai.
According to the National Journal, airport intelligence officers spotted the man waddling through the airport and decided he looked suspicious. After executing a search, they soon found 972 grams of flattened gold coins inside the man's rectum.
Another passenger on the same flight in from Dubai was caught trying to smuggle roughly 1.5 kilos, though the report didn't provide any details on his situation.
The following day, the customs office seized 386g of gold from a passenger who landed in the coastal city of Kozhikode on an Air Arabia flight from Sharjah, another city in the UAE.
Local officials said the gold was hidden in the traveler's underwear in an attempt to avoid declaring it.
Indian police have reported a surge in criminal gangs trying to smuggle gold into the country in recent months, presumably as India's punishing COVID-19 lockdown ravaged the country's economy. Customs officials said smugglers returning to India typically mask the gold in chocolate boxes, purses, umbrellas or even in pens in attempts to try and evade taxes.
UAE and Indian officials said they were working to trace the crime syndicate.
Gold prices have surged in 2020 as central banks unleashed a flood of liquidity to try and help mitigate the economic fallout of the lockdowns that rattled the global economy earlier this year.
Of course, gold smuggling isn't only a problem in India, where the precious metal has important cultural significance and a major role in weddings.
In a sign of where the entire country could soon find itself, the Democrat-run city of Chicago isn't just facing soaring violent crime, but is staring down a whopping $1.2 billion budget deficit, the Chicago Tribune reports.
Naturally the response to what some are already excusing as the city’s "coronavirus-fueled budget deficit" is for Mayor Lori Lightfoot to immediately talk massive tax hikes to plug the hole.
"Chicago Mayor Lori Lightfoot is considering a $94 million property tax increase, layoffs for more than 300 city workers and a gas tax hike as part of her plan to close a $1.2 billion budget deficit, sources told the Tribune," the report says.
She's expected to present her plan on Wednesday, which is according to a summary in Fox and Chicago Tribune to additionally include:
The problems have been building for years, given already the city was strapped with $46.5 billion in unpaid bills and only a reported $10 billion cash on hand, based on a damning review of the city's finances released this summer by Truth in Accounting.
Figures as of July 2020:
Trump and other Republican leaders have lately seized on rampant mismanagement on display in Democrat-run cities, in some instances with the president personally calling out "wacky" mayors, such as recently with Portland.
CHICAGO BROKE: Mayor Weighing $94 MILLION Property Tax Hike to Plug $1.2 BILLION Budget Gap https://t.co/ZKp1xw2wPd— Sean Hannity (@seanhannity) October 19, 2020
Let's hope the proposed layoffs and furloughs of city employees don't cut into the already understaffed police force, given that as things currently stand law enforcement clearly can't get the soaring violent crime and murder rate under control, also at a moment far-Left activists have demanded the disbanding of the police.
Progressive activists have claimed the problem is the opposite - that Chicago PD currently takes too big a cut of the city's budget and resources.
President Trump indicated via a Tweet Monday afternoon that he is removing Sudan from the official terror blacklist as the Arab League nation is inching closer toward normalizing ties with Israel.
The president indicated that Sudan, which has long been on the list based on allegations of providing covert support to Islamic militants that have carried out attacks on Americans, has agreed to set aside $335 million for payments for American victims of terrorism in the region.
For example, Washington would later blame Sudan in part for funding operations related to the deadly al-Qaeda twin bombings of the US embassies in Kenya and Tanzania in 1998, which had killed 224 people, including 12 Americans. Another 5,000 people were injured in the major attacks. Sudan was known have given safe-haven to Osama bin Laden at one point.
GREAT news! New government of Sudan, which is making great progress, agreed to pay $335 MILLION to U.S. terror victims and families. Once deposited, I will lift Sudan from the State Sponsors of Terrorism list. At long last, JUSTICE for the American people and BIG step for Sudan!— Donald J. Trump (@realDonaldTrump) October 19, 2020
This means Sudan is likely to become the third Arab League member state to normalize ties with Israel, after the UAE and Bahrain inked historic, unprecedented agreements to establish peaceful diplomatic relations and economic cooperation.
The timing is also crucial, given that just weeks before the Nov.3 election, the White House could tout this as a major foreign policy win.
Talks between Sudan and Israel have been underway for some time, but full diplomatic recognition has recently been stalled after Sudan officials accused the US of threatening the country with remaining on the terrorism list if it didn't accept the normalization deal with Israel.
Sudan has been on the State Department's list going all the way back to 1993, amid the lengthy rule of strongman Omar al-Bashir, who was toppled by Sudanese Army coup d'état in 2019.
During the post-9/11 'war on terror' Sudan became under even more scrutiny.
Concerning the 1998 embassy bombings, Voice of America has recently detailed that "Leading up to the attacks, the Sudanese government harbored the al-Qaeda militants, providing them with Sudanese passports and allowed them to transport weapons and money across the border into Kenya."
"Sudan had also given safe haven to Osama Bin Laden leading the U.S. State Department to place the country on a list of state sponsors of terrorism in 1993," the report underscored.
In a decision that could have profound consequences for the outcome of the election, late on Monday the Supreme Court denied a request from Pennsylvania's Republican Party to shorten the deadlines for mail-in ballots in the state after Chief Justice John Roberts joined liberal justices Sotomayor, Kagan and Breyer to oppose the four conservative justices Thomas, Alito, Kavanaugh and Gorsuch who said they would have granted the application.
After a Pennsylvania Supreme Court decision had moved the deadline for absentee ballots to be counted from 8 p.m. on Election Day to 5 p.m. the following Friday, Nov. 6, Pennsylvania Republicans and top officials from the state’s GOP-held legislature asked the Supreme Court to the ruling.
If the U.S. Supreme Court had granted a stay, it would have resulted in a return to the original deadline. However, due to the court's 4-4 deadlock, the previous decision stays and mail-in ballots can be counted.
As reported earlier, when discussing the implications of timing when absentee ballots are pre-processed, some states do not allow mail-in ballots to be opened before Election Day which could mean counting delays. This includes a few of the critical swing states – such as PA and WI.
And as previously discussed, with a recent WSJ/NBC poll finding that 47% of Biden supporters plan to vote by mail whereas 86% of Trump supporters will vote in person, the ruling is seen as a win for Democrats in the key battleground state, which President Trump won in 2016 by just over 44,000 votes, since Biden voters are considered more likely than Trump supporters to vote by mail in November.
Finally, as Axios adds, the deadlock underscores the importance for Republicans of confirming Trump's Supreme Court nominee Amy Coney Barrett, who the president himself has said could be a deciding vote in an election-related dispute, since it is by now clear that Roberts plans on siding with liberals on election-related matters.
Rapper 50 Cent has taken to Twitter to endorse President Trump after losing his mind over the Biden-Harris tax plan, which would result in a top tax rate of 62% in New York City.
"WHAT THE F*CK! (VOTE ForTRUMP) IM OUT," tweeted the rapper, whose real name is Curtis James Jackson III. "F*CK NEW YORK The KNICKS never win anyway," he added.
"I don’t care Trump doesn’t like black people 62% are you out of ya fucking mind."
👀WHAT THE F*CK! (VOTE ForTRUMP) IM OUT, 🏃♂️💨F*CK NEW YORK The KNICKS never win anyway. 🤷🏽♂️I don’t care Trump doesn’t like black people 62% are you out of ya fucking mind. 😤 pic.twitter.com/uZu02k2Dlz— 50cent (@50cent) October 19, 2020
...After a long discussion of who we were going to be voting for in the election, 50 Cent and myself came to the same conclusion. pic.twitter.com/H2NP7uoEGo— Brian Dawe (@DJBrianDawe) October 20, 2020
The New York-based rapper may want to reconsider his opinion of Trump, however - as the president received the NAACP's Ellis Island Medal of Honor in, while then-Senator Joe Biden worried in 1977 about his children growing up in a 'racial jungle' if schools were desegregated, before going on to write the 1994 crime bill which would incarcerate record numbers of blacks for petty crimes.
If Biden wins, 50 might want to buy a few more Lamborghinis to stow his cash.
Update (1740ET): In a stunning 'correction' from Vice, which ratchets this story up to '11' on the Spinal Tap amplifier of WTF-ness,
"This piece has been updated with more detail about the call and the headline has been updated to reflect that Toobin was masturbating."
Hey look, we understand, an accidental exposure of a penis could be rubbed off as a one-off, awkward moment but spanking the monkey, that's a hard one to get over.
Quite a multitasker!!
* * *
From the "Not, The Onion" file (which is becoming far too regular in this farcical new normal), legal analyst Jeffrey Toobin has been suspended by CNN and The New Yorker after he exposed himself during a Zoom call last week between members of the New Yorker and WNYC radio.
“I made an embarrassingly stupid mistake, believing I was off-camera,” Mr. Toobin said in a statement to Vice, which reported the incident and the magazine’s investigation.
“I apologize to my wife, family, friends and co-workers.”
“I believed I was not visible on Zoom,” Mr. Toobin said of the call, which Vice, citing unnamed sources, said took place last week.
“I thought no one on the Zoom call could see me. I thought I had muted the Zoom video.” Mr. Toobin could not be immediately reached on Monday afternoon.
