Money Flow Trading Method along with Risk Management

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Authored by Alasdair Macleod via GoldMoney.com,

Behind the scenes, the financial war between America and China is escalating dangerously into a war to secure global financial resources.

At a time of growing liquidation of dollar assets by foreigners, the US Treasury’s internal analysis will highlight future government funding problems in the light of a developing US recession. This will result in an overdependency on inflationary financing, threatening to destabilise the dollar’s purchasing power. For these reasons, America needs foreign portfolios to invest in US Treasuries, at a time when China also needs them to help finance her infrastructure plans and future development. We face a battle for these funds, and the outcome will determine all our futures.

https://zh-prod-1cc738ca-7d3b-4a72-b...1_11-22-47.jpg

Introduction
When you see a rash, you should look beyond the skin for a cause. It has been like this with Hong Kong over the last few weeks. On the surface we see impressively organised demonstrations to stop the executive from introducing extradition laws to China. We observe that university students and others not much older are running the demonstrations with military precision. The Mainland Chinese should be impressed.

They are unlikely to see it that way. The build-up of riots against Hong Kong’s proposed extradition treaty with the Mainland started months ago, supported and driven by commentary in the Land of the Free. America is now coming out in the open as China’s adversary, no longer just a trading partner worried by the trade imbalances. And Hong Kong is the pressure point.

This happened before, in 2014. The Chinese leadership was certain the riots in Hong Kong reflected the work of American agencies. The following is an extract translated from a speech by Major-General Qiao Liang, a leading strategist for the Peoples’ Liberation Army, addressing the Chinese Communist Party’s Central Committee in 2015:
“Since the Diaoyu Islands conflict and the Huangyan Island conflict, incidents have kept popping up around China, including the confrontation over China’s 981 oil rigs with Vietnam and Hong Kong’s “Occupy Central” event. Can they still be viewed as simply accidental?

I accompanied General Liu Yazhou, the Political Commissar of the National Defence University, to visit Hong Kong in May 2014. At that time, we heard that the “Occupy Central” movement was being planned and could take place by end of the month. However, it didn’t happen in May, June, July, or August.
What happened? What were they waiting for?

Let’s look at another time table: the U.S. Federal Reserve’s exit from the Quantitative Easing (QE) policy. The U.S. said it would stop QE at the beginning of 2014. But it stayed with the QE policy in April, May, June, July, and August. As long as it was in QE, it kept overprinting dollars and the dollar‘s price couldn’t go up. Thus, Hong Kong’s “Occupy Central” should not happen either.

At the end of September, the Federal Reserve announced the U.S. would exit from QE. The dollar started going up. Then Hong Kong’s “Occupy Central” broke out in early October.

Actually, the Diaoyu Islands, Huangyan Island, the 981 rigs, and Hong Kong’s “Occupy Central” movement were all bombs. The successful explosion of any one of them would lead to a regional crisis or a worsened investment environment around China. That would force the withdrawal of a large amount of investment from this region, which would then return to the U.S.”

That America is stoking and organising discontent anew in Hong Kong is probably still China’s view today. Clearly, the Chinese believed America covertly managed “Occupy Central” and therefore are at it again. Apart from what their spies tell them, the protests are too well organised and planned to be spontaneous. This time, the attack appears to have a better chance of success. The plan is coordinated with American pressure on Hong Kong’s dollar peg in an attempt to destabilise it, principally through the threat to extend tariffs against China to Hong Kong. This second attempt to collapse Hong Kong is therefore more serious.
Hong Kong is critical, because through Shanghai Connect it is the only lawful channel for foreign investment flows into China. This is important to the Americans, because the US Treasury cannot afford to see global portfolio flows attracted into China at a time when they will be needed to invest in increasing quantities of US Treasury stock. Understand that, and you will have grasped a large part of the urgency behind America’s attempt to destabilise Hong Kong.

Qiao Liang makes this point elsewhere in his aforementioned speech, claiming American tactics are the consequence of the ending of Bretton Woods:
“Without the restriction of gold, the US can print dollars at will. If they keep a large amount of dollars inside the US, it will certainly create inflation. If they export dollars to the world, the whole world is helping the US deal with its inflation. That’s why inflation is not high in the US.”

While one can take issue with his simplistic analysis, that is not the point. What matters is what the Chinese believe. Qiao concludes:
“By issuing debt, the US brings a large amount of dollars from overseas back to the US’s three big markets: the commodity market, the Treasury Bills market, and the stock market. The US repeats this cycle to make money: printing money, exporting money overseas, and bringing money back. The US has become a financial empire.”

Conceptually, Qiao was broadly correct. His error in these two statements was to not explain that ownership of dollars means they are deployed exclusively in America, but perhaps he was simplifying his argument for a non-technical audience. All dollars, despite foreign ownership, remain in the American economy as a combination of US Treasuries and T-bills, investment in US listed and unlisted securities, physical assets such as property and also deposits through correspondent banks held in New York.

It is not the dollars that flow, but their ownership that changes. Dollars are bought and sold for foreign currencies by central banks, sovereign wealth funds, commercial banks, insurance companies and pension funds. The currencies in which these entities invest matters, and investment decisions are obviously affected by currency prospects. It allows the US Treasury to attract these flows into the dollar by simply making other currencies less attractive. Foreign owners of foreign currencies can easily be spooked into the safe havens of the dollar and US Treasuries. This is the way foreigners are corralled into funding the budget deficit.

A weakening yuan-dollar exchange rate will dissuade international portfolios from investing in China’s projects, for which the Asian Infrastructure Investment Bank was established. China should respond to moves to undermine her currency, seeking to enhance the attractions of her investment opportunities to international investment funds by taking measures to support the yuan. If not, global investment funds will simply not come China’s way.

Besides attracting portfolio flows into the US, a rising dollar is also a threat to foreign governments and corporates who have borrowed dollars and then have to pay them back later. This was what mauled South-East Asian economies in the 1997 financial crisis. China as a state is not in this position, though some of her regional trading partners will have fallen into this trap again.

It is clear from elsewhere in Qiao’s speech that the Chinese understand America’s motives and methods. Therefore, they will anticipate American actions to undermine the yuan. If the Americans succeed and with the yuan made unattractive, international portfolio money that is already invested in China will be sucked out, potentially crashing China’s capital markets.

With the Hong Kong Human Rights and Democracy Act going onto the US statute book, President Trump will be able to use the link to the Emergency Economic Powers Act to impose sanctions against trade, finance and technology. The concern in Hong Kong is personal wealth will now decamp and that Hong Kong property prices will implode.

The British involvement
America’s strategy has included putting pressure on her allies to fall into line with her interests against China. All NATO members have been told not to buy Huawei equipment. Protective of the special relationship, the British have gone along with it. But Cheltenham’s GCHQ (the UK’s cyber monitoring agency) has at least given Huawei the opportunity to address the security issues that have been raised.

A greater problem is bound to arise, and that is the role of the City of London. In 2014, the then Chancellor of the Exchequer, George Osborne, agreed a plan with the Chinese leadership for the City to work with Hong Kong to internationalise the yuan. The Chinese wanted to bypass New York for obvious reasons.

The request to meet Osborne went through Boris Johnson, at the time Mayor of London and leading a trade delegation to China on behalf of the City. Johnson is now odds-on favourite to become the next Prime Minister and if appointed will undoubtedly find himself in a difficult position. He will have to walk a very fine line between Britain’s developing Chinese interests, her special relationship with America, his new friendship with Trump, and also the trade agreement with America which both Trump and Johnson are likely to prioritise following Brexit.

Depending on how Johnson acts, China may have to put her plans to internationalise the yuan on hold. The risk for China is that with her international financial plans threatened and the Americans determined to strengthen the dollar in order to undermine the yuan, she will not have access to the international portfolio flows she needs to help finance her infrastructure plans and her Made in China 2025 project.

Put another way, we face no less than a dangerous escalation of the financial war between America and China, with America trying to close off international finance to China.

