The War Between Public Pensioners And Tax Donkeys Is Heating Up
by Zero Hedge - April 20th, 2018 8:45 am
Courtesy of Charles Hugh Smith, Of Two Minds
You know it's serious when the newspaper of record finally reports it: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash (New York Times).
It's a long article but the summary is brief: corrupt politicos promised the moon to public employees, and now the fiscal chickens of insolvency are coming home to roost.
Public pension obligations are rising so fast that even repeated tax increases can't keep up.
This is setting up a second front in the war between entitled Baby Boomers and younger taxpayers who pay most of the federal and local taxes. Public pensioners are a subset of the entitled Baby Boomers, but their pensions can't be paid with borrowed money like Social Security and Medicare; public pension obligations come out of local and state taxes, and as those obligations soar then public services must be slashed and taxes jacked up by annual double-digit increases.
So there is a war brewing between public pensioners and the Tax Donkeys: the Unprotected who pay local property taxes on their homes, state and local taxes on their incomes, sales taxes on their purchases, junk fees on local government services, and so on.
Corrupt politicos created the war by over-promising benefits to public employees and ignoring fiscal realities. By the time the bill comes due, the politicos who rubber-stamped the unaffordable promises are themselves gorging at the public-pension retiree trough.
Not every public employee is receiving gold-plated pensions and benefits, of course, but that doesn't negate the reality that nationally, public pensions are increasing faster than government revenues and the returns earned by the pension programs.
If the stock and bond markets suffer multi-year declines, even modest declines, the pension war will move from skirmishes to open political combat. The 2008-09 Global Financial Meltdown was a taste of the reality facing public pension programs: once annual returns slip from +7% annually to -7% annually, the pension plans are soon insolvent.
Like virtually all wars, there are asymmetries between the two combatants: in the war between public pensioners and the Tax Donkeys, the pensioners can't switch pension programs, but the Tax Donkeys can move to lower-tax states.
Allow me to summarize…
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Frontrunning: April 20
by Zero Hedge - April 20th, 2018 8:39 am
Courtesy of ZeroHedge. View original post here.
- Trump says will not accept high oil prices, crude dips (Reuters)
- OPEC, Russia Oil Officials Hint at Extending Production Cuts (WSJ)
- Comey Memos Reveal Trump’s Early Doubts About Flynn (WSJ)
- Global stocks set for second week of gains, commodities ease (Reuters)
- U.S. Prosecutors to Weigh a Criminal Case for McCabe (WSJ)
- Hedge Fund Titans Pull Money From Funds to Pay Massive Tax Bills (BBG)
- Audit Cleared Facebook’s Privacy Practices Despite Cambridge Analytica Leak (WSJ)
- Corporate crooks set to face tougher penalties under new rules to be revealed by Government (ABC)
- China's ZTE slams U.S. ban, says company's survival at risk (Reuters)
- America's nuclear headache: old plutonium with nowhere to go (Reuters)
- Wanted: New Home for a Lot of Russian Aluminum (WSJ)
- U.S. sorghum armada U-turns at sea after China tariffs (Reuters)
- GE Takes Hit From Old Mortgage Unit, Cites Other Progress (WSJ)
- GE Surges After Brushing Off Wall Street’s Worries (BBG)
- Kudlow’s Candid Style Marks Transition to White House (WSJ)
- The U.K. Just Went 55 Hours Without Using Coal for the First Time in History (BBG)
- Barclays chief Staley survives whistleblowing inquiry with only a fine (Reuters)
- Japanese Official Says Font Size on Sexual Harassment Complaint Was Too Small (BBG)
- Trade Policies Are Puncturing America’s Economic Optimism (BBG)
- Mattel Taps Its Fourth CEO in as Many Years (WSJ)
- Soros body mulls future in Hungary as Orban vows migration fight (Reuters)
- What If Tesla’s Time Is Running Out? (BBG)
Overnight Media Digest
WSJ
- The Justice Department's internal watchdog referred its finding that former FBI Deputy Director Andrew McCabe had misled investigators to federal prosecutors to determine whether he should be charged with a crime, according to people familiar with the matter. (on.wsj.com/2HcX69H)
- Former FBI Director James Comey revealed…
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Trump Tweets Oil Down to $67.50 Giving our Readers $2,000 Per Contract Wins!
by phil - April 20th, 2018 8:34 am
I am now a Donald Trump fan!
