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Fresh concerns over Elon Musk’s stability

Washington (AFP) – Elon Musk has had a series of angry social media dust-ups with Wall Street analysts, journalists, employees and others.

But his latest outburst on Twitter attacking a British rescue worker in Thailand has raised fresh concerns over the star tech entrepreneur’s stability and leadership abilities.

Musk, the South African-born innovator and billionaire behind Tesla and SpaceX, found himself in hot water after insulting Vern Unsworth, a British diver who worked on the Thai soccer team rescue and who dismissed Musk’s plan to recover the trapped group.

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Gohmert: Lisa Page giving ‘insights’ into Russia investigation

(Washington Examiner) Rep. Louie Gohmert, R-Texas, said Tuesday that former FBI lawyer Lisa Page has been more helpful than FBI agent Peter Strzok when it comes to answering their questions about how the FBI handled the Russia and Hillary Clinton investigations.

“She has given us more insights to who was involved in what,” Gohmert told Fox News.

“She’s a more contrite person,” he added. “But make no mistake … she’s a Democrat. She wanted Hillary to win and she did not want Trump to win, and that’s been obvious.”

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Court rules Fannie Mae caretaker unconstitutional

(Washington Examiner) The government caretaker of Fannie Mae and Freddie Mac is unconstitutional, a federal court has ruled.

A three-judge panel for the U.S. Court of Appeals for the Fifth Circuit ruled that the Federal Housing Finance Agency, created in 2008 as the housing market collapsed, defies the Constitution because it does not answer to the president.

“We hold that Congress insulated the FHFA to the point where the Executive Branch cannot control the FHFA or hold it accountable,” the judges wrote in an unsigned opinion.

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Rand Paul: Trump’s critics ‘mistaken’

(AP) One Republican senator says critics of President Donald Trump’s approach to Russia are “mistaken” and points out that the United States has also picked sides in other countries’ elections.

Sen. Rand Paul of Kentucky says it’s important for the U.S. to keep an open dialogue with its adversaries, especially if it hopes to motivate them to change their behavior.

Paul tells The Associated Press, “We should look for ways to make the dialogue better.”

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Trump and Putin in Helsinki: No showdown in H-Town

By the time you read this, President Donald Trump and Russian President Vladimir Putin have finished their mano-a-mano meeting in Helsinki, Finland. The press conferences have been held, the photos have been taken, the talking points have been disseminated and the Elvises have left the building.

Ask a Democrat what went down between the two and they’ll tell you Trump and Putin probably finalized plans to hand the keys to the White House to Comrade Vlad. Ask a Republican and they’ll tell you that Trump forced Putin to hand over the GRU hackers who launched attacks on the American elections of 2016. Ask me and I’ll tell you that not much happened.

It’s not that I doubt Trump’s ability to wheel and deal at near-light speed, as demonstrated by the diplomatic masterstroke he scored with North Korean dictator Kim Jong Un. It’s not that I doubt that Putin is the diplomatic equivalent of a brick wall. It’s not even that I doubt the two men could come to some sort of agreement to cease the decades of hostility that have essentially defined geopolitics since the end of WWII.

It’s just that I know that — barring something extraordinary — whatever goes down in H-town is probably going to be buried under the news cycle by Friday. The grand globalist game of cat-and-mouse will continue unabated. But it’s worth noting that Trump and Putin aren’t cat-and-mouse. They — along with the rest of the politicians and their media flame-fanners — are cats. You and I are the mice.

In a recent interview with Fox News, the president noted “I could say: ‘Would you do me a favor? Would you get out of Syria? Would you do me a favor? Would you get out of Ukraine?’” While Trump’s hypothetical convo with the former KGB spook-turned-spooky dictator might seem quaint, it also represents a major step forward from Trump’s predecessor’s approach, which was to do nothing other than stage awkward “reset button” photo-ops, attempt to glare menacingly at Putin,and sit on his hands while Russia invaded the Ukraine like an aggressive form of cancer.