China’s policy predicament
In a tactical retreat, Hong Kong has put plans to introduce the new extradition legislation on hold. All it has achieved is to redirect demonstrators’ demands towards Hong Kong’s Chief Executive to resign, and the demonstrations continued.

The question now arises as to how the Chinese will proceed. So far, they have played their hand defensively in the financial war against America, but things are now coming to a head. Obviously, they will protect Hong Kong, but more importantly they must address capital flight through the Shanghai Connect. One option will be to suspend it, but that would undermine the trust fundamental to future inward portfolio flows. It would also be a huge setback for the international yuan. In any event, action must be taken to underwrite the yuan exchange rate.

One option would be to increase interest rates, but this will risk being read as a panic measure. In this context, an early and definite rise in interest rates would be better than a delay or a lesser adjustment to monetary policy. For the domestic economy, this would favour savers in an economy already savings-driven, but disadvantage exporters and many small and medium-size businesses. It would amount to a reversal of recent economic and monetary policies, which are intended to increase domestic consumption and reduce export surpluses.

The economic theories that the central planners in Beijing actually believe in will become centre-stage. China has adopted the global neo-Keynesian standard of economic planning and credit expansion. When the country moved rapidly from a peasant economy, credit was able to expand without the regular pitfalls of a credit cycle observed in an advanced economy being noticeable. This was because economic progress eclipsed the consequences of monetary inflation.
But China is no longer an economic green-field site, having become predominantly a modern economy. Consequently, she has moved from her pure mercantilist approach to running the economy to a more financial and monetary style of central planning.

Through deploying similar monetary policies to the Americans, it might now occur to Beijing’s central planners that they are at a severe disadvantage playing that game. The dollar and the yuan are both unbacked credit-based currencies bedevilled with debt. But if the dollar goes head-to-head against the yuan, the dollar will always destabilise the yuan.

Supping from the Keynesian cup is China’s principal weakness. She cannot afford to face down the dollar, and the Americans know it. For the Chinese, the path of least risk appears to be the one China has pursued successfully to date: do as little as possible to rock the boat, and let America make the mistakes. However, as I shall argue later, the time is coming for China to take the offensive.

Meanwhile, Chinese inaction is likely to be encouraged by another factor: the escalation of US embargoes on Iranian oil, and the increasing possibility of a new Middle-East conflict with Iran. This is bound to have a bearing on Chinese-American relations.

False flags and Iran
Last week, two oil tankers suffered an attack by parties unknown after leaving the Strait of Hormuz outward-bound. Predictably, the Americans and the Saudis blamed Iran, and Iran has denied involvement. The Americans, supported by the British, have been quick to point out that Iran had the motivation to attack and therefore was the guilty party. As a consequence of US sanctions, her economy is in a state of collapse and Iran needs higher oil prices. The US has been building up its Gulf fleet provocatively, increasing tensions. According to Al-Jazeera, Iran’s President Hassan Rouhani warned last December that “If one day they (the US) want to prevent the export of Iran’s oil, then no oil will be exported from the Persian Gulf.”

Perhaps that day is close. Tehran must be desperate, and she blames the Americans and Israelis for a false flag attack, an accusation that bases its credibility on previous incidents in the region and a suspicion that Israel backed by America wants an excuse to attack Iran. The Syrian bridge to Hezbollah threatens Israel to its North, so its involvement is logical, and it looks like a Mossad operation. By driving Iran into a corner, it is hard to see any other outcome than further escalation.

If America does get tied up in a new war in the Middle East, she will be fighting on two Asian fronts: militarily against Iran and financially against China. It could descend rapidly into a global crisis, which would not suit China’s interests or anyone else’s for that matter. However, an American attack against Iran could trigger the widespread flight of investment money to the safety of the dollar and US Treasuries.

If America achieves that objective before sending in the troops, she could then compromise on both Iran and on tariffs against China. Assuming Qiao Liang’s analysis still has traction in Beijing, this is the way American strategy might be read by the Chinese war-gamers.

Meanwhile, China is securing her defences. Besides aligning with Russia and both being expected to vote at the UN against Israeli/American attempts to escalate tensions in the Gulf, Russia can be expected to covertly help Iran. Beijing is also securing a partnership to protect North Korea, with Xi visiting Pyongyang this week in order to head off American action in that direction. The whole Asian continent from Ukraine to the Bering Sea is now on a defensive footing.

How will it be resolved?
If the funding of the US deficit is the underling problem, then a continuation of China’s longstanding policy of not reacting to America’s financial aggression is no longer an option. A weaker yuan will be the outcome and a second Asian financial crisis involving China would be in the offing. It also means the progression of China’s economy would become more dependent on domestic inflationary financing through the expansion of bank credit at a time when food prices, partially due to the outbreak of African swine fever, are rising as well.

There is bound to be an intense debate in the Chinese Politburo as to whether it is wise to abandon neo-Keynesian financing and revert to the previous understanding that debasing the currency and the inflation of food prices impoverishes the people and will inevitably lead to political destabilisation. The logic behind the state accumulating a hoard of gold, encouraging citizens to hoard it as well, and dominating international bullion markets was to protect the citizens from a paper money crisis. That paper money crisis now threatens the yuan more than the dollar.

It must be clear to the Chinese, who are no slouches when it comes to understanding political strategy, why America is taking a far more aggressive stance in their financial war. The absence of foreign buyers in the US Treasury market could turn out to be the most serious crisis for America since the end of Bretton Woods. The Deep State, driven in this case by the US Treasury, will not permit it to happen. For both China and America, these are desperate times.
There was always going to be a point in time when mundane chess moves end up threatening to check and then checkmate one or the other king. China now finds her king under serious threat and she must make a countermove. She cannot afford portfolio flows to reverse. The financing of her Made in China 2025 plan and the completion of the silk roads are vital to her long-term political stability.

China must therefore counter dollar strength by means other than simply raising interest rates. Inevitably, the solution points towards gold. Everyone knows, or at least suspects that China has accumulated significant undeclared reserves of gold bullion. The time has probably come for China to show her hand and declare her true gold reserves, or at least enough of them to exceed the official gold reserves of the US.

It is likely a declaration of this sort would drive the gold price significantly higher, amounting to a dollar devaluation. By denying gold is money, America has exposed itself to the risk of the dollar’s reserve status being questioned in global markets, and this is China’s trump card.

If Xi attends the Osaka G20 at the end of this month, the purpose would be less to talk to Trump, but more to talk to the other leaders to make it clear what the Americans are up to and to ensure they are aware of the consequences for the global monetary system when China takes positive action to protect her own currency and domestic capital markets.

https://www.zerohedge.com/news/2019-...ops+to+zero%29

As CryptoSlate.com's Priyeshu Garg notes, while many were quick to dismiss the effect Libra could have on the broader crypto market, it seems that the highly-anticipated digital asset is already making waves throughout the industry. Despite the problems it faces -which include centralization and lack of privacy - Libra was still celebrated by some in the crypto community.
Garry Tan, the managing partner at Initialized Capital, said that Libra’s launch was a “big day” for the crypto industry, as it has the potential to transform the crypto market. Tan pointed out that Facebook has 2.4 billion users, while WhatsApp, the messaging giant owned by Facebook, has over 1.5 billion. Recent studies estimate the number of crypto users worldwide to be roughly 35 million.
That means that a large percentage of those users could get exposure to other cryptocurrencies through Libra, drastically increasing the number of crypto users worldwide.
As we noted last week, the interest "is mostly institutions now."

According to JPMorgan, in the two years since bitcoin's last major spike in 2017 the "market structure has likely changed considerably... with a greater influence from institutional investors."
This also means that whereas bitcoin's historic surge to its all time high of $20,000 in December 2017 was largely retail driven, and thus extremely fickle as the subsequent crash showed, this time it is largely the result of institutional buying, which is far more stable and far less prone to sudden, painful shifts in sentiment and volatility.
In other words, "this time may be different" for bitcoin in a good way: because with institutions now piling into the crypto space, this is precisely the investor group that bitcoin bulls wanted from the beginning as it creates a far more stable price base for the future. Add to this the potential return of retail buying from east Asian (or even US) retail clients, and it is possible that what we predicted in early April, namely that the 3rd bitcoin bubble is starting...