Natalie Raabe, a spokesperson for the New Yorker, confirmed that “Toobin has been suspended while we investigate the matter,” Vice reported.
"Generously", CNN has "granted" Toobin some time off too...
Statement from CNN: "Jeff Toobin has asked for some time off while he deals with a personal issue, which we have granted.”— Jeremy Barr (@jeremymbarr) October 19, 2020
It appears Mr. Toobin is popular among Canadian Twitterati...
Exactly how such an 'accident' happens during (or even near) a business Zoom call is unclear, but as the details 'firm up', social media erupted in mockery...
jeffrey toobin posted hog on zoom— nuanced opinion guy (@charles_kinbote) October 19, 2020
the nine (inches)— Erin 🎃GrudgePAC🎃 Ryan (@morninggloria) October 19, 2020
the more i think about this the more confusing it is. how on earth— Erin 🎃GrudgePAC🎃 Ryan (@morninggloria) October 19, 2020
why on earth
what on earth
"zoom dick incident" pic.twitter.com/FXDFgkwFk4— Alison Herman (@aherman2006) October 19, 2020
Twitter's Orwellian decision to censor the Hunter Biden laptop scandal published by the New York Post completely backfired - 'nearly doubling' its visibility, according to the Massachusetts Institute of Technology and media intelligence firm Zignal Labs.
The poorly-thought-through ban triggered the so-called Streisand Effect and helped turn a sketchy article into a must-share blockbuster. And then on Friday, the Republican National Committee filed a Federal Election Commission complaint against Twitter, claiming that the ban “amounts to an illegal corporate in-kind political contribution to the Biden campaign.”
Looking at the firehose of Twitter shares of the URL—including original tweets, retweets, and quote tweets—Zignal found a surge of shares immediately after Twitter instituted the block, jumping from about 5.5 thousand shares every 15 minutes to about 10 thousand. -MIT Technology Review
So Twitter is back to where it was 2 days ago, only now everyone knows about Hunter's notebook. Brilliant— zerohedge (@zerohedge) October 16, 2020
The Streisand Effect was named after Barbara Streisand's 2003 attempt to suppress a photo of her Malibu, California residence by trying to sue a photographer for $50 million over the aerial photograph. Before Streisand's lawsuit, the photo had only been downloaded from the photographer's website six times - two of which were Streisand's attorneys. Once the story went viral, however, over 420,000 people visited the site over the following month. The lawsuit was dismissed and Streisand was ordered to pay $155,567 to cover the photographer's legal fees.
And Twitter did the same thing when they banned the Post story - blocking people from posting it or sharing it over Direct Message, deleting tweets, and suspending others who shared it. Of note, the New York Post's Twitter account is still locked.
Twitter cited their policy against unverified information and "hacked materials," though they never explained how the Biden emails - obtained from a laptop which Hunter dropped off at a Delaware computer repair shop and failed to pick up - violated that policy.
After Twitter came under extreme fire for what some consider election meddling and an editorial decision, CEO Jack Dorsey expressed regret, tweeting that "[s]traight blocking of URLs was wrong, and we updated our policy and enforcement to fix. Our goal is to attempt to add context, and now we have capabilities to do that."
For their partisan censorship, the social media giant has earned themselves a Congressional investigation spearheaded by Sens. Josh Hawkey (R-MO) and Ted Cruz (R-TX). Dorsey will testify next Wednesday via videoconference in front of the Senate Commerce Committee.
Though the so-called Islamic State Caliphate was at its height in 2014 and 2015, the terror group has been driven underground since it lost 95% of its territory in Iraq and Syria by December 2017. And in October 2019 the US military said it killed ISIS leader Abu Bakr al-Baghdadi on the outskirts of Idlib province in Syria.
Effectively defeated, it's believed that ISIS has since organized itself into a network of terror cells in Iraq and Syria. This has been used as a prime justification for the Pentagon keeping some 500 to possibly 2,000 American troops in Syria, alongside Trump's 'secure the oil' campaign in Deir Ezzor.
But now Reuters reports ISIS has issued a rare new message urging supporters to attack westerners and oil pipelines inside Saudi Arabia.
Reuters cites ISIS spokesman Abu Hamza al-Muhajir who issued a recorded message calling for the stepped up attacks inside the kingdom:
“Targets are plenty... Start by hitting and destroying oil pipelines, factories and facilities which are the source (of income) of the tyrant government,” he said.
The message followed by alleging Riyadh is a supporter of Gulf states' unprecedented step of opening diplomatic relations with Israel.
"He said the kingdom had supported normalization with Israel by opening its airspace for Israeli flights to neighboring Gulf states," Reuters continues.
Both the United Arab Emirates and Bahrain were among the first to sign historic agreements with the Jewish state, despite no Arab Gulf country ever recognizing Israel in history.
The US State Department has lately expressed hope that Saudi Arabia could eventually do so as well. Currently Sudan is the next Arab League member said to be on the cusp of realizing a deal to normalize relations.
With this latest ISIS message declaring Saudi Arabia a target, it all appears a repeat of prior al-Qaeda campaigns in the late 1990's.
Recall that Bin Laden when from being on the American/Saudi side of the Afghan war against the Soviets in the 1980s, but later called for attacks against Saudi Arabia and the US - by his own words outraged that the kingdom had allowed American troops to stage operations against Saddam during the first Gulf war on "sacred" Saudi soil, home to Mecca and Medina.
It seems in our complicated world many murky relationships develop that come across as inappropriate. Over the years, growing crony capitalism has become the bane of modern society and added greatly to inequality. This is why, when we look at Hunter Biden and how he benefited from his father's role as Vice President an investigation is in order. Even before we get to what happened in Ukraine, the ties between China and the Biden family are too many and too large to ignore. President Trump has received a lot of criticism related to how he gained his wealth, however, almost all of what Trump has done he did as an outsider and not as part of the ruling political class.
Before going deeper into this subject it is very important to look at how the "Biden revelations" are being handled by the media. The way media has handled these allegations reveal a flaw or bias in both mainstream media and social media to the point where even censorship is being deployed. A good example of the spin being put on this red flag of corruption can be seen in an article that appeared under trending stories on my city's main news outlet. Here in the conservation heartland of America, the media published a piece titled; "Biden email episode illustrates risk to Trump from Giuliani"
The Associated Press piece written by Eric Tucker shines the spotlight on Rudy Giuliani portraying him as the messenger of Russian contrived information aimed at damaging Biden and influencing the election. It starts off referring to "a New York tabloid’s puzzling account about how it acquired emails purportedly from Joe Biden’s son has raised some red flags." Then claims that during Giuliani's travels abroad looking for dirt on the Bidens he developed relationships with some rather questionable figures. These include a Ukrainian lawmaker who U.S. officials have described as a Russian agent and part of a broader Russian effort to denigrate the Democratic presidential nominee.
The piece then moves on to the area of how the FBI seems more interested in the emails as part of a foreign influence operation than wrongdoing by Hunter or his father. The people reading this article are informed how this is just another latest episode involving Giuliani that "underscores the risk he poses to the White House" which has spent years dealing with a federal investigation into whether Trump associates had coordinated with Russia.
The part of the article that got my goat was when it referred to how " The Washington Post reported Thursday that intelligence agencies had warned the White House last year that Giuliani was the target of a Russian influence operation." Sighting the Washington Post as an authority and bastion of truth is a common tactic used by journalists to add validity to their bias and lazy reporting. Tucker forgot to mention The Washington Post is the propaganda mouthpiece of Amazon and owned by its CEO Jeff Bezos the richest man in the world which has had several run-ins with the President.
The effort to denigrate Giuliani rather than focus on Biden wrongdoings cites both "former officials' and statements made by a person "who was not authorized to discuss an ongoing investigation and spoke on condition of anonymity to AP," and of course, the exact scope of what was being investigated was not clear. Claiming that many people in the West Wing have been concerned about Giuliani's actions or saying the president has expressed private dismay at Giuliani’s scattershot style does not make it true.
Thinking a case can be made that Hunter enriched himself by selling access to his father but claiming Giuliani’s lack of credibility will cause the allegations to implode is a bit of a reach. This fact much of what appears to be bribe-taking at the highest levels of government has been overlooked for so long is in its self is a problem. The appointment of an unqualified Hunter Biden to the board of a Ukrainian energy company with a reported compensation package worth some $50,000 per month led the Wall Street Journal, to publish a scathing article, on May 13, 2014. bringing the issue before the public.
At criminal.findlaw.com, FindLaw's team of legal writers and editors detail what constitutes bribery. It is offering or accepting anything of value in exchange to influence a government/public official or employee. Bribes can take many forms of gifts or payments of money in exchange for favorable treatment, such as awards of government contracts. Other forms of bribes may include property, various goods, privileges, services, and favors. Bribes are always intended to influence or alter the action of various individuals and are linked to both political and public corruption. In most situations, both the person offering the bribe and the person accepting can be charged.
Was Influence Peddled Or Bribes Taken?
Both giving and receiving bribes is usually a felony with significant legal ramifications. Influence peddling, the illegal practice of using one's influence in government or connections with persons in authority to obtain favors or preferential treatment falls into this category. One thing is clear, whenever we are talking about the involvement of huge sums of money, foreign players, officials holding high public office, or family members of politicians a few eyebrows should get raised. With this in mind, the Biden problem extends well past Hunter but also into how other family members have profited from Joe's time as Vice President such as his brother's involvement in a huge government contract in Iraq.