But just because Trump is a different style of player, don’t expect him to change the game. The president even acknowledged as much in the days prior to the Helsinki hoedown, warning against low expectations and promising not to push for “deliverables.” That’s elite-speak for the old “talks about the talks we’re gonna have about future talks.” As long as the superpowers can get out their aggressions — not to mention feed them — through proxy wars and chest-thumping, the status quo will remain. The United States and Russia will continue the ridiculous love-hate relationship which has kept the same faces on your TVs and, more importantly, your ballots.

Even if something noteworthy did transpire, the Left’s reaction will range somewhere between sneering disdain to proclaiming Trump guilty of treason. The right’s reaction will fall somewhere between mild disappointment to proclaiming Trump worthy of a Nobel Prize (to go with the one he should win for his North Korean deal making). And I will just hope there’s no shirtless posedown.

— Ben Crystal

The post Trump and Putin in Helsinki: No showdown in H-Town appeared first on Personal Liberty®.

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Stocks rise and fall because of central banks, not trade war headlines

There has been a lot of confusion lately in the mainstream economic media as well as in independent media circles as to the behavior of stock markets in the wake of the recently initiated global trade war. In particular, stocks suffered one of the longest runs of negative days in their history in June, only to then spike just after Donald Trump “officially” began trade war tariffs in July. The expectation by many was that the headlines would cause an immediate and continued downturn in equities markets, but this was not the case. Many analysts have been left bewildered.

This is an issue I have touched on multiple times since the beginning of this year, and it is something I predicted long before Trump’s election in 2016. But it is obvious that the schizophrenic nature of stocks needs to be addressed in a very concise, no-holds-barred fashion, because there are still far too many people who are looking at all the wrong causes and correlations.

First, let’s be clear: stock markets are not tracking the news headlines. The past month should have proved this if there was any previous doubt.

It is hard for investors and some analysts to grasp this fact, primarily because for at least the past few years it appeared as though stock markets were utterly dictated by headlines out of Bloomberg, Reuters and other mainstream media outlets. Once investors and analysts became used to this narrative it was difficult for them to adapt when the dynamic changed. They are still living in the past based on an assumption that was never quite correct to begin with.

In reality, headlines never actually dictated stock prices; it was always the Federal Reserve among other central banks.

As I and others have noted consistently, stock market valuations for the past several years have tracked almost perfectly with the Fed’s balance sheet. That is to say, every time the Fed purchased more assets and increased the balance sheet, stocks went up.

 

Fed Balance Sheet

 

After years of the notorious “Fed Put,” we now have an entire generation of investors and market writers that have never experienced a stock environment in which equities actually fall according to the health of their corresponding companies or the economy at large. The past year has been a bit of a shock for them, and it’s only going to get worse.

The Fed’s interventions in stocks are now essentially over, which is exactly why stocks are no longer hitting new historic highs every month as they used to. The massive bull market rally of the post credit crash world of 2008 has stalled, and here are the reasons why.

Central Banks tapering QE

The Federal Reserve was only the first to begin tapering its purchases of treasury bonds. Japan is now in the midst of what many are referring to as a “stealth taper” of its own bond purchases. The European Central Bank has announced it will likely end its QE program by the end of this year. Bond purchases helped first to support the ever growing debt burden of the governments and nations in question, but along with artificially low interest rates, it made bond investment less desirable in terms of profits. This pushed the majority of investors into stocks, where profits were essentially guaranteed by the central banks.

Now that QE is ending around the world and rates are rising along with yields, bonds are becoming a competing asset, luring investors away from stocks once more.

Central Banks raising interest rates

The Federal Reserve has been raising rates consistently since the end of 2016, exactly as I predicted they would before the U.S. election.  Interest rates are a direct influencing factor in stocks — low interest rates and cheap overnight loans to corporations by the Fed allowed these companies to continually buy back their own stocks, thereby decreasing the number of stock offerings available on the market and artificially boosting the value of the stocks that were left circulating.

Corporation have taken on a historic level of debt not seen since 2007 in order to keep their stocks prices high. Now that interest rates are rising, the party is almost over. The only source of capital left to fuel the stock buyback bonanza has been the Trump corporate tax cut.  Instead of using this cut as a means to increase employment, innovation and to bring manufacturing back to the U.S., companies have instead squandered it on boosting the stock market yet again. However, as we have seen this year so far, without the aid of cheap money from the central bank the effects of stock buybacks are diminishing.