... may soon be confirmed, and that the next bitcoin bubble peak will be somewhere between $60,000 and $100,000.
For now, Bitcoin options imply a 24% probability of Bitcoin being above $15k by September.

Bitcoin Soars Above $11k For First Time Since March 2018, Ether Tops $300


https://zh-prod-1cc738ca-7d3b-4a72-b...?itok=LY4e264-
by Tyler Durden

Sat, 06/22/2019 - 10:06


Update (1030ET): Bitcoin just puked some of its overnight gains on a heavy volume spike...




https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm941D.jpg


* * *

One day after we reported that Bitcoin futures traded above $10,000 as crypto derivatives markets "are gearing up towards another big weekend as bitcoin approaches $10k", not only did the spot price surge above $10,000 but just a few hours later - in a vivid replay of December 2017 - the cryptocurrency promptly took out $11,000 as well.

“The bounce back of Bitcoin has been fairly extraordinary,” said George McDonaugh, chief executive and co-founder of London-based blockchain and cryptocurrency investment firm KR1 Plc.

“Money didn’t leave the asset behind, it just sat on the sidelines waiting to get back in.”

Cryptos are a sea of green this morning after a big overnight session...


https://zh-prod-1cc738ca-7d3b-4a72-b...22_7-06-35.jpg
Source: Coin360

Volume spiked as Bitcoin surged past $10k...and accelerated above $11k - the highest since March 2018

https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm58A0.jpg
This has pushed the leading cryptocurrency to retrace 50% of its 2017 highs to 2018 lows collapse...

https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm762D.jpg
And it's following a very similar trajectory...

https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm42FF.jpg
Ethereum also spiked above $300...the highest since Aug 2018

https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm1495.jpg
In contrast with last year, Bloomberg notes that there are now signs of renewed mainstream interest in cryptocurrencies and the underlying blockchain technology, most prominently Facebook's Libra. The social-media giant is working with a broad group of partners from Visa to Uber to develop the system, which has already attracted attention and criticism from politicians raising privacy and security concerns.

https://zh-prod-1cc738ca-7d3b-4a72-b...22_7-10-30.jpg
image courtesy of CoinTelegraph
This lifts Crypto's total market cap above $333 billion, the highest since June 2018...

https://zh-prod-1cc738ca-7d3b-4a72-b...22_7-13-02.jpg

As CryptoSlate.com's Priyeshu Garg notes, while many were quick to dismiss the effect Libra could have on the broader crypto market, it seems that the highly-anticipated digital asset is already making waves throughout the industry. Despite the problems it faces -which include centralization and lack of privacy - Libra was still celebrated by some in the crypto community.

Garry Tan, the managing partner at Initialized Capital, said that Libra’s launch was a “big day” for the crypto industry, as it has the potential to transform the crypto market. Tan pointed out that Facebook has 2.4 billion users, while WhatsApp, the messaging giant owned by Facebook, has over 1.5 billion. Recent studies estimate the number of crypto users worldwide to be roughly 35 million.

That means that a large percentage of those users could get exposure to other cryptocurrencies through Libra, drastically increasing the number of crypto users worldwide.

As we noted last week, the interest "is mostly institutions now."

https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm3F0A.jpg

While a substantial part of the increase in volumes in dollar terms reflects an increase in the market value of bitcoin and other crypto currencies, the volumes in bitcoin terms are also significantly above their previous peaks.

https://zh-prod-1cc738ca-7d3b-4a72-b...%20futures.jpg
According to JPMorgan, in the two years since bitcoin's last major spike in 2017 the "market structure has likely changed considerably... with a greater influence from institutional investors."

This also means that whereas bitcoin's historic surge to its all time high of $20,000 in December 2017 was largely retail driven, and thus extremely fickle as the subsequent crash showed, this time it is largely the result of institutional buying, which is far more stable and far less prone to sudden, painful shifts in sentiment and volatility.

In other words, "this time may be different" for bitcoin in a good way: because with institutions now piling into the crypto space, this is precisely the investor group that bitcoin bulls wanted from the beginning as it creates a far more stable price base for the future. Add to this the potential return of retail buying from east Asian (or even US) retail clients, and it is possible that what we predicted in early April, namely that the 3rd bitcoin bubble is starting...

https://zh-prod-1cc738ca-7d3b-4a72-b...0june%2016.jpg

... may soon be confirmed, and that the next bitcoin bubble peak will be somewhere between $60,000 and $100,000.
For now, Bitcoin options imply a 24% probability of Bitcoin being above $15k by September.

https://zh-prod-1cc738ca-7d3b-4a72-b...%20%281%29.png
Source: sk3w.co

And if this feels like euphoria deja vu all over again... we have a long way to go...

https://www.reuters.com/article/us-p...90U14820130201

Peregrine boss Wasendorf gets 50 years jail for fraud
P.J. Huffstutter

6 MIN READ CEDAR RAPIDS, Iowa (Reuters) - A judge on Thursday sentenced the founder of Peregrine Financial Group to 50 years in prison for looting hundreds of millions of dollars from the brokerage, saying his customers would probably never recover the money they lost.

Peregrine Financial Group owner and CEO Russell R. Wasendorf, Sr is sentenced at the US District Courthouse in Cedar Rapids, Iowa, January 31, 2013. A U.S. judge on Thursday sentenced Wasendorf to 50 years in prison for looting hundreds of millions of dollars from the brokerage, saying his customers would probably never recover the money they lost.
REUTERS/Connie Gross for The Gazette-KCRG TV9

Russell Wasendorf Sr., who had tried to kill himself just before the fraud was uncovered last year, received the maximum sentence allowed by law and was ordered to pay $215.5 million in restitution for his nearly 20-year scheme.

A local hero in Iowa known for his charitable work and lavish lifestyle, Wasendorf triggered the collapse of the brokerage through his fraud. The scam shook investors’ confidence in the U.S. futures industry, already rattled by the failure of larger rival MF Global less than a year earlier.

“I’m very sorry for the financial and emotional damage I’ve caused to investors and employees of Peregrine Financial Group,” Wasendorf said in a feeble voice at a sentencing hearing in Cedar Rapids, Iowa.

“I feel I fully deserve whatever sentence I am given,” he said. “My guilt is such I will accept that sentence.”

Chief Judge Linda Reade of the U.S. District Court of the Northern District of Iowa said former Peregrine customers will probably never get all their money back.
RELATED COVERAGE

1. Peregrine Financial regulators lacked skepticism: study

Wasendorf, 64, admitted last July that he had bilked tens of thousands of clients over a period of two decades. He used little more than a rented post office box, Photoshop and inkjet printers to fake bank statements and lie to federal regulators, employees and his closest family members.

As regulators closed in on the fraud, Wasendorf made a botched suicide attempt outside his $24-million headquarters in Cedar Falls, Iowa, which investigators say was financed with money siphoned from customers.

Peregrine Financial, known as PFGBest, quickly collapsed, and 24,000 former customers are still missing most of the money they had invested with the firm.

Wasendorf pleaded guilty in September to embezzling more than $100 million, used to fund a life of luxury that included a private jet, extensive wine collection and lakefront condo in Chicago. Prosecutors said the amount stolen was more than $215 million.

“The lengthy prison sentence imposed today is just punishment for a con man who built a business on smoke and mirrors,” said Acting U.S. Attorney Sean Berry.

Supporters of the disgraced executive had asked Reade for leniency, arguing that Wasendorf is in frail health and had helped others even in the midst of his 20-year fraud.

Shackled at his wrists and ankles and wearing an orange sweatshirt over a prison jumpsuit, Wasendorf looked gaunt in court after spending six months in isolation in a county jail.

He has been sick in jail, and doctors found a tumor on or near his pancreas, according to testimony from his pastor, Linda Livingston of Ascension Lutheran Church.

Wasendorf’s mother died of pancreatic cancer, but it is unknown whether Wasendorf’s tumor is cancerous, she said.