The issue of Hunter Biden receiving money from Russia, Ukraine, and China surfaced during the first Presidential debate and Biden claimed it was a story already discredited by authorities. This narrative was destroyed when the Washington Times acknowledged the Treasury Department records confirm Hunter Biden received a wire transfer for $3.5 million from the Mayor of Moscow’s wife. It is difficult to find anyone that holds Hunter in high esteem and the fact the United States suspects the woman sending him this money built much of her wealth through corruption does little to improve his standing. For those of us cynical of all the so-called public servants that seem to line their pockets and hold the attitude they are above the law this is a big red flag.
If the veil of secrecy surrounding Hunter's career is lifted we will most likely find Hunter's dad did share in the spoils bestowed upon not only his son but others in the Biden family. I contend Joe Biden's cozy relationship with corruption is why former President Obama did not rush to endorse Biden when he announced he planned to run. To be clear, we are talking about, millions, and hundreds of millions of dollars or more. For us cynics, we see this as what may be only the tip of the spear when it comes to public officials throwing the American people under the bus for fun and profit. As a voter, this dovetails with my concern about Biden's relationship and attitude towards China which I consider a major issue.
AMC Entertainment Holdings, Inc., the largest movie theater chain in the world, with over 1,000 theaters across the US, is making a last-ditch effort to raise cash via renting out its auditoriums for private screenings. The move comes as the theater chain could run out of "liquidity" within six months as attendance levels remain weak.
Starting at $99, AMC is renting out an auditorium, at select locations, for private parties, up to 20, with the ability to screen the latest movies. Depending on the movie, each private screening could range between $99-$349 but split 20 ways, and hopefully, everyone took a rapid COVID-19 test - could be a promising move by the company to raise some cash.
But how promising?
US virus cases surged above 70,000 on Friday, with threats of another wave, right before flu season - it's going to take a whole lot of convincing on AMC's behalf to bring people back to indoor movie theaters, especially since there is no proven or widely available vaccine. As for millennials, well, this could be a golden opportunity to take advantage of pandemic pricing - just like we've outlined (here & here).
In case you're wondering what movies are available - right on AMC's website - they mention at least a dozen movies and pricing:
The move comes as the entire movie theater industry has imploded, along with much of the service sector economy. AMC recently said attendance levels are down 85% since reopening over the same period last year. The possibilities are surging that AMC could experience bankruptcy within the next six months as attendance levels are expected to stay muted through 2021.
As Rabobank's Michael Every said recently, "the movie industry - how we watch them, and so the money for how they are made, if they are made - could be dying, indicative of a whole key slice of the service-sector economy."
Even with the 70% of US movie theaters reopened during Labor Day, social distancing, virus fears, and surging cases across the Sun Belt kept people away.
Ahead of Labor Day, "Tenet," an action-thriller and science fiction film directed by Christopher Nolan, was supposed to be Hollywood's big release to drive Americans back into theater seats. In short, it was not. One Twitter user captured video inside a movie theater in Baltimore around the release of the film in early September, on a Friday, in primetime, as it appeared no one showed up. We noted then:
"The moral of the movie theater story is if theaters reopen with top-notch movies by big-time producers, well, the American public is still not interested because they believe facilities are not safe from the virus. To bring consumers back, a lot of convincing by theater operators will be needed."
No one at the movie theater. pic.twitter.com/uJrDo7KZZp— Alastair Williamson (@StockBoardAsset) September 12, 2020
October attendance has been so awful that Cineworld, the world's second-largest movie theater chain behind AMC, recently suspended operations in the US and UK.
With AMC about to run out of cash, Cineworld shutting down its US theaters, and attendance levels across the industry in collapse - at what point will Hollywood ask Washington for a bailout of their own?
Former White House chief strategist Steve Bannon says that if Donald Trump loses the election to Joe Biden next month he will run for the presidency again in 2024.
Despite maintaining his belief that Trump “will win on election day,” Bannon told the Australian that a Biden victory wouldn’t mean the end of Trump.
“I’ll make this prediction right now: If for any reason the election is stolen from, or in some sort of way Joe Biden is declared the winner, Trump will announce he’s going to run for re-election in 2024,” said Bannon.
The political operative also said that the current presidential race is far closer than polls suggest and that its outcome “won’t be settled anytime soon” and could eventually end up before the Supreme Court.
Bannon previously stated that Trump would be able to claim victory as early as “10 o’clock or 11 o’clock” on 3 November after he wins Ohio and is up in Florida and Pennsylvania.
As we previously highlighted, Biden’s campaign is preparing voters to anticipate that Trump could be ahead on election night but then the result would later be overturned after mail-in ballots are fully counted, a process that could take weeks.
“The elites are traumatized. They do not want to go stand in line and vote. That, ladies and gentlemen, is a game-changer,” Bannon said.
It was also recently revealed that Bannon is the architect behind the roll out of Hunter Biden’s laptop contents.
* * *
Two weeks ago, we reported that Wells Fargo, Deutsche Bank and many of their rivals were re-starting job cuts following a brief six-month "pause" announced back in March.
And now that banks' Q3 results are in, the topic of conversation in the industry is turning - as it always does around this time - the subject of bonuses. This year the dominant theme seems to be: how will the wide disparity in profitability between megabanks' various business lines impact bonuses, particularly bonuses for high-earners like traders and dealmakers?
The answer arrived Monday in the form of an FT report.
While traders, analysts and bankers have seen their positions insulated by gangbusters IB revenue (thanks to an explosion in trading and debt & equity underwriting), many will be disappointed to learn that they won't be seeing bonuses commensurate with the revenue explosion in these areas, as the world's biggest lending banks shore up their loan-loss provisions should the global economy lurch into a 'double-dip' recession.
Instead, the message from Bank of America, JPM and Citigroup, America's big lending banks, to their employees is clear: bankers should consider themselves lucky to still be gainfully employed after 2020. Despite exposing traders to the risk of COVID-19 infection during the early days of the crisis, and then again last month, JPM - along with Citigroup and Bank of America - has warned that bonuses likely won't be commensurate with the outsize revenue.
JPM has seen a 54% rise in fixed-income revenues at JPM and a 42% jump in fixed-income revenues at Citigroup. But profits for all three banks were weighed down by a combined $48 billion in loan-loss charges during the first nine months of 2020, the FT reports.
Senior investment bank executives at two of the banks told the Financial Times they were trying to “manage expectations” for 2020 bonuses by reminding staff that the wider businesses have booked huge loan loss charges to prepare for a surge in defaults as the pandemic ravages global economies. At the third, a senior executive said the bonuses were a “huge issue that we are grappling with”, as the bank tries to balance paying people for results with their need to be “good citizens”. This is in an environment where regulators and politicians have curbed shareholder payouts so they will have a cushion for potential loan losses. Investment banks walk a delicate line on pay every year, as executives try to balance the expectations of some bankers and traders with investors’ demands for cost control and public outrage about millionaire bankers getting richer.
Still, the challenges are greater than usual this year. “This is the first time since the financial crisis that we’ve had such a dramatic difference between parts of the big banks,” said Alan Johnson, founder of New York-based pay consultancy Johnson & Associates, referring to the gulf in the performance of the banks’ retail business and their advisory and trading divisions. The group-wide profits of Citigroup, JPMorgan and Bank of America were weighed down by a combined $48bn of loan loss charges in the first nine months of the year, more than three times as much as they set aside for souring loans in the first nine months of 2019.
Fortunately (for them), investment bankers at Morgan Stanley and Goldman Sachs will likely receive a bigger piece of the bonus pie, since those banks don't have massive lending businesses, according to one Wall Street recruiter quoted by the FT.
Mr Johnson said issues around pay would be less contentious at Morgan Stanley and Goldman Sachs because they did not have the same exposure to coronavirus-related loan losses as the big lending banks. Morgan Stanley and Goldman have collectively taken just $3.5bn in loan loss charges this year.
One insider reportedly familiar with JPM's reasoning told the FT that doling out massive bonuses to traders and their colleagues would be "foolish" given the uncertainty surrounding the global economic outlook. It would be “foolish, short-term, non-disciplined thinking to pay oversized payouts when medium to longer-term expectations (about the broader economy) are still unclear," they said.
Insiders at Citigroup and BofA insisted that their pay packages would be "in step" with the broader industry, but if profits in one business (say, fixed income trading) were up 50%, bankers in that department should expect their bonuses to rise by 25%.
A similar trend is expected to play out in Europe, where investment banks, including Barclays, DB and SocGen, are so deeply embroiled in trying to revive their flagging businesses and lure back shareholders in an age of negative interest rates that executives that weak bonuses are practically a foregone conclusion. "It seems simple to me; bonuses will be poor," said one London-based MD.
If there is a silver lining for traders and analysts, it's this: at the very least, they can expect larger bonuses thank their colleagues working for struggling business lines. Back in May, Johnson & Associates, the same firm quoted as the primary source in Monday's FT story, reported that bonuses would likely vary widely between business lines, with some retail bankers could see their bonuses shrink by 30% or more.
The entire market is now playing a game of deal, or no deal and today's "no deal" headlines sent stocks reeling...