How long will it take for corporations to completely exhaust this last revenue stream? I predict stock buybacks will die off by the end of this year. And with rising interest rates, all that debt they took on in order to keep stocks elevated will now become rather expensive to hold onto. Once stock buybacks diminish, markets will crash.

It’s important to note that the Fed is not the only central bank that is raising interest rates. The Bank of Canada and the Bank of England among others are beginning to push higher rates as well.

Federal Reserve cutting balance sheet

The Fed has been the single most important trigger for stock markets. Period. As noted above, it was the Fed that created the historic bull market rally after the derivatives collapse. Jerome Powell, the current chairman of the Fed, noted back in 2012 that this was the case, and also made statements on what would happen is the Fed ever raised interest rates and cut asset purchases, ending the central bank’s “short position.”

What did Powell predict in 2012? Essentially, a stock market crash. And, yet, as the new Fed chair, he is implementing the exact measures he warned about back in 2012.

With every new balance sheet cut and rate hike, the Dow Jones in particular tends to lose 1,000 points or more. The damages have been mitigated by continued stock buybacks from corporations, but as already mentioned, this stop gap will be ending shortly. In May, we saw an exaggerated market spike, but the Fed slowed cuts that month and also added a small amount of purchases, which only supports my assertion that the balance sheet is the primary indicator of where stocks are headed.

I should also note that the St. Louis Fed recently ended its reporting of data on cuts from week-to-week. There are other sources for this data, but they mainly show how much was cut per month, not when in the month those cuts were made. The St. Louis data was originally reported on a weekly basis.

I believe the Fed is not attempting to hide the size of its asset dumps, but it is attempting to hide the exact timing of when the cuts occurred.  In this way, they hope to distance themselves from any blame as it becomes more difficult to connect Fed cuts to specific plunges in stock markets.

Trade war distraction

The trade war continues as the most effective possible distraction from central bank activities. In every instance of a stock market decline, which takes place after every instance of a Federal Reserve cut in the balance sheet or an interest rate hike, Donald Trump also seems to make yet another trade war announcement.

The only outlier has been the “official launch” of the trade war with China, which saw stock markets suddenly rise.  I have witnessed numerous analysts and commentators frantic over the fact that stocks did not fall on the headlines. Some have even suggested that the investment world “loves the trade war.”

What these commentators do not understand is that the headlines are meaningless and the trade war has little to do with the behavior in equities. It is the Federal Reserve and to some extent other central banks that are controlling stock market prices, along with corporate stock buybacks which are facilitated by the Federal Reserve.

I’ve said it before and I’ll say it again — what we are witnessing is a controlled demolition of the U.S. economy, and stock markets are merely an extension of this process. They are a lagging indicator, not a leading indicator. Stocks fall when the Fed dumps more assets, and these cuts are growing larger and larger as 2018 drags on. Stocks rise when the Fed slows asset cuts in a particular week, or when companies initiate more stock buybacks. That’s it. That is all there is. There is nothing else to look at when predicting what stocks will do at any given time.

The facade will end when balance sheet cuts expand to a point at which buybacks cannot keep up and the slack in markets grows too fast.  Or when stock buyback cash runs out (probably by the end of this year). The trade war can and will cause various problems within the global economy, but the greater cause of fiscal distress will always be central banks. They are to blame for any future crisis.

— Brandon Smith

The post Stocks rise and fall because of central banks, not trade war headlines appeared first on Personal Liberty®.

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Putin claims $400 million funneled to Hillary campaign

(ZERO HEDGE) — Vladimir Putin made a bombshell claim during Monday’s joint press conference with President Trump in Helsinki, Finland, when the Russian President said some $400 million in illegally earned profits was funneled to the Clinton campaign by associates of American-born British financier Bill Browder – at one time the largest foreign portfolio investors in Russia. The scheme involved members of the U.S. intelligence community, said Putin, who he said “accompanied and guided these transactions.”

Browder made billions in Russia during the 90’s. In December, a Moscow court sentenced Browder in absentia to nine years in prison for tax fraud, while he was also found guilty of tax evasion in a separate 2013 case. Putin accused Browder’s associates of illegally earning over than $1.5 billion without paying Russian taxes, before sending $400 million to Clinton.

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