Despite his misdeeds, Wasendorf “did do some positive things for the community,” said former U.S. Congressman David Nagle from Iowa, who spoke up for the fallen CEO in court.

Nagle, who helped Wasendorf win zoning approval for Peregrine’s environmentally-friendly headquarters, asked the judge for leniency.

“Who wants to defend the magnitude of the crimes Mr. Wasendorf committed?” he said. “But good people do bad things.”

Wasendorf was well known for donating to local charities before his empire came crashing down.

However, he built his reputation for generosity using money stolen from his customers, Judge Reade said, adding that the donations likely eased Wasendorf’s feelings of guilt.


“It is easy to be generous with other people’s money,” she said.

Wasendorf’s downfall shocked his family and colleagues and shattered his image in his adopted hometown of Cedar Falls, where he moved Peregrine’s headquarters in 2009.

With an unusual empire including a Romanian property company and a glossy magazine, Wasendorf’s ego stood out even in the rough and tumble world of the Chicago-based futures industry.

He proudly underwrote big-name guest speakers at industry events and held private VIP receptions for them, and flashed a jeweled pinky ring. His favorite quote, according to his Facebook page, was, “If I wanted patience, I would buy it.”

U.S. prosecutors said the large financial loss, the sophisticated nature of the crime, and the sheer number of victims justified Wasendorf spending the rest of his life behind bars.

Slideshow (6 Images)
“The defendant spent like he was the richest man in the world,” Assistant U.S. Attorney Peter Deegan said in court.

BITTER CUSTOMERS
Prosecutors said the government doesn’t anticipate filing further criminal charges in Peregrine’s downfall. The FBI continues to review the firm’s records.

Wasendorf could trim 7.5 years off his sentence for good behavior, which would made him at least 106 years old before he is eligible for release.

The National Futures Association, which regulated Peregrine, had no comment on Wasendorf’s sentence.


The government has not yet decided where Wasendorf will serve out his days or when he will be shipped to federal prison.

Judge Reade said she would try to place him in a facility near his family.

James Koutoulas, co-founder of the Commodity Customer Coalition which has been working to help former Peregrine customers get their money back, welcomed the sentence. “I want this guy sitting on a cot afraid a shiv is going to go in his neck at night,” he said.

Bernard Madoff, who pleaded guilty in 2009 to running a multibillion-dollar Ponzi scheme, is serving a 150-year sentence in a medium-security North Carolina federal prison.

Reporting by P.J. Huffstutter in Cedar Rapids, Reporting and writing by Tom Polansek in Chicago; Editing by Claudia Parsons

Our Standards:The Thomson Reuters Trust Principles.

 

1. Apr 19, 2017 5:28pm | Edited at 9:56pm

1. https://cdn-assets.faireconomy.media...ar392875_2.gif BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 5,685 Posts | Online Now

Quoting CKXnlp3R
{quote} Hi, You are definitely right about leaving the positions open. I have encountered such thing numerous times and eventually closed the positions with the loss. I realized that sometimes it is best to analyze the situation like what you have described many many times, before letting the emotion rush make the decisions. Thanks again for your post, I enjoy reading it a lot! It starts to become part of my reading hobby now, lol

Thank you for the kind words. That is my goal here along with KeepCalmfx. When you learn something then we are happy. I appreciate the feedback and the more that you post with any and all comments then the better.

The last few days were very much fun for me and whether I trade a $50,000 US Funds Demo Account or a REAL FUNDS $50,000 US Funds account you must treat both the same. When I have a DRAW DOWN compared to closing all my positions. I have the same HIGH doing it because for me they are both the same. Of course in my case having traded millions of US Dollars with real funds then I know that I trade the same way. I once thought that my contact at PFG BEST in Chicago , Casey C had a client for me who had $5,000,000 US Dollars for me to manage so he at my request opened a $5.000,000 US Funds Demo Account.

I traded it for exactly 56 days and got my balance over $7,500,000 US Dollars and did 1804 Forex Trades. Looking at the volume of $100,000 US Dollars per open position times 1804 Forex Trades is a lot of Millions traded. I have sent the PDF File of my 1804 Forex Trades to KeepCalmfx to verify my numbers and it can be confirmed. The amount of losses that I had in those 1804 Forex Trades (DEMO) of course was 4 LOSSES.

I doubt anyone can duplicate that MYSELF included. That was 10 years ago and I did not use my Money Flow Trading Method then.

COMMENTS FROM BENJAMINIS: Let us review what we teach and why it works if YOU WORK.

Without your WORK then you are just wasting your time and probably your money.

There is no such thing as Political Correctness here because we are here to teach and share our knowledge ALL FOR FREE until May 15, 2017 and then if you have subscribed to this thread before May 15, 2017, then you will get a FREE LIFETIME PASS to our company website.

SO.... going back to our winning FORMULA for FOREX SUCCESS.

20% of the SUCCESS is yourself the Forex Trader.

20% of the SUCCESS is your EDGE which we teach you and that is Money Flow Trading.

20% of the SUCCESS is control of your RISK (Your hard earned money) Our UNIQUE RISK MANAGEMENT allows you to trade without worry, fear and greed. Of course we want to make sure that you have the right qualities to be a winning Forex Trader so our course is for a period of three months, so we can teach you the right trading methods and we can see your results and make adjustments without your FEAR OF LOSS of Real Money.

20% of the SUCCESS is using and understanding the USE of Technical Indicators which include not only the common ones. It includes the understanding of Supply and Demand. Support and Resistance and the use of Pivot Points which you can see each day on our daily charts that cover ALL our Trade Plans which we also help you develop and explain WHY. These are our Winning Trade Plans that we review every three months or earlier if circumstances in the markets require that.

20% of the SUCCESS is the FUNDAMENTALS, which are much more than Data Releases each day around the world. It includes reports and articles extremely well researched as you can clearly see from this article that explains why the TREND in the Equity Markets especially in North America is DOWN. By understanding the difference between PERCEPTIONS (MARKETS) and REALITY, you then have a good handle on REALITY before the MASSES do and you are not surprised when events eventually unfold.

In order to be able to help you better it is VERY IMPORTANT that you share your thoughts and your QUESTIONS here on our thread.


Benjaminis

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Via GoldMoney Insights,
Based on the findings of our gold price framework, we have long argued that we have entered a new gold cycle. However, until now, there was always the risk that strong economic growth could allow the Fed to raise rates above what the FOMC members themselves expected was possible. As markets and the Fed itself rapidly adjust to the new reality of a slowdown in economic growth, those risks have subsided, bolstering our conviction that the next gold cycle is about to unfold.

https://zh-prod-1cc738ca-7d3b-4a72-b...es/glasses.jpg

In 2018 we published a 3-part series “Gold Price Framework Vol. 2: The Energy Side of the Equation” in which we presented our revised gold price model (part 1), took a deeper dive into the link between longer-dated energy prices and gold by doing an in-depth analysis of the energy exposure of gold mining companies (part 2), and gave an outlook for gold prices (part 3).

For those unfamiliar with our model, we recommend reading at least part 1 to get a better understanding of our findings in this report. In a nutshell, we found that the majority of changes in gold prices can be explained by just three drivers: Central bank policy (more specifically real-interest rate expectations and QE), changes in longer-dated energy prices, and central bank net gold purchases (the least important driver). These three drivers can explain over 80% of the year-over-year changes in the gold price (see Exhibit 1).

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/drop_1.png

Based on the outlook for the main drivers of the gold prices, we reiterate our view that the risk to gold prices is clearly skewed to the upside, a position we are holding since early 2016. While our bullish view on gold remains unchanged, there is a clear change in our conviction level. For the past three years we have held the view that we are in a new up-cycle but we always maintained a somewhat cautious stance as we could see a near-term scenario where the Fed was able to continue to raise rates on the back of an acceleration in economic growth. We now think that this risk has all but vanished, with global economic growth pointing down, the FOMC members themselves cutting their future rate expectations and the market beginning to price in rate cuts rather than further rate hikes. In other words, the next cycle is about to unfold.

current gold price cycle started at the end of 2015…
Since we have presented our gold price framework the first time in late 2015, we have argued that we have entered a new cycle in the gold market. At the time we believed that longer-dated oil prices (5-year forward Brent) had likely set a bottom in late 2015 (at US$47/bbl, now US$60/bbl) and that real-interest rate expectations (10-year TIPS yields) were close to their cycle peak at 0.8% (now 0.3%) (see Exhibit 2). Our view was that – while there was some room to the downside – risk for gold prices were clearly skewed to the upside. While we weren’t extremely bullish near term for longer dated energy prices, the reason for our bullish view on gold was that we saw much more downside risk than upside risk for real-interest rate expectations.