Yesterday morning I was interviewed on the Benzinga Pre-Market Show where our trade of the day was to short Oil (/CL) (USO) Futures at $69.50 and, during the day yesterday we got had a nice $1,500 per contract gain as oil dropped to $68 and then, this morning, as oil climbed back to $68.50, where we wanted to short again, our beloved President, Donald J. Trump tweeted out exactly what I had said yesterday afternoon at my Nasdaq interview, with the President saying:
Needless to say we are thrilled, not just with the money but with the President's ability to summarize what we say during a 5-minute interview in a single tweet – THAT'S LEADERSHIP! Now, if the President would just put me in charge of the Strategic Petroleum Reserve and stake me with the Treasury, we could pay off the National debt in no time buying and selling oil contracts.
We wouldn't need OPEC to back down if we simply break the NYMEX and we could do that by calling their bluff and promising to sell their fake, Fake, FAKE orders for 223M barrels of oil for May delivery, which we said last Friday would be cancelled or rolled by today and, lo and behold, as of this morning, there are only 26,672 contracts left open for May delivery, representing just 26.6M barrels (90% cancelled) and that will be cut in half today, leaving the US with just 13Mb imported to Cushing at $67.50 per barrel when, earlier this month, we had "orders" for over 500M barrels at $62.50 that were canceled by the criminal NYMEX trading cartel WHO ARE UNDERMINING THE ENERGY SECURITY OF THE UNITED STATES, which happens to be TREASON!
Well, the orders were not "cancelled" – they "roll" the orders into other months to FAKE demand there as well and this little shell game pushes the price of oil up and up and costs US Consumers Billions of Dollars at the pump every month. In fact, this month's $5 gain x 20M barrels a day x 30 days is $3Bn we're being screwed out of in April alone. On the…
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Cryptos Continue To Surge As Tax-Day Passes
by Zero Hedge - April 20th, 2018 8:11 am
Courtesy of ZeroHedge. View original post here.
Crytpocurrencies are continuing their post-tax-day gains with Bitcoin above $8500, Ethereum at almost $600, and Ripple up over 30% on the week.
With Bitcoin back above $8,500…
And Ethererum is back above $550 – testing towards $600…
Certainly for now, the anecdotal performance suggests Tom Lee's tax-based-selling these is playing out with strength continuing, but, we also note that The Sovereign Investor believes the most important crypto indicator just turned bullish.
As the crypto asset class evolves, similar patterns and indicators used by traders in other asset classes are emerging.
One of these is the tendency of markets to be in either “risk on” or “risk off” mode.
Investors are either willing to take on more risk through buying riskier assets, such as tech stocks with little to zero earnings; or they are looking to take less risk, adding either gold or U.S. Treasurys to their portfolios.
As the oldest and most liquid crypto asset, bitcoin is considered “digital gold.” It can be exchanged for more altcoins than any other crypto and serves as the main entry and exit point to fiat currency.
On top of that, there are thousands of merchants that accept bitcoin as payment, providing users another exit to the crypto markets.
Bitcoin has been able to maintain crypto hegemony even through significant faults: Transaction speeds are much slower than rivals, and fees tend to skyrocket when the network is busy.
Many contenders have tried, but none have successfully replaced bitcoin atop the crypto throne, and it remains the “store of value” within the crypto asset universe.
This unique position allows it to outperform other crypto assets when investors are moving away from risk. As the crypto asset class evolves, similar patterns and indicators used by traders in other asset classes are emerging.
One of these is the tendency of markets to be in either “risk on” or “risk off” mode.
Investors are either willing to take on more risk through buying riskier assets, such as tech stocks with little…
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Trump Slams OPEC: “Oil Prices Are Artificially High, Will Not Be Accepted”, Oil Tumbles
by Zero Hedge - April 20th, 2018 7:40 am
Courtesy of Zero Hedge
Update: we didn't have long to wait for the Saudi response, which came just 30 minutes after the Trump tweet:
- THERE'S NO SUCH THING AS ARTIFICIAL OIL PRICES: SAUDI MINISTER
Which is ironic coming from the head of an oil cartel whose only purpose is to keep prices artificially high. It is even more ironic because just two years ago OPEC itself was slamming "evil speculators", hedge funds and anyone else who it suspected of selling oil for creating an "artificial oil price."
* * *
It was supposed to be OPEC's day, as a joint technical panel of OPEC and non-OPEC nations (also known as OPEC+) met in Jeddah, Saudi Arabia and declared that the global oil glut that has weighted on oil prices since the infamous OPEC Thanksgiving Massacre of 2014 and prompted the historic Vienna OPEC production cut agreement, has been effectively eliminated.
Little did OPEC+ know they were all about to be upstaged by yet another Trump tweet.
But first, back to Jeddah where OPEC and Russia congratulated themselves on "impressive results", having wiped out 97% of the targeted inventory surplus. But, as Bloomberg notes, instead of celebrating victory, the world’s largest producers are finding reasons to continue cutting output. And now, instead of targeting the excess inventory, OPEC+ has decided that production curbs should continue because another important goal – boosting investment in oil and gas production – remains far out of reach, according to Saudi Energy Minister Khalid Al-Falih.