Nasdaq was down for the 5th straight day, its longest losing streak since Aug 2019...
Interesting the drop starte to accelerate around 1430ET - margin call time.
This drops Nasdaq to 10-day lows, erasing 'Nasdaq Whale' gains...
And erases most of last week's (early) relative outperformance of Nasdaq vs Small Caps...
As we detailed earlier, it would seem the short-squeeze ammunition in Nasdaq futs has run out...
And escalated quickly today...
But what was remarkable was the near record surge between the Oct 6 net short of -75K and the subsequent week's net long position of +17.8K. This was the biggest 3-week surge in NQ contracts in more than 15 years, and the second highest increase on record.
FANG Stocks sank further...
And Financials floundered...
VIX jumped back above 29 today...
Treasury yields were marginally higher on the day, despite equity weakness (but all the TSY selling was around the European open)...
And note that the overnight selling in 10Y pushed yields up to unch from the previous Friday before reversing...
The dollar ended the day lower but erased a lot of its losses as stocks began to dump in the afternoon...
Crypto was higher today with Bitcoin spiking back above $11,800, breaking put of its recent tight range...
Gold had a big roundtrip on the day, ending unch...
Silver followed a similar path, with futs topping $25 briefly...
WTI slipped back below $41 as demand fears drifted back...
Finally, as we noted earlier, today is the 33rd anniversary of Black Monday (of course, it's different this time)...
Now that would be an 'October Surprise'...
The first two-thirds of 1987 on Wall Street was nothing short of spectacular... Fear seemed to disappear, and junior traders laughed at their cautious elders. The brash youngsters told each other to “buy strength” rather than sell it, as each buying wave was soon followed by another.
One thing that helped banish fear was a new process called “portfolio insurance.” It involved use of the newly expanded S&P futures. Somewhat counterintuitively, it involved selling when prices turned down.
[ZH: Nasdaq Whale buying calls, driving dealer gamma to extremes]
The rally topped out about Aug. 25, with the hitting 2,722 (less than a tenth of its current numerical value). Interest rates had begun creeping up amid concerns of early signs of inflation.
[ZH: Rally topped a week after that in 2020]
On Wednesday, Oct. 14, there were widely discussed rumors of a new punitive tax on takeover profits.
[ZH: Worries over Biden's tax plan?]
Friday the 16th was an option expiration day... selling intensified into the close.
[ZH: Today is op-ex day.. and selling intensified into the close]
The weekend was a rumormonger's delight.
[ZH: Well there is sure a lot of discussion about potentially shocking videos of Hunter Biden...]
And don't forget that we had margin increases across most of the major retail brokerages last week.
Back on September 2, when stocks hit an all time high, we asked if it "could be this simple" when showing the long-term resistance of the S&P:
could it be this simple pic.twitter.com/v0CGjqHLAV— zerohedge (@zerohedge) September 2, 2020
Well, at least so far, the answer appears to be yes and is also the reason why in his weekly focus note, Morgan Stanley's chief equity strategist Michael Wilson writes that last week's failure to break through technical resistance for second time "suggests the correction isn't over."
To that point, last month and shortly after our initial observation, Wilson laid out his view that long-term resistance in the S&P500 around the 3550 level would be very difficult to surpass prior to the outcome of the US election and passage of CARES 2. As he explains "this view was based on very strong long-term technical resistance going back to the late 1980s."
Then, just days later, the index quickly retreated for its first 10% correction in this new bull market, and while last Monday the index once again staged a valiant effort to break through, it was thwarted once again. Of concern to Wilson is that this second attempt occurred on less momentum, "suggesting the correction that began in September is likely not complete."
Furthermore, the Morgan Stanley strategist also highlights the lack of a fiscal stimulus deal, election outcome/timing of final results, and second wave of the virus "as the primary headwinds to higher prices in the near term."
So with both fundamentals drivers and technicals limiting stock upside limited, with so many uncertainties over the next month Wilson says that "another 10% correction from Monday's highs is the most likely outcome in the near term before this bull market can resume, at least at the index level."
Next, to quantify the potential downside, Wilson says that he continues to view the 200-day moving average for formidable support from a technical standpoint, which today is at 3123.
Then, from a valuation perspective, Wilson refers to one of his preferred market indicators, the Equity Risk Premium, which he says "looks too low" given the near-term uncertainties and upside risk to long-term rates we see. As such, he would be more comfortable with a buffer of 50 bps to add risk here. Such an adjustment implies an ERP of ~425bps rather than the 375bps indicated by current level of realized vol and is shown in the next chart.
It's also how he gets the 10% downside estimate: at 380 bps and with a 10-year Treasury yield at 0.75%, the current S&P 500 P/E multiple is ~22x. If one add the 50bps buffer noted above to the implied ERP from Exhibit 3 while holding the 10-year yield constant, we get a 2 multiple drop in the P/E to 20x, which implies 10% downside. Coincidentally, this also lines up with the 200-day moving average noted above.
Bottom line, Morgan Stanley urges investors to remain "disciplined" on new money entry points, favoring the low end of our 3100-3550 range we established back in August.
Finally, to avoid any bearish labels, Wilson as usual concludes on a bullish note, writing that the recovery and new bull market "remain on track to resume next year. More importantly, we think the average stock will outperform the major average (SPX), which is now highly concentrated to the top 20 largest stocks." He believes that the best way to express this view is by owning an equal weighted S&P 500 relative to the market cap weighed S&P or by skewing one's portfolio to smaller capitalization stocks that can deliver better operating leverage and earnings growth next year.
Shares of US airlines lifted off Monday morning after data this past weekend showed passenger numbers hit seven-month highs as air travelers take advantage of super low-cost airfare despite the reemergence of COVID-19.
TSA published a press release early Monday saying it "screened over 1 million passengers Sunday, representing the highest number of passengers screened at TSA checkpoints since March 17, 2020."
The release continued: "In addition to screening one million passengers in a single day, TSA screened 6.1 million passengers at checkpoints nationwide during the week (Mon., October 12 through Sun., October 18). That weekly volume also represents the highest weekly volume for TSA since the start of the COVID-19 pandemic."
According to TSA spokesperson Lisa Farbstein, airport security checkpoints nationwide screened 1,031,505 people on Sunday - this is still 60% lower than one year ago.
BREAKING NEWS: @TSA screened 1,031,505 people at security checkpoints nationwide yesterday, Sunday, Oct. 18. It's the first time volume topped 1 million since the pandemic low point of April 14, when 87,534 people were screened. It's still 60% lower throughput than one year ago.— Lisa Farbstein, TSA Spokesperson (@TSA_Northeast) October 19, 2020
TSA numbers this month show a return to normalcy, about eight months since the virus pandemic began. So far, the numbers this month show a rapid increase in travelers:
Readers may recall the lowest number of people screened at US airports was 87,534 on April 14, during lockdowns, where much of the airline and travel and tourism industry ground to a halt.
The increase in air travel has occurred as US virus cases topped 70,000 last Friday, the highest level since July. Single-day caseload records were seen in Wyoming, Minnesota, Wisconsin, West Virginia, North Dakota, Indiana, New Mexico, Utah, and Colorado.
As we've pointed out to our millennial readership, roundtrip airfare has never been cheaper - and with the virus mainly affecting the older segments of the population - now could be the time to travel.
Goldman Sach's Jan Hatzius compiled travel and tourism high-frequency data that suggests US air travel is steadily increasing from the April-May trough. US international passenger arrivals at the top five airports are also rising. Global air travel has rebounded as well.
Another proxy of the travel and tourism rebound is Airbnb searches, which rebounded and recovered back to the February baseline but have since slumped into fall.
Robinhood traders have spent the last seven months panic buying JETS ETF, with hopes the airline industry will recover in a "V-shaped" fashion.
The question traders have on their mind: How long will it take for the airline industry to recover?
With a full recovery not expected anytime soon, the latest air travel increase could come to an abrupt end this fall/winter as virus cases are expected to continue to rise. Nevertheless, there's no proven or commercialized COVID-19 vaccine available - deterring many from flying. Is this as good as it gets?
As we get closer to the 2020 election, analysts are starting to look at how various outcomes could affect the markets and the broader economy. Some of them are actually bullish on total Democratic Party control of the government.
In a recent podcast, Peter Schiff broke down what the analysts are saying and explains why he believes that the best possible outcome is gridlock.
Markets are beginning to handicap the presidential race. Oddly, they seem to be viewing a Biden win as a positive for the stock market. Peter said this doesn’t really make sense.
If Donald Trump being president was bullish for stocks because of what Trump was doing – if Biden was threatening to undo all that, and to increase taxes and have more regulation – you would think that Wall Street would think that’s a negative.”
In a recent interview, Peter said he thought at some point, traders would handicap the race, see Biden as the most likely winner, and sell off.
But instead, the traders, I guess, took another look at the race and then decided that, yes, a Trump win is good for the markets, but a Biden win is even better.”
There are basically four scenarios that could play out in November.
Trump wins and the Senate stays in Republican hands
Trump wins and the Senate swings to the Democrats
Biden wins and the Senate stays in Republican hands
Biden wins and the Senate swings to the Democrats.
Last week, an economist at Bank of America said the best scenario for the stock markets was a Democratic Party clean sweep. Peter said he’s seen this notion bandied about by other Wall Street pundits as well.