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/drop_2.png

By the end of 2015, the FOMC members were predicting terminal Fed funds rates at 3.5% (see Exhibit 3). The Fed also has a PCE (Personal Consumption Expenditure) inflation target of 2%, which, in our view translates into CPI (Consumer Price Inflation) of around 2.5-3% that is embedded in TIPS yields. Thus, we expected TIPS yields not rise much above 1% even if the Fed was able to raise rates as many times as it signaled at the time.

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/Drop_3.png

Importantly, with terminal rates at just 3.5%, any economic slowdown or even a recession would require the Fed to sharply slash rates, maybe to even negative territory, which in turn would bring down real-interest rate expectations. Hence, we argued that the next larger move in gold prices would likely be up due to declining real-interest rate expectations.

However, we also acknowledged that there was significant uncertainty about the path of real-interest rate expectations for the next few years. The Fed’s famous dot plot simply shows what the FOMC members expect for future nominal rates, not their stated target. A sharp pick-up in economic activity could allow the Fed to raise rates further. In our view, a “normal” 10-year treasury yield of 5-6% would have had quite a strong negative impact on gold prices. Assuming that the Fed would stick to its inflation target of 2%, real-interest expectations would most likely be around 2-2.5%[2]. All else equal, our model would predict gold prices to drop below US$1,000/ozt in such an environment.

In the aftermath of 2016 US presidential elections, that was exactly what the market started to price in. The market hoped that deregulation would unleash economic growth that would offset the negative impact of the Fed unwinding its balance sheet. And for a while, it looked like the economic environment in the U.S. did indeed gain steam and surprised both the market and the Fed. In turn, the FOMC members started to raise their expectations for terminal rates from just 2.75% back to 3%.

While this pushed 10-year inflation expectations from 1.2% in early 2016 to 2.2% in 2018, nominal rates rose even more quickly as the Fed was finally able to raise rates multiple times a year, pushing the 10-year Treasury yield to 3.2% in late 2018. The result was that real-interest rate expectations rebounded one more time to 1.2% (see Exhibit 4)

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/Drop_4.png

Gold has predictably struggled a little bit in this environment, but the dreaded gold bear market scenario never materialized. The price of gold was close to US$1,300/ozt before election day and it was down less than US$100/ozt by the time we saw peak rates late last year, despite also being in a bearish energy environment.

Part of the reason for this resilience is that, while the Fed tightened monetary conditions by raising rates and unwinding its balance sheets, central banks globally continued to ease, and total central bank assets are right now at an all-time high. This also explains why gold prices in some other currencies are also at all-time highs. On net, the up cycle that started in 2015 remains intact, and it just got confirmed by the Fed.

…and it just got confirmed by the chairman of the FED
The optimism about the pick-up in U.S. economic growth proved to be short lived, and over the past couple months, the FOMC members gradually lowered their expectations to 2.5% (see Exhibit 5) and, more importantly, slashed their expectations for the Fed funds rate by the end of 2019 to just 2.375%, implying zero hikes.

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/Drop_5.png

The market is even more bearish, Fed fund futures are now pricing in near zero probability for a hike. The weighted average forecast for Fed funds rate at the end of 2019 is now 1.7%, implying not one, but two rate cuts. In recent years, the market has always discounted the Fed’s optimism on its ability to hike rates. But what we have witnessed over the past months reflects a complete deterioration in confidence about the FEDs ability to hike rates any further.

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/drop_6.png

We argue however that, taking historical Fed policy into account, the market seems yet to be much too optimistic. As we have highlighted before, over the past 30 years, the Fed slashed rates by 5.5% on average when the US entered a recession. This would imply steeply negative 10-year treasury rates (see Exhibit 7).

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/Drop_7.png

And that doesn’t even take the high likelihood into account that the Fed will revert to what was once referred to as unconventional monetary policy: Quantitative Easing (QE). In our view, the most important development in regards to monetary policy was not the FOMC members’ change of heart in terms of forward outlook (the market anticipated that for some time now), but a remark by Fed chairman Powell during a conference on June 4, 2019. Powell sent a powerful message to the market by preparing it for what most people in the gold market have expected all along: that quantitative easing should no longer be considered unconventional but in the future should be a standard tool in the Fed’s arsenal. Powell said:
“There will be a next time,”...[Interest rates so close to zero] “has become the preeminent monetary policy challenge of our time. Perhaps it is time to retire the term ‘unconventional’ when referring to tools that were used in the crisis. We know that tools like these are likely to be needed in some form in the future.”


And not to be outdone by the Fed, ECB President Mario Draghi stunned markets two week later when speaking at the ECB Forum in Portugal by saying:
“In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required”

Given that the ECBs target rate has remained at zero, this could only mean more quantitative easing, or a derivative thereof. In other words, when the next recession comes, expect a lot more QE, not just from the Fed, but from virtually every major central bank.

And it’s just the logical conclusion. If the Fed cannot raise rates over 2.5% before the next recession, slashing rates by 5.5% means the new target rate would have to be -3%. That is a level of NIRP no other central bank has come even close to. The Swiss national bank has been keeping its target rate at -0.75% for the past years, but it argues it is doing this to keep the Swiss Franc from appreciating too much as the surrounding economies of Europe struggle, rather than trying to stimulate the Swiss economy. Hence, it seems inevitable that QE will be redeployed when the next recession arrives, and rates will cut to at least zero.


While the timing of all this is unclear, the direction is not. Arguably the U.S. economy has so far shown remarkable resilience to rising interest rates, an inverted yield curve, higher energy prices (until very recently) and an escalating trade war between China and the U.S., and potentially other countries[3]. And should the U.S. and China resolve their trade dispute, we could expect a short term rebound in confidence and economic activity. But rates have reached a threshold where they start to have a meaningful, and in our view irreversible effect on the economy. Real estate markets in major cities, which for 10 years knew only one direction, have already started to struggle. Recent employment numbers have also been less than encouraging. And higher U.S. rates have taken a toll on the rest of the world as well.

European PMI numbers, for example, have been weak for months. And China has its own issues, likely exacerbated by the ongoing trade war.

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/Drop_8.png

Hence in our view, it’s a question of when – rather than if – the U.S. enters the next recession. In a few weeks, this will become officially the longest period of economic expansion in U.S. history, exceeding the 120 straight months of economic expansion from 1991 until 2001. Given the strong headwinds for economic growth, we have little hope that this expansion has a lot more lifetime. And it seems that the Fed is now agreeing. While the Fed has left its target rate unchanged in the June meeting, both the language in the Feds’ statement as well as the rate expectations of the individual FOMC members has changed significantly.

At their March meeting, the median expectation of the FOMC members for end of 2019 and end of 2020 rates was 2.375% and 2.625%. Three months later the end of 2020 expectations have dropped to just 2.125% and while the end of 2019 median expectations remained the same, 8 members now expect lower rates from previously none. The market is taking this as an indication that it is imminent that Fed will reverse course and start cutting rates.


In our view this means that we are now solidly in the next cycle. The risk of sharply higher rates – meaning 5-6% - are firmly off the table. The next big move in real-interest rate expectations thus will be down. The table below shows the model output for different scenarios (see Exhibit 10).

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/drop_9.png

It is important to highlight that QE has a positive effect on gold that goes beyond QE’s impact on real-interest rate expectations.
Hence more QE will not just push gold higher through lower real-interest rate expectations but is a positive driver on its own. QE’s impact on gold is much harder to estimate in a multiple regression analysis though. Every round of QE had a different impact, and so did the tapering and the subsequent unwind. Hence in the table we show where the model predicts gold prices to go under different scenarios of real-interest rate expectations and longer-dated energy prices. More QE implies that there is more upside to these targets.