The Saudi minister's most important ally, Russian counterpart Alexander Novak, agreed there’s no obligation to stop just because the pact’s initial goal – stockpiles back in line with the five-year average – is at hand.
“We have our targets, but there’s no strict formula under which we would decide: ‘Well, we’ve reached zero, so we are done’,” Novak told reporters in Saudi Arabia on Friday.
What he really meant is that: oil prices keep rising, this is great for Russia, it's great for the Saudi budget deficit and the upcoming Aramco IPO, it is great that it is mostly off the back of Venezuela whose oil production is collapsing on its own and without OPEC's help which means even more…
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Rising Gas Prices Threaten To Wipe Out Trump’s Tax Cut Benefits
by Zero Hedge - April 20th, 2018 7:35 am
Courtesy of ZeroHedge. View original post here.
The Trump tax cuts were supposed stimulate growth, and while conventional wisdom held that it would be the US economy that would be boosted, it now appears that only US oil companies, or rather their shareholders (and the occasional OPEC member) will get the benefit of the extra cash jolt.
The reason: sharply higher oil prices, which today settled at a fresh 4 year high, are dragging gasoline prices across the country higher, and are rapidly approaching the psychological $3/gallon level, last seen in late 2014, just before the "OPEC Thanksgiving massacre" of 2014.
To some, the rising prices are merely a nuisance of life. Take Tim Rogus, a retired publisher in suburban Chicago, who told the FT he noticed fuel prices at the petrol station creeping up towards $3 a gallon but he is philosophical about it. “Our prices were nearly $4 at one point,” he says. “Life has to go on somehow.”
To others, especially those in the lower income quintiles, the rising gas prices will be a far bigger burden as it will mean a sharp drop in discretionary spending. now that more cash has to be set aside for essentials. Here, the FT is correct that it will be most rural areas and middle-income households that are about to be hit the hardest.
Worse, it means that the benefit of Trump's tax cuts for the middle class will be mostly, if not fully wiped out.
To be sure, it will take a while for the effects of higher oil/gas prices to be fully felt: the “driving season”, the peak of petrol consumption in the US, is April to September, and the EIA expects prices this summer to be at their highest for four years, up 10 per cent from 2017. Of course, for that to happen, US households will need to significantly curb their spending on other items, which means the weakness in retail sales for a US population whose personal savings rate is already near all time lows, will persist.
However, unlike the last time gas prices soared – most notably in early 2008, just before all hell broke loose – this time there is a silver lining: the…
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Stocks Struggle As Surging Dollar Snaps Commodity Rally
by Zero Hedge - April 20th, 2018 7:10 am
Courtesy of ZeroHedge. View original post here.
World stocks, as tracked by the MSCI All-Country Index, struggled on Friday, dipping in early trading but were set for a second week of gains after a solid start to the the global Q1 earnings season, even as a rally in commodity prices fizzled pressured by the recent dollar spike.
U.S. equity index futures are modestly in the red, alongside Asian markets, where technology shares came under pressure after yesterday's unexpected Taiwan Semi warning, which saw the world's biggest semiconductor foundry cut its revenue target to the low end of forecasts and blamed softer demand for smartphones
European stocks initially inched lower as traders assessed earnings results from companies including Reckitt Benckiser Group Plc and Ericsson AB, pushing the Stoxx Europe 600 Index slides 0.2%. However, since then Euro stocks erased all earlier losses as the Euro slumped, boosting exporters while the telecom sector outperformed after gains by Telia. The Stoxx Europe 600 Index rose 0.1% to session high with 11 of 19 industry groups advancing, telecom up 1.2% as Telia rallies following strong earnings.
Reckitt Benckiser falls after the company posted like-for-like sales for the first quarter that missed estimates, while Ericsson soars after posting results that were stronger than analysts had expected. ASM International heads for the worst performance on the Stoxx 600 after the semiconductor equipment maker’s results were seen as signaling a touch start to the year.
“Our base case is that investor focus will shift back to economic growth as some of the current uncertainties ease,” UBS strategists wrote in a note to clients. “In our base case we do not expect current tensions between NATO and Russia to escalate further than issues in the past, such as Crimea, and expect the trade dispute between the U.S. and China to be negotiated without escalating to a trade war."
Outside of the EU, the Swiss National Bank said it was "not in a hurry" to adjust policy despite the franc touching a milestone low of EURCHF 1.20, according to President Thomas Jordan. American sanctions on Russian oligarchs have had the effect the Trump administration wanted, Treasury Secretary Steven Mnuchin said. Both aluminum and nickel fall back after Thursday’s gains.