Why do they like this scenario?
After all, if we get that outcome, it is a certainty we will see corporate tax increases. If the tax cuts were good for the market, take hikes have to be bad. On top of that, we would likely see more regulatory red tape with Democrats in complete control. None of that bodes well for the economy. But the reason BoA likes this potential outcome the best is because it would likely mean the most fiscal stimulus.
What we want is no gridlock. We want the same party controlling Congress. And since there’s no way the Republicans are going to get the House, the only way to have clear sailing, no gridlock at all, to have the most amount of stimulus go through Congress and get signed by the president is if we have a Democrat sweep. And so even though the Democrats are going to raise taxes, this is still good for the stock market. Because this analyst realizes that the Fed and the stimulus trumps earnings. Earnings are secondary. The main game is stimulus. It’s the Federal Reserve that is playing the music that everybody on Wall Street is dancing to. And so, what this analyst is saying is we just need more of this music. The party is going to rage on if we get more stimulus.”
Peter said this proves that they know the entire stock market boom is artificial. And while he agrees that the Democrat sweep scenario might be good for the stock market, at least in the short-run, it’s the worst possible outcome for America. It’s certainly the worst outcome for the dollar.
The dollar is going to get killed. All that stimulus, all the deficits that are going to be the result of no gridlock – the traffic is going to flow meaning the red ink is going to flow. And so that is definitely the worst outcome for the dollar.”
The worst outcome according to the BoA economist is divided government. But Peter said for the economy, gridlock is the best thing we can hope for.
Anything that slows down what government wants to do is a positive. Because government wants to do harm. Government wants to damage the economy. So, to the extent that a divided government minimizes the damage, that’s a positive.”
Peter said he thinks a Biden win might play out the opposite of what we saw after Trump won in 2016, with a short stock market rally and then a sell-off as the markets digest what a Biden presidency really means and realize maybe hanging our hat on stimulus isn’t the best idea.
But again, the downside is always going to be mitigated by the Fed. But as the Fed mitigates the downside to the stock market, they intensify the downside to the dollar and to the overall US economy.”
In this podcast, Peter goes on to break down some of the economic numbers. He concludes that the economy has never been less great.
Update (2050ET): According to the Trump Campaign, the president remains committed to the debate, regardless of the rule change.
Trump campaign statement on debate commission rule changes
"President Trump is committed to debating Joe Biden regardless of last minute rule changes from the biased commission in their latest attempt to provide advantage to their favored candidate.
This was supposed to be the foreign policy debate, so the President still looks forward to forcing Biden to answer the number one relevant question of whether he's been compromised by the Communist Party of China.
Why did Biden allow his son Hunter to sell access to him while he was vice president, and why were there Chinese payment arrangements for Joe himself worked out by Hunter and his sketchy partners?
If the media won't ask Joe Biden these questions, the President will, and there will be no escape for Biden."
- Bill Stepien, Trump 2020 campaign manager
With Biden 'hunkering down' to prepare, while Trump does 3 rallies a day, Thursday's debate is going to be must-watch TV.
* * *
Update (1955ET): Just as was suspected by the Trump campaign earlier, the completely non-partisan Debate Commission has decide to not only drop 'Foreign Policy' from the topics for discussion during Thursday's debate but AP has now confirmed that the mics of the two candidates will be muted in order to allow two minutes of uninterrupted time per debate segment.
Full Statement from the Debate Commission:
Following the first presidential debate in Cleveland on September 29th, the Commission on Presidential Debates issued a statement that "additional structure should be added to the format of the remaining debates in order to ensure a more orderly discussion of the issues."
Since then, the Commission has considered the opinion of many who expressed concern that the debate fell short of expectations, depriving voters of the opportunity to be informed of the candidates' positions on the issues. They advocated a variety of changes that could be introduced for subsequent debates, including the turning off of microphones to avoid interruptions.
In considering this issue, the Commission is mindful of the distinction between enforcing rules already agreed upon by the candidates and making changes to the rules. The Commission has determined that it is appropriate to adopt measures intended to promote adherence to agreed upon rules and inappropriate to make changes to those rules.
Under the agreed upon debate rules, each candidate is to have two minutes of uninterrupted time to make remarks at the beginning of each 15 minute segment of the debate. These remarks are to be followed by a period of open discussion. Both campaigns this week again reaffirmed their agreement to the two-minute, uninterrupted rule.
The Commission is announcing today that in order to enforce this agreed upon rule, the only candidate whose microphone will be open during these two-minute periods is the candidate who has the floor under the rules.
For the balance of each segment, which by design is intended to be dedicated to open discussion, both candidates' microphones will be open.
During the times dedicated for open discussion, it is the hope of the Commission that the candidates will be respectful of each other's time, which will advance civil discourse for the benefit of the viewing public. As in the past, the moderator will apportion roughly equal amounts of time between the two speakers over the course of the 90 minutes. Time taken up during any interruptions will be returned to the other candidate.
We realize, after discussions with both campaigns, that neither campaign may be totally satisfied with the measures announced today. One may think they go too far, and one may think they do with the measures announced today. One may think they go too far, and one may think they do not go far enough. We are comfortable that these actions strike the right balance and that they are in the interest of the American people, for whom these debates are held.
We can only imagine how fast the mic will be 'accidentally' cut should President Trump decide to ask Biden about Hunter's laptop.
This seemed to sum things up rather succinctly...
1. Pathetic. 2. If you're not allowed to interact with your opponent, is it even really a debate anymore? 3. The @debates Commission might as well make it official and join the Biden campaign. https://t.co/lnQQhNOij5— Andrew Surabian (@Surabees) October 19, 2020
We look forward to President Trump's response to this blatant attempt to rig the debate. Perhaps this is why they feel the need to 'adjust' the rules...
THANK YOU TUCSON, ARIZONA! Together, we are going to MAKE AMERICA GREAT AGAIN!! pic.twitter.com/GYB2zG0f4H— Donald J. Trump (@realDonaldTrump) October 19, 2020
* * *
The Commission on Presidential Debates is meeting Monday afternoon to discuss potential rule changes for Thursday's debate between President Trump and Joe Biden, according to CNN.
"We are going to consider what changes we are going to make with regards to the debate on Thursday night," said one commission member, who added that there is also a chance that no changes will be made.
The Commission announced in late September that it would explore changes 'to ensure a more orderly discussion' following a heated first debate between Trump and Biden.
According to Trump campaign adviser Jason Miller, the commission may allow producers to "turn off the president's microphone whenever they want to, which again would be a gross violation of what we agreed to initially."
Trump campaign adviser Jason Miller on a call with reporters says he's hearing the debate commission may allow producers to "turn off the president's microphone whenever they want to, which again would be a gross violation of what we agreed to initially." https://t.co/2fwqta8FNP— Geoff Bennett (@GeoffRBennett) October 19, 2020
Meanwhile, in the wake of the Hunter Biden laptop revelations - and in what we're sure is a coincidence, the Debate Commission has decided to ditch foreign policy as a topic for Thursday's face-off.
According to Miller, the Debate Commission "changed focus of final debate away from foreign policy so Joe Biden wouldn’t have to answer to being compromised by the Chinese Communist Party, supporting endless wars and sending pallets of cash to Iran."
Good morning to everyone except Presidential Debate Commission members who changed focus of final debate away from foreign policy so Joe Biden wouldn’t have to answer to being compromised by the Chinese Communist Party, supporting endless wars and sending pallets of cash to Iran.— Jason Miller (@JasonMillerinDC) October 19, 2020
More via The National Pulse:
The National Pulse understands that while “national security” has been included in the list of topics by moderator Kristen Welker, the campaigns had long been discussing the subject being the majority of the debate, rather than regurgitating on issues such as COVID, climate change, and race.
Those topics were both covered in the first debate, and in the substantive Vice Presidential debate which saw VP Mike Pence emerge unquestionably victorious over a hectoring Kamala Harris.
The Hunter Biden laptop and e-mails were initially reported by the New York Post last week, triggering a cavalcade of censorship by Big Tech firms, as well as a failure by reputable media outlets to ask Joe Biden about the distressing revelations contained within, such as Hunter’s ties to Ukraine, to Moscow, and to the Chinese Communist Party.
Speaking to Maria Bartiromo on Fox News on Monday morning, Jason Miller added: “If the moderator doesn’t bring [Hunter Biden’s e-mails] up, I think you’re safe to assume that the President will. Again, these are real simple questions that Joe Biden needs to answer to the American public. And keep in mind this is supposed to be a debate on foreign policy. I know the Debate Commission is trying to move the goal posts yet again and work in a bunch of other issues. We’re going to talk about Biden’s support for endless wars, talk about the piles of cash loaded up with billions of dollars and sent to Iran, and we’re going to talk about all the foreign corruption, the foreign money that’s been coming into the Biden family. If Joe Biden can’t answer these real simple questions, you know he’s running from something.”
* * *
Meanwhile, the moderator for the third debate, Kristen Welker, has been added to the list of 'anti-Trump' debate moderators - with President Trump calling her "terrible and unfair" on Saturday in response to a New York Post article accusing her of having "deep Democrat ties."
On Monday, Fox News host Brian Kilmeade called Welker "often the most abrasive, most dismissive, most disrespectful reporter" in White House press briefings.