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Submitted by Eric Peters, CIO of One River Asset Management

He considered the wall, each stone a worry, within its pattern a story. For three decades he’d been climbing. Every wall was different, a reflection of its unique history. Only at the top were they alike. From that perch, the wall-of-worry overcome, did the greatest risk appear.

When he first started studying markets in the trading pits, survivors simply said that prices top when there are no more bears, when everyone who will buy has bought. From there, all it takes to turn is a single bull who decides to sell. After all these years he’d discovered no better explanation.

The greatest example was the dot com bubble. The Y2K worry was a gigantic boulder atop that wall. On March 24th, 2000, having scrambled up and over, the last bear turned bullish, the market peaked. What makes today’s market unique is that the wall appears to never end.

No sooner do we arrive at the top then new worries arise: Trade wars, Comey, Mueller, Korea, Cold War, government shutdown, impeachment, immigration, invasion, quantitative tightening, Turkey, Venezuela, SWIFT payments, sanctions, Huawei, Mexico, Iran, Fed independence, now under assault. And everywhere, always, America’s unilateral challenge to the terms of global trade, security, economic orthodoxy.

Each new worry magically extends the rally.
In the background is the bond supply, growing inexorably, as rates decline. $13trln in global fixed income securities yield something negative. Supporting economic growth is the world’s wealthiest nation, running a 5% budget deficit while at full employment, its GDP above potential.

And with an increasingly politicized Fed acting out of sync, coming to the rescue somewhere near the top, unwilling to wait for the tumble, the biggest risk is not that we run out of self-inflicted worries to sustain the rally, but rather that today’s proactive policy fails to provide the lift we’ve come to count on, or that inflation suddenly emerges.

Perhaps both.
* * *
Centuries
“Think in centuries,” said the CIO, playing games with himself. “Will fossil fuels be our primary energy source in 100yrs?” he asked. “Of course not.” Will they dominate in 50yrs? 25yrs? What will replace them? “Will we still use paper currency in 100yrs?” he asked. “Not a chance.” But will we still have paper in 50yrs? 25yrs? How about 10yrs? What will replace it? Bitcoin, Libra, crypto-dollars? “And will global central banks maintain their independence throughout the coming 100yrs?” he asked. “Nope, Japan has practically-speaking lost theirs.”

“Will America import manufactured goods in 100yrs if they can be made here at home in robotic factories?” asked the same CIO. “They won’t.” How about in 50yrs? 25? 10yrs? How will the world’s mercantilist nations adjust? “Will the US have an impenetrable wall along its southern border?” he wondered. “Surely it will,” he said. “How will America’s society and economy be transformed by merit-based immigration?” It’s coming. “And what two things in the next 100yrs could utterly transform the world?” he asked. “Cold fusion and the Singularity.”

Crypto
19% of humans have bought cryptocurrency, according to cybersecurity firm Kaspersky. Only 10% say they fully understand how they work. 14% of those who’ve never bought crypto claim to want to do so in the future. And this survey was conducted before this year’s dramatic recovery even started. The bear market that devastated cryptocurrencies started in Dec 2017 with Bitcoin hitting $20,000 and ended in Dec 2018 at around $3,200 (an 84% decline). 19% of crypto investors claim to have experienced hacking and 15% suffered fraud.

From the 2018 low of $3,200, Bitcoin has quietly rallied 248% to $11,137 (market cap $189bln). Ethereum is up 275% (mkt cap $32bln). Ripple +80% (mkt cap $20bln). Litecoin +506% (mkt cap $9bln). EOS +316% (mkt cap $8bln). The rally recently went parabolic, fueled by hopes that Facebook’s new Libra coin will help validate cryptocurrencies and expand their adoption. Bitcoin has recovered nearly 50% of the bear market loss, which is something stocks like Pets.com never managed to do. Crypto feels somehow different than the dot com stocks.

https://www.zerohedge.com/news/2019-...ops+to+zero%29

For the past few days, intelligence circles across Eurasia had been prodding Tehran to consider a quite straightforward scenario. There would be no need to shut down the Strait of Hormuz if Quds Force commander, General Qasem Soleimani, the ultimate Pentagon bête noire, explained in detail, on global media, that Washington simply does not have the military capacity to keep the Strait open.

As I previously reported, shutting down the Strait of Hormuz would destroy the American economy by detonating the $1.2 quadrillion derivatives market; and that would collapse the world banking system, crushing the world’s $80 trillion GDP and causing an unprecedented depression.

Soleimani should also state bluntly that Iran may in fact shut down the Strait of Hormuz if the nation is prevented from exporting essential two million barrels of oil a day, mostly to Asia. Exports, which before illegal US sanctions and de facto blockade would normally reach 2.5 million barrels a day, now may be down to only 400,000.

Soleimani’s intervention would align with consistent signs already coming from the IRGC. The Persian Gulf is being described as an imminent “shooting gallery.”

Brigadier General Hossein Salami stressed that Iran’s ballistic missiles are capable of hitting “carriers in the sea” with pinpoint precision. The whole northern border of the Persian Gulf, on Iranian territory, is lined up with anti-ship missiles – as I confirmed with IRGC-related sources.

We’ll let you know when it’s closed
Then, it happened.


Chairman of the Chiefs of Staff of the Iranian Armed Forces, Major General Mohammad Baqeri, went straight to the point; “If the Islamic Republic of Iran were determined to prevent export of oil from the Persian Gulf, that determination would be realized in full and announced in public, in view of the power of the country and its Armed Forces.”

The facts are stark. Tehran simply won’t accept all-out economic war lying down – prevented to export the oil that protects its economic survival.

The Strait of Hormuz question has been officially addressed. Now it’s time for the derivatives.
Presenting detailed derivatives analysis plus military analysis to global media would force the media pack, mostly Western, to go to Warren Buffett to see if it is true.

And it is true. Soleimani, according to this scenario, should say as much and recommend that the media go talk to Warren Buffett.

The extent of a possible derivatives crisis is an uber-taboo theme for the Washington consensus institutions. According to one of my American banking sources, the most accurate figure – $1.2 quadrillion – comes from a Swiss banker, off the record. He should know; the Bank of International Settlements (BIS) – the central bank of central banks – is in Basle.


The key point is it doesn’t matter how the Strait of Hormuz is blocked.
It could be a false flag. Or it could be because the Iranian government feels it’s going to be attacked and then sinks a cargo ship or two. What matters is the final result; any blocking of the energy flow will lead the price of oil to reach $200 a barrel, $500 or even, according to some Goldman Sachs projections, $1,000.


Another US banking source explains:
“The key in the analysis is what is called notional. They are so far out of the money that they are said to mean nothing. But in a crisis the notional can become real. For example, if I buy a call for a million barrels of oil at $300 a barrel, my cost will not be very great as it is thought to be inconceivable that the price will go that high. That is notional. But if the Strait is closed, that can become a stupendous figure.”


BIS will only commit, officially, to indicate the total notional amount outstanding for contracts in derivatives markers is an estimated $542.4 trillion.

But this is just an estimate.
The banking source adds, “Even here it is the notional that has meaning. Huge amounts are interest rate derivatives. Most are notional but if oil goes to a thousand dollars a barrel, then this will affect interest rates if 45% of the world’s GDP is oil. This is what is called in business a contingent liability.”


Goldman Sachs has projected a feasible, possible $1,000 a barrel a few weeks after the Strait of Hormuz being shut down. This figure, times 100 million barrels of oil produced per day, leads us to 45% of the $80 trillion global GDP. It’s self-evident the world economy would collapse based on just that alone.

War dogs barking mad
As much as 30% of the world’s oil supply transits the Persian Gulf and the Strait of Hormuz. Wily Persian Gulf traders – who know better – are virtually unanimous; if Tehran was really responsible for the Gulf of Oman tanker incident, oil prices would be going through the roof by now. They aren’t.