U.S. equity-index…
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Blain: “We Are Beginning To See Cracks Across The Tech Model”
by Zero Hedge - April 20th, 2018 6:18 am
Courtesy of ZeroHedge. View original post here.
Submitted by Bill Blain of Mint Partners
Irish border? Tech/Disruptive valuations – are they unsustainable? Wake up and put on the coffee.
“The man gave me the news. He said, you must be joking son, where did you get these shoes?”
Extraordinary weather here in London. This is the first time I’ve worn a Panama hat in April since 1976. Just last week I was still wearing my winter Fedora! One ponders just what the cooling Gulf Stream and the renegade Jet Stream are doing to us? Photo of view from office window attached. (Barclays office facilities – please take note.. this morning the world is looking thru your dirty windows..!)
The paucity of real market moving news is demonstrated by the headlines given over to the latest Brexit Spat – the Irish border. There are simple solutions – but no one seems particularly interested when it’s a chance for Brussels to punish Britain, Remoaners to bleat about how it’s never too late to repent, while Exiteers fulminate on the need to discipline Europe. Get real. Call it a free-trade zone or whatever. Does anyone really believe the UK and Yoorp will so diverge that Irish Milk will be different from Northern Irish Milk? Aside from arbing petrol prices either side of the border, (which is only 195-215 miles long, depending which map you use), isn’t it best to be practical? Get on with it.
Back on planet Rest of the World, a very real issue is tech stocks. Their market caps are enormous. 7/10 of the largest companies on the planet fall into the bracket. They dominate global indices, and account for much of ebb and flow of market value activity.
The raises some very big issues, not the least of which is valuations – where me-too investors and investment tourists have piled in. Do the current prices make sense? The conventional wisdom/excuse is you can’t value disruption/paradigm shifts from a conventional perspective. It requires an acknowledgement that extraordinary breakthroughs need to analysed and priced differently. They glitter, they shine, they sound good… so folk buy em – none of which are valid investment reasons!
Amazon has become…
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Saxo Bank: Reality-Check For The Euro Area Economy
by Zero Hedge - April 20th, 2018 4:15 am
Courtesy of ZeroHedge. View original post here.
Authored by Saxo Bank, Head of Macro Strategy, Christopher Dembik via TradingFloor.com,
The rosy “strong euro area growth” narrative is done. As a result of a lower than expected ZEW index (-8.2 points in April versus 5.1 points in March), Citi Economic Surprise Index for the Eurozone is sinking further into negative territory, reaching its lowest level since 2012. The index is currently the worst performer among G10, at minus 87.8. This collapse added downward pressure on European stocks during Q1 and the risk is high that it will happen again in Q2 or Q3 if economic indicators continue to disappoint.
The sharp drop in the ZEW index confirms that soft data are rapidly adjusting to weak hard data recently released by Markit and the European Commission. All of them send the same message: euro area growth has reached a plateau.
Even Europe’s fêted powerhouse is running out of steam.
Even Germany, which is often considered Europe’s locomotive and has been fairly immune to previous European crises, is losing momentum. One of the most important points to highlight from April ZEW survey is that economic expectations, which are usually a reliable indicator of economic growth in Germany, are now in negative territory. It clearly indicates a higher degree of pessimism about trade, which is well-illustrated by YoY exports data.
In the graph below, we can clearly see that German exports and Chinese exports are interlinked. The risk for Germany is that it experiences a new bearish export cycle similar to that of the 2014-2015 period, but that could be potentially worse due to the unique combination between negative China credit impulse, higher trade tensions and liquidity withdrawal from the international financial system. All of this tends to indicate that Germany is heading straight for slowdown, like the rest of the euro area.
Contrary to what has been written elsewhere, the euro area is still dependent on the evolution of global growth and trade. Domestic demand, mainly pushed by European Central Bank measures, has been a major driver of growth in the post-crisis years. The ECB’s accommodative stance gave easier access to consumer credit to households, thus enabling domestic demand to run well ahead of the pace that income growth would have allowed.
As we can see in the graph below, credit generation is highly…
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These Are The Men & Women Most-Admired By Brits In 2018
by Zero Hedge - April 20th, 2018 2:45 am
Courtesy of ZeroHedge. View original post here.
In 2002, David Attenborough was named among the 100 Greatest Britons by a BBC poll.
And as Statista’s Niall McCarthy notes, the veteran broadcaster and naturalist is still the most admired man in the UK, according to a new YouGov survey. Widely considered a national treasure in Britain, Attenborough had an admiration score of 16.6 percent, ahead of Barack Obama’s 12.3 percent.
You will find more infographics at Statista
Queen Elizabeth II is the most admired woman in the UK with an admiration score of 19.6 percent. Michelle Obama came second with 10.3 percent while Judi Dench came third with 10.3 percent.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
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