Brian Kilmeade is mad that NBC's Kristen Welker is going to moderate Thursday's debate, because her parents donated to Democrats and "she was a registered Democrat before," even though Kilmeade's colleague/first debate moderator Chris Wallace is currently a registered Democrat. pic.twitter.com/L59N2jZ7rl— Bobby Lewis (@revrrlewis) October 19, 2020
Others have noted that she accidentally tipped off Hillary Clinton's Communications Director Jennifer Palmieri in 2016 about at least one question she was about to ask.
In March 2016 Welker was busted on live television tipping off Hillary Clinton’s Communications Director Jennifer Palmieri about at least one question she planned to ask her during a post-debate interview in Michigan.https://t.co/5YD5TOADB9 pic.twitter.com/c3qTtwIG00— Jon Levine (@LevineJonathan) October 17, 2020
The saga over New Jersey's trading tax continues, and in the latest installment the Mahwah-based
New Jersey New York Stock Exchange told New Jersey lawmakers that it is prepared to move operations out of state should they impose a new tax on electronic trades via data servers, according to Bloomberg.
To prove that the NYSE is serious, in late September, Hope Jarkowski, co-head of government affairs for NYSE parent Intercontinental Exchange Inc., said that the world’s largest exchange by market capitalization conducted a test "for a wholesale transition out of New Jersey" noting that "from Sept. 28 to Oct. 2, we moved our production servers for our NYSE Chicago exchange out of New Jersey to our secondary data center."
The kicker: "Proximity to New York City is no longer relevant in today’s trading environment."
The latest threat to bail on the Garden State comes after state lawmakers announced they plan to charge a tax of a hundredth-cent per trade, down from an earlier proposal of a quarter-cent levy. The fee, which is set to begin Jan. 1 and last two years if passed, would be paid by "high-quantity processors of financial securities," or firms that collect and store data. Such operations exist in Mahwah, Secaucus, Carteret and elsewhere in New Jersey, where the NYSE, Nasdaq and CME all conduct operations, and whose proximity to Wall Street makes it conducive to fast electronic trades. But, as Bloomberg notes, "evolving technology is threatening the need for short, straight data lines, potentially allowing exchanges to operate well beyond their suburban tether."
While New Jersey has estimated that a trade tax would bring in $500 million in each of the two years on transactions involving stocks, futures, options, credit-default swaps, derivatives and other trades, market representatives disagree, and instead claim that such taxes enacted in France, Sweden and Italy have fallen far short of goals.
The strategy "will backfire," said Terry Campbell, vice president of global relations for Nasdaq Inc. "You will not get the revenue you predict."
Instead, according to those who have for years benefited from the legal frontrunning that is HFT, claim that individual investors and middle-class retirees would shoulder the burden, via higher transaction fees and costs passed on by pension funds and other investment managers. A coalition of exchanges and trading firms have been fighting the tax, with Monday’s hearing giving them another chance to warn lawmakers that the levy will hurt the state more than help.
After an overnight surge on the back of nothing but hope, the answer from Pelosi and the Democrats appears to be 'nope' as headlines state that "disagreements on stimulus language remain," pouring cold water on the belief that a deal wil lget done by tomorrow's Pelosi-mandated deadline.
House Dem caucus call happening now and based on comments from Pelosi and committee chairs , per sources on call, a deal with Mnuchin is not sounding imminent— Erica Werner (@ericawerner) October 19, 2020
This sent stocks to the low of the day...
It would appear that "hope" and "optimism" can only jolt the algos so many times before they get wise to it.
No matter how much you dislike Trump, only a fool can fail to see the implications for public access to information of the massive suppression on the internet of the Hunter Biden leaks.
This blog has been suffering a ratcheting of social media suppression for years, which reached its apogee in my coverage of the Julian Assange trial. As I reported on 24 September:
Even my blog has never been so systematically subject to shadowbanning from Twitter and Facebook as now. Normally about 50% of my blog readers arrive from Twitter and 40% from Facebook. During the trial it has been 3% from Twitter and 9% from Facebook. That is a fall from 90% to 12%. In the February hearings Facebook and Twitter were between them sending me over 200,000 readers a day. Now they are between them sending me 3,000 readers a day. To be plain that is very much less than my normal daily traffic from them just in ordinary times. It is the insidious nature of this censorship that is especially sinister – people believe they have successfully shared my articles on Twitter and Facebook, while those corporations hide from them that in fact it went into nobody’s timeline. My own family have not been getting their notifications of my posts on either platform.
It was not just me: everyone reporting the Assange trial on social media suffered the same effect. Wikileaks, which has 5.6 million Twitter followers, were obtaining about the same number of Twitter “impressions” of their tweets (ie number who saw them) as I was. I spoke with several of the major US independent news sites and they all reported the same.
I have written before about the great danger to internet freedom from the fact that a few massively dominant social media corporations – Facebook, Twitter, Instagram – have become in effect the “gatekeepers” to internet traffic. In the Assange hearing and Hunter Biden cases we see perhaps the first overt use of that coordinated power to control public information worldwide.
The way the power of the “gatekeepers” is used normally is insidious. It is quite deliberately disguised. “Shadow banning” is a term for a technique which has many variations. The net result is always that the post is not ostensibly banned. Some people see it, so that if the subject of the suppression claims to be banned they look stupid. But it is in fact shown to far, far less people than it would normally be. So even members of my own immediate family find that my posts no longer turn up in their timeline on either Facebook or Twitter. But a few followers, presumably at random, do see them. Generally, though not always, those followers are apparently able to retweet or share, but what they are not told is that their retweet or share is in fact put in to very, very few people’s timelines. The overall audience for the Tweet or Facebook post is cut to as little as 1% of what it might be without suppression. As 90% of the traffic to this blog comes in clicks from these social media posts, the effect is massive.
That was the technique used on the Assange hearing. In normal times, the ratchet on traffic can be screwed down or released a little, from week to week or post to post.
In the Hunter Biden case, social media went still further and without disguise simply banned all mention of the Hunter Biden leaks.
As I reported on September 27 last year:
What I find deeply reprehensible in all the BBC coverage is their failure to report the facts of the case, and their utter lack of curiosity about why Joe Biden’s son Hunter was paid $60,000 a month by Burisma, Ukraine’s largest natural gas producer, as an entirely absent non-executive director, when he had no relevant experience in Ukraine or gas, and very little business experience, having just been dishonorably discharged from the Navy Reserve for use of crack cocaine? Is that question not just a little bit interesting? That may be the thin end of it – in 2014-15 Hunter Biden received US $850,000 from the intermediary company channeling the payments. In reporting on Trump being potentially impeached for asking about it, might you not expect some analysis – or at least mention – of what he was asking about?
That Hunter Biden received so much money from a company he never once visited or did any legitimate work for, located in a country which remarkably at the same time launched into a US sponsored civil war while his father was Vice President, is a question which might reasonably interest people. This is not “fake news”. There is no doubt whatsoever of the facts. There
is also no doubt that, as Vice President of the USA, Joe Biden secured the firing of the Ukrainian prosecutor who was investigating Burisma for corruption.
The story now is that Hunter Biden abandoned a laptop in a repair shop, and the hard drive contained emails between Hunter and Burisma in which he was asked for, and promised, various assistance to the company from the Vice President. This hard drive was passed to the New York Post. What the emails do not include is any incriminating correspondence between Hunter and his father in which Joe Biden agrees to any of this – which speaks to their authenticity, as that would be the key thing to forge. Given that the hard drive also contains intimate photos and video, there does not seem to be any real doubt about its authenticity.
However both Facebook and Twitter slapped an immediate and total ban on all mention of the Hunter Biden emails, claiming doubts as to its authenticity and an astonishing claim that they never link to leaked material or information about leaked material.
Alert readers will note that this policy was not applied to Donald Trump’s tax returns. These were extremely widely publicised throughout social and mainstream media – and quite right too – despite being illegally leaked. Twitter may be attempting to draw a distinction between a “hack” and a “leak”. This is difficult to do – the Clinton and Podesta emails, for example, were leaked but are frequently claimed to have been hacked.
I am astonished by the online comment of people who consider themselves “liberals” who support the social media suppression of the Hunter Biden story, because they want Trump to be defeated. The truth is that those in control of social media censorship are overwhelmingly Atlanticist figures on the Clinton/Blair political spectrum. That embraces the roles of Nick Clegg and Ben Nimmo at Facebook. It explains the protective attitude of Blairite Wikipedia boss Jimmy Wales (also a director of Guardian Media Group) toward the Philip Cross operation.
Censorship from the self-satisfied centre of the political establishment is still more dangerous, because more stable, than censorship from the left or right. It seeks rigorously to enforce the “Overton window” on social media. It has a “whatever it takes” attitude to getting Joe Biden into the White House and removing a maverick element from the political stability it so prizes. Its hatred of public knowledge is behind the persecution of Assange.
The Establishment’s problem is that inequalities of wealth are now so extreme in Western society, that the attempted removal of access by the public to radical thinking is not protecting a stable society, but is protecting a society tilting towards structural instability, in which the lack of job security and decent conditions and pay for large swathes of the population contrasts vividly with the spectacularly flourishing fortunes of the ultra billionaires. Our society desperately needs thinking outside the box into which the social media gatekeepers are attempting to confine us.