Iran’s territorial waters in the Strait of Hormuz amount to 12 nautical miles (22 km). Since 1959, Iran recognizes only non-military naval transit.

Since 1972, Oman’s territorial waters in the Strait of Hormuz also amount to 12 nautical miles. At its narrowest, the width of the Strait is 21 nautical miles (39 km).

That means, crucially, that half of the Strait of Hormuz is in Iranian territorial waters, and the other half in Oman’s. There are no “international waters”.

And that adds to Tehran now openly saying that Iran may decide to close the Strait of Hormuz publicly – and not by stealth.

Iran’s indirect, asymmetric warfare response to any US adventure will be very painful. Prof. Mohammad Marandi of the University of Tehran once again reconfirmed, “even a limited strike will be met by a major and disproportionate response.” And that means gloves off, big time; anything from really blowing up tankers to, in Marandi’s words, “Saudi and UAE oil facilities in flames”.

Hezbollah will launch tens of thousands of missiles against Israel. As Hezbollah’s secretary-general Hasan Nasrallah has been stressing in his speeches, “war on Iran will not remain within that country’s borders, rather it will mean that the entire [Middle East] region will be set ablaze. All of the American forces and interests in the region will be wiped out, and with them the conspirators, first among them Israel and the Saudi ruling family.”

It’s quite enlightening to pay close attention to what this Israel intel op is saying. The dogs of war though are barking mad.

Earlier this week, US Secretary of State Mike Pompeo jetted to CENTCOM in Tampa to discuss “regional security concerns and ongoing operations” with – skeptical – generals, a euphemism for “maxim pressure” eventually leading to war on Iran.

Iranian diplomacy, discreetly, has already informed the EU – and the Swiss – about their ability to crash the entire world economy. But still that was not enough to remove US sanctions.


War zone in effect
As it stands in Trumpland, former CIA Mike “We lied, We cheated, We stole” Pompeo – America’s “top diplomat” – is virtually running the Pentagon. “Acting” secretary Shanahan performed self-immolation. Pompeo continues to actively sell the notion the “intelligence community is convinced” Iran is responsible for the Gulf of Oman tanker incident. Washington is ablaze with rumors of an ominous double bill in the near future; Pompeo as head of the Pentagon and Psycho John Bolton as Secretary of State. That would spell out War.

Yet even before sparks start to fly, Iran could declare that the Persian Gulf is in a state of war; declare that the Strait of Hormuz is a war zone; and then ban all “hostile” military and civilian traffic in its half of the Strait. Without firing a single shot, no shipping company on the planet would have oil tankers transiting the Persian Gulf.

https://www.zerohedge.com/news/2019-...udal-oligarchy

Authored by Charles Hugh Smith via OfTwoMinds blog,


Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy.

The Inheritance of Rome: Illuminating the Dark Ages 400-1000 is not an easy, breezy read; its length and detail are daunting.

The effort is well worth it, as the book helps us understand how the power structures of societies change over time in ways that may be largely invisible to those living through the changes.

The Inheritance of Rome focuses on the lasting influence of Rome's centralized social and political structures even as centralized economic power and trade routes dissolved.

This legacy of centralized power and loyalty to a central authority manifested 324 years after the end of the Western Roman Empire circa 476 A.D. in Charlemagne, who united much of western Europe as the head of the Holy Roman Empire. (Recall that the Eastern Roman (Byzantine) Empire endured another 1,000 years until 1453 A.D.)

But thereafter, the social and political strands tying far-flung villages and fiefdoms to a central authority frayed and were replaced by a decentralized feudalism in which peasants were largely stripped of the right to own land and became the chattel of independent nobles.

In this disintegrative phase, the central authority invested in the monarchy of kings and queens was weak to non-existent.

In the long sweep of history, it took several hundred years beyond 1000 A.D. for central authority to re-assert itself in the form of monarchy, and several hundred additional years for the rights of commoners to be established.

Indeed, it can be argued that it was not until the 1600s and 1700s--and only in the northern European strongholds of commoners' rights, The Netherlands and England--that the rights of ownership and political influence enjoyed by commoners in the Roman Empire were matched.

It can even be argued that the rights of Roman citizenship granted to every resident of the late Empire were only matched in the 19th and 20th centuries.

The rights of commoners were slowly chipped away by civil authorities and transferred to the feudal nobility. As the book explains, these rights included limited self-rule within village councils and ownership of land. These rights were extinguished by feudalism.

The connections between these civil society/legal freedoms (of self-rule and ownership of land/capital), the Protestant Reformation and the birth of modern Capitalism are explained by historian Fernand Braudel's masterful 3-volume history Civilization and Capitalism, 15th-18th Century, a series I have long recommended:
The Structures of Everyday Life (Volume 1) The Wheels of Commerce (Volume 2) The Perspective of the World (Volume 3)


The self-reinforcing dynamics of religious, civil and economic freedoms are key to understanding the transition from feudalism/monarchy to the world systems of today, in which some form of self-rule or political influence and economic freedom are expected of every civil authority.

Let's fast-forward to today and ask what relevance these histories have in the present era.

There are two points worth discussing. One is the acceleration of change; what took 300 years now takes 30, or perhaps less.

The second is the slow erosion of commoners' self-rule and ownership of meaningful, productive capital.

This gradual, almost imperceptible erosion is what I call neofeudalism, a process of transferring political and economic power from commoners to a new Financial Aristocracy/Nobility.

If we examine the "wealth" of the middle class/working class (however you define them, the defining characteristic of both is the reliance on labor for income, as opposed to living off the income earned by capital), we find the primary capital asset is the family home, which as I have explained many times, is unproductive--in essence, a form of consumption rather than a source of income.

Ultimately, all pensions, public and private, are controlled by central authorities, even though "ownership" is nominally held by commoners. (Ask middle class Venezuelans what their pensions are worth once central authorities debauch the nation's currency.)

In a globalized, financialized economy, the only capital worth owning is mobile capital, capital that can be shifted by a keystroke to avoid devaluation or earn a a higher return.

Housing and pensions are "stranded capital," forms of capital that are not mobile unless they are liquidated before crises or expropriations occur.

I am also struck by the ever-rising barriers to starting or even operating small businesses, a core form of capital, as enterprises generate income and (potentially) capital gains.

The capital and managerial expertise required to launch and grow a legal enterprise is extraordinarily high, which is at least partly why a nation of self-employed farmers, shopkeepers, artisans and traders is now a nation of employees of government and large corporations.

What sort of capital can be acquired by the average commoner now? Enough to match the wealth and political power of financial Nobility? This is the source of our fascination with tech millionaires and billionaires: a few commoners have leveraged technology to join the Nobility.


As for political influence: a recent study found that voters had very little power in the U.S., which is effectively an oligarchy: Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.

Summary: "The U.S. government does not represent the interests of the majority of the country's citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern universities has concluded."

Neofeudalism is not a re-run of feudalism. It's a new and improved, state-corporate version of indentured servitude. The process of devolving from central political power to feudalism required the erosion of peasants' rights to own productive assets, which in an agrarian economy meant ownership of land.
Ownership of land was replaced with various obligations to the local feudal lord or monastery-- free labor for time periods ranging from a few days to months; a share of one's grain harvest, and so on.


The other key dynamic of feudalism was the removal of the peasantry from the public sphere. In the pre-feudal era (for example, the reign of Charlemagne), peasants could still attend public councils and make their voices heard, and there was a rough system of justice in which peasants could petition authorities for redress.

From the capitalist perspective, feudalism restricted serfs' access to cash markets where they could sell their labor or harvests. The key feature of capitalism isn't just markets-- it's unrestricted ownership of productive assets--land, tools, workshops, and the social capital of skills, networks, trading associations, guilds, etc.

Our system is Neofeudal because the non-elites have no real voice in the public sphere, and ownership of productive capital is indirectly suppressed by the state-corporate duopoly.

Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy.

https://zh-prod-1cc738ca-7d3b-4a72-b...%20%281%29.jpg


* * *

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Good Morning BenjaminIs,

You are my Mentor, from your each & every post, I try to learn something.
Would you mind asking me, your Post# 6770, there is a transection for US30,
You SHORT100 units, @8.42am., and as per your teaching SL MUST be 100 units,
And this one is exceeding SL?? Plz advise. thanks,

loveandpeace

There have been MAJOR changes in my Forex Trading Strategy. I would be glad to explain them to you when you call me.

You have my cellphone number so please call me at 514 247 0775.

I will talk to you when you reach me. I have traded this account now for the period between June and today and everyone can see the results through the screenshots.


BWM

https://www.zerohedge.com/news/2019-...ops+to+zero%29

The fact that financial markets responded in very similar ways... lends credence to the view that these actions had the expected effects on markets and are thereby providing significant support to job creation and the economy.”

- Ben Bernanke defends the idea that markets and the economy respond significantly to quantitative easing

“… it will be like watching paint dry, that this will just be something that runs quietly in the background.”

- Janet Yellen refutes the idea that markets and the economy respond significantly to quantitative tightening


It doesn’t take much calculation to see that the Fed’s position on quantitative tightening (QT) is blatantly inconsistent with its position on quantitative easing (QE). You only need to notice that the excerpts above, taken together, violate the following pair of postulates:

1. When A and B are opposites, the effects of A should be opposite to the effects of B.
2. QT is the opposite of QE.

So financial markets and the economy should respond significantly to both QE and QT—although in opposite directions—or they should respond to neither QE nor QT. To claim otherwise, as in the excerpts above as well as other similar communications, is like arguing that one of the two postulates is wrong in the context of the Fed’s bond portfolio. That seems unlikely, but not impossible. In particular, the first postulate falls short of being an absolute truth, reality sometimes being more complicated than we’d like it to be. Consider that Newtonian physics seemed absolute enough until Einstein came along.
But former Fed chairs Bernanke and Yellen aren’t relativity theorists and haven’t framed it like that. In public comments and speeches that I’m aware of, they haven’t acknowledged the postulates in the first place let alone explained why they reject the logic of opposite actions yielding opposite effects. In fact, they don’t have to acknowledge or explain, because major media outlets—those with invites to FOMC press conferences and “sources” close to the key decision makers—rarely challenge the Fed’s narrative. If you’re established in the mainstream, there’s no upside to investigating inconsistencies, only the downside of being seen as impolite while jeopardizing your coveted invites and sources.

Awkwardness Alert: Here Comes a Chart that Really Excites Me

So let’s agree that the Fed’s positions on QE and QT are incompatible, at least on the surface, and it’s only decorum and incentives that prevent, say, the Wall Street Journal from calling bullshit. Since I’m only stating the obvious, you agree so far, right? Yes? Good. Now let’s see what the data say. And by “data,” I mean the Fed’s own Z.1 report. Regular readers might recall that I used the Z.1 to test claims about QE, posing two questions that seemed reasonable to ask:

1. How rapidly do banks and broker–dealers (BDs) expand credit during QE periods (QE1, QE2 and QE3) compared to QE pauses (all other times)?
2. How does bank and BD credit expansion compare to the Fed’s credit expansion during the same periods?

Here are the answers in chart form:

https://zh-prod-1cc738ca-7d3b-4a72-b...-1_thumb-1.png
Call it TMI, but the chart still excites me five years after I first produced it. (You can find the latest iteration here and then follow links to earlier versions.) Two of the most obvious questions yield the cleanest imaginable outcome—the private financial sector and the Fed almost perfectly offset each other! The Fed grabbed the credit-growth baton for QE laps and then passed it back for QE pauses, but whoever didn’t have it more or less stood still.

In other words, whereas the Fed expected to increase the amount of credit supplied to the nonfinancial sector, the Z.1 suggests it only substituted one source of credit for another. That’s not to say QE had no effects at all—it clearly jolted market psychology, and therefore, influenced market prices. But the Z.1 refutes the primary mechanism claimed by Bernanke, which required QE to increase total credit supply. The hypothetical chart that fits Bernanke’s expectations would have been less argyle and more Charlie Brown zigzag, with total credit creation rising to new highs.



https://zh-prod-1cc738ca-7d3b-4a72-b...on_thumb-2.png
All of which brings us from QE to QT. As of this month, the Z.1 shows four consecutive quarters of the Fed reducing its net lending, thanks to QT. So the argyle effect is necessarily over, because the Fed no longer alternates between only two options—QE and not-QE. The pattern has to change, but to what? Well, here’s the answer:

https://zh-prod-1cc738ca-7d3b-4a72-b...-2_thumb-3.png
Not as clean this time, right?
On one hand, the private financial sector appears to have neutralized some portion of QT by increasing its net lending after the Fed’s lending began to shrink. On the other hand, the financial sector’s increased lending didn’t exactly offset the Fed’s decrease. The change in the first is about half the magnitude of the change in the second.
Three Possibilities

So what exactly does the new QE–QT pattern tell us? I’ll suggest three possibilities, ordered from my least likely to my most likely:

1. QT might have caused the total amount of credit supplied to the nonfinancial sector to fall, a result that would be intriguing largely because of what it would say about the central bank’s expectations. If the private financial sector fully offset QE’s credit creation but not QT’s credit contraction, which is the conclusion you might reach if relying on nothing but the chart, then Bernanke and Yellen got it completely backwards. You’ll never see that conclusion in the Wall Street Journal, for the reasons noted above, but it actually fits the data.
2. We might not have enough QT data to reach a firm conclusion just yet. In other words, we might find that the picture changes with a few more QT quarters, especially as the volatility of these figures is quite high. That’s why I waited for four quarters of data before publishing my chart, but four still might not be enough.
3. Total net lending might have declined over the last four quarters even without QT, such that any QT effects were negligible, notwithstanding my chart. Instead, debt-saturated borrowers might have decided to take a rest after nine years of expansion and independently of monetary policy. This view lines up nicely with the Fed’s loan officer survey, which shows weakening demand for most types of loans during the last four quarters. It’s also consistent with the idea that monetary policy makers neither manufacture nor extinguish creditworthy borrowers, who travel to loan and underwriting desks from all corners of the economy, just not from the front steps of the Eccles building as the Fed adjusts its bond holdings.

For what it’s worth, my last point above ties into what I believe to be one of the biggest flaws in the Fed’s make-up. That is, scholars like Bernanke and Yellen reason from theories that require people to respond slavishly and robotically to every adjustment in public policy, however odd, circular or obscure the adjustment might be. In Bernanke and Yellen’s world, it’s no exaggeration to say that central banks really do manufacture creditworthy borrowers, as if the term open market account describes a freakish assembly line, not a simple bond portfolio.
Bottom Line

You’ll form your own views on all of the above, but my advice is to filter the Fed’s narrative with a healthy skepticism, however deferentially the media chooses to endorse it. I’m not saying the narrative is always wrong, just that monetary policy is notoriously difficult to evaluate. But not impossible—the Fed’s data can help separate fact from fallacy. Dig into the Z.1, and you might find that the best reality-check is a single chart—call it the Burberry truth—modest in ambition but scintillating nonetheless.
Exposing The Fed's False QE/QT Narrative With Its Own Data

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Robert Mueller will testify before the House Judiciary and House Intelligence committees, after both panels subpoenaed the former special counsel, according to a Tuesday evening press release.

https://zh-prod-1cc738ca-7d3b-4a72-b...%20house_1.jpg
"Pursuant to subpoenas issued by the House Judiciary and House Permanent Select Committee on Intelligence tonight, Special Counsel Robert S. Mueller III has agreed to testify before both committees on July 17 in open session," reads the statement.

News of Mueller's testimony is a sharp reversal from a rare public statement in May, during which he said "The report is my testimony," referring to the Russia report his office put out after nearly two years of investigation.

In April, Attorney General William Barr released a redacted version of the report which found no evidence of collusion between the Trump campaign and Russia, yet declined to render a prosecutorial recommendation on whether Trump had obstructed the investigation.

Meanwhile, despite an almost unredacted version of the Mueller report made available to Congress, Democratic lawmakers have insisted on access to the full report.