An early part of that thinking out of the box needs to relate to internet architecture and finding a way that the social media gatekeepers can be bypassed – not by a few activists, but by the bulk of the population. We used to say the internet will always find a work-around, and there are optimists who believe that the kind of censorship we saw over Hunter Biden will lead to a flight to alternative platforms, but I don’t see that happening on the scale required. Regulation to prevent censorship is improbable – governments are much more interested in regulation to impose more censorship.
The development of social media gatekeeping of internet traffic is one of the key socio-political issues of our time. We need the original founders of the internet to get together with figures like Richard Stallman and – vitally – Julian Assange – to find a way we break free from this. Ten years ago I would not have thought it a danger that the internet would become a method of political control, not of political freedom. I now worry it is too late to avert the danger.
* * *
Unlike adversaries including the Integrity Initiative, the 77th Brigade, Bellingcat, the Atlantic Council and hundreds of other warmongering propaganda operations, Craig's blog has no source of state, corporate or institutional finance whatsoever. It runs entirely on voluntary subscriptions from its readers – many of whom do not necessarily agree with the every article, but welcome the alternative voice, insider information and debate. Subscriptions to keep Craig's blog going are gratefully received.
In an interestingly-timed press conference, the US Justice Department said this morning that it has indicted six Russian intelligence agency (GRU) hackers for a four-year long global hacking spree that included attacks against Ukraine, Georgia (the country, not the state), the 2018 PyeongChang Winter Olympics, 2017 French elections, and a hospital in Pennsylvania.
“The FBI has repeatedly warned that Russia is a highly capable cyber adversary, and the information revealed in this indictment illustrates how pervasive and destructive Russia’s cyber activities truly are,” said FBI Deputy Director David Bowdich, adding that:
From November 2015 to October 2019, DoJ stated that "their computer attacks used some of the world's most destructive malware to date, including: KillDisk and Industroyer."
The six Russians - Yuriy Sergeyevich Andrienko, 32; Sergey Vladimirovich Detistov, 35; Pavel Valeryevich Frolov, 28; Anatoliy Sergeyevich Kovalev, 29; Artem Valeryevich Ochichenko, 27; and Petr Nikolayevich Pliskin, 32 - face a maximum sentence of 27 years in prison for wire fraud. They are wanted and assumed to be in Russia.
They are all charged in seven counts: conspiracy to conduct computer fraud and abuse, conspiracy to commit wire fraud, wire fraud, damaging protected computers, and aggravated identity theft.
Watch the full press conference below (starting at around 17:00):
Certainly the timing is noteworthy amid the Hunter Biden laptop scandal, Rep. Schiff's claims of Russian misinformation, and DNI Ratcliffe's denial of any Russian involvement.
The various speakers from the DOJ and FBI threw out wonderfully scary and hyperbolic statements, such as:
"No country has weaponized its cyber-capabilities as maliciously and irresponsibly as Russia," Assistant Attorney General John C. Demers said at a DOJ press conference.
"Time and again Russia has made it clear they will not abide by accepted norms," FBI Deputy Director David Bowdich said.
All of which could provide just enough cover for Joe Biden to push back against any Trump efforts to bring up the laptop during the debate by 'debunking' it as part of the "Russian operation," despite the fact that US intelligence has denied it and there is no proof whatsoever of any linkage.
However, a sliver of truth leaked out during the Q&A with reports as Assistant Attorney General for National Security John C. Demers was asked about Russian meddling in the 2020 election:
Reporter: "Do you have any evidence of the GRU actively trying to hack or take negative actions toward the 2020 election?"
Demers: "...we haven't seen anything that caused us to question" election integrity.
Watch (does anyone else think he looked nervous in the slip below while choosing his words very carefully):
Which implicitly spoils the "Russia, Russia, Russia" meddling narrative somewhat.
Perhaps the most notable observation from the latest Bank of America Fund Manager Survey is the finding that 74% of respondents believe that a contested election is the biggest reason for volatility in 4Q, and that 61% of Wall Street professionals believe the election will be contested.
Consistent with this, 44% of respondents in a parallel survey targeting FX and Rates investors found that 44% of respondents expected uncertainty to linger for up to a month if not longer—still a considerable share. Yet even as the market is setting up for the possibility of greater volatility, it now appears that the consensus is leaning toward the more benign outcome as recent volatility measures have come off the highs.
Despite the easing of market nerves about the outcome of Nov 3, it remains a distinct possibility that we don’t have a result of the election on November 4th according to BofA, which notes that the economic implications of the election will depend on the reason and duration of the delay. There are three distinct scenarios:
Here, the biggest wildcard will be state mail-in ballots, with BofA chief economist Michelle Meyer writing that "states could have a challenging time working through such a large number of mail-in ballots." Furthermore, rules also vary by state in terms of when the ballot can be sent and counted, which is why the ultimate outcome of the election may not be known for days, especially if battleground states are late on counting all the mailed-in votes.
While the most common state deadline is on Election Day when the polls close, some states will accept a mailed ballot if it is received after Election Day as long as it is postmarked prior. The rules differ in terms of when the ballots can be counted. Some states do not allow mail-in ballots to be opened before Election Day which could mean counting delays. This includes a few of the critical swing states – such as PA and WI. Moreover, mail-in ballots may be contested for signatures that don’t match voter registration cards.
As BofA warns next, a key risk is that the lead in the race swings back and forth between Democrat and Republican candidate depending on what kinds of ballets are being counted. A recent WSJ/NBC poll found that 47% of Biden supporters plan to vote by mail whereas 86% of Trump supporters will vote in person. Indeed, according to the US Elections Project website, there have been just over 15 million ballots returned and of the states that identify party affiliation, 57% were Democrats, 24% Republicans and 19% no party affiliation.
As these votes are tallied, Meyer predicts that this could "potentially give a lead to Biden, then in-person voting could swing the election toward Trump, then Biden could again regain ground as officials work their way through remaining mail-in votes."
In other words, "political analysts may not feel comfortable calling the winner despite the data on hand." Ultimately, depending on allegations of voter fraud, Trump may contest the election and escalate it all the way to the Supreme Court, in a rerun of Gore vs Bush. How long that particular process lasts is anyone's guess.
Early in the pandemic I advised readers to zone out, take a break, and read fiction and other works of art that have stood the test of time. There’s only so much crazy we can deal with and there’s only so much mental benefits to be had from intensively monitoring a pile of political trash.
Over a long enough time frame, the madness of 2020 will fade. However awful the damage is now and however many people’s lives are ruined by asinine government policies, the world will recover. Poverty will resume its downward stroll; Capitalism will provide.
Or will it?
I have degrees in history: I am at least a bit more familiar than the average person with the abject poverty that until a few generations ago was the norm for humans everywhere, and the technological improvements that have powered and propelled our societies into the wonders they are. Through disease, genocides, world wars, rebellions and revolutions, state power, civil wars and cold wars, humanity – even the darkest moments of the 20th century – we prevailed, and came out better than ever. I write for a wonderfully optimistic site called HumanProgress, dedicated to displaying misperceptions about the state of humanity. I adore the “New Optimists” and their relentless work in showing us exactly how much progress we’ve made.
But I confess: this year, I’m afraid. I fear the “new normal” and the “next normal,” and how easily we surrendered hard-earned freedoms. I fear the people who, loudly and unironically, push for states to restrict life even more, to throw everything and the kitchen sink at what looks like a bad flu season. Do we honestly think we’ll get back the freedoms that we have lost?
In ‘Can We Talk About Something Else Now?’, I gave a shout-out to the great economic historian and political economist Robert Higgs, and called his work “an eerie reminder of the long-run interplay between government and freedom.” What propelled Higgs to fame in libertarian circles was his principled, unwavering critique of state power. He didn’t mince words about the government. When I first met Dr. Higgs six years ago, he struck me as a little too cynical and a little too paranoid; surely, the things he professed about the overreach of American government couldn’t happen? We’re past such monstrosities. We have checks-and-balances that still work – for now, anyway.
With the disaster of this year, Higgs’ words look remarkably prescient. And I’m not the only one painfully reminded of his work: Don Boudreaux and Veronique de Rugy are just some examples.
One of Higgs’ central contributions is the idea of state power ratcheting up over time. During every emergency, be it war or civil rights disputes or climate change or pandemics, the state introduces “temporary” one-off measures. Closing of borders, $1,200 checks, restrictions that harm people and kill businesses – all in the need of preserving our way of life over the long run. But we know, as Milton Friedman often pointed out, that there’s “nothing more permanent than a temporary government policy.”
Ask Sweden and its recently deceased star economist Assar Lindbeck, fighting as he did his entire career against rent control – a “temporary” measure introduced after World War II. Or the punitive marginal income tax on top incomes, levied as a “temporary” public finance effort during the banking crisis of the 1990s. Even after public finances had been under control and in good shape for at least twenty years, the worst portion of this expropriation was rolled back only this year – sending Sweden to a meagre third place in the league of highest marginal tax rates. James Buchanan predicted as much in Public Finance in Democratic Process from 1967.
Let me engage in some speculation, hopefully entirely off and ridiculed in three to six months.
Part of Higgs’ ratchet is that after the immediate emergency passes, the state surrenders some of its extended powers – but not all of them. Like the examples of Sweden’s rent control and top marginal tax, some of them linger for decades. The rest of us grow used to them, and forget that we could ever live without them.
As winter rolls over the Northern Hemisphere, the corona cases will increase – relatively slowly for now, then faster and faster. Death rates might move up with it, and everyone will freak out. Most governments are already losing their minds, reintroducing heavy restrictions on what its “free” people may or may not do. They cover this in increasingly Orwellian euphemisms (“circuit breaker” sounds technocratic and harmless, right?). Some, like the editorial writers at The Guardian, don’t even pretend any longer:
“The most obvious advantage of one rule for everyone is its simplicity. Arguably, the sense of being ‘in it together’ from March onwards also made a positive difference in terms of people’s sense of wellbeing, their willingness to tolerate hardship and offer help and appreciation to others.”
It’s not about what works and what doesn’t, a disease or how best to combat it. It’s not even about weighing one set of ills against another. It’s about feeling good and about being in it together – suppressing everyone’s rights and freedoms together.
Air travel won’t return to its 2019 peak. Fewer people will fly, eschewing the wonders of Elsewhere for the safety of Somewhere. The prospects of mandatory quarantines, sometimes in both directions of travel, will sway all but the most dedicated people from traveling. Those who venture into these remarkably safe wonders of civilization will find themselves going through an additional ordeal – not unlike what happened after 9/11 (another set of freedoms never returned to us). We’ll be wearing masks for many years to come, possibly forever; food and drinks will not be served; hand sanitizers and wipers ensure that nothing ever touches your skin. The slight silver lining is some extra space as under no circumstances will seat neighbors be permitted – which means that airlines will struggle with profitability, see more future bailouts, and some of them probably nationalized.
The comparatively harmless plexiglass will be everywhere, as will the masks that make it impossible to read others’ facial expressions and on occasion hear what they’re saying. Social interaction will be inhibited, and not just physically. We’ll all make our purchases behind protective veils – or through the pseudo-anonymity of being online – losing the affectionate interactions that make market participants friendlier. Say goodbye to late-night rumblings through the streets – nightclubs and bars will stay closed, permanently, as such frivolity is most certainly not “essential.” If you’re even allowed outside, that is – which you won’t be – there will be few reasons for you to leave the safety of your home.
Vaccines will arrive, faster than ever before in human history, but the combination of not providing enough protection and a sizable portion of the population refusing to take them, will mean that corona restrictions remain in place.
The madness of 2020 has had a lot of extraordinary firsts: lines in the sand we never thought politicians would cross. We thought they’d never infringe on people’s freedom to walk outside, meet others, trade in perfectly harmless and mutually beneficial exchange. We were wrong: at the first sight of (slight) danger, we handed over freedoms left and right – and nobody really cared. Higgs’ thirty-year-old words are more relevant than ever.
When even free-marketeers like Tyler Cowen say that opening schools “just doesn’t seem worth it,” we don’t want to know what he thinks about other activities. In the early days of the pandemic, opponents of freedom said smugly that “There are no libertarians in a pandemic.” Perhaps, we reluctantly conceded as we all feared what we didn’t know, before we retorted that there would be no statists coming out of one. Liberty’s proponents seem to be losing that one too.
“The benefits of a national lockdown no longer justify the costs,” states The Economist, as if they ever did or as if that mattered to power-hungry intellectuals and politicians. The latter have been enjoying a seven-month high on dominating others – and learned that their subjects didn’t really mind. They will fight tooth and nail to hold on to their newly acquired powers, and there will be nobody opposing them.
What Higgs teaches us is that temporary efforts, introduced for whatever high-flying reason, take on a life of their own. They lull the population into a false sense of security and a misplaced appreciation for the now normal. Fast forward ten or twenty years and everyone forgets that the invasive powers we transferred to the state were ever temporary in the first place. Higgs is the intellectual champion we don’t deserve, but so desperately need.
Let’s just hope that I am wrong, and that progress wins out in the end.
In what remains the most undercovered financial topic of the year, if not century, we remind readers that starting about a year ago, central banks around the world launched an unprecedented if stealthy attempt to overhaul the entire monetary architecture of fiat money by implementing digital dollars, a transformation to a cashless society which in recent months has also received the tacit support of Congress, which is actively drafting bills to send "digital dollars" to the unbanked. For those just catching up, read the following recent articles:
Since we have done so on numerous occasions in the past, we won't discuss the staggering implications of such a transformation when (not if) it is implemented over the next few years, instead pointing readers to recent thoughts from DoubleLine fixed income portolio manager Bill Campbell, who warned that "Pandora's Box Of Fed's Digital Currency Will Ignite An "Inflationary Conflagration" - which is spot on in its assessment that this is at its core a central bank Hail Mary attempt to spark drastic inflation across the globe in hopes of "reflating away" the world's untenable debt load - and whose conclusion is striking:
The temptations of CBDCs are not limited to excesses in monetary policy. CBDCs also appear to be an effective mechanism for bypassing the taxation, debt issuance and spending prerogatives of government to implement a quasi-fiscal policy. Imagine, for example, the ease of enacting Modern Monetary Theory via CBDCs. With CBDCs, the central banks would possess the necessary plumbing to directly deliver a digital currency to individuals’ bank accounts, ready to be spent via debit cards.
Let me quote again from Charles I. Plosser’s warning in 2012: “Once a central bank ventures into fiscal policy, it is likely to find itself under increasing pressure from the private sector, financial markets, or the government to use its balance sheet to substitute for other fiscal decisions.” With a flick of the digital switch, CBDCs can enable policymakers to meet, or cave in to, those demands – at the risk of igniting an inflation conflagration, abandoning what little still survives of sovereign fiscal discipline and who knows what else. I hope the leaders of the world’s central banks will approach this new financial technology with extreme caution, guarding against its overuse or outright abuse. It’s hard to be optimistic. Soon our monetary Pandoras will possess their own box full of new powers, perhaps too enticing to resist.
We bring all this up because earlier today, hot on the heels of recent announcements by both the ECB and BOJ which recently discussed their ongoing preparations to launch digital currencies, Fed Chair Jerome Powell spoke at a panel focusing on Cross-Border payments hosted by the IMF during its annual meeting, in which he said that the central bank hasn’t made a decision to issue a digital currency, citing the need for further work and "extensive" public consultation with stakeholders before doing so.
.@FederalReserve’s Powell & @BIS_org’s Carstens: To make #CrossBorderPayments successful, we need international cooperation among a wide range of parties, including private sector, central banks, @FinStbBoard and the IMF. https://t.co/EFHUv21SWz #IMFmeetings pic.twitter.com/2EhFQre4wK— IMFLive (@IMFLive) October 19, 2020
"It’s more important for the United States to get it right than to be first," adding that "we are committed to carefully and thoughtfully evaluating the potential costs and benefits of a central bank digital currency for the U.S. economy and payments system. We have not made a decision to issue a CBDC."
And while one would be temped to interpret Powell's statement as one of skepticism that Digital Dollars are coming, we believe this is misplaced with Powell emphasizing that "80% of central banks around the world are exploring the idea." Powell also noted that of the $2 trillion in dollar currency in circulation - with this number spiking following the covid pandemic - about half remains outside the US.
Meanwhile, even Bloomberg notes that "Fed officials have swerved sharply from their previously cautious approach to digital currencies, embracing a full-scale study on whether one might be suitable for the U.S."
Powell also listed the main reasons why central banks are obsessed with to launching CBDCs, saying that "there are a number of ways that a CBDC might improve the payments system, and it is mainly this area that motivates our interest" which include:
Faster and cheaper transactions
Addressing a decline in the use of physical currency
Modernizing the payments infrastructure
... and the main reason cited by Powell: "reaching consumers who have been traditionally underserved by financial institutions", which is another way of say granting the Fed permission to make targeted direct deposits to virtually anyone, anywhere in the world at any given moment in time, in the process making obsolete such legacy institutions as Congress, Commercial Banks and the IRS, since the Fed has ultimate control over the lifespan of every single currency unit from inception to its eventual destruction at the hands of the Fed.
That said, while CBDCs are clearly coming, we expect a period of at least several years before their arrival, absent another major financial crisis, of course: "We have not made a decision to issue a CBDC and we think that there's a great deal of work to be done", Powell said.
Powell's generic caveats aside, the die has been cast: as we reported in August, the Fed announced that it was expanding experimentation with technologies related to digital currencies. In addition, the Boston Fed is working with researchers at the Massachusetts Institute of Technology to build a "hypothetical" digital currency oriented for central bank use.
Other central banks around the globe have been more advanced in their preparations to roll out digital currencies: Sweden began an e-krona project in 2017 and has issued two reports on the topic. The Bank of Canada has launched a formal research project that has partnered with other monetary authorities. The Bank of Japan said earlier this month that it aims to start early phase experiments next year.
The full IMF panel on cross-border payments and digital currencies is below:
For those who need a crash course, on CBDCs, RealVision's Raoul Pal had a good twitter thread on the topic yesterday:
Important Thread:— Raoul Pal (@RaoulGMI) October 18, 2020
If you don't think Central Bank Digital Currencies are coming, you are missing the big and important picture. This is going to be the biggest overhaul of the global financial system since Bretton Woods.